The U.S. Government's New Problem: Big Tech

More war in the Persian Gulf... What the bond market is still signaling... Why Big Tech is compounding Washington's debt problem... Whitney Tilson's plan to beat the AI bubble... Stansberry Conference Livestream Passes now available...

Welcome back from the long weekend. The energy market didn't take one...

The November contract for Brent crude, the international benchmark, traded near $99 a barrel this afternoon, and West Texas Intermediate's October contract was around $94. Brent is up roughly 11% over the past month and about 46% over the past year.

Both are near $100 a barrel, a number we haven't seen since just before Memorial Day. (With Labor Day marking the unofficial end of summer, we've come full circle.)

The cause is the same one we've been writing about all year, with a new location. Iran-backed Houthi militants once again hit several Saudi energy facilities, including the Jazan refinery, halting operations and wounding dozens. It's the third strike on that site in a month.

The attack came on a busy weekend in the Persian Gulf. The U.S. said it struck three Iranian-affiliated oil tankers on Saturday, and Iran's Islamic Revolutionary Guards claimed hits on three U.S.-linked vessels of its own.

Those targeted ships aside, the Strait of Hormuz remains a parking lot. Roughly 10 tankers a day have been crossing the strait over the past week and a half. Before the Iran war, more than 100 ships passed through the strait on a typical day.

Americans are feeling it at the pump, of course. The national average for gasoline has risen to $4.15 a gallon, up nearly 40% since the war began in late February. And diesel hit an all-time high of $5.90 yesterday.

All this matters...

As Dan Ferris wrote in these pages earlier this year, diesel is what moves everything else in the economy...

Most of us don't think about how goods arrive at our doors. We simply click "buy" online, and they show up.

But the truth is, we all rely on trucks for the items we consume...

There are 15 million commercial trucks in the U.S., 76% of which run on diesel. About 97% of the largest tractor trailers (known as Class 8 vehicles) run on diesel.

International trade relies on diesel trucks, too. The U.S.'s two biggest trading partners are Mexico and Canada. Roughly two-thirds of surface trade (trucks, rail, and pipelines) with Canada is hauled by trucks, as is roughly 85% of surface trade with Mexico.

Truckers are already suffering from higher diesel prices.

That was in March.

Now, by official numbers, inflation is running at least 3% year over year. After all... when transportation costs rise, consumers have to pay more for the goods they're buying.

What the bond market is still saying...

The 10-year Treasury yield was near 4.8% this morning, its highest mark since October 2023. The 30-year was around 5.27% earlier today, not far off the 5.33% it touched on August 18 – a 19-year high.

Recall that higher Treasury yields mean falling Treasury prices. Folks aren't rushing to own U.S. debt.

Some of this drop in bond prices stems from oil's short-term wartime uncertainties. Some of it is Friday's jobs report, which showed 162,000 new positions against expectations closer to 55,000, with unemployment holding at 4.1%.

A "hot" labor market and $99 crude speak to heightened inflation. The last consumer price index ("CPI") reading stood at 3.4%. And the personal consumption expenditures ("PCE") index – which has been the Federal Reserve's preferred inflation measure – was 3.7%.

We'll get more inflation data later this week, with August's producer price index on Thursday morning and August CPI on Friday.

But the war and inflation aren't the whole story...

The even bigger factor is Uncle Sam's debt problem...

Treasury yields aren't only a forecast of inflation or growth. A 30-year Treasury bond also reflects the risk of lending money to the U.S. government. And that rising risk isn't Iran's fault.

I (Corey McLaughlin) wrote about this about a month ago. At that time, in a span of a few days, the government reported that the U.S. fiscal deficit had risen to more than $432 billion in July... and we saw the Treasury sell $25 billion of 30-year bonds at a 5.216% yield, the most expensive 30-year bond sale since 2001.

The Treasury needed this higher rate to tempt buyers. And the cost of paying this yield is adding up...

The national debt is around $40 trillion. Through July, with just two months left in the government's 2026 fiscal year, Uncle Sam had paid $931 billion just in interest. That's roughly 11% more than the government paid during the same stretch a year earlier.

Interest is the third-largest line item in the federal budget, behind only Social Security and Medicare. It now eats up roughly 18% of every dollar the government collects.

