Digital Abundance, Physical Scarcity
Digital Abundance, Physical Scarcity
June 2026
Last month, we enjoyed the new highs while keeping an eye on our Safety Floor — the infrastructure, energy and materials needed for the AI buildout. The consolidation we anticipated arrived on schedule — measured, healthy, and without drama. The market caught its breath. So did we. And now, with the Warsh era officially underway at the Fed and ‘Project Freedom’ still navigating the Strait, June opens with a clearer view of what actually matters underneath the headlines.
The Bifurcation Underneath the Index
The old advice — buy the broad index and forget it — is quietly becoming a less complete strategy than it used to be. The S&P 500 is heavily weighted toward traditional software and SaaS businesses, and those business models are facing real structural headwinds. As AI systems become genuinely capable of writing, testing, and maintaining code, the economic moat around legacy software is being hollowed out.
The Power Floor Thesis
Every AI model that runs, every data center that powers it, every robot that acts on its inference — all of it ultimately consumes electrons, copper, steel and other precious metals and rare earths. This is the heart of what I’ve been referring to the Power Floor: the physical infrastructure of energy generation, grid capacity, and industrial inputs that the existing — and now emerging — digital economy cannot function without.
This is not a defensive posture — as investing this way would normally be considered. It is a growth thesis. The data center buildout alone is creating sustained, multi-decade demand for electricity, transmission capacity, and the heavy metals that move power from source to socket. A single new mine takes 10 to 15 years to bring online; a single new data center can be announced and breaking ground within twelve months. The math of that mismatch is the investment thesis moving forward.
This is also why we’re also seeking a modest tactical allocation to physically-backed industrial metals like copper and silver — both face genuine structural supply deficits, and both are essential inputs to the electrification of AI. That said, we’ll continue to avoid rare earths, where geopolitical manipulation makes price discovery unreliable and ROI incredibly speculative.
IPO Liquidity Drain & Market Buying Power
I want to address a concern I have been hearing from economic pundits: the worry that the next wave of major tech capital raises — SpaceX, OpenAI, Anthropic and others — will “drain liquidity” out of public markets and trigger a broader market pullback.
Per FS Insight, total money market balances (Cash) now sit at roughly $7.8 trillion — a historic high. The capital these private tech giants need, while large in absolute terms, is genuinely small relative to that reservoir of cash. The story here is not fragility. It is the opposite: an unusually well-funded market with significant purchasing power waiting on the sidelines for the right entry points. That is not what a bubble looks like.
Fed’s Beige Book
The Federal Reserve’s June Beige Book reported economic activity rising in 10 of 12 Districts, with manufacturing expanding across nine — driven specifically by defense production and data center demand. That’s our Power Floor thesis showing up in federal data.
But I want to be honest about the friction underneath the headline. Wage growth is slowing. Input costs for shipping and fuel are rising faster than companies can pass them through to prices, which is compressing margins — which could eventually affect valuations. And the Fed is flagging incremental deterioration in residential mortgages, consumer loans, and agricultural credit. The expansion is real. The strain underneath it is also real. Both can be true, and a thoughtful portfolio should be built for both.
The Semiconductor Race
Briefly, because I know not every reader follows this closely: the competition inside our core hardware thesis is intensifying in ways that strengthen, not weaken, the case for owning the physical layer.
Nvidia is moving into traditional CPU territory through a co-designed chip with MediaTek, optimized for the power efficiency that local AI agents — those running on folks home computers or phones — require. Intel is entering the data center game with its new GPU architectures designed to sidestep memory bottlenecks issues. On the global stage, Huawei — who’s blocked from buying advanced chipmaking equipment — has designed a new solution by stacking older computer chips on top of each other like building blocks to make them more powerful by 2031.
The technical details matter less than the pattern: necessity is forcing physical innovation everywhere you look. And physical innovation requires physical inputs. That is the thesis, again, in a different costume.
Stick to the Plan
Our roadmap for June is disciplined and unchanged in its core: hold the Power Floor and AI hardware allocations, continue migrating capital away from passive index drag and into direct physical assets, and use ongoing tax-loss harvesting in digital assets to offset structural gains elsewhere.
The headline noise will continue. The Fed transition, the Strait, inflation, the election cycle — none of these are going away in June. But the architecture underneath our portfolios was built for exactly this kind of environment: one where the surface is loud and the foundation is quiet.
And now, your Monthly Market & Economic Update by the numbers.
Warmly,
Mark Sauer | Founder & CEO | AllOneWealth
Market Update
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Global Equities
May closed on a constructive note. The S&P 500 and Nasdaq Composite both pushed to new record highs in the final week, gaining 1.4% and 2.4% respectively, with software stocks notably reclaiming leadership as concerns about AI displacement eased on strong earnings. The Dow added 0.9%, US small caps rose 1.9%, and foreign developed markets gained 0.8% on the prospect of energy relief from a potential Iran framework. Emerging markets led the global tape, surging 4.1% on a sharp rally in Korean and Taiwanese semiconductor names.
The story underneath the numbers: markets are pricing in the possibility — not yet the certainty — of a de-escalation in the Gulf.
