Ackman's Pershing Square relies on macro narratives for equity pricing. He does not deny the historical Phillips curve but argues that the largest investment item in 2026 has shifted from interest-sensitive assets to competition assets with nearly infinite returns. Superintelligence is framed as a positive expectation, an indispensable military buildup, thus the cost of capital loses its braking function, leaving only a pricing function.

The capital path is the securitization of technology capital expenditures. Microsoft, Amazon, Meta, and power companies issue bonds to build data centers, with interest entering electricity prices and cloud pricing, then into core PCE. The Fed's 25 basis point hike will not lead competitors to cancel clusters but will only pass the coupon to downstream. Continuous construction in China makes it harder for the U.S. to unilaterally slow down. The widening credit spreads seen by Gundlach are the bond market re-pricing "issuing bonds to build AI," while the stock market still trades on infinite returns.

Similar breaks were seen during the 1970s oil shocks: interest rates cannot eliminate essential demand, only embed interest into prices. This is also seen in wartime finance: military spending is insensitive to the cost of capital. We are currently in a phase of "tools still exist, but targets have changed": the federal funds rate still targets housing and employment, while the largest nominal demand is in computing power and electricity.

Structural judgments pertain to the transfer of pricing power. The dominant factors of inflation have shifted from labor and rent to electricity, chips, and interest capitalization. The mechanism is: when the expected return on an investment is framed as infinite, rate hikes no longer reduce quantity but only increase price; the more the central bank raises rates according to the old model, the larger the embedded interest component of inflation becomes.

ABAB News · Law of Cognition

The competition for infinite returns does not respond to rate hikes as a brake.
Interest embeds into electricity prices, making rate hikes cost-push.
The model targets housing, while expenditures are already consuming electricity.