My time is winding down on the West Coast and it’s been a very fruitful two weeks. There are times that it’s nice to step away from the screens, machines, and never ending decisions & to do lists that we all get caught up in, in this ‘technology age’ or whatever the GenZ or Millennial folks might be calling it these days. Next up on the docket is the Permian Basin - and I will be joined by Six & a few others for a combination of on the ground research, discussions, and dealmaking opportunities that we are hoping to unlock in the coming weeks. One of the biggest changes from a social media standpoint in the coming weeks will be a much heavier emphasis on our Substack pages over the X page. There have been a lot of changes to X in recent months, and given our organizational changes that we are undergoing - especially in terms of juggling 5 different balls at once - optimizing where we’re putting out the best content matters much more to me than simply putting out content for the sake of staying relevant in the algorithm. Some of you have probably already noticed my page, @DonMiami3, getting a larger emphasis in the recent weeks…

More will come on some of the changes within the next two weeks as they are finalized.

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This FOMC meeting is being overhyped to a degree that I have not seen since the 2022 days, with full-style college football coverage expected tomorrow. Regardless of what the Fed does, which we’ll discuss below, the bond market has already done additional tightening that was reflected through movement in bond yields. It’s very obvious (apparently not to PhD economists - that there is a massive runaway fiscal problem that any administration, both sides, seem totally unwilling to address) and with that we’re starting to see said consequences both in the United States - but also around the globe. Couple that with the worst energy shock in 20 years, and there’s a recipe for higher inflation (CPI likely running about 4% YoY right now, don’t trust the Truflation figures)... While we may still see brief intermittent pullbacks on front month WTI, such as back into the mid-90s briefly, directionally there are many reasons to think that this cycle is going to be a structural change shifting to a higher base price level for a long time, rather than a cycle where the price move is short lasting. What we’ve seen thus far is still not enough to cause demand destruction, and relative to the supply situation, just about everything in the petroleum products space is still underpriced on a nominal basis.

In the Oil and Gas Strategy Note tomorrow we’ll discuss what I call ‘the final TACO’ and when it may be announced.

This evening we’re going to briefly review the report schedule for the remainder of the week - in which we’re going to cover a lot of ground previewing the upcoming Permian Basin visit. Then we’ll look at the diesel and refined products situation and preview the FOMC decision tomorrow, as well as discuss likely outcomes.

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Report Schedule for Rest of Week

• On the Ground in the Permian Basin, Oil and Gas Strategy Note (Wednesday)

• Portfolio Strategy Update (Wednesday)

• Welcome to the Permian - Midweek Macro Note & FOMC Recap (Thursday)

• Saturday - Permian Thoughts Part 1

Diesel and Refined Products Tighten Further

Front month WTI continues to act as expected, with a higher base right now in the mid-90s at current Hormuz flows and inventory levels:

Gasoil has almost tripled this year, and I’d like to see consolidation before the next leg up - though that may be very brief:

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This week we’ve got an interesting one with the FOMC decision ahead - where it looks like that the FOMC will raise interest rates by 25 basis points amid elevated & embedded inflation, and amidst the largest energy shock of the decade (surpassing the starting days of the Russia-Ukraine war). There are many factors at play here beyond energy prices, though they are undoubtedly going to play the largest role (along with other commodities) and bonds into and through Q4.

There has been a lot of outrage this week on X amongst the ‘beta bros’ - who are desperate to keep the high inflation status quo going to keep tech equities sideways or higher. The reality has been since May that inflation has started running too hot and putting a damper on the broader tech and AI trade…

As inflation pushed the final surge higher - we now have a dynamic where there are crosscurrents emerging among messaging - and we are still looking at an overall slowdown in data center construction going into 2027. Democrats have adopted more of an ‘anti’ data center messaging campaign strategy - as I suspected they would earlier in the year - and that is going to resonate strongly with voters this cycle. Even as the headline labor #s mask actual labor market weakness right now - and will continue to do so - the anti-AI messaging is going to continue to grow in popularity into 2027.

