The Market Radar

We anticipate monitor and comment on market-moving global economic and geopolitical issues.  No dark side brooding, no wanting the world to end, no political rants.  Traders, investors, policymakers, or market observers can’t afford to ignore us.  In one word, perspicacity.

An educated citizenry is a vital requisite for our survival as a free people– Thomas Jefferson

By seeking and blundering, we learn. – Johann Wolfgang von Goethe

I can calculate the motion of heavenly bodies,
but not the madness of people [markets]. – Isaac Newton

     The four most dangerous words in investing are, ‘this time is different.”  – Sir John Templeton

Ten people who speak make more noise than ten thousand who are silent. — Napoleon Bonaparte

Never attribute to malice that which is adequately explained by stupidity. – Hanlon’s Razor

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RIP Tommy John, My Friend from the Bullpen

Tommy John died Saturday at his home in Bradenton, Florida. He was 83.

The record books will note that he won 288 games across 26 seasons, that he made four All Star teams, that he is one of only two pitchers in MLB history with more than 275 wins who isn’t in the Hall of Fame, which is shameful. They will talk about the surgery that carries his name, the one that turned a career ending injury into a footnote instead of an ending. That’s the Tommy John most of the world knew. I knew a different one. I knew him as a kid.

I met him when I was a very young teenager, first as a starstruck fan, then, almost impossibly, as his bullpen catcher during the comeback year nobody thought would happen.

The Ride of My Young Life

My best friend and I heard that Tommy was making an appearance at an event in Century City, so we caught a bus down from the suburbs just to see him. We already knew him a little by then. Dodger Stadium was where we spent nearly every free hour of our childhood, and Tommy was one of the few players who actually noticed a couple of kids hanging around and took the time to talk to us. After the event that day, he offered to drive us back to the Dodger stadium. I remember sitting in the back of his car feeling like a prince, rolling right past the guard at the stadium gate like we belonged there. Fifty years later, I can still see it exactly as it happened.

The Night of the Injury

I was there the night he hurt his arm. I walked out to his car with him afterward, and I will never forget the look on his face. It was fear, plain and simple, the fear of a man who believed he had just thrown his last pitch. Soon after, he underwent an experimental surgery on his left arm that almost no one expected to work. In the months that followed, Tommy developed a stutter that stayed with him until he finally took the mound again, eighteen months later.

Bullpen Sessions

A couple of months after his surgery, I got the job every baseball obsessed kid in Los Angeles dreamed of: ballboy and batboy in the Dodger clubhouse. As I grew older, bigger, and stronger, they started trusting me to throw batting practice and catch bullpen sessions before games. And when Tommy began his comeback the following season, someone had to catch those bullpen sessions with him.

That someone was me. I couldn’t have been prouder.

It was not easy work. Tommy still could not fully extend his fingers, and his control and accuracy was nothing less than horrendous. Pitches bounced in the dirt. Pitches sailed over my head. A few caught me in places a catcher never wants to be caught. It felt like a small war zone back there, and I will admit I tried to duck out of those bullpen sessions when I could, hiding out in the outfield shagging fly balls during batting practice instead, which I loved. It rarely worked. Sooner or later I would hear Red Adams, the Dodgers pitching coach, calling me back to the bullpen to catch TJ, and back I would go. What always stayed with me, even as a kid who barely understood what he was watching, was that Tommy never once gave up on himself.

Winter Ball – He’s Back!

That winter I went with him to Arizona for winter ball. Tommy told me once that pitching to those young hitters, most of them just out of high school or college and nowhere near the majors, was harder than it looked. A big leaguer had discipline. He would take a pitch off the plate, wait for his spot, give a veteran like Tommy something to work with. These kids had no such patience. They would swing at anything, good pitch or bad, and Tommy could not afford to waste a single one testing them. Nothing was a given out there. Every pitch had to mean something.

One afternoon from that winter has stayed with me my whole life. I was working the radar gun behind the plate, clocking his pitches as they crossed it, which was how it was done in those days. Back then pitch velocity was measured crossing the plate and not out of the pitcher’s hand as it is today. The older method clocks a pitch that reads 5-10 mph slower. One of his fastballs came in at 88 by that old measurement, which means by today’s standard, Tommy was likely throwing well into the 90s again. Back to his full, pre-injury self.

