Dear friends of Civitas Growth Partners,
Somewhere between $1.8 quadrillion in global assets and a $600 million line-item for executive ranch vacations and concierge medicine, it became official: 2026 has fully abandoned the concept of proportion. Wall Street minted $3.5 trillion in Nasdaq gains in four trading days, a hedge fund named after an AI doomsday manifesto nearly imploded from margin calls and then wrote a $400 million check days later, two college football programs signed jersey-patch deals worth a combined $35 million a year, and a movie theater chain is building a $100 million business out of plastic popcorn buckets. Meanwhile in Washington, Dr. Fauci found 111 ways to say nothing at all, and a self-described "radical pragmatist" is trying to win a Senate seat by campaigning out of a Montana brewery.
As Charles Mackay wrote in Extraordinary Popular Delusions and the Madness of Crowds:
"Men, it has been well said, think in herds; it will be seen that they run mad in herds also."
With that, let's get to it…
Politics and Current Events
Axios and WSJ's editorial page both zeroed in on Anthony Fauci this week: he invoked the Fifth Amendment rather than answer for instructions to delete Covid-era records, days after repeating the same nonanswer 111 times at an earlier hearing, per Sen. Rand Paul's count. We're generally skeptical of criminalizing policy disagreements, but "please delete this email after you read it" is not a policy disagreement. Also, when did grown men start diarying so much? Are we missing something here?
More than 1,200 employees at OpenAI, Anthropic, Google, and Meta signed an open letter, "Pacing the Frontier," asking Washington to help coordinate a slowdown in frontier AI development - not because they think it's a bad idea, but because no single lab can afford to blink first, a classic prisoner's dilemma laid out well by Axios. Right on cue, the NYT reported that Stanford and the Arc Institute used an AI model to build 16 working viruses that do not exist in nature. When the people building the thing are the ones asking for guardrails, that's usually worth listening to.
Axios reports profanity in American politics has hit an all-time high, with presidents and hopefuls cursing publicly at least 692 times since 1919 - 605 of them in the last decade alone. We'd call it a decline in decorum, except the data suggests decorum was always a thin coat of paint.
Elon Musk is reviving his America PAC with a fresh nine-figure investment to juice Republican turnout in the midterms, per Axios, layering onto a GOP cash edge already north of $700 million once MAGA Inc. is counted. Money is piling up on one side of the ledger at the exact moment the two-party duopoly is looking shakiest in decades - which, as it turns out, might make it decisive in the wrong direction.
China's leverage got a two-for-one demonstration this week: an Axios recap of Evan Osnos's New Yorker piece finds China racing ahead on drones, EVs, batteries, and clinical trials while running a startlingly effective surveillance state, and separately, China cut oil imports more than 40% during the Iran war and still kept its economy humming, effectively becoming the swing buyer that capped global energy prices. Being the world's most price-insensitive buyer, and now its price-setter, is a nice place to sit.
A viral post captured the mood on Western energy policy: "Thank you Germany, for sacrificing your economy to save the planet," one poster jabbed, while investor Bill Gurley separately noted that China built 500 gigawatts of solar last year to America's 50, and has 40 nuclear plants under construction to America's zero. Both sides of that split agree the West is choosing symbolism over kilowatts; they just disagree on which country is worse at it.
Texas Gov. Greg Abbott halted approvals for new data centers until the state audits the roughly 474 gigawatts of pending grid-connection requests - more than five times Texas's record peak demand - per Axios. AI infrastructure just found a bipartisan enemy: the electric bill. The DSA says hello to everyone.
Trump Media is now charging Wall Street up to $1.2 million a year for a millisecond head start on the president's Truth Social posts, per two separate Axios writeups - and the service has already proven its value: a single post postponing Iran strikes moved Brent crude nearly 11% within seconds. Selling advance notice of market-moving government speech to the highest bidder is either a brilliant new revenue line or a preview of the next insider-trading scandal, and it's not obvious TMTG cares which.
Two data points on the two-party duopoly's health, pointed in opposite directions: The Economist finds a record number of independent congressional candidates are running in 2026, with 45% of Americans now identifying as independent, while in Michigan, progressive Abdul El-Sayed narrowly won the Democratic Senate primary over a four-term incumbent, per The Free Press, riding the same populist energy remaking both parties from the flanks. The center is getting squeezed from both directions at once - a realignment, or just an unusually confusing cycle.
A SpaceX rocket stage drifted off course for a year and slammed into the moon exactly as predicted, per the AP - no one witnessed the 5,400-mph impact, but a Chilean telescope caught the debris plume. A fitting metaphor for a lot of this year's AI capex: everyone can see it's on a collision course with something, they just disagree on when and with what.