As we've said before, the bond market has been speaking. But policymakers are following a decadeslong playbook: making things worse with a short-term "fix."

Would you want to buy a 30-year bond right now? We don't. Neither do a lot of others. So as we've reported before, the Treasury is upping its bond-buying activity – through the midterms, at least.

The thing is, the government's bonds now have big competition...

Yet another piece of this story doesn't get enough attention. Credit Opportunities editor Mike DiBiase and Digest contributor Nick Koziol both discussed it last month.

Here's what Nick shared in the August 19 Digest, titled "Here Comes the Liquidity Support"...

Nvidia (NVDA), Amazon (AMZN), and Alphabet (GOOGL) have all launched massive bond sales recently. Bank of America estimates that we'll see $200 billion in hyperscaler debt offerings in both 2026 and 2027...

And since some of the hyperscalers – like Alphabet and Microsoft (MSFT) – have credit ratings that match or even exceed the government's, investors are turning to them rather than to government-debt auctions.

We know that the hyperscalers are going to keep spending. And since they're essentially out of free cash flow, they're going to have to offer more debt to raise capital.

That'll give investors plenty of chances to buy. But if investors favor hyperscaler debt over Treasurys, yields may remain higher...

The hyperscalers blew past Bank of America's estimate.

Combined, the five top hyperscalers – Alphabet, Amazon, Meta Platforms (META), Microsoft, and Oracle (ORCL) – issued roughly $220 billion in bonds through August 10. Goldman Sachs now sees them issuing $250 billion worth this year and $400 billion in 2027.

And the ratings comparison is real. Microsoft carries a AAA rating. Alphabet's is AA+. Amazon's is AA. The United States lost its last AAA years ago.

Think about what that means for an institution deciding where to park money for the next decade. One borrower prints its own currency but runs trillion-dollar deficits with no plan to close them... at least beyond rebundling debt and letting inflation take care of the rest.

The other has a fortress-like balance sheet and a AAA stamp, and it pays you more for the trouble. That's not a hard call. And every dollar that goes to Microsoft or Alphabet is a dollar that doesn't show up at a Treasury auction.

Meanwhile, there's plenty of supply... More than $8 trillion of U.S. government securities are set to roll over between now and year-end. We know the government will be buying some of that, but who else? Long-term yields could keep on rising, meaning government debt will cost more to finance... and on and on.

This puts Kevin Warsh in a box...

The Fed chair is looking at higher yields, higher oil prices, and "sticky" 3%-plus inflation, plus a labor market that is holding up, if not warming up.

All things being equal, that's when the Fed would hike the federal-funds rate. Roughly 60% of fed-funds futures traders are now pricing in a 25-basis-point increase when the Fed wraps up its next policy meeting on September 16.

President Donald Trump would prefer the opposite.

After Friday's jobs report, he made that clear for the first time since Warsh took over as Fed chair this year. As Trump wrote on Truth Social: "High interest rates put the U.S.A. at a very unfair disadvantage, and I won't allow that to happen!"

He told the Fed to "BE PATRIOTS for a change."

And he also attempted to use the Fed's current stance as leverage for trade negotiations. Trump said the U.S. would cut off trade with partners running surpluses against the U.S. if rates don't come down. (Wasn't that first part already what "Liberation Day" was all about?)

At his keynote speech in Jackson Hole last month, Warsh said the Fed's priority right now is inflation. The market is saying the same thing. We'll find out in next week whether Warsh means it... or listens to the person who nominated him to be Fed chair.

Substitute 'Internet' for 'AI' – and get prepared...

So, investors are putting more faith in AI companies and related investments than in the U.S. government. In other words, in a convoluted way, decades of mismanaged government finances are helping fuel the AI boom (and/or bubble). That's fine – for now...

But we've kind of seen this before. As our colleague Whitney Tilson recently wrote in his free daily e-letter, he's part of a half-dozen investment group chats, and they're all filled with AI talk. Whitney recently replied in one group...

As I read the back and forth on AI, over and over again I keep thinking: If you substitute the word "Internet" for "AI," it's the same as 1999/early 2000. AI, like the Internet, is a revolutionary, world-changing technology that some early adopters and companies are using to massively benefit.

But as the Internet bubble inflated, the spend far outpaced the demand, resulting in circular financing, terrible companies achieving absurd valuations, etc. – a classic bubble that burst, taking the lousy companies to ZERO and the great companies down 80%.

