Good Saturday evening MacroEdge Readers & Community,

This is actually being written mid-morning as I head cross-country for 2 days of summer Arizona golf… It’s a great time of year to get out on the courses in Arizona because summer pricing is in effect and there’s usually no one out there past the 11am tee time. Ever so often, these weekend trips are a great reset to get some clear thinking and go over everything that we’re building. August is also a special month since it’s the month that I made the decision to exit the corporate sphere, now almost 3 years ago, and transition into our organization in a full time leadership capacity.

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There’s a lot of exciting things that continue to come out of our organization, and the second half of 2026 is going to be a period of growth and acceleration - both in and outside of the global macro sphere. More to be discussed on this on Wednesday in its own report/update as I outline some changes coming in the second half of the year. Under our Macro Research division, we will be introducing Portfolio Strategy, Oil and Gas Research, and expanding our economic advisory solutions to oil and gas firms across the Western Hemisphere. Included in Portfolio Strategy will be two flagship portfolio strategies managed by our team, key market driving insights, and real-time updates to said strategies. Under oil and gas research - like it sounds - this will also be a standalone offering focusing strictly on the oil and gas world. The sector continues to be grossly underweighted in market cap terms relative to its importance - and as worsening demographics globally come into greater play, I continue to believe we’re heading toward, and not away from, an era of much greater scarcity amid the print/inflate/pray models that we continue to see implemented across the West and Asia. Our economic advisory solutions will be expanded to the oil and gas sector, additionally, and made available primarily for upstream & non-operated financial firms in the sector. More on all of this will be available on Wednesday in much greater detail. As discussed on Thursday evening, as well, our new partnership with two oil and gas firms is enabling us to expand greater into that space - and as new opportunities come available for alternative investments, I will be sharing this information for those interested in the entire oil and gas landscape beyond the very small public equity world…

In this brief Redeye Macro Note (yes, my eyes are indeed red from the very early morning flight time)... we’ll be covering the following:

• Reports in the Pipeline

• Macro Data from the Past Week

• Weekend Geopolitical Events, Thus Far

• The Latest Energy Technicals

Since this report is being drafted morning/midday depending on your timezone, it may not have the absolute latest geopolitical/war/headlines, so I recommend checking our X account (@MacroEdgeRes) in the event anything does come up. On the macro data side of things, the last week was mostly uneventful outside of

& thank you to our fantastic community for getting us back on the Top 100 Rising list to start this very warm weekend! It has been great engaging with many of you in the comment sections, etc., of recent reports (and on X)... it’s something that I am trying to get better at amidst greater schedule demands.

Reports in the Pipeline

• (Sunday) Weekly Macro Note - What’s Next for Bond Vigilantes, Japan Satellite State Status, Week Ahead, Asia Update Part 5

• (Tuesday) War Note

• (Wednesday) A MacroEdge Update - What’s Ahead and What’s New in 2H of 2026

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Macro Data from the Past Week

In terms of notable macro data for the past week, GDP was already discussed in the Midweek Macro Note. Real growth is anemic with inflation absolutely ripping (it continues to do so, contrary to the opinions of those on X) - just look at the bond market.

PCE came in hot again (the month/month decline is noise) - and rate cut odds are ticking higher as a result:

This Administration only knows one thing: inflate, inflate, inflate - and we’re going to see them attempt to do just that - especially with midterms only being 3 months away.

September rate hike odds (25bp) are now about 70/30:

The FOMC dropped the ball on a rate hike, and Warsh is being overhyped as a 5D intellectual chess player… What I saw was not Greenspan in any way, shape, or form - but we’ll see as things progress into the September meeting. If Warsh does get consent to cut the number of FOMC meetings per year - that would actually be a tremendous victory for us all.

10Y reaction to the FOMC meeting and press conference:

The 10Y was even more extreme - again hitting multi-decade highs.

In Japan, they held rates as expected, and outside of that event - they may hike one more time this cycle before the wheels start coming off the bus. Note the correlation over time between the BoJ beginning to ease and the wheels coming off the bus of the global economy - they are generally very coordinated - and even more so given how much this political administration is pulling Japanese decision-making under their influence.

Weekend Geopolitical Events, Thus Far

(Continued below: Weekend Geopolitical Events, Thus Far - A ‘Supersized’ Trump TACO, The Latest Energy Technicals, & Much More’…)…

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Good Friday evening MacroEdge Readers and Community,

This evening we’re going to have a shorter (following some feedback and comments to Part 1) look at the state of data centers and data center construction. In Part 1, I focused heavily on the what, why, and buildout - so if you haven’t yet read through Part 1, I recommend doing so that Part 2 makes sense.

Part 1 Table of Contents:

The report came at an apt time in the momentum/AI/data center trade - as large unwinds began to occur over the last 14 trading days (especially with the liquidation of the ‘Situational Awareness’ public equities book). While many are choosing to cite their elevated Anthropic pre-IPO buy-in as evidence ‘still’ of Aschenbrenner being a genius - I suspect that over time that label will wane, and eventually the mask will be lifted. Every cycle, these false market oracles are created - and I don’t think that this one is done yet, especially judging by South Korean intervention in markets - and massive intervention in Japanese currency markets. While somewhat unrelated to what we’ll be discussing tonight, the global markets are essentially all one trade now. For the better part of a year now, I’ve warned that correlations continue to grow across this entire trade - and as the financing of it gets more interconnected and government-backed, those correlations will only grow further.

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Look at the US AI ETF (AIS) versus the Nikkei 225, as one example that I’ve frequently highlighted:

The KOSPI correlation is even stronger:

Well… what does this have to do with data centers? A whole lot. The public equity bubble, as we discuss below, has been a huge enabler of the entire data center boom, and as it matures and eventually boosts, we’ll see a shift toward government-financing through the military, etc as the private sector math stops penciling. One of the greatest risks to the entire buildout with future construction is now opposition at the local level to the data center facilities through the withdrawal of local tax incentives. This is a strategy already proving successful in Texas - and even though the massive buildout is well underway and (in my opinion) shifting toward that mature phase for the current cycle - there is now downside room on the construction side to create an air pocket before we start to see intervention on the construction side more directly. Data centers have been utilized like a Soviet Union-style economic program to prop up, stimulate, and ‘grow’ the economy - and they’ve done a masterful job of keeping up construction employment that way too. Look at the latest construction-related data via FRED:

(Total Construction Spend, Nominal):

(YoY - % Terms Basis)

Ex-res real estate:

Is there any public employment data to be trusted anymore? It’s certainly getting harder:

Specialty contractor employment:

While I could claim that I don’t have a clue why we’re undergoing a buildout of this scale for something that is unlikely to ever generate long-term profits in its current form - I do have many clues - and the answers are not pretty. This entire buildout has served as a beautiful faux growth source during a period of innovation stagnation - especially at the ‘hyperscalers’ and Magnificent 7 companies. It’s a question that I pose frequently to my community on X - in the last 5–10 years, from a technology standpoint (outside of LLMs - which are also questionably labelled AI in their current form) that has revolutionized anything? Not particularly. Peak innovation comes at peak cycles, and we’re far more interested today in a Roman-style print-and-forget philosophy until something breaks - and the bond market is finally starting to reprice that reality - which will also inevitably negatively impact the entire data center ecosystem.

Without rambling on too much more to finish off the introduction - we’re going to jump right into the content we’ll be covering tonight - which is focusing not on the background, tax incentives, buildouts, construction data, etc. - but on the following:

• (Part 2) The Public Equities

• (Part 2) The Financing Wobbles

• (Part 2) Are Data Centers Shale on Steroids?

• (Part 2) Data Centers and the Rings of Empty Chinese Cities

• (Part 2) Finishing Comments - A National Security Pivot

Let’s dive in.

Catch up on Part 1 of 5 - Midyear State of Data Centers and the AI Bubble Report

Next in the Series and Upcoming Reports

In the ‘Midyear State of Data Centers and the AI Bubble Report’ - we are covering everything over five parts. Below are following three parts that are still to come (and will be released on Wednesday for the next three weeks):

• Part 3: A Look at the LLMs and Assessing the Moats

• Part 4: How Big is the Bubble, and Will There be Bailouts?

• Part 5: A Summary and What’s Ahead for the Second Half

Outside of this series - over the weekend - we’re going to be covering a lot of ground. In addition to this Part 2 report, we’ll also have:

• (Saturday) Redeye Macro Note

• (Sunday) Weekly Macro Note: The Zimbabwe Roadmap

• (Tuesday) War Note and What’s Coming Soon

• (Wednesday) Product/Offering Previews, Partnerships, and an Update

• And more on the way

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The Public Equities

Let’s talk about the pure-play US equities that have been riding shotgun on this entire data center buildout, because the divergence between them tells you almost as much as the spending and construction employment data we just went through (not very much)...

Continue reading below with Ozone <The Public Equities continued, The Financing Wobbles, Are Data Centers Shale on Steroids?, & much more…>

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Good Thursday evening MacroEdge Readers & Community,

This evening we’ll take a look at the rally action underway in the US and Asia with the KOSPI and Nikkei up big off of key moving averages. From a technical standpoint, both were absolutely gutted and oversold, and the KOSPI bounced hard off of the 200 daily moving average, sitting below it for a day. The key driver was liquidations, a giant short squeeze, and the government of Korea announcing a nearly $14bn injection into the sovereign wealth fund to invest in AI, data center, and technology equities. While this hasn’t happened yet - it’s enough to quickly restore confidence in the short run - and as seen below in the technicals, it’s almost textbook where these bounces happened.

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Overnight - the KOSPI sits up 12%, while the Nikkei is currently up 1%, and the Nasdaq is up about .4%. The Bank of Japan is making its rate decision this evening - but that won’t happen for nearly 3 hours from the time of this writing, so it will be something that gets covered in the Redeye Macro Note. These moves have the classic characteristics of a 2000/2022 style countertrend rally - so I wouldn’t get too excited about them yet, unless the Nasdaq decides to break the parabolic rounding top pattern it’s been in since the Iran-war melt-up began.

On the oil and gas front - the UKMTO appears to have stopped reporting tanker incidents/attacks - and oil futures are off about a percent, 3-2-1 spread narrowed slightly today off of all-time highs - but the technicals continue to look constructive, covered below briefly.

Today’s GDP real GDP number came in softer than expected, and we continue to print more and more - while not getting very much out of it (other than market meltups in nominal terms?):

The ‘comedy’ post of the day - the US State Department used AI for a presentation on Africa, and the results are, shall we say… to be expected?

