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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My 9/11 Story, 25 Years On

It was early August 2001 when I asked my wife if we should fly into Washington, D.C. a few days early before my best friend’s wedding. He was planning to marry his sweetheart on September 16, 2001, at St. John’s Episcopal Church, where new presidents attend a prayer service the morning of their inauguration. My 6- and 3-year-old daughters and I were in the wedding party.

I wanted some extra time for the girls to see the great sights of the Capitol City, where I had attended graduate school and begun my career several years earlier.

I secured some VIP passes from our congressman for tours of the White House and the U.S. Capitol. The passes came in the mail around mid-August, with the date for the Capitol tour scheduled for 8:30 am, September 11, 2001.

Just another day. It was before history changed.

 

Sep11_Congress

We also planned a trip to New York after the wedding, as my girls wanted to visit their birthplace. The oldest specifically requested a trip to the top of the World Trade Center’s Windows on the World.

Their last night in New York before moving to California was spent at the Marriott World Trade Center, South Tower.

We booked our flights.

The return flight from New York was familiar. I had flown it at least a hundred times — United Flight #93, Newark to San Francisco.

Just another routine United flight. It was before history changed.

Sep11_Flights

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Washington, D.C.

We arrived at Dulles Airport on Sunday night, September 9th, and it felt good to be back in Washington.

As we were disembarking, my 3-year-old noticed the overhead air blowers were still on and blowing hard. She shouted, “Dad, they’re wasting energy!”

The plane burst out laughing. California was in the middle of an energy crisis, experiencing brownouts daily throughout that summer.

September 10, 2001

The following morning we had some downtime, and because the White House was only a few blocks from our Georgetown hotel, I took the girls down to see the president’s house. We arrived at the front gate, and I noticed the Secret Service on top of the White House with high-powered binoculars, scanning the sky.

I hadn’t seen this since the day after the U.S. bombed Libya in 1986, in retaliation for Gaddafi’s bombing of a Berlin disco that killed several American soldiers. I had an interview the next day at the Council of Economic Advisers (CEA), located in the Old Executive Office Building, and I recalled how tight security was — specifically, the sharpshooters on top of the White House.

For context, I hadn’t been in Washington in five years before our September 2001 visit, and, no doubt, security had ramped up considerably since. Put away those conspiracy theories.

Video Tape

I began filming the White House the day before history changed — specifically the Secret Service, their high-powered eyes trained on the sky above the White House.

I mentioned to my family there must be “some sort of terrorist alert.” My very bright, analytical 3-year-old immediately chimed in: “Dad, they’re trying to hurt the president.”

After thinking a minute longer, she asked, “Dad, do they [the Secret Service] know we’re good guys?” It was somewhat hilarious, at the time. We have it all on tape.

Lafayette Park

It was hot and humid in Washington on September 10, 2001, the day before history changed. I took the family across the street, sat them on a bench in Lafayette Park, and went to fetch them some water from a street vendor.

Before leaving on the water run, I noticed a Middle Eastern–looking man sitting on the bench next to my daughters. He was very agitated fiddling with his cell phone and rapidly thumbing through a stack of ATM receipts — I recall some were from Bank of America.

What struck me most was his fidgety, nervous demeanor.

He was casually dressed in nice khaki slacks, an olive-green button-down shirt, and sandal-like, full-toed shoes. He smelled of cheap European cologne. I will never forget his face.

While I was out getting water, for some reason, I had a bad feeling. I began to think the man on the bench fit the profile of a terrorist. I seriously considered walking back across Pennsylvania Avenue to report the suspicious character to the uniformed Secret Service officers at the White House’s north gate. I’m sure they would have laughed and dismissed me as some kook.

When I got back to the park, the man was gone. I asked my wife, “What happened to the guy sitting on the bench? He reminded me of a terrorist.” True story.

Racial profiling? No, his agitated state is what made me suspicous.

I had a strong feeling based on his actions and my own experience being so close to the first 1993 bombing of the World Trade Center, when I worked on Wall Street.

September 11, 2001

About 8:00 am, my wife woke us in a panic. We had overslept and needed to hurry to get to the Capitol building.