With some of these crosscurrents emerging - we have tech starting off the week on a softer note - but I would take it with a grain of salt right now. I suspect that October is going to be a very interesting and dynamic month with the energy shock, and we’ll talk more about that below. On top of the potential (and likely rate hike), which will not solve the underlying supply shock, Asian markets are also continuing to wobble - with the KOSPI failing to reclaim its major uptrend going back 12+ months. All of these red flags warrant paying attention to, and there is total apathy about the severity of this energy shock - which is mind-boggling…

This evening we’re going to cover the macro week ahead - which will focus heavily on the FOMC meeting, discuss FOMC odds and whether or not their decision will matter as yields continue to rise, highlight a few technical looks - notably from Asia, and wrap up with ‘the inflation problem’ - which is something that the Fed cannot alone solve… This time higher prices and shortages may have to do that.

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MacroEdge Schedule for the Week

• Tuesday: War Note

• Wednesday: Portfolio Strategy Update, Oil and Gas Strategy Update

• Thursday: Midweek Macro Note

• Friday: Radio Show - TBD

• Saturday: Weekly Oil and Gas Macro Note

Macro Week Ahead

Developments in the bond and energy/commodities markets will continue to set the tone on everything through the remainder of the year, as it looks very unlikely that the Strait of Hormuz is going to reopen by that point. The decision this week is going to get a lot of attention, but either way - hike or not - the bond market will do the work as investors love faith in Bessent and the runaway fiscal train in the US.

Housing & industrial data is scattered throughout the week.

• Wednesday: FOMC Rate Decision (USA), US Retail Sales

• Friday: BOJ Rate Decision (Japan), National CPI (Japan)

Reporting this week:

• FedEx

• General Mills

• Darden

FOMC Week and Odds

The Fed is very likely to increase the policy rate this week, by 25 basis points. Odds are anywhere between 75-90%, and I would peg it about 95% right now. With the President threatening additional tariffs if the Fed hikes, the bond market is well aware that the problem actually lies with Congress and not the Fed, even though the Fed has largely become an enabler of policy failure after policy failure.

In the prediction markets - odds are relatively similar:

(Kalshi)

As Tom says frequently on X… follow the 2Y and disregard the noise:

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The bulk of my update this evening will be coming over at MacroEdge Oil & Gas Research, while Six is providing our latest Portfolio Strategy update below. Don’t miss either one.

You can find it at MacroEdgeEnergy.substack.com/subscribe

For those of you who did not catch the latest Weekly Macro Note or War Note you’ll know that there are some changes coming both to our organization and our offerings. Continue to follow my X (@DonMiami3) as well as these are announced and rolled out.

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MacroEdge Flagship Portfolio Strategy Update

Hot PPI today started a waterfall of selling in rates, with SOFR futures pricing in nearly a full 25 basis points of tightening between now and June 2027 going into CPI tomorrow. The waterfall was extended by credible speculation of Houthi rebels hitting the pipeline that Saudi Arabia has been using to reroute oil around the Strait of Hormuz. Treasury Secretary Scott Bessent daring the market to bet against him (albeit on Japanese Yen) may be accentuating the recent declines, as it is likely not coincidental that yields have gone nearly straight up since he declared “I am the house now”.

Since Warsh’s hawkish stance at Jackson Hole, we’ve seen a strongly above expectations payroll report, a hot PPI, and a hot CPI tomorrow looks likely to all but guarantee a September rate hike. The SOFR strip currently prices the funds rate roughly a full point higher by mid 2027, and positioning is stretched in that direction. Warsh and Bessent remain closely aligned, and Warsh is likely to look for any reason he can find not to hike. Waller echoed similar sentiment.

Equity indices are barely off their all time highs as oil, ags, and nominal and real yields soar. This could be indicative of a lack of acceptance of current conditions, or indicative of prepositioning for the next policy waffling or “TACO”.

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I hope you had a fabulous long holiday weekend. This was a fantastic weekend for me as I continue to ‘chart the future’ - and it is going to be a very robust & exciting rest of the year. Labor Day marks a nice turn point in the year where I feel like many of the people I get to work with on a weekly basis really lock in and get focused until the holiday season. While this year seems to be flying by like no other - I am very much looking forward to the remainder of the year and all of the changes ahead.

