Real Estate & AI - Unified Theme

Some intelligent people on social media have decried the vulnerability of the American insurance industry to a reckoning of credit risk in commercial real estate.

I maintain these fine people have missed the plot: real estate is now a POSITIVE AI COVARIATE.

Reshoring: Reshoring Wage Shocks HELP American Real Assets & AI Capex Real Returns

What underpins reshoring, or more precisely, what prevents reshoring from becoming a massive drag on the American economy?

Productivity and capex!

The quotes below come from today's Treasury press release:
https://home.treasury.gov/news/press-releases/sb0585

Capex, Growth, Productivity, and long-term Deflation

The capex and growth, today feeds into future deflation expectations: this is how you tame bond vigilantes:

COMMERCIAL REAL ESTATE IS A LEVERAGED BET ON AI

The GENIUS of the Trump administration is the coupling of AI success with a successful "reflation" of CRE and employment: through the AI-driven conduit, capital revivifies American capital investment, employment, and anchoring of goods and services deflation.

The best part, though: reshoring BEGETS FURTHER reshoring: AI-driven automation only incentivizes further investment in on-shored factories and displacement of Chinese goods. This entire motion already succeeds: do you not think with record deficits and spiraling wars, yields should already be at HISTORIC HIGHS?

As Bessent's team says, itself: AI has the potential to re-rate the entire American economy...

Betting Against Real Estate is Betting Against AI-Driven American Growth

Insurance stocks would already be a smoldering crater, were the above plan not already in motion. The capital markets have tasted blood - with private credit headlines already tarnishing the BDC's and rating agencies - and were it not for the credible re-shoring pivot, the US insurance and banking system would already have credibility and already be in the throes of bailouts and full-blown crisis.

Instead of a crisis is the challenge: a military and political challenge: can the US defend her Empire during this pivot and keep pressure on the neo-Soviet axis? As long as American leadership maintains coherence, the reshoring march continues!