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This evening we’ll be covering the following, briefly, because tomorrow’s data center update is going to be much more lengthy:

• Next Reports

• Coming Soon to Our Macro Research Suite

• Non-Operated Oil and Gas Opportunities

• The Dead Cat… Dragon? JPY Puck Save and BoJ Decision

• Oil and Gas Update

Next Reports

• Friday: Data Center Construction Part 2

• Saturday: Brief Redeye Macro Note

• Sunday: Weekly Macro Note

Coming Soon to our Macro Research Suite

• Oil and Gas Research – Once a Week Report and Commentary, along with the MacroEdge Oil and Gas Portfolio Strategy

• Portfolio Strategy

• Solutions Sector Integrations: Oil and Gas - Economic Advisory, Aviation - Technology

An exciting metric for our Substack community as we hit a new all-time high for readership this month - with two reports to go:

Non-Operated Oil and Gas Opportunities

As we continue to expand our capacities as an organization, one of the most exciting opportunities to come out of the year has been a significant expansion into the oil and gas industry. Mid-August, our team will have an update on an opportunity in the space, and we will be sharing more about that then. Stay tuned.

The Dead Cat… Dragon? JPY Puck Save & BoJ Decision

The market is a weird spot post-FOMC. There’s a lot of retail exit liquidity that needs to be sold into come August (with the last two large AI IPOs) and with midterms top of mind for the Administration - I suspect that they are extremely cognizant of market performance now. August marks a turning point, and just 3 months remain until the midterms. Per prediction markets, races like the Texas Senate race are virtually 50/50, and with the Iran War continuing and fuel prices remaining elevated, the situation could continue to worsen for the GOP. I suspect it will be another cycle of populism over qualification - and will really only be paying attention to the key ‘swing’ states come election time.

The question on the equities side is shifting to whether or not this bounce is going to be once that takes most indices back or above previous all-time highs, which would really occur between now and midterms.

You’ll notice that the Nasdaq is fighting this parabolic trend off of the move today:

On moves like these (as we saw into April), what really matters or not is if the trend can recover all-time highs or not, to determine if this is a ‘dead cat bounce’ or a ‘dead cat dragon’ that turns into a more powerful pre-midterm rally.

The Nasdaq is probably good for a 1K+ point rally or so if it breaks this intermediate trendline:

(Continued below: The Dead Cat… Dragon? JPY Puck Save and BoJ Decision, Oil and Gas Update, and FOMC Statement from John Galt)…

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Good Tuesday evening MacroEdge Readers & Community,

This evening we’ll keep the note brief - John has a fantastic piece of his thoughts on the FOMC meeting tomorrow (below) - and I am going to cover four topic areas that I think are relevant for the evening. While I expected to cover the non-op oil and gas opportunity component, we are going to kick that to Thursday evening and focus primarily on the latest Middle East war updates and the FOMC meeting tomorrow. As I’ve stated several times over the past few weeks, I think July and September present the only opportunity for the Fed to actually hike this year. Employment data sort of continues to meander lower (the aggregate basket of employment activity), and inflation is way too high. Now of course, I acknowledge that some will say the Fed didn’t make a policy error in 2008 when oil hit all-time highs, and that’s true - but the inflation of the last 5+ years now has been much more embedded and the forces at play are very different (things like record retirements, poor youth demographics, a massive market bubble) - the list goes on and on.

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This evening we’re going to explore four primary topic areas - the latest geopolitical updates from the last 48 hours - where we will discuss Houthi involvement and the $85 Brent threshold for escalation that I suspect Iran is now using as a signal to ‘flare up’ the conflict through things like action against tankers - as we’ve seen tonight - or with their latest missile barrage at a US base in Jordan - which has conflicting reports on impact. We’ll also cover the Asia situation - which is one of great volatility as the semiconductor and memory trade suffers its biggest challenge of the cycle. The cyclical industry is facing tremors - not yet a ‘cracking moment’ - but one that gives those of us with ‘memory’ flashbacks to similar technology troubles seen in Dotcom. While I do suspect that governments will intervene in markets as they seemingly always do, the last hike from the Bank of Korea was a useful signal that excess had gone absolutely out of control - to have that much leverage sloshing around a country that small - and with workplace issues in people quitting to trade and gamble full-time - it was something that policymakers were eventually going to address.

We will also cover the FOMC preview - in which I outline the roulette scenario for tomorrow. July and September, in my opinion, present the only opportunities for the Fed to move rates higher this year. There are, of course, significant implications if they do that - namely for the entire technology sector - and for other sectors like CRE. Yields have indeed pulled back some in recent days - but regardless of how it goes - I suspect that the vote itself will be extremely close tomorrow between 50/50 as members disagree with how to proceed. When a supply shock becomes a structural shift in supply chains that may last a year, the stakes are higher and different. Lastly, I will briefly touch on gasoline and diesel, and we’ll explore if they’re telling the real story of market tightness versus front-month crude prices that continues to paint a mixed picture.

A relevant post on ‘X’ from my friend Dario in Hong Kong:

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Next Reports

• Thursday - Midweek Macro Note & Exploring Non-Op Oil and Gas Opportunities

• Saturday - Redeye Macro Note

• Sunday - Weekly Macro Note

Latest Geopolitical Updates from the Last 48 Hours

• Houthi forces ink agreement with the Chinese on Red Sea passage

• Yemen discusses similar toll structure for the Bab-el-Mandeb as is currently seen in Hormuz.

• Iran launched a pre-emptive strike on a US base in Jordan in the early morning hours - sending crude and gasoline higher and erasing most losses from the last two trading days.

• The US continues to enforce the blockade of Iranian ships.

• Trump met with both Netanyahu and Zelenskiy today - and Ukraine’s Foreign Minister did everything but directly apologize over the targeting of a Chevron contractor ship.

• $85 Brent remains the level I think Iran intervenes at to lift oil, and lower than that they are not comfortable with.

• Spreads continue to show market tightness.

• With the Strait of Hormuz effectively entirely closed, there are really two outcomes between now and October: massive escalation of the conflict to reopen the Strait, or continue to buy time through TACOs to keep oil in a subsidized range while trying to negotiate a deal - the latter is now becoming the riskier strategy because the US simply is running out of time now to do so with the oil inventory situation.

Asia Situation

In Asia - both Korea and Japan continue to see very large drawdowns - the KOSPI in Korea is down 20% in two trading sessions - driven by losses in its hyper-concentrated cap-weighted names. You’ll know the importance of these in our Global Bubble Index - which I will update over the weekend - though I also highlighted today that Spain and the TSX in Canada have not broken yet, unlike the KOSPI and Nikkei.

The KOSPI is now down almost 50% since late June - one of the largest and fastest major index declines in history.

As I expected, the won is also strengthening alongside the move:

The Nikkei is off about 3% in the evening session:

Both of these technical patterns had been flagged weeks ago as we started the Asia Note (Pt) series.

It’s also time for the yen to rally - or else the Prime Minister will be stepping down:

FOMC Preview

Tomorrow everyone will be obsessed with the FOMC outcome and decision - look at the vote over the actual headline - and the statement for direction on September.

Continued below: FOMC Preview, Gasoline and Diesel Telling the Real Story?, Most Critical FOMC Meeting Ever (Sort of) - Preview (John Galt)

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Good Sunday evening MacroEdge Readers & Community,

This evening we’ll be discussing a plethora of topics - looking at the FOMC week ahead, as well as what data will accompany it. Yesterday evening we discussed the latest developments from the Middle East - including the latest on the Strait of Hormuz and Bab-el-Mandeb traffic trends. For those that caught the Redeye Macro Note, I will try not to repeat too much of what was covered in reviewing the TACO headlines yesterday - but I suspect the Houthi attack on the Aramco refinery played a major role in the US calling off attacks this weekend. Overall, until we get through the FOMC week and get a pulse on what the Fed, now under Warsh, expects to do the remainder of the year, ranges will remain in place for the time being. Additionally, I expect the second half of the year to deliver a very binary outcome (discussed in Weekly Macro Note of two weeks ago) in either a final crack-up leg higher before the Fed is forced to take action and finally hike due to higher inflation, or this sideways intervention action sort of continuing through midterms by which point we could start to see the winds leave the sails of the entire AI/data center/momentum trade more broadly.

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Because the stock market is in fact the economy under this ‘i-shaped’ regime, there are a lot of forces well beyond what we can see at face value that have an interest in keeping the 2026 party going. While inflation and war drove equities to new highs in the first half of the year as the war kicked off, this momentum has been stalled since May as inflation has been elevated, and oil prices refused to return to pre-war levels. Oil prices, along with yields and FOMC discussions this week, will play a key role in determining how the above-mentioned outcome resolves.

Prime Minister Netanyahu will also visit the United States this week, and I suspect that we see an update on those discussions before the end of the week when it comes to the Iran-war situation. The Houthi involvement clearly marked a point on the escalation ladder at which US leaders were not comfortable continuing to wade into.

On the futures front - the Nasdaq is up about 1%, CL (WTI spot) is down roughly 5% - though technically continues to look very positive, Bitcoin is near $64,000 - also about a 1% move, and these futures moves based on Saturday headlines can all change on a dime, so I wouldn’t read too much into them. On the Asian market front - which I will also touch on below - Korea and Japan are at possible technical spots for a bounce - though it appears unlikely that they will hit new all-time highs for some time without massive government/central bank involvement, coupled with re-leveraging.

Keep in mind that the war itself can not be stopped for long in order to keep equities rising at this point. The market needs further inflation for multiple expansion to continue - which is already at very thin levels historically (even though the juniors on X think they’ve got it all figured out… or we’re just Argentina in the not-so-distant future)...

This evening we’re going to cover the following:

• Report Schedule for the Week

• Macro Week Ahead

• FOMC Week

• Asia Bounce?

• Macro Data Review of the Last Week

• Takes Two to ‘TACO’

• Crude Roadmap Simplified

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Report Schedule for the Week

• (Tuesday) War Note & Non-Op Oil and Gas Opportunities

• (Thursday) Midweek Macro Note, Portfolio Strategy Update, Oil and Gas Research Coming Soon

• (Saturday) Redeye Macro Note

• (Sunday) Weekly Macro Note

Macro Week Ahead

• Monday: N/A

• Tuesday: Conference Board Sentiment

• Wednesday: FOMC Decision & Rate Statement

• Thursday: Real GDP, PCE, Bank of Japan Rate Decision (Evening - US time)

• Friday: n/a

Major corporate earnings this week:

• Microsoft (Wednesday)

• Meta (Wednesday)

• Apple (Thursday)

• Amazon (Thursday)

Energy Earnings:

• Baker Hughes

• Shell PLC

FOMC Week

There is a relatively high chance of a rate hike this week. Warsh has left the option open, and with energy prices as high as they are (I know people on X say that’s not inflationary) - I would give it about a 50% chance right now given the dissents last time around. Either way, I expect the actual vote to be extremely close - and if that is the case and the Middle East supply shock continues - then the Fed will likely move in September instead. The base case right now among retail seems to be that the Fed will not act this year; the bond market does not agree with that thesis.

