Yo Pit Crazies,

Treasury Secretary Scott Bessent has close to $1 trillion parked in the government's checking account, and on Monday CNBC reported he's thinking about pointing it at the long end of the bond market. That's a big gun, and it did nothing for stocks. The S&P 500 Trust ETF (SPY) still hasn't made a near-term high since Treasury announced the bigger buyback on August 19.

My Twitter feed is full of $40 trillion debt tweets. Some say it's all Trump's fault, some say Biden, and a few go back to Bush and Obama. I can't really blame any of them, because Congress is the one that gets to spend.

They pass spending bills now, not even budgets, and every president signs them or the country defaults. Total debt crossed $40 trillion on August 18, double where it sat in 2017. Interest alone runs about $1.1 trillion a year, more than we budget for defense.

The most disturbing trend is the spending itself. Some states have turned COVID-era programs that were sold as emergencies into a permanent transfer from Washington. This is crazy town.

So why doesn't the market tank on this? Interest rates float, and spending can theoretically stop. On and on we go until Congress does its job.

Everybody points to D.O.G.E. as the thing that finally cut something. Roughly 386,000 federal workers left between January 2025 and January 2026, and the workforce ended up about a quarter million smaller. Federal outlays went up anyway, because most of the budget is entitlements and interest, and only Congress can touch those.

Congress never codified the cuts into law, and agencies posted more than 104,000 jobs in the first five months of this year. Here we stand.

1 Month TLT Chart

This is an intractable but solvable problem. Traders still have to figure out how much of a pall this casts over stocks. It also creates a different set of opportunities, because big dollars are pushing a different class of stock around.

The first eight months of 2026 belonged to AI. The last quarter could look a lot different once NVIDIA (NVDA) reports Wednesday after the close.

1-Year AVAV Stock

AeroVironment, Inc. (AVAV) builds drones and counter-drone systems, and it's trading near one-year lows. It closed Monday at $148.20 after a 7.5 percent drop, about 10 percent above its 52-week low and roughly 65 percent off the high.

The 2027 defense budget request asks for more than $74 billion in drone and counter-drone money, triple the 2026 level. Inside that request, an office called the Defense Autonomous Warfare Group goes from $225.9 million to $54.6 billion. That's a 24,000 percent jump for a program nobody had heard of two years ago.

None of it is law yet, and it runs through the same Congress I just spent four paragraphs complaining about. The difference is that this crowd has never had trouble writing a defense check. Frank and I follow AVAV in Cap Gains, and I'm short a put in it now with earnings on September 2 as the next hurdle.

There are different opportunities in momentum with all these flows coming out of Washington. Tim Colby is going live with them this week. Tap here to check him out.

Hopefully this was helpful,

Andrew