I knew we wouldn’t make it on time and, reluctantly, put the kibosh on our trip up to the Hill. My wife and our oldest went down to the lobby to grab some breakfast. My youngest, still suffering from jet lag, was sound asleep.

I was reading the Washington Post when they returned to the room in horror and told me to turn on the television — a plane had crashed into the World Trade Center.

For the next few hours, I watched in shock and was on the phone constantly with my friend, the bridegroom, who had a view of the WTC from his Greenwich Village apartment.

When American Flight #77 hit the Pentagon about an hour later, it was only a matter of minutes before F-14s were buzzing over our Georgetown hotel.

I went outside and saw people hustling up the sidewalk and noticed the military had come out onto the street — a Humvee stationed at every corner in Georgetown. This doesn’t happen in America.

Get Out of Washington

I began to fear for the safety of my family and decided it was time to get out of Washington. I told my wife, “If these people have chemical or nuclear weapons, we’re smack in the middle of their target.”

As I was heading out the door to rent a car, my oldest shouted, “Dad, get a purple car!” Yeah, right, I thought.

I arrived at Hertz in Georgetown, and the clerk said I was lucky — there was one car left. They pulled it up to the office. A purple Volvo.

Charlottesville

On our way to Charlottesville, I was overcome with the incredible grief all of America was suffering, especially thinking about my friends in the WTC. I felt sick.

It felt like the end of American exceptionalism. These things just don’t happen in America.

Seeing American flags draped over the freeway overpasses on our drive to southern Virginia, I thought, as many others did that day, that this was my generation’s Pearl Harbor.

September 12

The next day at Jefferson’s Monticello, a busload of senior Japanese tourists pulled up to our third president’s home. They were soon smitten with my 3-year-old — one heck of a cute baby, with a friendly, unique personality.

The Japanese tourists asked to take pictures with her. I warmly agreed and thought how surreal it was — the day after our own Pearl Harbor. Surely some of these people were alive, and on the other side, on December 7, 1941.

It was the first few days of a grave new crisis; the nation was grieving and in complete shock, just as the Pearl Harbor generation had been on that dark December day 60 years earlier. And there was my child, chumming it up with these beautiful Japanese seniors — a pearl in their eyes — who were once considered the enemy of the “greatest generation” just a little over a half-century before.

It gave me a glimmer of hope that the country would make it through the dark days.

The Japanese are now one of our closest allies, which could never have happened without forgiveness. No peace without justice, no justice without forgiveness.

Whenever I have the chance, and it feels appropriate, I ask my Japanese friends if they forgive the U.S. for bombing Hiroshima and Nagasaki. I’ve never received an unequivocal answer. Not once.

It seems the official position is to sweep it under the rug:

In 2007, during Shinzo Abe’s first term as prime minister, Defense Minister Fumio Kyuma referred to the bombing of Hiroshima and Nagasaki as “something that couldn’t be helped.” — LA Times, April 2016

The FBI

The day after the attacks, I began to think again about the man I’d encountered in Lafayette Park.

I contacted the FBI to report the incident.

At first, they seemed to mock me — asking how he was dressed, probably expecting I’d reply, “in Arab garb,” like a thobe, ghutra, and egal.

I spoke with the FBI several times after that. They always remained aloof and never shared any information.

Enter Bob Woodward

I then contacted the Washington Post’s Bob Woodward, who put me in touch with his research assistant. We had about a half-hour conversation, in which he told me Al-Qaeda liked to scout their targets just before hitting them.

Was the White House a target?

Several reports specifically identified Capitol Hill and the White House as targets on Sept. 11. One said a bin Laden associate — erroneously — “gave thanks for the explosion in the Congress building.”

A key figure in the bin Laden financing organization known as Wafa initially claimed “the White House has been destroyed,” before having to correct himself. — Washington Post, January 28, 2002

I can’t remember if it was the FBI or Woodward’s assistant who confirmed that the 9/11 terrorists had emptied their bank accounts just before the attack and transferred the cash back to the UAE:

From September 5 through September 10, 2001, the hijackers consolidated their unused funds and sent them to Hawsawi in the UAE. — National Commission on Terrorist Attacks

The ATM receipts were convincing enough, but my suspicions about the man in the park were confirmed when the FBI released photos of the 9/11 hijackers.

