In this report, we analyze AI, the Market and give our overall analysis, which includes our Predictive Analysis and our Recommendations.
We provide an analysis of the development of AI this past quarter, focusing on key bellwethers.
We provide a general analysis of the American market.
We end our report with an overall assessment of the 2nd Quarter of 2026, a Predictive Analysis for what might be in store for us, and what we Americans might do about it, from the individual to the nation.
AI WATCH
AI DATA CENTERS – Before the July recess, the House introduced a bill that would force companies building AI data centers to pay for their own power.
The fight against data centers is only increasing, as townships fight against having one built on their lands. Their requirement for water makes them an ill-fit for human cohabitation.
New technologies are emerging that could greatly reduce AI data center size and water demand.
The GOP on one hand suspects China is behind the anti-datacenter trend, but on the other hand its constituents seem to be against them as well. President Trump downplayed the accusation.
AI GEOPOLITICS – The quarter began with the U.S. banning Anthropic AI exports and creating an AI safety check to the removal of the safety check and a lifting of the Anthropic ban.
China and the U.S. are charging far ahead of the rest of the world, as both have assets the others simply lack, across the board. China’s lack of citizen restraint has enabled it to push the bounds of AI faster than the U.S. has been able to.
There will be no effective protests to the building of data centers in China.
China’s aggressive push is also pushing everyone else, who feel the pressure of not being too far behind. The U.S. seems to be more led by China than leading, with Trump’s efforts at caution being reversed in short order.
China and the U.S. have ostensibly begun talks to begin talks to talk about AI, but so far, nothing of substance has come, though both sides seem to want to slow down if they thought they could trust the other (they can’t).
It has been revealed that Grok has helped the U.S. run its operations in Iran.
Both Taiwan and the U.S. are trying to limit China’s access to high-caliber AI chips, with new restrictions announced in June, and more restrictions to come.
AI PLANNING AND DESIGN – A prediction by the CEO of Google DeepMind that AGI (Artificial General Intelligence) might be only 3-4 years away has raised concerns across the board.
Concerns of AI designing its own more dangerous version of itself only explode when AGI comes into play. It is at this level, theoretically, that humans can no longer safely contain just how AI develops.
Yet the concern might be undermined by AI’s imperfect record. Weaknesses have been exposed in classic brain tests, engineering design failures, and “chaos engineering failures.”
So far, the bigger do the best in the AI race, and that includes at the corporate level. There are technologies emerging that could change that reality, but so far, AI is a technology that favors the large-scale over the small-scale.
There is a tension emerging between the corporate designers and the government users, one that doesn’t exist in authoritarian countries like China. Here in America, the corporate people are hoping to solve the dangerous AI problem themselves.
The government, so far, seems (at least by the end of this quarter) content not to slow down the race. This has given the corporate people the lead, for now.
Yet, in the end, America’s AI rules might be written through court rulings, as more and more deference is given to judges’ broader interpretation not just of the law, but the prescriptions they can apply in ostensible enforcement of the law.
AI MARKETS – Rumors of AI costing Americans jobs have proven to be true, kind of. In reality, jobs are being lost, some are being created, and some that were lost may be regained. AI, so far, has proven to have more flaws than were supposed, so some companies are now finding themselves needing to rehire the people they fired.
In California, a class-action lawsuit has been filed alleging AI has been used to inflate gas prices.
One thing that is continuing is the proliferation of massive AI war chests, with Alphabet creating its own $85 billion AI war chest. China’s AI War Chest is $295 billion. It is expected more major players are soon to follow.
The very nature of the AI machines, the collection of physical infrastructures needed to power the most advanced AI programs, is changing the global economic infrastructure faster than analysts can fully get a grip on.
Here are the full research notes we used to compile this Situation Report.
MARKETS
INFLATION – There are two inflation indicators, one is called headline inflation and the other is called core inflation. Headline inflation measures broader trends and core inflation measures direct consumer spending. In the broader sense, inflation has spiked to a three-year high during this quarter to 4.2%, while core inflation is much lower.
