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To Investors,
We saw Democrat candidates win major races yesterday for Governor of Virginia, Governor of New Jersey, and mayor of New York City. This is a good ‘ole fashion ass kicking. A straight rout across the board in favor of the Democrats.
Half of the country is waking up happy this morning and the other half is left wondering how we got to this point. But put politics aside for a second.
There is a very important finance and economics story smacking us in the face. The voice of the people was heard last night. They are clearly telling the world that rent is too high, groceries are too expensive, the system is not working for them, and change is needed.
You can see these problems clearly in the data.
First, the difference in sentiment between the people who make more than $100,000 and those who make less than $100,000 is widening. You can see this clearly getting worse since the summer of 2022 and accelerating in 2025.
You can call it a k-shaped economy. You can call it a bifurcation. No matter what you call it, the economy is being split into two groups: those that own assets and those that don’t.
This k-shaped economy related to sentiment passes through to consumer spending habits. We know that the top 10% of earners account for half of US personal spending.
But when you dig into consumer prices of every day items like groceries, you can see a very big problem. Adam Kobeissi writes “US grocery prices have risen +5.3% YoY as of July 2025. To put this differently, if a family spends ~$1,000 a month or $12,000 a year on groceries, this marks an average annual increase of +$636.”
Home affordability doesn’t offer a much different story. Kobeissi continues by showing “it would take a -38% drop in home prices OR a +60% JUMP in household income JUST for affordability to go back to 2019 levels. You must now make ~$113,000/year to afford the MEDIAN home in the US.”
The problem is only going to get worse in the short-term too. For example, artificial intelligence is driving a wedge into the job market. You see the people who are using AI continue to grow revenue and profits, while the working class is watching job openings fall off a cliff as AI begins replacing many jobs.
So the financial answer is for people to acquire assets. Bill D’Alessandro shows this chart of wage growth vs. asset appreciation. He says “you’ve got to be converting your time/wages into assets. Best time to start was 20 years ago, second best time is now.”
So when I think about what is happening here, you have to believe multiple things are true. The people are voicing their opinion for a reason. Affordability in America is way too high. We have to bring that down and provide relief for millions of people. You also have to see that the financial answer is for more people to own assets, but understand why that is nearly impossible to get people to do. Our schools don’t even teach financial education, let alone most young people having the ability to understand investing.
At the same time, the rise in popularity for dumb ideas like socialism is a response to the affordability crisis. If you don’t have a financial solution, you immediately look for a different release value. It is easy to get swindled by a charismatic guy who promises a bunch of free things, especially when that guy is explicitly acknowledging the pain that you are experiencing.
It doesn’t make the socialist ideas good. But it is understandable why the message resonates. Over the coming weeks I will explore the various ways this change is going to impact financial markets, but I will leave you with one of the important truths I have come to believe: the voice of the people will ultimately be heard.
And their message was crystal clear last night.
Hope everyone has a great day. I’ll talk to you tomorrow.
- Anthony Pompliano
Founder & CEO, Professional Capital Management
Recession Odds, Bitcoin’s Future & NYC Mayor Election
Anthony and John Pompliano break down today’s markets — from Scott Bessent’s U.S. outlook and Tom Lee’s bullish call to Jordi Visser’s take on Bitcoin’s “IPO moment.”
They also cover job growth, mega themes, the New York City mayoral race, and Anthony’s latest thoughts on bitcoin and stocks.
Enjoy!
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