I shouted out the number, and the whole crowd erupted around me, coaches, Dodger executives, and teammates all cheering at once. Everybody there understood exactly what they had just witnessed. Tommy John was back. He went on to win 20 games in a season with the Dodgers, and two 20 game winning seasons with the Yankees, on a rebuilt elbow that, by all reason, had no business working that well again.

Tommy John was one of the kindest, most decent men I have ever known. He never made a kid feel small. I loved him then, and I love him still.

Baseball lost a legend this weekend.

The world lost a saint.
 

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The $2.5 T IOU – Big Tech’s Off-Balance-Sheet AI Bet

One of the most durable comforts in the AI trade has been the belief that hyperscaler capex is discretionary. If demand for chatbots and coding tools disappoints, the thinking goes, Big Tech simply turns off the taps. Bloomberg Opinion’s Chris Bryant has taken a hard look at the accounting footnotes and concluded that this optionality is largely an illusion. Credit markets, meanwhile, have stopped waiting for the equity crowd to catch up.

Bryant tallies the future spending commitments of the major hyperscalers at more than $2.5 trillion, counting leases not yet commenced plus contracted purchases of equipment, energy, and services. None of it appears on a balance sheet. The Q2 disclosures show how fast the lock in is building. Alphabet now carries $811 billion in purchase commitments, including $707 billion with terms beyond one year, a stunning $475 billion sequential increase. Meta’s noncancellable commitments have reached $349 billion, more than double the figure at the close of 2025, alongside $279 billion in future data center leases. Microsoft sits on $557 billion combined. Even Oracle, the smallest of the group, has $260 billion in pending leases and $19 billion of unconditional purchase commitments running five years.

What changed is the balance of power in the supply chain. On GPUs, the hyperscalers have preserved flexibility. Microsoft’s Amy Hood and Amazon’s Andy Jassy both stressed this week that chip purchases can be slowed if demand softens. But memory is a different animal. Micron has locked customers into agreements of roughly five years covering at least $100 billion of future revenue. Sandisk extracted $42 billion from just three clients. Samsung may dedicate up to 70% of capacity to customers on long contracts secured by deposits and guarantees that make exit punitive. The suppliers, scarred by past cycles, are forcing customers to carry the downturn risk. The tell is buried in Meta’s filings: nearly $11 billion of its money market cash is now restricted from general corporate use, collateralizing infrastructure purchase agreements through 2030.

Credit Risk Rising

The credit market has moved from noticing to trading. A record $127 billion of AI linked corporate bonds changed hands in July across the eight largest names, a more than fourfold rise from a year earlier, lifting the complex to 14.5% of total US investment grade volume from an average of 4.5% in 2025. Much of that paper is only months old, the residue of the bond flood that Meta, Nvidia, SpaceX, and Oracle unleashed to fund their buildouts. After initially absorbing the deluge, investors have pushed funding costs sharply higher and reached for protection.

Credit default swaps (CDS) tells the story in miniature. Oracle single name notional stands at a record $25.1 billion, up from $6.9 billion a year ago, with spreads on five year protection out to 218 basis points, which is junk pricing for an investment grade name. Meta CDS, which only began trading regularly in November, has already amassed $5.8 billion notional. SpaceX hit $1 billion within weeks of its debut bond. Even the picks and shovels are getting hedged. Nvidia five year CDS touched 82 basis points this week, double its level in the middle of June, and tech now accounts for nine of the ten widest names in the CDX investment grade (IG) ndex. As S&P’s Gavan Nolan puts it, “Hyperscalers are the big driver of the investment-grade CDS market right now.”

Importantly, this is repricing, not panic. Traders report healthy flow in both directions, with protection buyers offset by investors selling CDS on the view that the selloff is overdone, and bid/offer spreads have held stable even as credit spreads widened. Hedge funds are working relative value between bonds and CDS and across the capital structure, while insurers and asset managers are returning to single name CDS for the first time in years. A functioning hedging market is a feature, not a bug. But its very emergence confirms the thesis: credit risk is now central to the hyperscaler investment case.