Sep11_Khalid

I will never forget that face.

I had sat my daughters down on a park bench across the street from the White House, the day before September 11, 2001, next to one of the hijackers. His name was Khalid al-Mihdhar, a senior Al-Qaeda operative who helped crash American Airlines Flight #77 into the Pentagon.

How twisted was it that on September 10, 2001, the Secret Service was on top of the White House combing the sky for potential terrorists, while one of the Al-Qaeda hijackers sat right under their nose, less than 1,000 feet away?

The Wedding

My friends bravely decided not to cancel their wedding the following Sunday, and we shared in their joy under extremely stressful conditions.

The church was located just across the street from Lafayette Park, a stone’s throw from the White House, where president-elects traditionally attend their pre-inaugural church service.

Midway through the wedding, with the country and all of us still on edge, an army of sirens began to blare. It seemed to last an hour. Almost everyone in the church thought another attack might be underway.

I thought the presbyter was going to stop the wedding. We got through it.

Back Home

When the government lifted the ban on air travel, we caught one of the first flights out of Dulles back to the West Coast. That was one nervous flight.

One of our flight attendants panicked when a passenger refused to sit down. I have no doubt our plane was crawling with air marshals.

We Made It

We got through it. The nation got through it.

The world is much different now.

September 11th came too close to my family, but we escaped the ultimate tragedy.

Not so for many of our friends, fellow Americans, and good citizens from other countries who lost their lives that day.

I miss my friends who lost their lives that day.

Please God, bless their families and all those who lost loved ones, and the brave Americans who have made the ultimate sacrifice protecting us, and the many who still work to keep us safe.

Everyone Has a Story

Everyone remembers exactly where they were and what they were doing on the day that changed history.

I had wanted to write this story down for 17 years but just couldn’t do it. Now my children will have it to pass on to their children.

Everyone has a 9/11 story. Write it down. It’s cathartic.

 

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Global Bonds Are Sending a Memo — Are Stocks Listening?

Global sovereign bond yields just hit their highest level in nearly two decades. A Bloomberg gauge of global bonds climbed to 3.72% on Monday, the highest since mid-2008, marking a fourth straight session of increases. Ten-year Japanese government notes touched 3% for the first time since 1996. UK 30-year yields hit levels last seen in 1998. The 10-year Treasury is back to January 2025 highs. And Australia’s 10-year yield surged to levels last seen in 2011.

The triggers are stacking up: Fed Chair Kevin Warsh’s hawkish tone, renewed US-Iran hostilities pushing oil higher, entrenched inflation running above target for five years, and a wall of government and corporate debt issuance — including a surge in AI-driven tech borrowing potentially crowding out sovereign demand. Markets are now pricing a ~70% chance of a Fed hike this month, a near-certain ECB hike, and an expected BOJ move as well.

I spent my career working with highly indebted countries, and this setup — sticky inflation colliding with wide fiscal deficits across the US, Japan, the UK, and France — is familiar territory. When multiple major economies get squeezed by the same debt-and-inflation dynamic simultaneously, the potential for something to go sideways is not a zero probability. I’ve watched this movie before.

What concerns me most: equities have barely blinked. The AI-led rally has stocks near record highs even as the term premium investors demand for holding long bonds keeps climbing. That’s the same combination that set up the 1987 crash — a stock market roaring ahead while ignoring a spike in bond yields, until it couldn’t anymore.

September and October are historically the worst months for stocks and global bonds. We’ll be watching this closely and posting a lot more on sovereign debt stress and the yield-equity divergence in the coming months. Stay tuned.

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Kevin Warsh’s Jackson Hole Speech

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For Pete’s Sake! $40 trillion?

This should sound familiar to the long-term Global Macro Monitor readers. It is beginning.

Why do we have this gut feeling Japan and France will be the [next ] countries of focusGMM, circa 2012

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Battle Stations in the Bond Market

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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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