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Fixed Income
Treasury yields drifted lower in the back half of the month, shrugging off a hot inflation print as geopolitical optimism took the lead. The 10-year ended near 4.44%, its lowest level in over two weeks. Markets currently expect the Fed to hold the federal funds rate steady through year-end, though futures still assign roughly a 46% probability to a December rate hike — a reminder that the inflation question is not yet settled.
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Commodities
WTI crude fell roughly 2% on the final session of the month to around $87 per barrel, capping a steep ~17% decline for May as the war’s risk premium began unwinding. Technical analysts noted WTI appears to have completed a head-and-shoulders pattern with the head peaking near $108 in April — a constructive signal if the geopolitical thaw holds. Gold edged higher, with spot trading near $4,530 per ounce.
Economic Update
- April PCE Inflation Mixed: The headline rate climbed to a three-year high of 3.8% year-over-year, driven almost entirely by the Iran-related oil shock. Core PCE — which strips out food and energy — decelerated month-over-month to 0.2% from 0.3%, though the annual rate ticked up to 3.3%. The May PCE report, due June 25th, will likely push the headline number above 4% before the recent oil decline begins to feed through.
- The Iran Framework: US and Iranian negotiators reached agreement on a 60-day Memorandum of Understanding to extend the ceasefire and open formal negotiations on Iran’s nuclear program. Under the proposed framework, the Strait of Hormuz would reopen toll-free for the 60-day window, Iran would be permitted to sell oil freely, and a reported $300 billion “investment fund” would address Iran’s demand for war-related compensation. Final approval from both President Trump and Tehran remained pending at month-end. Secretary Rubio publicly cautioned that the US is maintaining a “Plan B” should talks collapse.
- Earnings: Two standouts closed the season strongly. Nvidia posted quarterly revenue of $81.6 billion against estimates of $78.8 billion, with data center revenue growing 92% year-over-year. The company added $80 billion to its buyback authorization and raised the dividend to 25 cents — though shares traded lower post-print, continuing a recent pattern for the world’s most valuable company. Dell Technologies delivered a genuine surprise: revenue up 88% year-over-year to $43.8 billion, beating estimates by roughly $9 billion, with adjusted EPS up 214%. Snowflake beat sharply and rallied over 36%, sparking the broader software rebound.
Charts of the Month
The US Personal Savings Rate Is Telling Us Something
The American consumer is running thin. The personal savings rate fell to 2.6% in April — the lowest reading since June 2022, and within striking distance of the post-pandemic low. For the first time since 2023, consumer price inflation is outpacing wage growth, which means real disposable income is shrinking in real time. The high cost of essentials — particularly food and gasoline — is doing most of the damage.
A few data points that sharpen the picture: roughly 71% of taxpayers report having already spent their (larger-than-usual) tax refunds. Credit card delinquencies have spiked to a 15-year high. Total outstanding credit card debt reached $1.25 trillion in Q1, up 5.9% year-over-year. This is not yet a crisis, but it is the data signature of a household sector that is absorbing real strain.
Why this matters for the portfolio: the Consumer Discretionary weakness we flagged in May — cruise lines, booking agencies, the equal-weighted Discretionary ratio at four-year lows — is not a technical curiosity. It is this chart, expressed in stock prices. A resolution to the Iran conflict and the resulting decline in gas prices would provide the single fastest mechanism for relief to household balance sheets. The framework is built to participate in that relief without depending on it.
Source: Data by St. Louis Federal Reserve. Chart by VestGen. Commentary by Mark Sauer
Core PCE vs. Trimmed Mean PCE: The Quiet Battle Over the Inflation Number
This is one to watch closely, because it could quietly reshape the path of interest rates.
In his swearing-in address, new Fed Chair Kevin Warsh outlined three priorities: reform what he called outdated economic data models, reduce contradictory “Fedspeak” from regional Fed presidents, and eventually unwind the Fed’s balance sheet. The most consequential of those — by a wide margin — is the first one.
Warsh has publicly signaled a preference for replacing the Fed’s official inflation gauge from Core PCE to a lesser-known alternative called Trimmed Mean PCE. The difference sounds technical but matters enormously:
Core PCE removes food and energy every month, because those categories are historically volatile.
Trimmed Mean PCE removes whatever categories are most volatile in any given month — high and low. The result is a smoother line that tends to run lower in periods of energy-driven inflation spikes.
Look at the chart. Core PCE currently sits at 3.2%. Trimmed Mean PCE sits at 2.4% — much closer to the Fed’s 2% target. If Warsh successfully lobbies for the benchmark change, the doves on the FOMC gain immediate analytical cover for rate cuts. That single methodological shift could meaningfully lower the bar for easing without any change to the underlying economy.
Why this matters for the portfolio: the path of interest rates affects everything from bond duration to growth-stock valuations to the cost of capital for the infrastructure buildout we discussed in our lead piece. A Fed that finds a credible reason to cut sooner is a Fed that lowers the discount rate on long-duration growth assets — including the AI hardware and Power Floor exposures we have been building toward. Critics will rightly point out that “trimming” volatile categories can mask broad, sustained price increases, and that critique deserves to be heard. But the institutional momentum behind a quieter inflation number is real, and worth watching.
Source: ChData Bureau of Economic Analysis, Federal Reserve Bank of Dallas, chart by VestGen. Commentary by Mark Sauer