We’ll keep this report brief as we spool up the busy week ahead - and we’ll review the report schedule for the week as well as the macro week ahead. While there is a general obsession over the next FOMC meeting - I am much more focused on energy price movements and yields with fiscal dominance continuing to pour gasoline on the fire. Whether or not the Fed moves 25 basis points or not will have very little effect on the end outcome (which will either be yields moving higher immediately if they don’t hike, or yields stay in a range if they hike and process the next few months of market data). Given how low quality and compromised macro data is, I think it’s also mattering less than ever - and we have to rely on alternative signals and metrics to get the full picture of what’s going on in the economy. This is going to be a critical 4th quarter ahead for energy and commodity prices, and there are a lot of signals looking like late 2021 and late 2007 in the space - especially from a technical perspective. I know that some think that Ken Griffin and Peter Thiel entering the oil and gas space from an investment standpoint is a red flag, but I happen to think the opposite given where we’re at in the cycle. While the inevitable outcome of any major parabolic move in oil prices tends to be demand destruction - this cycle will be unique in the fact that there’s not some magical production source that we find that can just come online. Middle East flows are still impacted to the tune of about 5-7mmbpd (very large) and now the conflict between Ansarallah and Saudi is also heating up.

The theme that we’re living in right now is the illusion of abundance… and I happen to think things will change pretty substantially on the commodity-front over the next year - particularly in oil and gas where I think opportunities remain robust.

This evening we’ll first cover the report schedule for the week, dive into the macro week ahead, talk about ‘going around the globe’, highlight the fact that we’re at yet another day with more inflation, and we’ll lastly take a look at an oil and gas preview - talking about lies ahead in the most important trade of the 4th quarter (yes, more important than AI and semiconductors).

I could continue to beat a dead horse talking about the semiconductor & AI trade - but I don’t think it serves much of a purpose…

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Report Schedule for the Week

• War Note (Tuesday)

• Oil and Gas Strategy Note - Public & Private Opportunities (Wednesday)

• Midweek Macro Note (Thursday)

• Redeye Macro Note & Don’s Notebook (Friday Evening or Saturday)

• Oil and Gas Macro Note (Saturday)

• A New Frontier in Oil and Gas (Sunday)

Macro Week Ahead

It’s a relatively light week ahead from a macro data standpoint. With a mostly noisy - and largely useless employment data release out of the way - we’ll pivot to our next favorite batch of chop with the PPI and CPI reports. While these lag, I expect that we start to see things entrench even further as commodities and food prices continue to rise… Gauges like copper provide a useful look at where things are at - and the inflation picture is not a pretty one right now… The Fed continues to be between a rock and a hard place and the next wave up in commodity inflation could be one on par with the 70s and late 07 into 08 - and we know the outcome of that. While some may bury their heads to deny the reality of the Hormuz situation, it’s pretty apparent that inflation is the risk that the Fed continues to ignore.

• Producer Price Index - United States (Thursday)

• Consumer Price Index - United States (Friday)

• University of Michigan Consumer Sentiment (Prelim)

*Earnings with market caps >$300bn - Oracle

Around the Globe We Go

I am resuming an intensive travel schedule given the change mentioned in the future section - and this will coincide with many different timezones, and locations - but the focus is almost solely on the oil and gas sector, and the many opportunities that have appeared in the last 6 or so months. Some of these locations include Midland (next), Phoenix, Williston, & more, and I look forward to sharing the journey with many of you - and meeting some of you on the road as I plot a new vivid pathway forward…

Some Change on the Horizon

As they say - ‘nothing lasts forever’ - and that will be the case as change approaches on the horizon. Over the next three changes there will be changes occurring to our organization, though these will result in minimal impact to our report schedule, deliveries, and social media activity. Stay tuned over the course of September to get a full understanding of these changes. One of those will include a major relocation to Scottsdale, AZ - which will serve as my new homebase when I am not on the road - given our intensive focus of late on the oil and gas sector - I am able to easily able to reach Midland, Williston, Houston, Tulsa, et al. and (yes I know there are many readers from Texas), Texas-living itself is not conducive to the environment that I am trying to craft. As part of the entire shifting operational landscape, we will have new locations and service areas - and these will also be announced sometime this month.

The changes and the transition for me were the only & best choice for the future, and decisiveness has long put me in a great position to grow organizations from, from the ground up, and from the sky to the stars. Change never comes with certainty, but these particular changes and what’s to come are the foundation of my vision on a much larger scale…

Another Day, More Inflation

We are on the brink of a major commodity-driven inflation impulse wave - and that’s ex-energy… I know the correlation is tight, but I like to separate the two from an analysis standpoint.