It suggests mass spending is up, but domestic spending is not, meaning resources are either being bought at increased rates, or the cost of resources themselves are going up. The Iran War exclaims the cost of one resource going up, oil, but we believe the mass spending on AI machines is a factor as well.
LABOR – The unemployment rate has remained mostly steady at 4.3%, which is low. However, the median duration of unemployment now stands at 11.6 weeks, meaning companies are not letting people go, but they’re not hiring them.
Reinforcing this notion is the drop in jobs gained from triple digits in April to double digits in June, at 57,000.
FEDERAL RESERVE – There had been suggestions that rate hikes might soon be coming from the Federal Reserve, but that’s not so certain now. The governors are not in agreement, with some wanting cuts, while some want to raise the rates, and other want to hold. The likelihood of a move on the interest rate in Q3 is now low.
GDP – The U.S. GDP for Q1 was 2.1%, which shows an economy with modest growth.
KEY INDICATORS – Here are the key indicators over the last three months (in sequence, listed from April to June).
Nonfarm Payrolls – +115,000, +129,000 (revised), +57,000
Unemployment Rate – 4.3%, 4.3%, 4.2%
Average Hourly Earnings (YoY) – ~3.5%, ~3.5%, 3.5%
Consumer Price Index (YoY) – ~3.8%, 4.2%, No June at time of print
Personal Consumption Expenditures Price Index (Core YoY) – ~2.8%, ~2.9%, No June release at time of printing
Real GDP (Annualized) Q1: 2.0%
Retail Sales (MoM) – +0.4%, +0.9%, No June release at time of printing
Federal Funds Rate – 3.50–3.75%, 3.50–3.75%, 3.50–3.75%
10-Year Treasury Yield – ~4.45%, ~4.50%, ~4.46%
20-Year Treasury Yield – ~4.9%, ~4.9%, ~4.85%
Here are the full research notes we used to compile this Situation Report.
ASSESSMENT
The terms we are now choosing to use to describe the main political factions in America reflect our belief that the nature of that reality of power has fundamentally shifted.
They are not intended to be manipulatively negative, but politically accurate. As we see it, the American faction is simply not there, though some factions are much closer to America than others.
Our terms are intended to create what we believe is the underlying reality of power of American politics. As we see it, there are four major factions that have organized and identified themselves. The one faction we are most interested in, the Americans, are not in that group.
While we clearly “support” the Americans, we leave it to the reader to decide if they value a progressive state, a continued Progmerican reality, or a true American republic. What we will not do is address the progressives as fellow Americans, for they clearly are not.
We have been under the rule of people we call Progmericans, these are people who have one foot in Progressive ideology and one in American traditionalism. The GOP Progmericans have leaned American but concede on the concept of “equality” over “equal rights.
The DNC Progmericans are not American at all, but they use the language of America to veil their true progressive natures. They have been largely of a mind that they lack the power to fully destroy Americanism, formally, and usher in what they’ve always wanted, the progressive state.
With the rise of Trump, these two factions have bifurcated, with the DNC Progmericans now engaged in an existential war for the vehicle of power that is the Democratic Party. Their rivals are the advocates of the Progressive State, here, now, and hard.
The GOP Progmericans may have done more than bifurcated. We see three major factions now. There are the MAGAs. These folks are mostly American, though they have tendencies to support anti-1A actions against their political opponents. Compared to the DNC Progmericans and the Progressive Staters, they’re liberty-loving Americans.
There are the constitutional conservatives, a much smaller group, but one that is most faithfully “American.” They have little to no power in the anti-progressive coalition. They are growing weary of Trump, though they still view him as the only present hope they have to fight what they perceive is the progressive assault on the republic.
On that point, we are inclined to agree.
Then there are the remaining GOP Progmericans, most of whom have developed the same pathological hatred of Trump that the DNC Progmericans and Progressive Staters have. It’s the kind of hatred that shuts down the frontal cortex and dims your view of true reality.
The wrinkle in this dynamic is Israel, which has become a foil for both anti-globalism and anti-nationalism. For the broad right, Israel represents globalism. The influence it has on this country is out of proportion to what it should be if we were a sovereign nation (or so they presume).
