How I Called 2026's Biggest Rally | Vincent Delaurd

Episode Summary

Executive Summary: Vincent Deluard argues that the U.S. is entering a 2026 growth re-acceleration driven by strong nominal income growth, tax collections, fiscal stimulus, and AI-related capex, even as sentiment remains deeply pessimistic. He sees multiple “bubbles” forming—stocks, pessimism, and nominal growth—and thinks these conditions could fuel inflation, higher rates, and a volatile late-1999-style market before a more redistributive political regime emerges later in the decade.

Main Topics: 2026 growth re-acceleration and inflation risk (Priority: 5/5): Deluard expects the U.S. economy to accelerate in nominal terms in 2026, potentially creating a second inflationary wave rather than a recession. Tax collections as the best real-time macro indicator (Priority: 5/5): He argues daily Treasury tax receipts are a superior measure of economic activity versus noisy surveys and lagged official data, especially in a data-distorted environment. Fiscal stimulus, tax refunds, and political incentives (Priority: 5/5): He expects immediate stimulus from tax refunds and additional fiscal spending tied to tariffs and pre-midterm political pressure, supporting growth into 2026. Fed policy, Kevin Warsh, and the balance sheet debate (Priority: 4/5): Deluard is skeptical that the Fed will be meaningfully hawkish; he thinks rate cuts are likely and that balance-sheet reduction can coexist with easier rates under the new policy framing. AI capex, productivity uncertainty, and energy demand (Priority: 4/5): He sees AI capex as a real demand impulse for the economy, especially through data-center buildout and heavy energy requirements, while remaining skeptical about measurable productivity gains. Multiple bubbles and deteriorating sentiment (Priority: 5/5): He describes a stock market bubble, a pessimism bubble, and a nominal growth bubble coexisting, creating a volatile environment reminiscent of 1999–2000. Global geopolitics, capital flows, and hard assets (Priority: 4/5): He links geopolitical instability, deglobalization, tariffs, and weakened U.S. industrial capacity to the case for international diversification, energy, commodities, gold, silver, and crypto.

Key Arguments: Official macro data is unreliable; daily tax receipts are a better high-frequency proxy for real economic activity. Nominal incomes are still growing quickly, so recession fears should be faded until the hard data proves otherwise. The 2026 fiscal impulse will come first from roughly $200 billion in tax refunds and later from additional political stimulus. The administration has strong incentives to keep fiscal policy loose ahead of the midterms, including possible tariff-dividend checks or similar measures. Kevin Warsh is unlikely to be the hawkish Fed chair some expect; his balance-sheet rhetoric is more political than doctrinal. Lower rates plus balance-sheet reduction and banking deregulation can amplify leverage and inflate asset prices. AI capex is a real economic tailwind because data centers and related infrastructure require massive physical and energy investment. Productivity gains from AI may exist, but they are too uncertain to drive the macro thesis; nominal income growth is the observable reality. The market is in an unstable late-cycle phase where leadership rotates, volatility rises, and equities can grind higher before losing momentum. The U.S. appears to be shifting toward an emerging-market-like structure where tax flows, balance-sheet behavior, and political instability matter more than traditional developed-market assumptions. Global geopolitical तनाव and deindustrialization weaken the old postwar order and support a more defensive allocation to non-U.S. assets. Gold, silver, copper, energy, and crypto function as imperfect transition assets in a world of rising nominal growth, deficits, and monetary experimentation.

Data Points: U.S. tax collections growth: 5% to 10% historically; about 8% last year - Used as evidence of strong nominal growth and a reason to reject recession calls. January tax collections growth: 24% YoY initially cited; later revised to about 12% to 13% - High-frequency Treasury data used to argue the economy is stronger than sentiment suggests. Personal income tax collections growth: more than 10% - Described as evidence that nominal incomes are rising rapidly in 2026. Expected tax refund checks: about $200 billion - Retroactive tax overpayments from the one big beautiful bill expected to hit households in the next four weeks. Tariff revenue: about $300 billion a month - Presented as additional fiscal room for stimulus and spending. Federal deficits: 5% to 6% of GDP - Cited as the baseline fiscal backdrop before any additional stimulus. AI/mega-cap capex: close to $1 trillion in 2026 - Referenced as a major source of economic demand and investment activity. Consumer sentiment comparison: levels not seen since last COVID - Used to illustrate the “pessimism bubble” despite economic resilience. Value-added tax/withholding analogy: about 25% of paycheck withheld - Example of why withholding tax receipts closely track economic income. Non-withheld individual income taxes: around $1.2 trillion annually - Split between capital gains and other non-primary-job income, used as a proxy for gig-economy earnings. Gig-economy-related tax base: around $1 trillion in taxes; implied ~$5 trillion underlying base - Deluard argues this segment is growing around 10% annually and is undercounted by surveys. International portfolio underweight: U.S. portfolios often hold ~80% equities, with ~80% of that in U.S. stocks, and ~50% of U.S. sleeve in the Magnificent Seven - Used to argue investors are excessively concentrated in U.S. mega-cap equities. Energy sector performance: best performing sector in the S&P 500 - Presented as validation of the reflation/energy thesis after the sector was widely hated.

Pivotal Quotes: "We have this higher growth, higher rate, higher productivity, higher inflation, higher deficits, and that until proven otherwise, these kind of growth scares are to be faded." — Vincent Deluard: Core macro framework for how he views the U.S. entering 2026. "There are three bubbles: stock market bubble, pessimism bubble, and finally, a nominal growth bubble." — Vincent Deluard: Summarizes his view that markets, sentiment, and nominal activity are simultaneously stretched. "All we know is income. Income is growing. Now, is it inflation? Is it growth? Is it productivity? I don't know." — Vincent Deluard: Explains why he prioritizes tax collections and nominal income over noisy productivity narratives.

Implications: Listeners should expect continued volatility, potential inflation re-acceleration, and a supportive backdrop for energy, commodities, and hard assets. The key risk is a late-cycle policy mix that lifts assets now but sets up a more redistributive, politically charged regime later.