The copper melt-up continues:

Wheat and other softs have risen sharply in the last 3 months:

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This evening Six will provide an update to our Portfolio Strategy book, while adding commentary, and I will be publishing our Oil and Gas Research Strategy Note in about an hour over on MacroEdgeEnergy.substack.com/subscribe. It’s been a mostly uneventful Wednesday to this point, and tomorrow I will be out for much of the first half of the day as I head to the airport and get ready for a very packed second half of September and beyond. Stay tuned for some major updates over the next few weeks (many exciting things) & I look forward to seeing you all back tomorrow evening for the Midweek Macro Note. As to the remainder of the week - the Friday nonfarm report will determine the September hike, which is currently priced at about 60/40. As mentioned in the Weekly Macro Note, I really don’t think it will matter all that much either way what Warsh does - and bond vigilantes have a unique opportunity to spike the 10Y higher and take markets lower in what could shape up like a 1987-style event should it happen. The window for this is limited, however, because of the ever present fiscal hand in markets today, and left tails simply have to materialize out of black swan events…

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9/2 Portfolio Strategy Update & Commentary - @SixFinance

Another week in paradise, eh? Following Jackson Hole we have indeed seen the market reprice a hike into the market which has been closely followed by more US strikes on Iran. We are nearing a threshold where a growth scare could materialize, considering that housing and private construction remain depressed and interest rate increases being priced into the forward curve continues to accelerate. The Flagship model has mostly closed its tech exposure today (see positioning at end), and substantially increased exposure to the most asymmetric opportunity I am seeing in the market today.

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Today we saw notable signs of the war resuming with the US escalating through more powerful airstrikes against Iranian assets that have since paused as of about 2 hours ago. Chris Wright came out with a statement to put an intermediate top in the substantial rise in oil and fuel prices, stating that 17 million barrels had flown through the Strait of Hormuz on Monday… (which we know will be changed or refuted by the end of the week by someone else within the Administration). The situation for refined products continues to get tighter with PADD5 diesel going for almost $210/bbl today and NY Harbor diesel over $200/bbl… These prices are high and they’re already bleeding into everything more greatly. While they’re impacting performance of things like aviation and logistics immediately, we’re also seeing them reflected in higher commods and ag prices - which is something we will continue to discuss in greater detail as we now approach the October (clock hitting zero) month as I refer to it as.

We also saw a second ‘TACO’ announcement from Barak at our favorite tabloid Axios stating that the strikes today bought at least a month in Hormuz flows. While this is absolutely false, they stemmed the immediate overnight gains, and we’ll probably see sideways to down action on the week if we don’t see an escalation in tanker attacks. It’s par for the course given where we’re at, but have no doubt that they’re starting to panic about the potential for $7/gal average national diesel prices and $6/gal gasoline prices just 2 months from the midterms. Iran is back above the $85/bbl Brent threshold, and the most likely roadmap from here is a retest of the ‘handle’ triangle on the technical pattern we’ve just broken out from, and then much larger upside from there.

On the equity side of things, I continue to expect them to try and continue the sideways action for as long as feasibly possible to get OpenAI and Anthropic IPOs through the pipeline - and the charts and interest in the broader AI thematic are starting to dramatically cool off their fervors from earlier in the year. I had several interesting conversations today on what’s next for AI and data centers, and I agree with some of the conclusions that we’re given from people far smarter than I on the sector… Right now, it continues to look like the party is just coming to a slow stop rather than ending abruptly - with markets undergoing a distributive phase similar to that seen in 2000… What’s even more interesting is that I think the FOMC meeting this month doesn’t matter a whole lot in terms of whether or not yields do the tightening or Warsh raises by 25bp. The reality is bond vigilantes have started to price in both sovereign risk again, and a greater risk of the Strait of Hormuz staying closed for a very extended period of time - and that’s landed us back at a 10Y over 4.8%, and the need to wheel out the fake headlines again for temporary reprieve… such is this ‘game’.