For the pathological anti-Trumpers, Israel is a useful wedge, even among MAGA, so they’ve made it their cause celeb. Even the assassination of Charlie Kirk is dragged into this Israel storyline, with the Progmerican GOP now accusing Israel of killing Charlie Kirk.
Within the Progmerican GOP, the break from the GOP has happened, with leaders like Tucker Carlon and Candace Owns now openly calling for conservatives to abandon the GOP.
For the progressives, Israel represents the best argument for sovereign ethnic nationhood, the preservation of a race through a sovereign state that is intentionally being targeted for extermination. Proving that narrative false has been a core mission for the progressives ever since the country was founded.
At the heart of progressivism is the assumption that only if ALL the peoples of the world submit to the progressive way can the benevolent few experts engineer the end of suffering and death.
Sovereign states are a stink to the most ambitious nationalists and colonizers on the planet, the progressives, no matter where they rule or protest.
So long as Israel represented sovereign nationhood, the broad right was a natural supporter. But as perception has grown of Israel’s “undue influence” it is now being viewed as a symbol of globalism.
In general, most people who are anti-Israel are not supportive of the Iran War, even if it succeeded in changing the regime and destroying China’s main Middle East foothold. Most who are still pro-Israel continue to support the start of the war, though many are frustrated Trump is not committing to regime change.
China’s aggressive AI push must serve as a temptation to the most powerful in America, even among those who had only recently chosen to reject the “China model” (Free markets for the chosen few, serfdom for the rest) because it may put even them at risk.
Now, the threat of a powerful Chinese AI unconstrained by individual liberty will strengthen the sales pitch of the progressive to the powerful few. Choose control or die.
In our Transitions series, we covered the end of the first Emperor of China and the rise of the first great dynasty of China, the Han. We see the emerging progressive state as the first Emperor of China whose legalism helped him build an efficient fighting force in a short period of time. He succeeded in gaining complete control of the Empire he conquered.
Unlike the progressives, however, the First Emperor built on his personality, not an ideology, When he died, his empire died. The progressives, though, are building an Empire not on an ideology, but on a victimhood in need of protecting.
Their triumph over the enemy would be their end, since the center is largely resistance and revenge, not progressive ideals.
As a matter of fact, we would wager the vast majority of the progressive state’s most aggressive soldiers and ardent supporters are almost exclusively driven by the hatred of the enemy and the thirst for revenge. This is the beast progressive marketing has called to itself, as you can see in our Progressive Media section in part one of this report on pg. 2.
PREDICTIVE ANALYSIS
It is remarkable how well the U.S. economy has fared through this war, though strains are beginning to show. Still, the economy seems strong enough to hold up even if the war continues, at least for another few months.
The U.S. economy is both being in part buoyed up by massive AI investments, and also constrained by it through inflationary pressures.
We are watching for the small-scale alternative to AI machines to arise, but so far, there are no viable alternatives, though promising breakthroughs have been made. Should these breakthroughs produce a viable small-scale alternative, the whole balance of power will shift once again.
Until the rise of AI Machining, we believed technology favored the small scale over the large scale. The more we are embedded in AI, the less that statement is true, for now.
The Republican Party has become for most Americans the symbol of controlled opposition. So far, the only personality keeping perhaps as many as half of card-carrying Republicans in the party is still Donald Trump. After 2028, there is no uniting spirit in the GOP quite like Trump. There is no uniting spirit at all.
Donald Trump may yet be the most effective bludgeon against the full emergence of the progressive state, but he might also be the impediment to American political parties emerging before 2028.
Should Trump end the war in Iran with the regime still in power, and thus China still firmly ensconced in Iran, we could see the final collapse of his anti-progressive coalition and the emergence of an American political party. Should the war end with a pro-U.S. Iran, the coalition will hold until Trump leaves office.
On the Progressive side, there is a major bifurcation happening, but it’s by one faction’s will, not the others. The Progmerican left is still not convinced they have the national power to push the true progressive agenda and use state and corporate violence to do so. The progressive staters are ready to move now.
