Zooming Out

As we step into 2026, the narrative dominating economic forecasts isn’t a classic cycle story of overheating and cooling, it’s something deeper, structural, and far more asymmetric.

We are entering a productivity boom driven by AI... and a labor market rupture that may not feel like a crisis at first, but will reshape how markets, inflation, and capital behave for years to come.

1. AI Pushes Productivity, But Not Employment

The age of “agentive AI” is here. Not just answering prompts, but doing tasks, managing workflows, even operating in physical environments (think robotics, warehouses, autonomous logistics).

But the job losses won’t come from mass layoffs.

They’ll come from a thousand small decisions:

• Not replacing open roles.

• Automating support teams.

• Consolidating ops functions.

• Quietly shrinking labor overhead.

🧠 Net result: A rising unemployment rate (forecast: 6%) without a recession.
That’s the new world we’re entering: GDP goes up, but job security goes down. Read that again.

2. GDP Grows: But It’s a Two-Speed Economy

AI-led productivity means we can produce more with fewer people.

Expect:

• 4–5% GDP growth, even with stagnant employment

• Big capex cycles in AI infra, automation tools, robotics

• Bifurcation of prosperity between asset holders vs. manual workers

🏦 Owners of capital, software, and leverage will thrive.
🧍‍♂️ Repetitive task-based roles will get quietly phased out.

It’s not recession vs. boom: it’s boom for some, attrition for others.

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3. Inflation Falls, Thanks to AI-Driven Deflation

AI supercharges the supply side of the economy:

• Faster service delivery

• Cheaper software + content production

• Scalable customer support, dev tools, operations

At the same time, higher job insecurity pulls down demand:

• Consumers spend less

• Wage pressures soften

• Credit usage stabilizes

📉 Result: Disinflation becomes the base case.

Even if GDP is strong, inflation slows: not from rate hikes, but from productivity gains.

4. The Fed Will Cut, Even If the Economy Looks “Strong”

With inflation softening and unemployment rising, the Fed’s dual mandate forces it to act:

• Lower inflation = room to cut

• Higher unemployment = reason to cut

We expect multiple rate cuts in 2026, even in the face of solid GDP numbers.

But don’t assume this means easy money everywhere…

5. Long-Term Rates Stay Sticky: That’s the Catch

Here’s the paradox:

📉 Fed Funds Rate goes down
📈 Mortgage & long-term rates stay high

Why?

• AI raises long-run R* (real neutral rate)

• Credibility risk adds to term premium (especially in an election year)

So while the Fed eases, markets still price long-term risk aggressively. That means:

• Real estate stays tight

• Capital costs stay high

• Monetary policy feels less effective

📈 Yield curve steepens
💥 Macro confusion deepens

What It Means for Crypto & Strategic Assets

This macro setup is highly bullish for real assets, crypto included, if you understand the capital rotation.

✅ Bitcoin: Productivity Hedge

BTC will regain its core narrative: a hard asset in a world of artificial productivity and fiscal instability. The Venezuela episode reminded markets that fiat dominance relies on force. BTC offers opt-out sovereignty.

✅ Ethereum: Real Yield Engine

ETH’s network continues to grow (1.87M tx/day) and benefits from both:

• Tokenized real-world assets (RWAs)

• Increased blockspace demand from automation bots + on-chain agents

✅ Gold & Commodities: Defense + Repricing

The U.S. won’t be alone in AI. The global race for AI inputs - rare earths, chips, data infra - will create persistent public-private investments in:

• Lithium

• Semiconductors

• Modular nuclear energy

• Defense infrastructure

Watch what the U.S. gov backs directly. The next 10x will likely come from mission-aligned capital deployments.

Summary

Strategic Positioning for 2026

🔒 Be in real assets
💻 Be in scalable skills or capital
💰 Be in high-productivity vehicles (crypto, AI infra, gold, RWA platforms)
🧠 Don’t chase narratives — track flows, productivity, and state-backed sectors

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Let’s make sense of the bifurcation — and stay on the right side of it.

—
Saâd
from Swiss Islamic Finance