DTCR ETF, signs of distributive action:

This evening we’re going to briefly dive into the four sections below - looking at the recent signs of escalation, and how they contribute to the staircase to the TACO. Additionally, we’ll look at the recent price action in oil, and provide an update on the technical outlook and scenarios there. The market for diesel and refined products continues to tighten in both the US and globally, which will impact inflation greatly, especially for producers, but it will also have major midterm impacts - and Iran is betting on being able to weather economic calamity over the next two months from a near freeze-out of exports. Finally, we’ll take a brief look at the Nasdaq and the sideways action of the last two months - and whether or not an inflationary environment that we find ourselves in will actually be good for the concentrated AI-heavy index…

Let’s dive in.

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Signs of Escalation = Staircase to the TACO?

Trump escalated attacks notably today - hitting targets across Iran, as well as energy infrastructure, and power infrastructure. Generally, when we start climbing the escalation ladder more rapidly - they are trying to buy time through a looming ‘TACO’ announcement - ie: something like a temporary ceasefire, and I expect that this time is no different.

The difference this time is that oil inventories are in a much worse spot both in the US and internationally, and product prices are at/near all-time highs across the board - from jet fuel, to diesel, etc. Once things like Urea and NatGas start moving, that will only add to the inflationary process, and I think the Trump admin has one can kick left before we see things get significantly worse come the end of November if there is no resolution regarding Hormuz and Bab. We shall see, but as discussed in the next section, the continued theme and strategy is one of patience.

Oil Takes a Seat at the Blackjack Table - Patience, Patience, Patience

The question of whether or not front-month WTI will hit a ‘blackjack’ now over the next 12-18 months now is becoming more of a ‘when’ rather than a ‘it won’t happen’. With inventories as tight as they are, the TACOs are going to continue to become less effective, and from a fundamental and a technical standpoint - the current midterm setup warrants continued patience, but also confidence in price direction given where we’re at. With WTI back above $91/bbl in a very confident move, even a retest of the breakout won’t meaningfully impact the price trajectory to a higher destination then where we are at now.

The technical setup should push WTI back to cycle high levels - and there are a few ways we can get there. The most likely outcome is that the last TACO is blown and we see WTI retreat to the mid-high 80s in a retest of the breakout point, though a continuation sees mid-90s before a brief pullback and then higher. Note that my illustration is not to be used as a timing instrument, as I continue to think things tighten significantly from October, onward.

It is quite possible now that we see oil begin a move to the 2008 cycle highs in the high 140s to low 150s, even, so don’t rule out that scenario as I put those price levels at about a 50/50 chance right now, and will continue to raise that as Hormuz remains closed through the end of the year.

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Today I had a fabulous cross-country travel day. Given some operational and organizational transitions underway across the board - I’ve decided to re-ramp up my travel schedule to continue to push our network to a broader audience among enterprise leaders with my ground-up approach - focusing specifically on oil and gas. This weekend was mostly uneventful until we got to the afternoon - when the US struck Larak Island - from which the IRGC has been launching anti-ship missiles at tankers in the Strait of Hormuz. Iran retaliated by launching their largest ballistic missile attack in what appears to be several months - though they did not target any energy infrastructure - instead targeting US military assets in the region. The ‘bear trap’ as I’ve called it - continues to play out - and finding a pathway out of this conflict by the end of the year is going to be an almost impossible task for the Trump Administration - especially with Brent in the sweet spot range for Iran - but below the point where other actors like China get more involved to calm things (>95bbl).

Iran is just playing the long game now as this has evolved into much more an economic war - and that’s pricing into the inflation risk across the commodity spectrum globally. Everything from food inputs to softs to energy prices are all re-rating higher, and I think that the risk is much higher to the upside without any Hormuz resolution by the end of October. I’ve long thought that October has served as that point of no return, and I also expect the Trump Administration to announce another SPR release at that time. This timeline is going to continue to ‘take patience’ as I’ve harped on, and the commodity trade will continue to get more constructive the longer the Strait remains impeded. Looking back from where we were in May when we spent two weeks on the ground in the Panhandle of Texas to where we are now is very interesting, and we’ve got something else ‘On the Ground’ in the works in the next few weeks, so stay tuned.

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Given the escalation ramp-up, futures are down slightly - with small caps leading the dip, while tech also remains sideways and has for months now. Crypto is quite flat in the mid-high 70, and oil is up on the evening - in a triangle^2 pattern that will likely continue to play out until October before we start to see resolution.