What we still haven’t determined is if the true planners and designers of the progressive state operation are acting out of confidence or desperation. We suspect the latter but act as if the former, lest we underestimate this opposition to the American republic.
The progressive staters have another root issue, their band of monsters, the professional insurrectionists, the Antifa soldiers, aren’t actual progressive staters. Their handlers, their funders, their organizers are, but the ranks and files are not.
They have raised monsters to do monster things, and the monsters won’t stop monstering even after their handlers tell them to stop.
They want nothing short of total and complete destruction of all things, a purity cleanse of the planet so that only the glittering good remain. This is the marketing the progressive staters chose.
NOTE: We are speaking figuratively. These are still real humans, and our God is a forgiving God to those who repent. Lest we become monsters too, let us remember the humanity, even of our enemies.
The marketing was effective in gathering brute force under its pride banner, but, like so many revolutions before it, the strong arms that pave the way to power want to keep it in the end. In the case of Stalin, the strong arms won. In the case of Hitler, they lost.
In this case, without their physical intimidation, the counter to the progressive state would explode. The public meetings alone would exponentially increase, not just because of the removal of real fear, but the reduction in security costs alone.
In progressive states, the state itself could act as the physical intimidation, but it’s one thing for there to be a vague threat from private actors, it’s another for that threat to be directly from the state itself, especially in a land with competing civil authorities, all of which can reject any other part if it is clearly acting outside the scope of the King, the Constitution.
Private thug force is way cheaper and less risky than direct unconstitutional state force, which is what would need to be applied to counter the sudden explosion of public expression antithetical to the progressive state.
The removal of Graham Platner from the Maine Senate race is upsetting his fellow progressive staters, who are now calling to boycott the election. Jasmine Crocket is doing a similar thing to the Progmericans’ candidate James Talarico. She’s calling for a boycott of the election by her fellow progressive staters.
Should the DNC Progmericans beat back the progressive staters seeking to take hold the power apparatus of the Democratic Party, these hired and cultivated “monsters” are going to be almost as much of a threat to the DNC Progmericans as they are to Americans.
We are not prepared to do a predictive analysis on the midterms, beyond saying the outcome, we believe, is not settled, though it leans towards a Democratic House and a GOP Senate.
The outcome of the War in Iran will go a long way towards settling the matter, short of the DOJ finally proving undeniable clear as day evidence of the collusion between America’s two major political parties and the Chinese Communist Party.
We have little doubt this collusion is real and has been the primary driver of anti-American power within our own nation.
It is why our nation put itself in the position of relying on China for its essential lifesaving and preserving medicines. No leaders of a sovereign people would have ever chosen to put their nation at such a risk without great rewards from her enemies, even if it were only in the form of Chinese market access and high profits at home.
Those who chose profit over sovereignty are effectively collusionists with America’s enemy, the Communist “Republic” of China.
We believe the collusion probably only started with market access and profit, but it eventually became something far more direct. We also believe some degree of blackmail is being used through operations not unsimilar to the Epstein operations.
We believe they tempt people of power to do terrible things that are documented, so they effectively own their power. The politician becomes the avatar of the CCP. We believe there are many, some more obvious than others (like Swalwell), and they sit on both sides of the aisle.
Of course, the CCP are hardly the only people to practice such tactics, but they are more insulated from such tactics than their counterparts are in America.
To give the reader perspective, Thune is as likely a CCP avatar as Schumer is. This is not to say for sure either are, but we’d consider them suspects to be thoroughly investigated.
Also, we don’t want to paint a picture of CCP omnipotence. The progressive staters fully intend on being the worldwide hegemon, not the CCP. The frenemy cooperation ends when America ends. For now, their common enemy, us, keeps them aligned, but they compete for power even as they cooperate in opposition to Americans.
China isn’t controlling our country, but it has undue influence on it, influence far more profound than what Israel has. And China, like Israel, is also an ethno-state.
The progressives are creating a narrative that could create an ethno-state, the POC (person of color, aka anyone not white) state, but that will depend on the white savior part of the faction holding on to power once the white Americans are done.