While I don’t have a crystal ball, the Fed has two chances to move being now and September given the inflation backdrop. The July MoM energy base effects will go away in the next CPI report, and Fed officials know this. Inflation is nowhere near the 2% mandate - and we’re going on 5+ years of more of the same. I do expect that similarly to 2000, the rate hike will act as a major denting factor in the AI trade and capital is going to stay away - especially from the data center financing side of things.

Hello Fed, anyone home?

The time to hike is this meeting or next… That’s all I have to add.

Asia Bounce?

To start the week - the tech trade is showing a little bit of life on WTI being off around 5% - that’s not really reflecting into Asia - and I would warrant caution in expecting this bounce in Asia to be like the rest. The major bounce off the trendline is going to be a major test now - especially for the KOSPI - and as I’ve noted now for almost a year - the wheels really tend to come off the bus when the Asian central banks actually have to cut instead of continuing the course with hiking as their rates blow out while their currencies get smoked.

(Continued below - Asia Bounce Odds Analysis, Macro Data Review for the Last Week, Takes two to TACO, & the Crude Roadmap - looking at the latest crude and gasoline data/technicals).

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Good Saturday evening MacroEdge Readers & Community,

I am starting this article before the evening turns to Sunday morning, so I will keep that greeting in place - even though I know that many of you will be catching this on Sunday morning. It’s going to be an early morning for me tomorrow, and we have a very busy week ahead - but stay tuned for another potent Weekly Macro Note tomorrow evening. This evening I noted that I would also be discussing oil and gas opportunities on the non-op side, but I will move that to the Tuesday evening War Note so that this stays short and focused on the latest updates on the Strait of Hormuz and Bab, as well as the several ‘TACO’ headlines that were announced earlier in the day.

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The re-emergence of the ‘TACO’ is not surprising if you read the Midweek Macro Note, as oil prices have returned to prices that will essentially sink the party currently in power (GOP) in the Midterms - and time is running out for it to actually make a difference in the mind of the consumer. Right now, the consumer economy for the 80-90% continues to be greatly harmed by high prices, the war, and the closure of the Strait of Hormuz (while Bab is now partially closed to some Saudi vessels) - though I expect that this latest pause will once again end up short-lived.

Weekend CFDs show oil down about 3.5% - though from a technical point of view, I like what I am seeing emerge if a higher base is now formed in the mid-80s (covered in the Saturday TACOs section).

This evening I am just going to provide a brief update on the traffic situation in the Strait of Hormuz and Bab - both of which are impeded - though Hormuz to a much higher degree. I expect that Ansarallah involvement in Yemen played a role in Trump suspending further action for the time being in Iran, with a major attack launched against an Aramco facility - and several other locations in the country in the last 48 hours. Another Saudi crude carrier was also impacted in the Red Sea, and the US continues to fight the war from (what I say as a non-war expert) a very odd position? Additionally, I will provide a brief update on the Saturday TACOs seen today - which sent weekend oil CFDs down slightly, though when zooming out in the technical context, this could be very positive to finally land in the 90-110 range on a much longer-term basis. Tomorrow evening, we’ll be exploring macro data from the last week, the FOMC week-ahead, and much more - so stay tuned.

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Upcoming Report Schedule

• Sunday: Weekly Macro Note: Macro Data from the last Week, FOMC Week, and More

• Tuesday: War Note & Non-Op Oil and Gas Opportunities

• Thursday: Midweek Macro Note

• Saturday: Redeye Macro Note

A Look at Hormuz and the Bab

News ‘broke’ this morning that Oman was leading a new delegation in Iran to resume talks on Hormuz traffic, while this is occurring, it was also noted that the President of the US halted attacks on Iran, and this halt has now lasted two days.

It appears that there are a variety of reasons contributing to the President getting spooked again on a broader attack - but one of those is the fact that Hormuz is once again fully closed - hitting zero crossings on Saturday (which marks just the second 0 reading for the month of July):

Insurers still won’t touch vessels entering and exiting the Strait - and the fact that this is still as closed as it is will be a huge problem the remainder of the year if there aren’t workarounds to a much greater degree than the ones in place today as the US runs through its SPR… and other countries do too.

(Continued below: A Look at Hormuz and Bab, Saturday TACOs - Will it Continue? More Inflation Warnings at the Pump)…

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Good Thursday evening MacroEdge Readers & Community,

This evening we’re going to provide a brief Midweek Macro Note after the lengthy AI Bubble + Data Center Construction report yesterday evening. The report has been well received thus far - and I don’t want to spoil any of the details if you haven’t yet had a chance to read it - you can do so below:

Pt 1 AI Bubble + Data Center Report

The war has continued to point toward signs of escalation throughout the week - even though it was leaked today that Trump attempted to pass a ceasefire to the Iranians through the Iraqi PM. Right now, oil is tilting back in a range where it becomes much less feasible for Trump to sustain the conflict going into elections in just a few months - if oil remains anywhere near these levels for a duration of time - the election is absolutely cooked for the party currently in charge across all branches of the government. At the pump, gas and diesel are both noticeably higher than a month ago - and even though demand continues to be subsidized with the Strategic Petroleum Reserve - both in the United States and abroad - we are heading toward an ‘energy emergency’ again as spreads are screaming. Today, Russia announced the possibility of a diesel export ban for a month and gasoline for 6 months - they have also begun importing crude oil from India to meet the refining gap caused by Ukrainian strikes.

For my own fill-up today (93 octane - yes, those fellow V8 owners will understand) - a full tank is back to about $110. The national average is ticking higher as gasoline futures move higher - and diesel is back near a cycle high. This weekend is going to act as a major determining factor toward any potential offramp from escalation in my opinion - as we’re riding the escalation ladder back up - this time, though, there are no airbags for politicians to ride on (maybe shorting oil futures along with BS news stories comes back in style?). It looks like the Fed will be forced to come in hawkish next week, and bond vigilantes have awakened from a multi-year slumber to actually put pressure on all of this idiocy. Wall Street and academic economists continue to whiff over and over on inflation, and just a few weeks ago were once again morphing into their true deflationista selves on a negative MoM inflation print driven by energy base effects.

As discussed in the War Note on Tuesday, the driver of market action will oscillate between oil and the bond market here for the next few weeks as everyone assesses how significant the energy impacts will be. While the United States can absorb an energy shock better than many European and Asian countries, it cannot replace the lost barrels on the market. With the Houthis (Ansarallah) threatening to close the Red Sea route, the accumulating impacts on Russian energy infrastructure, and Hormuz back to being effectively closed, these effects will compound as reserve releases wear off if closures/impacts continue.

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This evening - we’re going to look at the latest oil and gas updates, provide some brief notes on the conflict from between Tuesday and now, look at Asian markets in part 5 of the brief ‘Asia Update’ briefings, and highlight action in the bond market and how the rising risks of a rate hike this year are tempering the AI/data center/tech trade.

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Next Reports in the Pipeline:

• Saturday Evening: Redeye Macro Note (Macro from the past week) and Non-Op Oil and Gas Opportunities

• Sunday: Weekly Macro Note

Latest Oil and Gas + War Updates

Oil and gas markets are once again flashing warning signals in terms of available inventory. Spreads are at/near all-time highs, and Brent surpassed the $100/bbl level, while other Middle Eastern crude is surpassing the $110/bbl level. I still do not think that these levels are high enough to induce demand destruction - as long as the subsidization of demand continues from the Department of Energy and the Trump Administration.

Brent-WTI spread:

(HFI Research)

• Energy equities got way, way, way oversold on the WTI ‘dip’ - this next leg up has a gap now to fill below at some point - for the time being, the pain is on as the march for WTI toward $100/bbl continues once again.

On the 10m setup, this flag setup could propel prices to $95/bbl

(continue reading with Ozone - Latest Oil and Gas Opportunities, War Updates, Asia Update Part 5, Bond Market Update, Portfolio Strategy Update + Commentary from Six)

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Good Wednesday evening MacroEdge Readers and Community,

Hopefully you’ve had a great start to your summer and are enjoying these long July days. I know many of our readers tune in specifically to this report series (and not many of the other reports that are put out) because of its relevance and role in the economy and markets today. Over the last several years, the AI and data center story has been one that has put even the biggest disbelievers in a state of surprise for a number of reasons. We’re now hitting what I believe to be terminal altitude for the data center boom cycle - and we’re going to cover a lot in this Part 1 report.

I’ve decided to break this report into five parts to give us ample time to actually cover and break down different areas within this entire behemoth - that way we’re not lumping everything in when it shouldn’t be. The five parts of the ‘State of Data Centers and the AI Bubble Report’ will be as follows:

• Part 1: (Part 1) Data Centers and Data Center Construction

• Part 2: (Part 2) Data Centers and Data Center Construction

• Part 3: A Look at the LLMs and Assessing the Moats

• Part 4: How Big is the Bubble, and Will There be Bailouts?

• Part 5: A Summary and What’s Ahead for the Second Half

Parts 2, 3, 4, and 5 will be released on Wednesday for the next four weeks of reports (five including this release).

The data center cycle has been one of the most prolific infrastructure buildouts in decades - but there are so many pertinent questions about it all, namely with the ‘what, why, and how’ as the overarching themes… It’s one of those things that I think we will look back at and not in fact compare to the railroads, oil infrastructure, and highway buildouts of decades past. While we are undoubtedly continuing to propel ourselves into a more & more digital reality and this unique world we are living in has enabled people like me to reach tens of thousands of people in an instant - much of that technology has been around for decades now. AI itself - in its current form - is really not ‘AI’ in any way, shape, or form. It’s essentially an enormous content vacuum that’s permeating absolutely everything we do - and much more a data collection and ingestion mechanism than anything else. While I know some of the proponents will respond to this with ‘but, but, but’ - but the next time you log in to your email, or have your face scanned to check in at the airport, or send a message on Twitter (X) - just remember that you are part of the ‘AI’ project. As an ingestion system in its current form - current LLMs and AI technology is astoundingly inefficient - on X I’ve likened this to ‘Soviet-style’ technology and infrastructure where we’re building something to build it. When it comes to the commoditization of the space, US AI executives are panicking about innovation going on elsewhere in the world that threatens their business models through open source methodologies. The how or why in this technology is a story in and of itself - and now we find ourselves going - just how much infrastructure are we willing to commit to that could potentially be obsolete just a few years from now? Are we really supposed to sit here and believe that data centers and this technology won’t evolve? If so - is this particular technology really a technology at all - or are there forces behind it that don’t meet the eye? We will find all of those things out as this entire cycle continues to evolve.