The notable macro event for the week will be the ever-stupid nonfarm payrolls report that will get adjusted for the next 18 months, though do not take (even a negative print) as an excuse for the Fed being unable to hike this month. The reality is we’re sitting on the edge of a supply-shock driven inflationary impulse - and the Fed has no tool(s) to combat such an event… The Warsh/Bessent meeting is very interesting and likely signals something much deeper is going on underneath the hood. I noted today that the general apathy/incompetence around Hormuz is starting to get rather alarming, and the comparison to the early 2020 days (but in reverse for inflation and energy supplies) seems quite relevant.

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It’s a late night update from the West Coast once again - I have a very short business trip to take care of tomorrow in the South - and from there I will be making my way east… Today was a relatively muted Nvidia reaction, there was some excitement early on, but the action has only moved the Nasdaq futures up about half a percentage point overnight, while the other indices remain flat. Energy prices swung today off of the lows - and we’re seeing movement in the MacroEdge Oil and Gas portfolio that will be discussed in a separate portfolio strategy update released shortly. If you don’t yet subscribe to the MacroEdge Oil and Gas Research Substack - you can do so below:

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Overnight reaction is relatively muted as the Bank of Korea increases rates 25bp, and Nvidia numbers are once again hot - but going to be very hard to keep up in the quarters to come.

I think we are crawling toward ‘terminal velocity’ on quarterly revenue figures from Nvidia - and while we might not hit that point until Q1 or Q2 - if markets are actually ‘forward looking’ they’re going to start pricing in the risk that the data center construction/financing/buildout cycle are all starting to lose momentum.

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Wheat has surged higher on a combination of drought, tighter diesel/fuel markets, and surging fertilizer + other input costs for farmers. I am extremely proud of this one in particular, since we spent two weeks earlier in the year covering this trade from Amarillo, TX and the Texas Panhandle. Our on the ground research remains best in class, and we’ve got more in store the rest of the year on the discovery front… Maybe a follow-up to the Panhandle will be warranted if wheat starts to climb toward those crazy 2022 levels:

In case you didn’t have a chance to read that…

I continue to expect that the ‘TACO’ theme and this relatively quiet period will continue until the Warsh speech on Friday now, and Fed officials are actively underpricing a supply shock and fuel shock continuation (or worsening of one) going into 2027 - both of which I think we could see get worse before they get better.

That’s all for the brief update this evening from me - and I will see you over on the MacroEdge Oil and Gas Research Substack…

We are doing really special things here folks…

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MacroEdge Flagship Index Portfolio Strategy Discussion & Update -

@SixFinance, Head of Research

It has been a frustrating go of it since the inception of the Flagship and although we are outperforming SPX to date, I feel that we have too much equity beta in a market with increasing macro pressures. Certainly correlating with the index more than I would like over this small sample size. The portfolio has not been changed since last week’s update, but I anticipate increasing portfolio concentration in our best ideas. Changes will be coming in next week’s update. Jackson Hole this Friday should be a very interesting insight into how aligned the Fed is with Treasury. Inflation is still running hot, balanced against an increasingly weak housing sector.

Continued below: Portfolio Strategy & Commentary Continued

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It’s great to be back for another edition of the War Note series. I continue to improve and am looking forward to things continuing to do so through the week - I will be headed back to our Texas office on Thursday for a meeting, and I remain deeply optimistic about the second half of the year. I am going to start getting back on the road on a more frequent basis in the second half of the year - and we are planning on having a resumption to the ‘On the Ground’ research series - for a Part 3 from the Permian Basin in September, of which I will have more details on - on Friday.

Today was another very muted and boring day in equity markets - US equities remained largely flat - and the biggest story was the dip in front-month crude, led by another batch of ‘TACO’ headlines that we will discuss below. This is part of the ‘patience’ timeline I have frequently pointed out now for the better part of the last 8 weeks - and with midterms so close now (just two months out, give or take a week) - they are going to start pulling out all of the stops to try and improve things in this final 60 day stretch. While there’s not much to salvage, the Administration sent Ratcliffe to Moscow for discussions - and China clearly exerted some influence over Iran in getting flows a notch higher out of Hormuz over the last several days. I think the Administration is living on borrowed time as it pertains to oil inventories - and we’ll burn through more seabound inventory here over the next 2 months until things begin flaring back up again. Once that occurs, that is where we can see crude begin a climb back to the $100bbl level (see chart below in ‘The Patience Game Continues for the Crude Trade’).