We consider that possibility dubious. The progressive state, should it consolidate power, will quickly become an ethno-state with globalist ambitions, just like China already is.
Like the progressives of America, China holds that the whole world must be progressive for heaven to descend to the earth. But the Chinese heaven is Han-led, not POC-led, not white savior led.
China just wants to be the central authority of that world “coalition” of progressive provinces. Progressive staters want the same thing for themselves, with their power representing the central authority of a world coalition of progressive provinces, a world free of the burden of the white race.
Outside of clear evidence beyond a shadow of a doubt that this direct collusion is real, the progressives are still in line to win the House in 2026, though that is hardly a certain thing.
We believe Trump must affect regime change before the 2026 midterms to have a chance of holding both the House and the Senate. Such a victory would protect the growth of true American political parties without state interference.
While this victory would keep many Americans in the GOP fold, it would at least give Americans a chance to get ready for a post-Trump world, when many of those Americans will be ready to hear what our American parties have to say for 2028.
The one wildcard, which we already mentioned, is the DOJ providing clear and indisputable evidence there is direct collusion between the CCP and America’s major political parties.
One of the reasons why Democrats are protected is because some Republicans are most likely involved, and most likely their most powerful leaders, including John Thune and Mitch McConnell.
Both China and America embrace abortion.
China has deeply cultivated the sub humanization of its people so much so that people are afraid to help someone lest they somehow get entangled with the authorities. This is not to suggest there aren’t millions of Chinese who hold on to the sacredness of individual human life, but they are the minority, as, we believe, they are now in America as well.
We believe the underlying spirit that undermines American integrity is the continued acceptance of abortion as a means of birth control and the continued vilification by the progressives of opposition to that practice. When the unborn human is measured by his or her usefulness to the parents, the commodification of the soul has fully metastasized in the body of the nation.
The secret weapon of America’s power has always been the degree to which its people, be they state agents, corporate leaders, or schoolteachers, abide by the standard of individual self-determination, self-stewardship.
So long as we shared the idea of a creator outside of our authority endowing all humans with the “inalienable right” to self-determination (which means a right to self-expression, self-organizing, self-defending, and self-defining that no individual has a right to violate), then we have ears that cannot hear the progressive sales pitch of “equality” over equal rights.
We have hearts that cannot abide murdering unborn humans because they have a birth defect, they’re the wrong sex, they’re an economic burden, they’re just too much work, or they’ll interfere with my career, which are the reasons that more than 9 in 10 abortions take place in America, now mostly through a pill they take at home.
Abortion is in keeping with progressive ideology, including China’s, for the individual is only useful in the context of the whole, not in the context of “inalienable rights.” Like slavery undermined America’s secret weapon, self-determination, abortion does as well.
The tolerance for those who promise revenge and glory through destroying your neighbors only increases as the spirit of abortion becomes the assumed universal good, as it has mostly become in America today.
RECOMMENDATIONS
For the individual, read our included special publication this week, Exiting Goshen. It is a starting point for what it takes to be able to provide for you and yours outside of the system that increasingly wants you dead or, minimally, neutered. The link will be included in the email release.
As our readers know, our publisher and editor have purchased a church they intend on becoming their Hope Exit Castle. Due to some unforeseen setbacks, we are not yet ready to use the space publicly.
When we do (we’re hoping by next Spring), we intend on holding American symposiums, where we make an invitation to anyone who will agree to a basic American Creed that they are willing to publicly proclaim and be held accountable by.
We haven’t finalized the creed, but it will essentially reiterate an affirmation of core rights, such as gun rights, free speech rights, and the right to due process.
We want others to do similar things. If you have space to share, donate it to the cause of helping facilitate Americans finding one another.
Through meeting together, Americans can articulate their Americanism to one another. From those conversations, Americans can form political parties in answer to the non-American ones we now have, the Democrats and the Republicans.
We must facilitate American conversation that exclude non-Americans. We must recognize the non-American without doing to them what they still seek to do to us, sub-humanize them and offer them no path back to restoration.
