Yo Pit Crazies,

The S&P 500 is sitting within one percent of a record high.

The 30-year Treasury closed Monday at 5.31 percent, the highest since June 2007. That is two weeks running where the long end repriced and stocks refused to care.

I have seen records set alongside high rates before. Most of the 1990s looked like that. The difference is what Washington was doing in the background.

Back then the government was barely borrowing. Fiscal 1998 ran a $69 billion surplus, the first in three decades, and the books stayed balanced through 2001. Gross federal debt sat under $6 trillion.

Now gross debt is $39.8 trillion and closing on $40 trillion. Treasury has borrowed $1.8 trillion in the first 10 months of this fiscal year, more than it borrowed in all of fiscal 2025. Net interest is on pace to clear $1 trillion, which is more than Medicare.

A generation that ran a surplus three decades ago cannot get through a year now without $2 trillion in new borrowing. Plenty of those old members of Congress grew up on Depression stories and knew how to be tight with a dollar. Hopefully we do not have to relearn that one the hard way.

So the index is at a record while the government funds itself at crisis prices. Can AI fix it? Look for our big Anthropic write-up in the coming weeks. In the meantime, here are two names for a defensive book, one long and one short.

Somebody Has to Plug in the Data Centers

One of the bigger advantages of Sibyl (our idea-flow tool that flags when a name in one of my themes hits a good price) is the daily drumbeat. I keep the themes in my head. Sibyl tells me when the stock is finally worth acting on.

I do not think any energy name belongs near 52-week lows right now. NRG Energy (NRG) is sitting there anyway.

The stock printed $112.50 on August 4 after a second-quarter miss and still trades around $122, roughly 30 percent below where it was in February. The miss came from interest expense and integration costs, not demand. Revenue landed at $7.48 billion and adjusted EBITDA rose 34 percent.

1 year NRG chart

Here is what got lost in the selloff. NRG closed a $12 billion purchase of LS Power's fleet in January and doubled its generation to roughly 25 gigawatts. It has 5.4 gigawatts of new gas turbines reserved with GE Vernova and Kiewit, and late last month it moved close to a 1.2 gigawatt supply deal with a hyperscaler.

The energy price spike at the start of the Iran conflict burned a lot of buyers, and the nuclear enthusiasm that carried this whole sector last year has gone quiet. That is why the stock is cheap. The demand did not go anywhere.

The Anthropic IPO and the data center buildout keep power demand at records. As Hans says, compute demand looks infinite. I will add that energy demand is the same thing wearing a different hat.

I like NRG up $20 to $30 by the end of 2026.

The Kids Just Do Not Drink

Maine has a lot of pot shops. If I had to name the fastest growing industry in my county, that is it. We get a new one every six months.

But the shops are a symptom, not the cause. The number that matters: Gallup has young adults who drink at all falling from 59 percent in 2023 to 50 percent last year. That is the customer base for Constellation Brands (STZ) walking out the door.

Constellation is not new to my loser list. It just earned a fresh entry.

Berkshire Hathaway (BRK) cut 95 percent of its Constellation position in the first quarter. The 13F that hit last week showed the rest of it gone. Berkshire's Alphabet (GOOGL) stake is now its third largest at $36.6 billion, so the money is not sitting idle. It just does not want to own beer.

1 Year STZ

You can see why. Constellation's fiscal 2026 net sales fell 10 percent to $9.14 billion. Last quarter's sales dropped another 3 percent. Management guides fiscal 2027 organic sales to somewhere between down one percent and up one percent.

Even Altria (MO) squeaks out a rising top line, and that company sells something people have been quitting for 60 years. First half revenue rose 1.6 percent on pricing alone.

I am being a Grumpy Old Man here, but pot, DoorDash, and SNAP is not a great combination for the health and vitality of the young. The demographics are in and Constellation is on the wrong side of them. The dividend is nice, but a dividend does not fix a shrinking customer base.

In the meantime I need to open a bottle of something good for my Ceres Club Cafe on Wednesday night. Tap this link to check out Ceres and join me tomorrow.

So which one does the crew pick for Monday's Ticker Highlight Show? Tap this link to join at whatever rate you want and get Monday's pick as soon as it hits.

Hopefully this was helpful,

Andrew Giovinazzi