The point of Part 1 is to look at the data centers supporting this entire thing - and I remember in the early days just how fast these things were getting approved. In a fun fact about me - I was actually dating a banker in West Texas at the time and recall with great detail just how fast Stargate approvals, permitting, and details were rammed through without second thought. Local (municipal) and county-level politicians for the first several years of this buildout cycle got away with committing to these deals behind closed doors, and behind a defense written by lobbyists that impacts to the community would be permanent and profound in many cases - which is where the story starts to falter. On that front, what I expect to see as we roll through the second half of the year, and construction teams start to wrap up their work at these ‘hyperscaler’ sites - is an interest from the Trump administration in figuring out how they can prolong the buildout of these facilities - even if they aren’t needed. Yes, to my point above, that puts this infrastructure buildout more closely to something we might expect in China or the Soviet Union - but as someone that believes we are at or very near ‘peak innovation’ for the current tech innovation cycle - politicians are far, far, far more interested in the short term benefits than any long term consequences - especially given what they (and I, and likely you) know about the attention spans of voters at any level. When you look at the current technology landscape - and it’s something that I do frequently as we have an entire practice at our firm delivering such solutions - I agree with Ed Zitron and others that ‘peak innovation’ is something that we are witnessing now, but maybe on more of a rolling basis than a single event.

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AI and infrastructure buildout popped out of nowhere a few years ago - and all of the companies sitting on hundreds of billions of dollars in cash decided that it was the sexy new thing that they should chase, and that there would be some sort of return in the end. What I know about commoditized infrastructure buildouts is that they look very sexy in the beginning, but the endings across whatever the commodity might be do not look so hot. Months back, those that read our smaller Macro Note series will know that I likened the infrastructure buildout with data centers to the shale boom of the early 2010s - but on an even grander scale. The stakes could never be higher for the politicians that have committed wholeheartedly to making this (almost) the entire economic engine of the United States for the time being, and I expect that they’re going to ride on the wagon until they make it to the Oregon Trail. Is the next era of ‘innovation’ we want to leave behind for the future generations, one populated by infinite data centers (taxpayer-backed), an existence devoid of any social interaction, and one that we engage in these Chinese-style buildouts for ‘number go up’ economics where we dig holes and then hire people to refill them? That’s a question that collectively, people will have to decide for the remainder of the decade and beyond.

My goal has never been to make that decision for anyone else, and I think with the discussion focus areas and data below, there are many useful findings and facts about the current state of this major economic driver, so I hope you find this series very useful for portfolio strategy, business, or even personal decisions or choices outside of the financial or technology worlds. One of the most compelling parts of what I do is seeing our organization compile all of this data, and then knowing that there are tens of thousands of brilliant readers, minds, traders, business owners, and so much more interpreting it in their own light.

If you did not have a chance to read the first part of this broader series from February and March, I highly recommend that as a starting point so you can get a sense of how the sector and space has progressed since then, from the time I issued a warning that the Trump administration had better find its newest growth engine, to the Iran War starting shortly thereafter and inflation and equities booming side by side… It’s been an interesting year thus far and this five part series is not about my broader macro market commentary - which for the remainder of the year is focused on a very binary outcome - either the gates to inflation (hell) being opened with everything melting up concurrently, or inflation/war getting to a point where things finally stagnate - and along with things like data centers - this sideways stall out ends up materializing into a more significant slowdown - whether through stagflation or through cooling of said economic activity.

Maybe - in the end - this will sum up the whole phase of this buildout:

In Part 1 of 5 of this ‘Midyear State of Data Centers and the AI Bubble Report’, focusing on data centers and data center construction - we’re going to cover the following sections:

• Background to the Current Capex Cycle, Tax Benefits, Backroom Deals, and More

• Current Data Center Technology

• Consumer Power and Water Impacts

• State of Data Centers - Data Center Construction Data

• State of Data Centers - Moratoriums, Bans, and Much More

• (Part 2) State of Data Centers - the Public Equity Markets

• (Part 2) Are Data Centers Shale on Steroids?

• (Part 2) Data Centers and the Rings of Empty Chinese Cities

• (Part 2) Finishing Comments

Obviously, each section is going to be unique, but there’s enough information in here for everyone -regardless of what you’re here for - to take something useful away. I hope you find this compilation of our data, my thoughts, commentary, (yes, opinion too), useful on this very warm July week. It’s going to be a very interesting second half of the year for this entire capex-funded space, and I am most of all interested in seeing how things progress from where we are now to the December/January update when we get another many months under our belt.

Background to the Current Capex Cycle, Tax Benefits, Backroom Deals, and More

The current capex cycle

The current AI capex cycle is historic. We’re currently sitting at/near the cycle peak - and I expect us now to be slightly off of the highs from earlier in the year. Just because the hyperscalers are dropping ridiculous forward capex guidance does not mean that those figures cannot be adjusted if the math finally hits some of these enterprise leaders over the head (I expect that it will). In today’s Alphabet earnings, they announced a higher capex figure than scheduled by ~$20bn or so; markets did not react positively to that line. As someone who frequently utilizes Gemini and other Google AI solutions - the product quality seems to be rapidly degrading - and even though Alphabet is able to *handle* what they’ve taken on - I am not sure that means they should be. The amount of data collection occurring now through Google is also astonishing.

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Good Tuesday evening MacroEdge Readers and Community,

In this second edition of the resumed ‘War Note’ series, we’re going to take a look at the latest from the Middle East war between the US and Iran. Trump just authorized a landmark deal for Saudi Arabia that will provide a pathway to nuclear enrichment, and behind-the-scenes developments continue to get more interesting and complex, beyond what meets the eye about the war in the immediate term.

On the conflict front, things really accelerated over the weekend as Iran began using maneuverable IRBMs, causing casualties among American forces in Jordan and Kuwait. Iran is seemingly less focused right now on Qatar than they are on Kuwait, Bahrain, and Jordan - and some sources have reported a possible mobilization near Kuwait. It appears that Iran continues to operate on a relatively linear escalation trend - and as strikes intensify - we seem to go up the rung on both sides to match. This latest escalation sequence will last until (one or some of these happen): oil prices get so high the US is forced to come to the table - or China forces Iran to the table, bonds fall too low that the US is forced to come to the table, or we escalate to such a degree that the conflict ends in a quicker fashion, but that will come with massive energy infrastructure impacts across the Middle East in what could be ‘mutually assured destruction’.

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Outside of the geopolitical and energy sphere - the ‘carry trade’ continues to go absolutely crazy - and allows them to pump equities at the expense of the yen:

The won still appears on the precipice of some strengthening - and yields are at or near cycle highs. Today was one of those bizarre days where ‘everything goes up’ in the literal sense.

Just remember, at the end of the day, war is one of the most inflationary forces of them all - and especially when it’s between two oil powers (and involving many others):

Will the TACO arrive just in time once again?

The official Iran war clock…

In futures markets to start the evening, which I don’t really even like covering, markets are mostly flat in the United States, while they’re up in Asia - led by Korea and Japan tracking not too far behind. The KOSPI and semiconductor trades are becoming one and the same, and everyone that got all excited and antsy today about the rebound should see the ‘record complacency means binary outcomes’ section below for more on the risks of what we’re seeing.

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The Latest on Hormuz

Hormuz traffic has effectively returned to zero after nearly a dozen tankers and freighters have been targeted by IRGC Sepah Navy forces in the last few days (charted in the section below).

The latest development to watch will be whether or not Yemeni Armed Forces successfully shut the Red Sea route to Saudi tankers - and today we saw our first signs of that happening. I really don’t think the Houthis have much to lose given the environment they’ve faced since the embargo, and with that the escalation ladder can get quite steep, quite quickly, especially over the next couple of weekends.

Geopolitical and Energy Updates

The EIA made an absolutely bizarre comment this morning, essentially green-lighting the President to run the Strategic Petroleum Reserve (SPR) down to 70 million barrels if need be. The SPR is subsidizing global demand right now and playing a key role in filling the gap in those millions (hundreds of millions of aggregate) lost barrels from the Middle East.

I continue to believe they will run this down lower than currently is being broadcast (280mb) or so - and the next few auctions will be telling in terms of whether or not anyone actually can purchase the product in these salt caverns. If worst came to worst, I do not think Trump would have a problem running through the congressionally mandated minimum (set by a law in the 70s) - and run the thing to zero if he could. As I mentioned on X today, I really am pondering if they are going to ‘collapse the caverns’.

Keep an eye on the 3-2-1 spread:

(Continued below —> geopolitical and energy updates, record complacency means binary outcomes, Hoovernomics & tariffs ride again… from John)…

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Good Sunday evening MacroEdge Readers & Community,

We’re starting a relatively quiet week on the macro front this week that will have plenty on the geopolitical and earnings side of things. We also continue to closely monitor the situation in Asian markets - as Korea and Japanese equity markets have begun to wobble more violently in the latest bout of volatility - as discussed many times in the past few weeks.

Futures are subdued this evening as markets are trying to assess whether or not we’re going to get a much larger wave of escalation in US-GCC attacks on Iran in the coming days - which did not materialize last night even though it was announced by the President.

Take note of our ‘why war is bullish’ note from a week ago for signals on direction this week. The fiscal input in markets remains enormous - and the deficit surged once again in June. This week we will get earnings and outlooks from Alphabet and Tesla - which will give us a useful benchmark outlook on the AI capex trade going forward, and a second look at consumer health on the automotive side of things. The wealth effect has kept automobile/light truck sales at elevated levels - even with automotive delinquency data looking as it does and repos sitting at 2009 levels (yes, I know this metric isn’t population- or cars-on-the-road adjusted).

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There are so many mixed signals in the data - and a major part of this, in my opinion, is just how poor data quality is getting across the federal government datasets and metrics (especially survey-based data).

