Carlyle is headquartered in Washington - understanding political dynamics and policymaker objectives is central to how we think about the macro and investment environment. This year is different - level of interest is much higher due to geopolitics, potential AI regulation, and fiscal concerns.

Nominal GDP has been growing over 5%, close to 6%. Too much has come from price increases - that's the main concern. The Fed pivot under new management is interesting - from a dove expecting 3-4 rate cuts to someone who keeps rates flat for the rest of the year. We're in the largest concentrated capex boom in 25 years, potentially the largest in our lifetimes.

Construction employment is growing 3x the rate of broader payrolls. There's demand for advanced manufacturing - batteries, transformers, generators. From last September, in 9 months we've seen a 60% increase in economy-wide compute capex. 12-month forward earnings expectations for semiconductor manufacturers have risen 2.5x. Hard to be bearish with this backdrop.

The way some executives at foundational AI labs have been talking has not been helpful politically - talking about taking all jobs, large share of electricity and water, building models so powerful they introduce national security risks, and needing $1 trillion of savings annually. There will be a modulation in how these topics are discussed to make benefits more obvious. For data centers, there are issues around taxation and dedicated revenue streams for localities, but the construction jobs and positive spillovers are a great story to tell.

This comes back to affordability - the consumer price level has increased by over 25% over the last 5 years. If central banks don't deliver price stability, policymakers will pursue interventionist policies - price controls, nationalizations, public competition for private sector businesses. That's almost inevitable if your central bank doesn't deliver price stability. Higher rates and bond yields are probably a less bad outcome than these other interventions.