It is vital we begin to see the non-American, else we will never find one another.
It is equally vital that non-American doesn’t become a thing, a beast, a demon. They may act like monsters, and they do, but they are still as human as you and I.
For Christians, we remember Paul, the least and greatest apostle who led campaigns to murder Christians. Men and women would be snatched out of their beds and dragged off to heresy courts through Paul’s direct actions.
When the first great martyr for Christ, Stephen, was murdered, Paul cheered the mobs on and even minded their coats for them.
Yet God found Paul and made him our brother instead of our enemy. This is always the hope we should keep for our enemies, ESPECIALLY when it becomes tempting to wish for the monster’s annihilation, knowing there’s still a human inside that beast.
Among the demons attacking ICE agents today are future saints. Count on it.
For America, the regime must fall, or it will be a loss that will be felt for decades to come. Within the nation-state game, the United States of America’s future as the hegemon of the world relies on its success in replacing the regime with a Pro-American government. This is geopolitical fact.
If you are an American citizen, and you find yourself rooting for Iran, you are rooting for a significant diminishment in the quality of life for yourself, and even more for your children, and even more for your children to come.
For the progressive, it’s not so clear that any outcome is good for you. If Iran holds, China’s power increases in the Middle East dramatically over the next decade, which is bad for you, because if the power structures you take over are significantly less than China’s, you will NOT be the last socialist highlander standing.
AI machines are the font of power in this century for now, and China’s Middle East presence will enrichen its resources, while the loss of Iran would set it back, significantly (not catastrophically).
Yet, a victory by Trump would strengthen his support at home, and the American economy as well. The problem with the progressive is they need the power structure of America to remain intact after the transition, yet a growing power structure in America not under their control is also a detriment to their project.
If America gets too far ahead of China, that’s bad for the progressives, unless they’re in charge. Nation-state Americans with that kind of advantaged power are an existential threat to the progressive dream of killing the sovereign nation to make way for the global progressive state.
If America falls too far behind China, before they take over, this is also a losing scenario for them.
The best scenario for the Progressive State in the Iran War is that regime change doesn’t take place until they take power, then they would work for regime change of a different nature.
But things are moving very rapidly, and even by 2028, China’s Middle East presence will be much more profound than it is now, entangled in all ways possible, from economics to AI tech and more. By 2028, regime change in Iran will be more than the progressive state can manage, we believe.
With all this in mind, we hold that a limited ground war engagement through special forces should not be ruled out if that’s what it takes to remove the regime. If it takes more than that, Trump will have no political capital for that war.
If we already know we cannot facilitate regime change with special forces operations (in the max 1-2k overall troop range), then we should destroy Iran’s infrastructure, so China must spend more money restoring it.
These are pragmatic “recommendations” within the nation-state game we are all playing, and most of us want to continue to “play.”
The progressives are playing a different nation-state game than the Americans are, though most of the Americans are unaware of what’s at stake in Iran from a purely pragmatic geopolitical perspective. The war is cloaked in Israel lore, probably intentionally.
Trump’s refusal to spell out the intention of the war, to knock China out of Iran, is probably due to the risk of escalation should China feel it was losing face by losing Iran. As China isn’t aggressively calling on protecting its ally (like it did before the war), China will not lose face if Iran loses the war.
At some point, Trump might have to decide to risk the China escalation, for the American people have no idea why this war matters so much to their future flourishing potential.
FURTHER RESOURCES:
We strongly recommend you peruse this 261-page document. It contains links and excerpts to many stories that didn’t make it to the final cut. In any “normal” year, many of the cutting room floor stories you will find in this document would be leading bellwethers.
Yet the global shared reality of the significant changes we see daily makes the most dramatic news day event in 2012 seem like a quiet whisper.
We look at significantly greater data than we can possibly share. Even our news aggregate and archive site, newslinkia.com, can’t contain the volume of data we must view to find the bellwethers we select.
This is the filtered data we chose to consider for our Situation Report.
We do not claim to be perfect in our selections, but this document will show you, if you don’t see it here, we simply didn’t select it.