Step back and the macro picture is uncomfortable. Silicon Valley has abandoned its capital light DNA and converted variable spending into quasi debt, precisely as its funding shifted from internal cash flow to public bond markets. If cheaper open source models undercut OpenAI and Anthropic, the contracted revenue backing these pledges erodes, but the pledges remain. That is negative convexity at the heart of the market’s largest concentration of equity value. The capex put is smaller than advertised, the exit doors are narrowing, and the CDS market is now quoting the cover charge.

Markets are getting antsy for a return on all this invested capital, and the pressure is slowly building.

Stay frosty, folks.

*Sources: Chris Bryant, “AI’s Wildest Spenders Are Hitting the Accelerator,” Bloomberg Opinion, July 31, 2026; IFR/market reporting on AI linked credit trading, July 2026.*

Screenshot
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The $2.5 T IOU – Big Tech’s Off-Balance-Sheet AI Bet

One of the most durable comforts in the AI trade has been the belief that hyperscaler capex is discretionary. If demand for chatbots and coding tools disappoints, the thinking goes, Big Tech simply turns off the taps. Bloomberg Opinion’s Chris Bryant has taken a hard look at the accounting footnotes and concluded that this optionality is largely an illusion. Credit markets, meanwhile, have stopped waiting for the equity crowd to catch up.

Bryant tallies the future spending commitments of the major hyperscalers at more than $2.5 trillion, counting leases not yet commenced plus contracted purchases of equipment, energy, and services. None of it appears on a balance sheet. The Q2 disclosures show how fast the lock in is building. Alphabet now carries $811 billion in purchase commitments, including $707 billion with terms beyond one year, a stunning $475 billion sequential increase. Meta’s noncancellable commitments have reached $349 billion, more than double the figure at the close of 2025, alongside $279 billion in future data center leases. Microsoft sits on $557 billion combined. Even Oracle, the smallest of the group, has $260 billion in pending leases and $19 billion of unconditional purchase commitments running five years.

What changed is the balance of power in the supply chain. On GPUs, the hyperscalers have preserved flexibility. Microsoft’s Amy Hood and Amazon’s Andy Jassy both stressed this week that chip purchases can be slowed if demand softens. But memory is a different animal. Micron has locked customers into agreements of roughly five years covering at least $100 billion of future revenue. Sandisk extracted $42 billion from just three clients. Samsung may dedicate up to 70% of capacity to customers on long contracts secured by deposits and guarantees that make exit punitive. The suppliers, scarred by past cycles, are forcing customers to carry the downturn risk. The tell is buried in Meta’s filings: nearly $11 billion of its money market cash is now restricted from general corporate use, collateralizing infrastructure purchase agreements through 2030.

Credit Risk Rising

The credit market has moved from noticing to trading. A record $127 billion of AI linked corporate bonds changed hands in July across the eight largest names, a more than fourfold rise from a year earlier, lifting the complex to 14.5% of total US investment grade volume from an average of 4.5% in 2025. Much of that paper is only months old, the residue of the bond flood that Meta, Nvidia, SpaceX, and Oracle unleashed to fund their buildouts. After initially absorbing the deluge, investors have pushed funding costs sharply higher and reached for protection.

Credit default swaps (CDS) tells the story in miniature. Oracle single name notional stands at a record $25.1 billion, up from $6.9 billion a year ago, with spreads on five year protection out to 218 basis points, which is junk pricing for an investment grade name. Meta CDS, which only began trading regularly in November, has already amassed $5.8 billion notional. SpaceX hit $1 billion within weeks of its debut bond. Even the picks and shovels are getting hedged. Nvidia five year CDS touched 82 basis points this week, double its level in the middle of June, and tech now accounts for nine of the ten widest names in the CDX investment grade (IG) ndex. As S&P’s Gavan Nolan puts it, “Hyperscalers are the big driver of the investment-grade CDS market right now.”