Axios flags a historic drop in crime worth a mention - so next time someone brings up the horrors of American cities, please send them this piece (although anecdotes and generalizations never cease to be popular in conversation).
Illinois just decoupled from the federal Section 1202 QSBS exclusion, meaning Illinois residents will owe state tax on qualified small-business stock gains the IRS lets them exclude federally, effective for tax years ending after 2026. A reminder that "rolling conformity" states can un-roll whenever the budget needs the money - worth a call to your tax advisor before assuming an exit is as clean as the federal rules suggest (and another step by the Land of Lincoln to scare away capital).
Economy, Markets, and Business
Two versions of AI's circular-financing problem landed this week. Bloomberg revisited the web of deals between Microsoft, OpenAI, and Nvidia that has OpenAI committing $1.15 trillion through 2035 while its backers fund the spending that buys their own products, and separately the FT detailed how Google, Broadcom, Apollo, and Blackstone assembled a $200 billion financing machine just to keep Anthropic supplied with chips. We have seen left-pocket-to-right-pocket transactions before, but never at a scale where none of the parties involved want the hardware on their own balance sheet.
Chamath Palihapitiya published his full AI investing stack this week - bullish on land and power, out on chips, skeptical of clouds, uncertain on model economics, and all-in on the "harness" layer that lets enterprises keep their proprietary workflows model-agnostic. A useful map if you're trying to figure out which layer of the AI stack still has room for a check that isn't already spoken for.
a16z is making the same electricity bet twice: its Charts of the Week argued that during a gold rush you sell the shovels - or in this case, the air conditioning - and a longer essay traced how Base Power's founders left Blackstone and SpaceX convinced that a battery and a transmission line do the same job, just cheaper. American electricity generation has been flat since the mid-2000s while China's has quadrupled; whoever solves that gap first owns the AI decade.
An ironic pairing on AI-hype whiplash: The Information reports SpaceX burned $16 billion last quarter chasing a trillion-dollar revenue promise, while Bloomberg reports that Leopold Aschenbrenner's hedge fund Situational Awareness - which nearly collapsed under margin calls last month, shrinking from $45 billion to $10 billion - just put $400 million back to work in a private company. Nothing cures conviction like a near-death experience, apparently.
The FT found that PwC Middle East published AI reports riddled with hallucinated footnotes - fake citations, a nonexistent academic paper, and a real JPMorgan initiative attributed to a Medium blogger with 280 followers. The irony of a consulting firm selling AI-adoption advice while its own AI-generated thought leadership can't survive a fact-check writes itself.
Tech giants are now spending real money on the trades: Google, Meta, and BlackRock are collectively committing over $265 million to recruit and train electricians and carpenters, with Google alone pledging $50 million to boost IBEW apprenticeship intake, per a NYT report. Hourly data-center construction workers now earn roughly 42% more than those in comparable roles - the AI boom's least glamorous, best-paying trickle-down.
WSJ reports corporate America is suddenly rediscovering thrift on AI spending, shopping a la carte between OpenAI, Anthropic, and cheaper Chinese open-weight models for tasks that don't need a frontier model - "tokenomical" is the new watchword, replacing last year's "tokenmaxxing." Stripe's chief economist, meanwhile, tells Axios that the recent surge in U.S. labor productivity may not be an AI story at all - it looks more like companies finally squeezing full utilization out of capital they'd already bought.
The Economist argues China is getting comparable AI results for a tenth of America's data-center spend, thanks to cheaper land, equipment, and labor, plus a healthy dose of distilling outputs from expensive American models. A separate Economist piece runs the math on the other side of that ledger: covering America's AI capex through AI revenue alone would require roughly $2.5 trillion a year in enterprise spending - more than the entire tech sector earns today, at adoption rates that may already be leveling off.
Two dueling bull-case data points made the rounds: Morgan Stanley pegs hyperscaler return on invested capital at 31% in AI infrastructure and 25%-46% in inference, and Goldman Sachs projects global AI token consumption growing 24x to 120 quadrillion by 2030. If both hold up, the hyperscalers' free cash flow problem solves itself; if either is wrong, a lot of capex assumptions unwind at once.
Amid all that AI enthusiasm, Axios reports labor's share of national income just hit a new low, with JPMorgan noting the return on capital in the nonfinancial corporate sector remains elevated versus historical norms. It's the age-old tug-of-war between labor and capital, and right now capital is winning comfortably - which may explain why so many working Americans have piled into the stock market themselves rather than fight it.
WSJ profiles the rise of solo, AI-run companies clearing $1 million-plus in revenue, with Stripe data showing the ranks of solo operators past that threshold have doubled since 2023 and those past $10 million have nearly tripled. The bar for starting a company has never been lower; the bar for staying the only employee, apparently, is also dropping.