On the war front - the Strait of Hormuz remains effectively closed - with just 2-3 daily transits right now - and there hasn’t been any VLCC traffic in several days. Oil markets have picked up on this - with Brent surpassing $90/bbl in the overnight trading hours - and WTI right around $85/bbl. These levels are much more sustainable than the $110-$120 range for oil E&Ps, and as I highlight below, the market needs to find a better equilibrium now even with the Strait closure. The war is on the precipice of either a major escalation on both sides given the events of the last 72 hours, or another ceasefire/MoU that will likely serve as a period for both sides to reorganize and reload again. Strait traffic is unlikely to normalize for at least the remainder of the year now, based on pre-war traffic levels. Sure, there’s oil and gas products being routed elsewhere, but the market is still tight tight tight (just look at 3-2-1), etc. Iran continues to strike tankers and cargo ships with ease in the Strait - calling into question the efficacy of US strikes in recent days in the region. Another tanker was disabled within the last hour after it was impacted by an anti-ship missile.

‘Quote of the week’

This evening we’re going to take a brief look at the next reports in the pipeline, take a look at the quiet macro week ahead (with the exception of some important earnings events), dive into the technicals across the market - domestically and internationally - and provide a brief update on the oil and gas outlook.

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Next Reports in the Pipeline:

• Tuesday - War Note and Non-Op Oil and Gas Opportunities

• Wednesday - State of the AI Bubble and Data Centers - July 2026

• Thursday - Midweek Macro Note

• Saturday Evening - Redeye Macro Note

• Sunday - Weekly Macro Note

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Macro Week Ahead

This week is much more important geopolitically and on the earnings front than for macro data. We’re heading into the next FOMC meeting here in about a week - and that will provide us useful signals on whether or not there are enough FOMC members to land at least 1 rate hike for the year. I do not expect to see a hike at this meeting, though the following meeting presents the highest chance of a hike, as negative base effect MoM inflation readings will abate for July given the spike in energy prices.

Full week: FOMC blackout.

Monday: n/a

Tuesday: ADP Employment

Wednesday: n/a

Thursday: (Japan) - CPI

Friday: Home Sales Data

Earnings >$500bn

• Tesla

• Alphabet

Keep an eye out for geopolitical developments this year - as we sit on the precipice of major escalation, or another major ‘TACO’ ceasefire walk-back… This is another ‘Devil’s Pool’ window in this conflict:

Technicals Deep Dive

MAGS & Nvidia

MAGS showing a significant negative divergence on the weekly ->

Many of these have even weaker looks on the monthly timeframe. Notice how performance on the leaders stopped including the full momentum basket, as markets became reliant on the AI and semiconductor trade.

A drop out of the wedge here on NVDA would bring about 120 or so from a technical standpoint:

Upside in the pattern stands at about 250, but that would be very unlikely for 2H, barring any major intervention by the government in the AI space. Note the compounding negative divergences as well, which matter more on the weekly and monthly, and usually signal longer term trend reversals.

Continued below: Technicals Deep Dive in AI and Data Centers, Bonds, Oil and Natural Gas, Asian Markets, FX, Crypto… Our updated oil and gas outlook, and Portfolio Strategy update from Six)

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Good Friday evening MacroEdge Readers and Community,

This evening we have a very brief report to wrap up the week as promised - and we’ll be discussing the weekly close, the binary market outcomes for 2H 2026, and taking a look at Asia for Pt. 4 of the ‘Asian Review’. Asia has been wobbling violently the last few weeks, and the Nikkei finally suffered a crack lower out of the relatively orderly drawdown it was experiencing (discussed below), and the KOSPI was on holiday, which gave Korean traders a reprieve from a rapid drawdown that has seen 1 in 30 Korean adults margin called in the short time period.

Outside of the Asian troubles - which we’ve now been discussing for ~4 months - due to the multitude of risk factors there, the oil market has been picking up on the war escalation that we’ve seen over the last 36 hours. Attacks have intensified dramatically in the last 48 hours, and infrastructure is now being targeted more directly. I am not sure what these attacks will accomplish other than serve as another escalation marker - and the Strait of Hormuz is back close to zero in terms of transits. The IRGC Navy began shutting down the Strait about ~$70/bbl, if you recall - and we correctly identified that Iran wanted (and needed) Brent to at least $85/bbl. At this profitability level - they can continue to stay in the ring for as long as possible - and the Strait closure is going to cause another inflation impulse like we saw earlier in the year if this continues through August. The Houthi forces have also taken steps toward involvement - aligning with IRGC commands, and the IRGC directly targeted Yanbu in the last 6 hours - a notable target escalation. If we get impacts to Yanbu or the Bab-el Mandeb Strait, then we are once again way mispriced in energy markets (but namely spot WTI and Brent). On the products front, as discussed a few nights ago, gasoline and diesel have been accelerating rapidly. Most consumers are seeing 20-30 cent jumps from the lows in terms of gasoline prices, and diesel is firmly back above $5/gal average nationwide. The 3-2-1 spread is at a record high of ~$70 - highlighting record market tightness - and rig counts also popped higher on a w/w basis. Tomorrow and Sunday, I will be discussing sector opportunities given the pricing backdrop - and keep an eye on key ETF benchmarks as sector signals (like XLE):

This weekend - the focus will be on the war and how the escalations will impact oil and gas markets. Presidential advisors know that the situation in the Strait of Hormuz is totally unsustainable - and the binary outcomes as it pertains to the Strait are clear: escalate or inflate…

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Next Reports on Deck:

• Saturday Macro Note - Non-Op Oil and Gas Opportunities - Our Partnership for the Future

• Sunday - Weekly Macro Note - Week Ahead, Technicals Deep Dive, Oil and Gas Outlook, Portfolio Strategy Update

• Tuesday - War Note

• Wednesday - State of the AI Bubble and Data Centers - July 2026

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Reviewing the Weekly Close

Since we discussed much of the macro data for the week, there wasn’t a whole lot of notable data today that was released.

For building permits - on a Y/Y basis - we’re seeing a slight contraction while new construction announcements ticked up again slightly in the range:

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Good Thursday evening MacroEdge Readers and Community,

This week has turned out to be quite interesting as the Iran-US conflict seems to be heating to a ‘peak fever’. Oil prices are right at the threshold where the President can continue to push, escalation and we’ve seen that over the past 8 or so hours as infrastructure attacks have resumed, and we’re right on the edge of Iran resuming potential energy infrastructure attacks. The war seems to have transitioned from an Israel-Iran war to one almost exclusively between the US and Iran, though the longer this goes (past Sep/Oct), the more likely we are to see it escalate once again.

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From a technical standpoint - things are degrading significantly. While Korea (KOSPI) is on a holiday today during market hours, the Nasdaq is below the diamond pattern in the technical setup. These usually retest the downside trendline - and I expect that we will get some kind of TACO on Sunday evening if the war escalates further through tomorrow into the early weekend, which could be a short-term ‘war climax’ per se.

A look at the Nasdaq ‘diamond top’:

From early June following the triggering of the ‘Motherlode’ technical signal:

Red bars = tally > 50 or greater, 4 instances since 1990

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In Korea - the market is on holiday, but the market is at the major parabolic uptrend that resulted in this blowoff move:

I will have more on the technical front tomorrow evening.

What we saw this evening in the press conference was totally uneventful from a market impact standpoint. I continue to see this Administration operate with a myopic view towards the stock market - it is the only measure they care about going into midterms - and I think they continue to have several reserve tools to keep the train at least near the tracks until that period of time. Right now, however, the train is vibrating violently - and the engine of the US economy right now - data center spend, and AI is currently sitting on the verge of a major slowdown come the 4th quarter. While investors may bury their heads in the sand for a period of time on hype, lenders are growing much more wary that data centers are ever going to have any payback (they won’t)

Next Wednesday we will have the second AI and data center report of the year, which you do not want to miss. This is a follow-up to our February and March reports on the state of the AI bubble and data center data. While we privatized much of the data after a wave of publicity earlier in the year, we will once again be making as much data public as possible through Ozone. We’re taking a look at construction status, moratoriums/bans, AI debt risks, things like the Oracle-OpenAI arrangement, and more.

Next Reports on Deck:

• Redeye Macro Note - Friday: Reviewing the Close of the Week, Binary Market Outcomes for 2H 2026, Technicals, Asian Review Pt. 4

• Saturday Macro Note - Non-Op Oil and Gas Opportunities - Our Partnership for the Future

• Sunday - Weekly Macro Note

• Next Wednesday: State of the AI Bubble and Data Centers - July 2026

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A Look at the Macro Data from the Week

In Korea, the Bank of Korea hiked rates by 25 basis points amidst a massive market bubble (the worst in Korean history). While financial journalist hacks on X are posting about record low valuations - they’re not factoring that market cap concentration in the key index is just a few names representing >70% of the index. SK Hynix went public on US markets - and others are rushing to now (see chart above):

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Good Tuesday evening MacroEdge Readers & Community,

This evening we are resuming the War Note series to match the resumption in the US-Iran conflict. As airstrikes have escalated in recent days, the President notified that he expected the conflict to continue for at least 60 additional days, which I expect is due largely to the desire to continue letting inflation and nominal asset prices run at ‘hot’ levels until at least the midterms. The consumer economy in the lower 80% is softening now at a brisk pace - especially in real terms - and they want to mask that slowdown by turning back on the nominal wealth effect. It’s ugly, but it’s really the last lever they have to pull before midterms…

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With oil having rebounded sharply over the last week (Brent neared $88/bbl and WTI >$80bbl) that will dampen some of the YoY energy disinflation celebrations that we saw on the networks today. I will discuss the inflationary nature of this war - especially in the context of nominal assets - below in ‘war is inflationary’ and we’ll take a look at the latest war updates. From there - we’ll dive into the latest on energy markets which have acted favorably from our calls over the last few weeks - with crude prices up sharply from the lows, and tier 1 energy names like CHRD moving higher. Energy prices have rebounded to pre-MOU levels, and I continue to think Iran & GCC nations want Brent around this $85 ‘magic’ level - because >$105 = trouble, and those that view oil in real chained terms miss the YoY base effects impact.

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Brent is up $14bbl from the MOU lows:

Diesel is back near cycle highs as Ukraine attacks on Russia accelerate, and the Strait remains effectively closed.