And he wrote to Whitney Tilson's Daily readers...

There's little doubt in my mind that we're in a similar AI bubble right now – but I'm much less certain how much further it will inflate and when exactly it will burst.

Are we in early 1999, when Internet stocks doubled over the next year before crashing? Or are we in early 2000, on the edge of the precipice? Time will tell...

If you read last Friday's Digest, authored by Whitney, you know more about his outlook...

If the parallels to the dot-com bubble hold, he wrote, this year is like 1999, not the peak in 2000...

In other words, the party might not be over just yet. We could see one last, spectacular surge higher – what my colleague Brett Eversole calls a "Melt Up" – before an equally spectacular fall.

You'll want to be prepared for both with a plan – one that lets you keep making money if the Melt Up plays out... while making sure you're on the right side of the reckoning that tends to follow.

As he explained on Friday, Whitney has spent his whole career preparing for these kinds of moments that will be remembered for decades...

In 1999, at the height of the dot-com boom, I turned my back on the popular tech names, raised $1 million from friends and family, and bet big on quality stocks. The decision helped me make millions and successfully trade through two market crashes.

Now, with the Magnificent Seven beginning to fade, I see the same opportunity.

This Thursday, he's going to show folks precisely what to do this time. In a free presentation, he's revealing his blueprint, and he'll share the name and ticker of the obscure stock at the top of his buy list right now.

He'll also tell you one stock to avoid at all costs, plus more about his strategy for navigating what could come next to protect and grow your wealth over the long run. Again, the event is free. And if you sign up now, you have a chance to get a report naming 10 stocks to watch.

Click here to register.

Lastly, let's talk about a stock that's definitely not obscure...

We've mentioned Palantir Technologies (PLTR) in recent weeks, namely after its blowout earnings report last month... which led to its stock price soaring nearly 30% in a day.

The company has become one of the biggest winners of the AI boom. But after an incredible run, has the stock simply gotten too expensive?

In the newest Top Stocks video episode, our Director of Research Matt Weinschenk sits down with True Innovations Report editor Josh Baylin to talk about it.

Either way, Palantir's business is hard to ignore and is worth a discussion.

The company was deploying artificial intelligence long before ChatGPT got everyone talking about AI. Its software – an "operating system" for a business or institution – is now deeply embedded across intelligence agencies, militaries, and major corporations. It helps them connect massive amounts of data and use AI to make real-world decisions.

Palantir is also in the business of "selling sovereignty," helping its customers protect their data from the providers of other AI tools. As CEO Alex Karp described it in a recent investor letter...

Every organization in the world is awakening to the risks of handing the creators of the language models the keys to their institutions, of letting the models loose within their homes.

The demand from our partners is clear.

It is for control over data, the prompts that the models ingest, and more fundamentally the organizational and business intelligence, their alpha, that the language labs are not only ready and willing, but structurally designed to capture from their customers.

Last month, Palantir reported 93% year-over-year total revenue growth, and it reported 149% revenue growth from U.S. commercial businesses.

In our Top Stocks video, Matt sits down with Josh to break down what Palantir actually does, why its technology may be so difficult to replace, and whether one of the hottest AI stocks on Wall Street can still be worth buying.

Click here to watch this episode – for free – right now on our YouTube page. Or you can find the episode here, on the members section of StansberryResearch.com under "Media."

New 52-week highs (as of 9/4/26): Abercrombie & Fitch (ANF), Alpha Architect 1-3 Month Box Fund (BOXX), iShares MSCI Singapore Fund (EWS), Cambria Emerging Shareholder Yield Fund (EYLD), Global X MSCI Greece Fund (GREK), Marathon Petroleum (MPC), Ternium (TX), Versigent (VGNT), and Valero Energy (VLO).

Hope you had a great Labor Day weekend... We're back with the mailbag and, today, we have a note about Friday's "nonfarm payrolls" report, which showed 162,000 jobs added in August in the U.S... Do you have a comment or question? As always, e-mail us at feedback@stansberryresearch.com.

"I am resisting, to the best of my ability, the notion the job numbers were tampered." – Subscriber N.B.

All the best,

Corey McLaughlin
Baltimore, Maryland
September 8, 2026