Two individual stock-market records fell in the same week: Microsoft posted the largest one-day market-cap gain of any U.S. company ever - about $450 billion - after earnings quieted fears its AI spending wouldn't pay off, and Apple became only the second company ever to top a $5 trillion valuation, largely for having mostly sat out the AI capex arms race. Investors are now paying a premium both for going all-in on AI and for staying out of it - which tells you more about sentiment than strategy.
The broader melt-up kept running: the Nasdaq 100 gained $3.5 trillion in four trading days on earnings beats, Citadel Securities says the forces behind this year's rally remain "firmly intact" even after a bruising retail-investor shakeout, and Axios notes investors have stopped pricing in war, oil, rates, or bubble risk entirely. "Broadening out" is this cycle's euphemism of choice; it sounds a lot better than "still concentrated, just less obviously so."
Earnings season is delivering numbers even the bulls didn't ask for: the Kobeissi Letter counts the S&P 500 beating estimates by +27% and the Nasdaq 100 by +55% in Q2, and the FT, via Axios, puts overall S&P profit growth at +47.4% year over year - the best quarter since the pandemic rebound. Beating a lowered bar isn't hard, but this is beating a raised one.
A venture capitalist's public gut-check on returns: over the last decade, the S&P 500 returned roughly 4x, the Nasdaq 100 about 6.4x, and FAANG stocks 8.3x - all fully liquid - which would rank as a 90th-plus percentile venture fund. We'd add only that a passive index doesn't charge 2-and-20 for the privilege.
J.P. Morgan makes the case for private equity's growing footprint in sports: nearly one in five major-league teams now has PE involvement, drawn by locked-in TV money and fans who, unlike most consumers, never stop buying the product even when it's bad.
Executive perks are booming right alongside everything else: WSJ's analysis of 1,500 large public companies found close to $600 million spent on roughly 15,000 executive perks last year, led by a doubling in median executive-security costs since 2021 (Meta alone spent $22.5 million protecting Mark Zuckerberg). Meanwhile the NYT reports movie theaters are minting upwards of $100 million from collectible popcorn buckets - proof that in this economy, the margin is wherever you decide to put it.
The Ted Benna sequel nobody expected: the self-described "father of the 401(k)" is now trying to fix the retirement system he helped build, pitching an employer-funded incentive account called Radish for workers who can't afford payroll deductions in the first place, per Bloomberg. Only about half of eligible workers actually use a 401(k); sometimes the fix for a good product is a second, simpler product.
McKinsey research relayed by Axios finds global wealth hit $1.8 quadrillion last year, but only 20% of the gain came from actual new capital formation - the rest is inflation and rising valuations of assets that already existed. "Every asset on this planet is now financialized," in one researcher's words, which is either fine as long as growth eventually catches up or the setup for the correction everyone keeps postponing.
A tale of two indulgences: Robb Report notes MGP, one of the largest U.S. whiskey distilleries, posted another double-digit sales drop as the category softens, while Forbes reports the Cheesecake Factory's stock has nearly doubled this year, pushing founder David Overton's stake past $300 million on the back of traffic growth that's outpacing casual dining broadly. Brown spirits are out; bottomless breadsticks and 5-lb menus, apparently, remain recession- and bubble-proof.
Society and Culture
A brewery in St. Paul has released Old Ranch Hand, a 5% ABV cream ale flavored like ranch dressing, for this year's Minnesota State Fair - served in a glass with a ranch-salt rim, naturally. America's condiment diplomacy (the TSA reported a spike in travelers smuggling ranch overseas after the World Cup) has now reached the taproom.
Burned-out daters are outsourcing the verdict to Excel: WSJ profiles a cohort of "love hackers" who feed their dates' traits into spreadsheets to score compatibility before deciding whether to see someone again. We appreciate the instinct to model the decision, but we'd note that even the best model is only as good as the inputs, and "vibes" doesn't fit neatly into a cell.
The NFL's only publicly owned team gave everyone a rare look inside the business: the Green Bay Packers posted their first non-pandemic operating loss since 1989, driven by a $130 million jump in player costs tied to the Micah Parsons trade, per Sportico. Packers leadership blamed the loss partly on lacking the private-equity "ATM" other teams now have, but HuddleUp's rebuttal argues that's the wrong lens entirely - the team has posted rising revenue for five straight years, and one bad year of player-cost timing isn't evidence the public-ownership model is broken.
Roommate-matching is having a senior moment: home-sharing platforms are increasingly pairing empty-nesters and widows with paying roommates rather than just twentysomethings, per The Hustle, with roughly 55 organizations now running the matchmaking in the U.S. amid the housing shortage. Equal parts affordability play and loneliness cure - a rare instance of a business model solving two problems at once.