Quote of the day…(maybe one for the KOSPI investors too)

Lastly, we’ll look at volatility and Asia and how that continues to signal trouble ahead in 2H as leverage, central bank issues, weak currencies, yields, and the worst speculation in Asian market history collide to cause problems. I do not expect that the party is yet over in Asia - and given how reliant South Korea and Japan now are on the wealth effect to offset a weak currency, they want to pump their markets higher just like the US does. We’ll take a look at the latest below in part 3 of our Asian market analysis updates…

Next Reports on Deck:

• Midweek Macro Note & An Analysis of ‘Trump v Warsh’ - Project Argentina versus Project South Africa, Portfolio Strategy Commentary, and More

• Redeye Macro Note - Friday: Reviewing the Close of the Week, Asian Review Pt. 4

• Saturday Macro Note - Non-Op Oil and Gas Opportunities - Our Partnership for the Future

• Sunday - Weekly Macro Note

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War Is Inflationary - It’s Just the Truth

While John will discuss the inflation data (and report) from June more in-depth, I am in the camp that the risk of inflation is still much larger than disinflation. Yields are in no way, shape, or form providing us any valid signal on disinflation right now, and I think with the war picking up steam in recent days - the risks are that they turn the inflation machine on for the rest of the year to keep things masked past midterms. The economy in real terms is going to continue to slow now - especially as we lose momentum in the AI space with the data center buildouts, though that may be more of a 2027 than Q4 2026 story as I originally anticipated.

On the inflation review for June - I would be cautious in overstating the impact of this report - while it bought time to prevent a rate cut, yields certainly didn’t care a whole lot.

The path of least resistance will continue to be letting inflation run hot - and this one-off to prevent a necessary hike will not continue if oil, gasoline, and food prices rebound sharply in July/August.

The massive ‘blowoff’ occurred as the war worsened, and inflation ripped earlier in the year:

This time, if energy prices get to a high enough level - this will not be the same dynamic - though I do expect that we will see volatility increase across the globe. The chance for another melt-up leg higher is still there, but energy prices will get the final say in how short that may be.

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Latest War Updates

On the latest for the war - the Strait of Hormuz is almost completely sealed off to commercial traffic again. We’re back at the sub-5 level for transits, and this is going to cause another commodity-driven inflation wave to bubble under the surface the longer this goes on. I really don’t anticipate that anyone can afford to have this last another 60 days given oil inventory levels (which continue to decline globally ex-China, and will begin declining in China soon) - and the US SPR is now nearing the 300 million barrel level (Congress has a min 254mb level).

The Strait is seeing traffic return to full war levels, and the blockade is now back on:

While inflation and assets may benefit from inflation in the Iran war - the lower 80% in the economy will suffer more the longer this conflict continues - that will be especially noticeable again in the global south, though it will be quite quiet and without significant media coverage.

An overview of the major updates over the last 12 hours:

• Fourth Night of U.S. Strikes: U.S. Central Command completed a seven-hour wave of precision air strikes on Tuesday night, targeting Iranian coastal defense systems, missile and drone launch sites, and naval capabilities along Iran’s southern coast.

• Retaliation in Bahrain and Kuwait: The Islamic Revolutionary Guard Corps launched retaliatory attacks against U.S. assets, using cruise missiles to strike and set fire to a major U.S. military logistics center at Mina Abdullah in Kuwait, while also targeting U.S. Fifth Fleet facilities in Bahrain.

• Interceptions in Jordan: Jordan’s air defenses intercepted and shot down three Iranian ballistic missiles that entered the kingdom’s airspace, which followed an Iranian drone strike aimed at Jordan’s Al-Azraq airbase.

• Threats to Global Energy Corridors: Asserting a “for everyone or for no one” stance on regional oil, the Guard Corps threatened to block all alternative energy export routes in the region if the U.S. naval blockade of Iranian ports persists.

• Trump Escalation Warnings: U.S. President Donald Trump warned that air campaigns will intensify next week to target civilian infrastructure, specifically power plants and bridges, if Tehran refuses to negotiate a deal. (We’ve seen this before, and he will walk it back just as the Hormuz tolls got walked back)... brinkmanship is how he ultimately ends up getting back at the negotiating table, which is really just the ceasefire table…

Energy Markets Review

• Thus far in July, there has been fewer than 4 million barrels of oil are exiting the Strait of Hormuz per day (an 8mb reduction from normal levels).

• Ukraine attacks on Russian energy infrastructure and tankers continue to worsen - this is being reflected in gasoline and diesel spreads - which are at all-time highs.

• Gasoline markets are near record-tight levels, and prices by the end of the week are going to be back above $4/gal or so on average in the United States.

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Good Sunday evening MacroEdge readers and community,

This evening we’re watching some escalation signals in the Iran-war - namely, as both sides battle over Hormuz control. Iran has exerted greater control over Hormuz in the last 48 hours (as we expected in the last Weekly Macro Note) because oil prices have gotten too low for them to be happy. Ideally, Iran wants Brent ~$85/bbl - and GCC nations also wouldn’t mind this - even though they won’t say it out loud. Some of the loudest energy bears on FinTwit have gotten extremely loud this weekend, expecting oil prices to do something like a pandemic waterfall - which makes absolutely no sense with demand as robust as it is - and countries continuing to run down their strategic petroleum inventories.

Trump will likely panic on a 5-7% up move on oil, and WTI is very close to reclaiming the 200-day to the upside; something is going to have to give with the Strait of Hormuz, because as I highlight in the section below, traffic is almost back to zero - and we’re in Mid-July now. This comes as the SPRs globally (ex-China) are at or near tank bottom levels. The resolution here is quite clear - they either escalate militarily to take Hormuz, or accept much higher WTI/Brent price levels once again - and I don’t think they want the latter, even though the former is inflationary. We’re basically at inflation^2 right now.

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In markets this evening - the Nasdaq is off about a percentage point and leading lower - WTI/Brent are very close to pushing back above their 200 day moving averages - losses are leading in Asia with the KOSPI sidecar halted at one point. The regime that I continue to expect is a sideways one as long as we see war rage. If WTI >85 and Brent >90, then we will see significant downside pressures emerge as the Fed will seriously have to begin discussing a rate hike. I strongly dislike the obsession with these overnight Sunday moves - but I think what’s going on in Asia is going to drive the semiconductor and AI action here as those markets begin to violently wobble. The amount of gapping, halting, etc. being seen in South Korea is flashing potential Asian market crisis - and Japan is not far behind in their market dynamics. South Korea is just the worst - as highlighted frequently by our Global Bubble Index - due to the extreme utilization of leverage into hyper-concentrated areas within the semiconductor and technology trades. The sweet spot for WTI is going to continue to be in the $71-$81bbl range now for E&P companies, but we need to see actual stability for anyone to start rigging up. For the time being (as I highlighted with some North Dakota rig count data yesterday evening), it would be absolutely foolish to launch new drilling endeavors right now until we can establish a 3m/6m average price floor and get some confidence in where that demand/price equilibrium is.

MacroEdge in the news… MacroEdge employment data recommended for the Warsh Federal Reserve due to labor market data issues:

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Macro Week Ahead

This week is fairly busy with macro data - focusing primarily on (already) outdated inflation data - which we should not overweight. The Fed will use the incoming data for the July rate cut decision - and as we’ve seen in the latest Japanese inflation data - inflation is shaping up to be more embedded than policymakers thought with just the energy shock issue. While WTI at $75/bbl really has no inflation problem potential - all of the other inputs are still way up Y/Y - and its price levels continue to rise in nominal terms.

• Monday: No data

• Tuesday: CPI (US), Warsh rate hike signals

• Wednesday: PPI, Warsh testimony day 2

• Thursday: June retail sales

• Friday: Housing starts & building permits

For earnings >500bn market cap:

• JP Morgan Chase

• United Health

• Taiwan Semiconductor

There are other sizable names reporting as well, but keeping it simple for the sake of our filter. SK Hynix will also begin trading tomorrow.

War Resumes (Again)

• U.S. Launches More Strikes on Iran: U.S. Central Command (CENTCOM) conducted multiple rounds of retaliatory strikes targeting Iranian missile sites, air defense systems, and paramilitary Revolutionary Guard boats to degrade their ability to disrupt international commercial shipping.

• Iran Retaliates Across the Persian Gulf: Following the U.S. strikes, Iran launched an array of drones and missiles, hitting U.S. facilities in Bahrain, Kuwait, Qatar, Jordan, and Oman, and threatening to completely collapse ongoing interim ceasefire negotiations.

• IDF Strikes Hamas Arms Facility: The Israeli Defense Forces bombed a temporary weapons production facility in Gaza City, claiming Hamas operatives were utilizing the site to aggressively restore their capabilities in violation of existing agreements.

• Ukraine Strikes Russian Energy Infrastructure: Ukrainian forces heavily damaged the Syzran Oil Refinery in Samara Oblast—roughly 800 kilometers from the frontline—triggering severe explosions and a massive fire amid an intensified long-range campaign targeting Russian fuel networks.

• Russian Advances in Donetsk: Intense fighting continues on the ground as Russian forces secured a solid foothold in eastern Kostyantynivka, advancing north of the city’s railway station and battling deep into the urban center.

Hormuz Traffic Analysis

Strait traffic is once again closer to zero than any sort of normalized level - and the oil bears have gotten really cocky about flows over the weekend and the US’ ability to maintain flows at any sustainable level:

Continued below: Hormuz traffic analysis, Why War Can Be (or is) Bullish, A Look at Asian Markets Pt. 3, A Chart to Make One Think - John

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Good Friday evening MacroEdge Readers & Community,

This evening we’ll keep it short with a brief end of week wrap up to the post-holiday week. Hopefully you all had safe travels back home and are ready for the long summer stretch that we discussed in the Weekly Macro Note. I am not expecting a whole lot during the July and August months - and the Administration is going to remain very cognizant of equity markets given how close we are to midterms now. The #1 mandate of the ‘stock market is the economy’ and with labor market trends - like the total number of Americans out of the workforce exploding - they know that it’s paramount that they continue to pump assets higher. On Monday, SK Hynix will begin trading in the US - and IPOs continue to serve as exit liquidity this year as evidenced by names like SpaceX - where most investors through vehicles like SPVs remain locked up for long durations.

It was fantastic to get back in the cadence of MacroEdge Radio this evening - as we hosted ‘Nobody Special’ for Episode #75 for a deep dive and discussion on Asia, semiconductors, the AI bubble, circular financing and more. The episode will be live on our YouTube channel in the morning, as well as via Spotify and Apple Podcasts - and we will be full throttle on a fantastic guest lineup in the coming days for the rest of July, August, and September.