Importantly, this is repricing, not panic. Traders report healthy flow in both directions, with protection buyers offset by investors selling CDS on the view that the selloff is overdone, and bid/offer spreads have held stable even as credit spreads widened. Hedge funds are working relative value between bonds and CDS and across the capital structure, while insurers and asset managers are returning to single name CDS for the first time in years. A functioning hedging market is a feature, not a bug. But its very emergence confirms the thesis: credit risk is now central to the hyperscaler investment case.

Step back and the macro picture is uncomfortable. Silicon Valley has abandoned its capital light DNA and converted variable spending into quasi debt, precisely as its funding shifted from internal cash flow to public bond markets. If cheaper open source models undercut OpenAI and Anthropic, the contracted revenue backing these pledges erodes, but the pledges remain. That is negative convexity at the heart of the market’s largest concentration of equity value. The capex put is smaller than advertised, the exit doors are narrowing, and the CDS market is now quoting the cover charge.

Markets are getting antsy for a return on all this invested capital, and the pressure is slowly building.

Stay frosty, folks.

*Sources: Chris Bryant, “AI’s Wildest Spenders Are Hitting the Accelerator,” Bloomberg Opinion, July 31, 2026; IFR/market reporting on AI linked credit trading, July 2026.*

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Mooch is a Must View

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Global Risk Monitor: Week in Review – July 10

Ceasefire Off, Risk Still On: Positioning Into a Loaded Week

The market’s message last week was unambiguous: geopolitical tail risk gets sold, not bought. Trump declared the US-Iran ceasefire over, both sides exchanged attacks in the Strait of Hormuz, the VIX kissed 19 Wednesday — and the S&P 500 still closed the week up 1.23% at a three-week high, with VIX back to 15.25. As long as WTI stays subdued near $71.41, flows will keep chasing the economy and earnings, not Tehran.

Rates Are the Real Story

The bond market isn’t as sanguine. Yields rose ~7-8 bps across the curve (2Y 4.20%, 10Y 4.56%, 30Y above 5%), and hike probabilities repriced sharply: July FOMC odds jumped to 31% from 17%, September to 84% from 61%. The June minutes showed a committee split between holding and hiking, with near-unanimity that persistent inflation forces a move. Warsh’s first semiannual testimony Tuesday at 10:00 a.m. ET — hours after June CPI — is the week’s binary event. A hot print plus a hawkish chair leaves little cushion in duration.

Technicals: Constructive, With One Caveat

The SPX Equal Weight bounced firmly off its 20-day SMA — textbook uptrend behavior pointing toward new highs. Breadth confirms: 65.3% of SPX members above their 200-day, a four-month high. The caveat is semis. The SOX reclaimed its 50-day SMA after Tuesday’s 4% drop, but the price action is choppy rather than a clean V-bounce. If chips fail here, expect rotation rather than breakdown — but watch confidence.

The Week Ahead

Q2 earnings kick off with FactSet forecasting 23.3% YoY S&P 500 growth. Banks report Tuesday-Wednesday (JPM, GS, BAC, C, WFC, MS, BLK); ASML Wednesday and TSMC Thursday will stress-test the semi rebound. PPI, retail sales, and housing data round out the docket. Crypto desks should also mark August 7: Bitcoin’s BIP 110 soft-fork signaling window opens with only a 55% miner threshold — a governance dispute, but a potential volatility source.

Forecast: Slightly Bullish, with Higher Volatility. The risks to that call: an oil spike, or a hawkish Warsh pushing yields through the equity market’s pain threshold.

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The Commie Conspiracy to Save Your Wallet

God help us. The godless Commies are on the march!

New York City has adopted a new rule that bans companies from using deceptive subscriptions to trap customers into paying for gym memberships, streaming services and other recurring charges, the city’s consumer protection office said.

The new rule, which will start on 1 October, promises hefty fines and aggressive enforcement for violators. Companies that do not provide a simple way to cancel could pay $525 per user subscription, back fees and additional fines.  – The Guardian

NOT!

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Global Risk Monitor: Week in Review – July 3

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The Largest Global Unicorns

This graphic ranks the world’s most valuable unicorn companies — private firms commanding valuations of $1 billion or more, without ever answering to public markets.

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Global Risk Monitor: Week in Review – June 26

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Contrarian View: Jeremy Grantham

This is well worth your time, Folks. A must view.

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