College sports found a new revenue line worth six figures per team: Notre Dame signed a jersey-patch deal with SoFi worth $18-20 million a year, reportedly the richest in college athletics history, only to be matched days later when Ohio State inked a JPMorganChase partnership worth nearly $17 million annually across all 36 of its teams. NIL was supposed to be about paying players directly; instead, the biggest checks are landing on fabric.
WSJ reports that an outside investigation into Michigan's athletic department found more red flags than the university's own public summary let on - including previously unreported complaints about a water polo coach - after Michigan paid the law firm $12 million for the review. The instinct is not confined to athletics: the university will also cover first-semester grades on transcripts for every arts and sciences student, framed as a mental health measure. Selective disclosure of an investigation you commissioned and paid for is a bold strategy; we'll see how it holds up, even for Michigan Men.
WSJ reports a growing number of U.S. colleges are quietly spending down donor-restricted endowment funds to cover operating bills, sometimes without telling the donors, as nearly 200 private colleges borrowed from restricted funds in 2025 versus 131 in 2021. Several states are now passing laws letting donors sue over it - a fiduciary problem hiding behind a mission statement.
Zac Brown gave away a free cruise for two to all 37,000 fans at his 15th consecutive sold-out Fenway Park show, a personal gift north of $40 million, per CBS Boston. A genuinely uncomplicated act of largesse in a newsletter otherwise full of complicated ones (although the cynic in us did wonder how this "gift" was treated from a personal tax perspective).
American families expect to spend north of $900 on back-to-school shopping this year, pushing total K-12 spending toward a record $43.3 billion, per Axios and the National Retail Federation - Northeast families are budgeting the most, at over $1,000. Inflation found its way into the pencil case.
WSJ profiles the rise of "helicopter parenting" into the workplace itself, with parents calling hiring managers and sitting in on their adult children's Zoom interviews. HR professionals are, understandably, not thrilled - if you need your mother on the call to negotiate your benefits package, that's useful information for the employer, just not the kind you meant to share.
Caltech's admissions office runs a four-person "fraud squad" that scrutinizes every admitted student's application for fabricated science-fair wins and doctored transcripts, per WSJ, a response to both a rising volume of anonymous tip-offs and AI making fabrication easier. Verification is quietly becoming its own growth industry - directly downstream, fittingly, of the same AI making everything easier to fake.
Researchers flying lidar over a stretch of the Amazon the size of Connecticut found 396 previously unknown ancient earthworks, suggesting the region could hold up to 30,000 in total and that the long-vanished Aquiry civilization may have numbered up to three million people at its peak, per Scientific American. A useful reminder that "undiscovered" and "nonexistent" are not the same thing, in the Amazon or anywhere else.
One Final Thing
Last issue we asked whether the AI buildout is the next dot-com bubble or something genuinely different. Of our respondents, 75% picked "it's a bubble, but a productive one - like the fiber-optic buildout: a painful pop that leaves useful wreckage behind," and 25% went with "this time is different - the revenue and cash flow behind it are real." Notably, nobody picked the straight "1999 all over again, a crash is coming" option - even the skeptics in our readership aren't calling for a clean crash, just a messy correction.
Given this issue's AI-pacing petition and the ongoing tug-of-war between capital and labor, here's the question: Will the "Pacing the Frontier" petition actually change anything? Take your pick - (A) yes, expect real international coordination or U.S. government action within the next 12 months; (B) no, competitive pressure between labs and countries wins, and nothing meaningfully changes; or (C) labs quietly self-pace on their own, without government involvement, to manage the optics.
We're Looking for Exceptional, Overlooked Businesses
At Civitas Growth Partners, we invest our own capital in founder-led B2B businesses with $1M to $4M in recurring revenue, strong retention, and best-in-class products, but that fall outside the traditional VC or PE mold. These businesses are often bootstrapped, breakeven, and haven't yet invested meaningfully in sales and marketing. Growth is steady (0–25% annually), and the product quietly leads its niche.
This is a category of company that is often overlooked, but we see tremendous opportunity. Our model is to help these businesses scale to $10M or more in revenue by providing flexible capital (minority or control), supporting both organic and M&A growth, and deploying an operational playbook honed through years of work with capital-efficient founders. Because we invest our own capital — not institutional LP funds — we bring no artificial timelines or exit pressure. That gives founders room to build enduring value. Our partners have achieved more than 6x equity outcomes without compromising what makes their companies special.
We're actively looking for our next great partner. If you know a founder or operator building something exceptional — and overlooked — we'd be grateful for an introduction. We value the relationships that lead us to great companies and are always happy to have a conversation about referral arrangements. Reach out anytime at team@civitasgrowth.com.
Cheers,
The Civitas Team