MacroEdge Radio on Youtube

For the week - markets were relatively tame - the Nasdaq is up about 2% from the lows on higher action in semiconductor action - and crypto is moving higher (which we’ll discuss more tomorrow in a brief Saturday Macro Note as we look to decipher the next moves for risk)... WTI spot gained about $3/bbl on the week - which at one point was $7/bbl when the conflict in Iran began to flare up as they began enforcing stricter Strait of Hormuz controls. I continue to believe that China is playing a key role in letting Iran ebb & flow in their enforcement of the Strait and in their military actions. Military action of late has been very tame - focused on US assets and bases in the region rather than energy infrastructure - and a lot of what we’re seeing on the conflict front continues to be theater. For the US - this benefits equity markets - as the war instability means markets begin searching for any reason to climb higher. On top of that - the Treasury Dept began enforcing limited sanctions against Iran again this week - and it remains unknown how much money has actually been transferred to Iran to date from GCC countries (in frozen and non-frozen funds).

This evening we’re going to briefly cover the ‘quiet weeks’ of summer ahead, talk about the war resumption and potential for escalation, provide an update on oil and gas, and Six will provide a portfolio strategy note.

Saturday Macro Note discussion:

• Asian Risks Part 3

• A Look At Crypto - Positive Underlying Signals for Risk?

• TREX - Partnering for the Future of Non-Op O&G

Sunday Macro Note:

• A Latest Look at Housing Data & Foreclosures

• Homebuilder Equity Summer Look

• Technical Opportunities and Red Flags

• Macro Week Ahead

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Quiet Weeks of Summer Ahead

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Good Sunday evening MacroEdge readers and community,

It’s fantastic to be back from the 4th of July weekend and back in the driver’s seat of the ‘long summer’ ahead of us. From now until September - it’s a period to really accomplish a lot and buckle down across the board, so I know we’ll take advantage of that, and hope you do too.

From a market standpoint - I am having a little bit of a difficult time getting a read on the high-beta stuff as Bitcoin and other hyper-leveraged asset classes have bounced in recent days. While it’s certainly plausible that these classes bottom first, the technical setup in most things is becoming clearer as we head into mid-July, and directionally, things are going to move substantially based on where we’re sitting today. With the Korean and Japanese risks at new heights - I think it’s quite plausible that a downside impulse could play out in a ‘swan’ style fashion - catching a lot of the amateurs that joined the party very late (ie: last 4 months) off-guard, though with mid-terms now just a few months away - the administration is going to have to balance wanting to fight inflation & restoring affordability with keeping asset prices higher for their primary voting bloc/supporter base in non-presidential election years. With consumer confidence & sentiment readings at all-time lows, there’s a lot of apathy about how things are going right now (with the exclusion of the AI/semiconductor) trade that has driven record market concentration and pushed markets to new heights. The market setup as we head into the long summer is becoming more clear:

We may get some sort of initial trap with this setup and then move onto resolution. Given market concentration risks, negative divergences, internals, and now risks to future earnings in the AI space as CAPEX comes under investor scrutiny - it’s quite obvious the direction to which I think this will resolve itself, though I remain skeptical until we see any further directional confirmation for the crypto trade. Because of market concentration risk - this also doesn’t need to spread to a bunch of other areas in markets - but I think it will because the stock market is now the economy.

As discussed below, this is a very quiet week for corporate earnings (and macro data), and I expect to spend most of my time monitoring energy markets and the Asia situation, namely Korea and Japan, due to many of the risks that we’ve discussed over the last 6 weeks.

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This is a very quiet week for corporate earnings. We start off the following week with bank earnings, and I expect that Q2/Q3 will mark a lot of tops for the semiconductor/AI names in terms of the earnings (yes, data centers too). Without taxpayer bailouts or a perpetual cash stream that they are trying to establish, whatever is left of our ‘profit-seeking’ system is going to sniff out what a mess we’re walking into in this trade.

Macro Week Ahead and Start of the ‘Long Summer’

No earnings of companies >500 billion market cap this week.

• Monday: ISM Services PMI, Fed Speech

• Tuesday: Export/Import Data, API Crude Stock Oil Change

• Wednesday: FOMC Minutes, EIA Crude Inventory

• Thursday: n/a

• Friday: n/a

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Report Schedule for the Week

As discussed in our previous Macro Note, one of our goals is to get the train back on the track, team and content wise, so that critical reports aren’t being missed and dispatched to you as our readers and clients, even when we are stretched thin and on the road with client work. Part of this effort involves expanding our network of contributors - and other items like briefer notes that have been discussed in the past. We’re going to continue to find the most optimal solution and look forward to the long summer ahead as a period to deliver the absolute highest quality and most actionable research possible, so that, namely, you all can be making the best decisions for your organizations and your portfolios.

• Tuesday: June Employment Report, Energy Note

• Thursday: New Partnerships and Offerings, Midweek Macro Note

• Friday: MacroEdge Radio resumption - Episode #75, Redeye Macro Note

• Sunday: Weekly Macro Note

Expanding Our Umbrella over the ‘Long Summer’

As we’ve discussed over the past 16 or so weeks, many opportunities have arisen for us as an organization - and we will be discussing these over the next 4 or so weeks. Several new partnership opportunities are ones that we will share and pass along, and I am excited to do so. Stay tuned for more on the Portfolio Strategy front as well.

Consumer Slowdown Risks

One of the things I’ve been highlighting is the risk of a consumer slowdown in the second half of 2026 if asset prices fail to continue their ‘melt-up’ that began with the start of the Iran war and during an enormous federal deficit that is rendering the Fed Funds Rate essentially useless in most sectors outside of things like housing (yes - it’s important) but with demographic changes, etc, there are reasons why this cycle has/is taking much longer to play out than anticipated.

The latest wave in higher prices - especially in food, airfare, etc is putting a lot of strain on consumer balance sheets.

The Iran war was a huge mistake on the ‘price war’ side of things as 1) wars are almost always inflationary and 2) going to war with a massive oil exporter usually results in an inflation shock.

Continued below: Consumer Slowdown Risks, KOSPI Timebomb Part 3, American Housing Questions the Media Never Asks - John Galt).

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Good Wednesday evening MacroEdge readers & community,

This evening we’re going to take a look at the latest energy situation and data, and cover where we stand going into the longer than usual market weekend - with markets being closed on Friday. While banks remain open, markets will not, so trading in Asia will dictate how our week starts for the most part. Tomorrow we will also get our June labor market data drop - which should mostly be noise as most of these NFP prints have become. JOLTS didn’t give us that much information, and ADP came in softer than expected, yet yields surged as markets re-priced in a hike this year (which I could only see happening if Warsh decides that it’s time to pop the bubble). The asset economy is the widest I’ve ever seen from the income economy, and I am not sure policymakers understand this any longer - given the composition of where the policymakers come from/backgrounds - it’s going to take stopping nominal prices from rising to actually do anything to reverse this trend.

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Tomorrow should be a very thinly traded session as the last of the serious shops packed up their bags for the Caribbean, Aspen, or whatever 2nd or 5th home fits the theme of the ‘America 250 weekend’. On Friday evening, we’ll have a brief recap and look at the employment report coming tomorrow - and for the remainder of the week - for those hanging around, it’s watching and seeing how Korea and Japan go the rest of the week (along with Taiwan to a degree). I expect that we will see another more serious intervention in the JPY soon, and continue to monitor the KRW. What we have in Asia right now is arguably the most serious bubble in decades, and I think downside in both the KOSPI and Nikkei will be more severe than here in the US due to an even higher degree of market concentration of the AI/semi/RAM names in Korea (like ~75% of the KOSPI).

This evening, we’re going to take a look at the employment preview, talk about the next report (coming on Friday), discuss Asian risks, and more. I also will note that I continue to expect distribution or higher price action until we see crypto crack further - right now we’re in a waiting pattern across the board as equity gains have mostly stalled since May-early June.

Next Report - Friday Evening (4th Preview, AI Wobbles, and June Employment Data Note)

In the Friday ‘Redeye’ Macro Note, we’ll cover the latest on the AI Wobbles - including coverage on the pressure on the sector as tokenomics begins to crumble, take a look at the second half of the year for MacroEdge, and our first half-year in review - including some of our most notable calls, and cover the June employment data. Don’t miss it.

Friday Redeye Macro Note Preview

• A Look at the Second Half of the Year for MacroEdge

• A Look at the Best Moments from 1H from our Team

• The Latest AI Wobbles

• June Employment Data Recap

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Employment Preview and NFP-Look

The NFP tomorrow is actually quite directionally important for the 10Y - which has been moving back higher as treasuries have sold off:

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Continued below: Employment preview and NFP look, Latest Energy Data - what’s next?, Asian Risks Pt. 2, Latest Energy Data - What’s Next?

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Good Sunday evening MacroEdge Readers and Community,

It’s great to be back for the last Macro Note of June, joined by John - Six will be out for the evening having a much more exciting weekend than I did, but I’ve enjoyed what actually feels like the first days of summer. For the 4th, I will be popping up to North Florida and enjoying some continued planning for the second half of the year as we prepare to expand our operations now with both MacroEdge, and all firms operating under our broader umbrella. I expect that this week - as frequently has been noted to me by John - is going to be the ‘Tonka Traders’ aka retail hour, which means that you get left with ‘Ocean Drive’ for the week, instead of Wall Street - who is already firing up jets and blasting down to either Florida or the Carribea… though some may be hitting that bizarre late season snow that I’ve seen in the Mountain West… Some crazy weather is happening all around the country!

This evening we’re going to cover the Asian risk - which is expanding dramatically with superbubbles in both Korea and Japan (which make actually lessen the damage here slightly), I will provide an update on Portfolio Strategy - which will finally be going live in Q3 - we’ll discuss being ‘back in our cadence’ and what to expect on the MacroEdge Radio front given that it’s been on about a two month hiatus. In addition to that, we’ll lay out the schedule for the week and what to expect on things like updates, a note to wrap up the 1st half of 2026 (hard to already believe that it’s behind us), and we’ll discuss new opportunities coming from MacroEdge and our ecosystem as they are coming available - many of which will be soon.

On the war front, what we’re seeing has pretty much become noise for equity markets. The ceasefire remains in place, and there are some volleys back in forth of inconsequential strikes not actually doing all that much. The one time we have been seeing Iran escalate is when too many tankers/freighters start using the Oman traffic lane in the Strait of Hormuz, and I expect that to continue for months. Traffic is nowhere near normalizing - and as I’ve said for months - I expect that it will take until the end of 2026 before we see actual ‘normal’ figures. Every brief spike up to this point has faded.

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Consumers are likely in their final hurrah for what looks to be many months - there are a lot of contributing factors to this - but the debt load that the average consumer is facing is significant. Once the final holiday hurrah is through (which is next weekend), I expect markets to start caring more about the below data:

We know that the stock market is in fact the economy for the upper ‘i’ - and if the stock market halts its nominal gains, expect consumer spending to taper across the board. The FIFA bump is another effect likely occurring, and I am seeing restaurants really struggle under the latest weight of the inflation wave from the Iran-war energy shock. Once equities and nominal price levels stop rising, it will be over for this economy (and the market) in a feedback loop.

It’s a softening market backdrop, and I want to see weakness hit the Dow - particularly in housing and trucking equities - which have not softened as much as the MAGS and tech giants. Things are rattling in the markets from a technical and an internal standpoint, which I will provide an update on later in the week. This dumpster fire environment - or one might call a ‘bubble’ has been hit over and over and over with steroids, and the poor thing is now like a fat cat that’s struggling to get up and even walk to the food bowl. Yes there are midterms coming up in November - but we continue to just run the deficit drunken high like a bunch of fools and the punchbowl must be taken away, though I am afraid we are going to get the complete opposite scenario with things like YCC & rate cuts eventually coming right back in to play for a final grand finale (ie: Japan scenario - as I’ve covered for going on 12+ months now). While nominally, they are going to want to keep the party going this week, I would put very little cadence in what will likely be a low volume week.

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MacroEdge Portfolio Strategy - Update Soon

We are having some exciting meetings of late relating to the direction of Portfolio Strategy - and actually being able to invest in model portfolios that will be led by Six. These discussions and our planning continues, so stay tuned for some exciting news and announcements in the 3rd quarter as we spool up Portfolio Strategy - and expand it outside of the Ozone ecosystem… This will include both a research and portfolio component combined, and when we have more information available - it will be shared as soon as possible.

Back into our Cadence in Q3 & MacroEdge Radio

One of the most challenging things about growing an organization is our limited bandwidth as a team. We’re solving a problem here, driving a boat across a frenzied lake (figuratively - I have not had to do this yet), the next minute to solve another problem, developing a new dataset, and traveling across the country and world to interact with our customers. As a founder-led organization, when we’re away from our office - that means things like our Macro Report cadence suffer, and that is something I am fully committed to changing in the second half of 2026.

At minimum, you will be getting 3 reports per week out of Ozone - with the Weekly Macro Note and at least two other Macro Notes (the Midweek) and sometimes we will extend that to 4 during special situations - as we did during the Iran war for energy coverage.

On top of that, we are bringing back MacroEdge Radio on a weekly cadence, and when I am traveling, it remains extremely difficult to host the show remotely from my device with John joining, so we’ve figured out a new workaround that should enable us to never miss a beat on the show front. There are so many new guests and faces I look forward to inviting on the show with John (including myself at some point) - but wanted to note this since it was a question that’s popped into my email several times in the last 2-3 months.

For the week ahead:

• Tuesday: Energy Note & Update to the Inventory Situation (is the trade cooked?), Employment Data Preview

• Thursday: The 1H 2026 Sendoff, Global Technicals, & What’s in Store For 2H from MacroEdge & More

• Friday: Redeye Macro Note - 4th of July, Employment Data Review

Thursday Nonfarm expectations are for something relatively modest.

Pre-4th Macro Week Ahead

It’s a relatively quiet week on the macro data front, with labor data coming in on Thursday because of the Friday market holiday in observance of the 4th. On top of that, it’s quiet for earnings too. I expect Asia to drive much of our market action this week - and keep an eye on both JPY and KRW - as well as the KOSPI and Nikkei - which continue to endure violent volatility and swings.

• Monday - n/a

• Tuesday - MacroEdge Job Cuts Tracker - June

• Wednesday - Japan Consumer Sentiment, Kevin Warsh speech

• Thursday - June Nonfarm Payrolls - expect FIFA impact to wane

• Friday - US Market Closed

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The Asian Risk

The Asian risk is something that I’ve flagged now since the beginning of the year - pre-Iran market pumping - and it’s something that has only grown in magnitude, especially during the war. Markets there are facing record concentration risk, currency risk, and weak currencies, and meteoric leverage usage has enabled these parabolic rallies. With risks mounting to things like the AI and semiconductor trade (highlighted by John below) and the BIS, expect that these risks only multiply here in the next 1-2 months. If the currencies strengthen or the markets continue to wobble as they are, the tech stall will get more pronounced in the US and elsewhere.

Continue reading below by upgrading to Ozone…

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Good Monday evening MacroEdge Readers & Community,

Hope you are all having a fabulous start to this very warm late-June week. The longest day of the year is now in the rearview mirror, and we get to look forward to things like hurricane season (/s) in the months ahead, and markets are once again at a potential turning point for the summer season. With talks of bailouts becoming larger for the AI firms (through things like a sovereign wealth fund, domestically) I expect that investors are going to become more skeptical about the entire AI bubble ecosystem in the months and weeks to come. At some point, we should expect all of these technical, fundamental, and internal warning systems to matter - as the market is once again a table standing on one leg.

This evening, Six is going to provide a portfolio strategy update, as promised yesterday evening, and I look forward to seeing you all for the Midweek Macro Note on Thursday evening. The signs and warning continue to worsen in Korea (this piece may even be censored there) - and I will discuss the Korea and Japan situation more in the Global Bubble Index on Thursday.

Tomorrow, MU reports, and I expect (sadly) that governments will stand in if the downside is significant. From these levels in Asian markets, they’re at real risk of full-on recession if any sustained downside occurs. The next question is… how will we handle our ‘motherlode’? Or will the can be kicked for yet a few more months…

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Hyperscalers: Made in China (@SixFinance, Head of Research)

The Economist cover famous contra opportunity arrives at an interesting time, directly following the throttling of access for the most advanced frontier models to foreign nationals, and in the process removing large quantities of potential demand.

As the US AI strategy by the capital spenders has been the frontier (the newest, best models, experimental), and development of rapidly scaling technology. Demand was subsidized in this phase, heavily. The 2026 large IPOs necessitate a new urgency toward profitability, else the frontier models risk losing access to lower-friction capital raising from the public markets at favorable prices. At the same time, companies are publicly beginning to rein in the blank-check approach to corporate AI spending as costs have ballooned in many cases.

This sets up a “good enough” commodity AI at 5-10% of frontier cost that places Chinese models in an advantaged global position as they can service the large and likely growing price sensitive AI consumer, to whom “good enough” is oftentimes more than enough.

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Good Sunday evening MacroEdge Readers & Community,

More of the same continues this evening from the war negotiations out of the Middle East - with Qatar stepping in this evening to intervene as soon as commodity prices began to move higher. Futures are flat across the board, with oil prices lower slightly after an early session pop on news that the Iran delegation was departing the peace talks. We now know that the peace talks will continue for the remainder of the week, which is the perfect jawboning tool for the entirety of the week, as inventories continue to draw down. The setup on oil and natural gas continues to look constructive now, and I expect that upside will materialize once we can actually work through all of the short-term headline noise of deals, MoUs, etc. A deal/ceasefire in Lebanon will mean that we can begin to shift headline focus to the actual inventory data - and that’s something that the market has refused to look at for the entirety of the move - really since the war first began.

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Traffic in the Strait of Hormuz remains nowhere near pre-war levels, and even as sanctions are lifted on Iran - it appears that Iranian tankers will be controlling a bulk of the exports out of the Persian Gulf for the time being. I expect that over the 60-day negotiation window, we don’t see Strait traffic get anywhere near prewar levels. The reality is that it’s not whether or not Iran/Oman want to permit boats through - they really would love to collect the tolls - it’s the insurance companies waiting to see if tankers are actually going to be allowed to cross without incident. Just 6 tankers have crossed in the last 24 hours (dark/sanctioned), and 3 ships with AIS on have gone through after Iran claimed the Strait was once again closed for business:

The goal now for policymakers is going to be to kick the oil market pressure as long as possible into the future - which gets it closer to a date where oil production can meaningfully move higher - which is also still months away (and may even be toward the end of the year). The dilemma continues to be the fact that inventory levels are collapsing at the same time that prices are not resulting in any sort of transmission to markets that we are short on supply - so the eventual outcome will likely at this point be localized shortages and a structurally higher floor on prices - even in the face of fake headlines and outright market manipulation by nations. If there is one thing that politicians hate more than anything else - it’s high oil and gasoline prices - and we’re seeing how quickly that can weigh on things like election outcomes, etc. With November now being just over 4 months away, it’s obvious that the pivot has to come now - and it doesn’t mean that the war won’t resume later. It’s also notable that neither Hezbollah nor Israel are taking part in the talks in Switzerland - even though the bulk of the focus today was about halting the conflict in Southern Lebanon.

The real story in the macro data this week will be oil inventory levels. Expect that we hear from the EIA that Cushing in Oklahoma is hitting operating minimums - and that will impact PADD2/4 flows to refineries - which will not be able to purchase product from Cushing. While again, the impact won’t be most dramatic at home, this is what the early beginnings of a real summer pinch are going to look like - and the padding on the front-end is simply noise for an absolute rubber-band that’s going to hit as we physically (and in a literal sense) hit tank bottoms.

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Macro Week Ahead

This week we will get our last of the hot PCE sequence readings from this energy price shock - and the remainder of the data isn’t particularly consequential. I would start to pay more attention to API and EIA data from here on out - as it’s likely that Cushing, OK, and other key oil storage facilities start hitting ‘tank bottom’ this week.

• Monday: n/a

• Tuesday: S&P Global Flash PMIs

• Wednesday: n/a

• Thursday: Final Q1 GDP, May PCE, Durable Goods, Tokyo CPI

• Friday: UMich Consumer Sentiment - Final

On the geopolitical front - which I cover below, expect that things are going to continue to be really noisy this week with Axios & other sources running full bore on peace talks, deals, etc. in the headlines. Given the situation with oil inventories domestically - and around the globe - the US administration is doing everything possible to get out of the situation, as we will continue to run down oil inventories for the next 8-10 weeks.

Earnings this week:

• FedEx (Tuesday)

• Micron (Wednesday)

Geopolitical/Energy Update

This week we will get more of the same ‘bs’ jawbone action with the fact that the discussions are ongoing and they will use news outlets to control the narrative that there is *nothing to see here* while we begin to hit tank bottom at distribution facilities. Because there’s no way out now of the drawdowns - and politicians would much prefer to create the illusion that there is plenty of oil abundance

The setup on gasoline technically is now quite constructive - even though they slammed it back below the trendline this evening.

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