We’re going to keep this evening quite brief - given the time of the evening it already is - and John has a great addition below covering the latest on ag and the surge in farm bankruptcies underway with soaring costs, poor margins, and difficult drought conditions that we’ve been discussing now for much of the year. On the market front - Nvidia will report tomorrow - and the Admin needs to continue to see the can kicked long enough for the Anthropic and OpenAI IPOs to make it through the pipeline - which acts at least somewhat of a bailout for the infrastructure component of the stupid buildout that is slowly hitting a wall. OpenAI itself will not be the future of AI, even if Sam manages a close network in the White House right now - which is going to start fracturing as quality continues to decline - and spending continues to rise:

While the Soviet-style buildout continues to provide a great nominal sugar high for the economy, that’s at the expense of an absolute acceleration in our ‘i-shaped’ economic conditions - and shift to a more ‘Argentina-like’ economy, of which I expect to continue in the years to come.

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Reports for the Remainder of the Week

For the remainder of the week - there’s a lot of quality information we’re going to be covering.

• Wednesday: Midweek Macro Note (Early), and Oil and Gas Research Strategy Note

• Friday: To Be Announced

• Saturday: Oil and Gas Research Weekly Macro Note

TACO Tuesday - Reviewing the Headlines

Today there were about a dozen different ‘TACO’ headlines about the war - which sent crude prices sharply lower. They began early in the morning with news Pakistani officials were in Tehran for discussions on restoring flow to the Strait of Hormuz - and this continued throughout the day with Russian headlines, AlArabiya headlines, and so on/so forth.

Here is a continued preview of what we saw throughout the day:

There was another headline from TankerTrackers discussing 25mmb in ship-to-ship transfers underway, a lot of noise in the headlines, and I think it all plays into the continued need for patience in the crude trade - which is taking a long, long time to play out - even with the record spreads in product prices.

Which one of these headlines and which ones aren’t? I don’t think it matters - and the markets are looking right to Hormuz flows for actual signals. With the midterms coming up, there’s going to be a significant hand in the market for the next two months, regardless, though I think the next SPR release announcement will tighten the markets globally to a great degree as we begin to trend toward Congressional minimums (which I expect Trump to blow through, eventually).

The Patience Game Continues for the Crude Trade

For the crude trade - the patience game continues to be the only game in town. Crude fell about 5% today, and is down another 1% or so overnight - the two pathways remain intact - though scenario b - the line dipping into the mid-70s or so now looks to be more likely if the trend breaks down. Whenever Brent has dipped too far from $85/bbl Iran has responded very quickly - and their most opportune time for actually causing election damage is now approaching the golden window - so they may just be holding off until the first week of September before doing just that.

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It’s great to be back in the driver’s seat for another Weekly Macro Note. This week is going to be spent getting back up to speed after I had a few medical incidents in the last few days that warranted the need for immediate care and time away from screens - including a concussion (ongoing). As a result, I would expect that my contributions may remain relatively limited this week in terms of depth - but we are going to be getting back up to speed now, and I apologize for the Thursday - Sunday pause in outbound reports…Please note that I will be based on PST for the first half of the week, so that may impact our publishing time as well. Have a fantastic start to the week.

As I get back on the mend, there are plenty of things going on as we wrap up the month of August - and the Oil and Gas Research reports will resume on Wednesday - which you can locate below:

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To start the week - it’s relatively quiet in overnight markets - and I expect that the midterm can kicking is going to get even more noticeable from here on out (particularly with bonds and oil prices). With diesel prices sitting at near-record highs, and gasoline prices not far off - the Administration is planning to up the ante on Iran tomorrow with the ‘toughest’ economic sanctions package ever placed on the regime. What we’re likely to see, in my opinion, is Iran take that as further escalation and we’ll see them start to up the tightness in the Strait of Hormuz and Bab-el-Mandeb, of which there was a very slight spike in tanker traffic over the weekend. I think a lot of this is being coordinated now with the Chinese - especially with those vessels going through the Omani lane - and China has a vested interest in also attempting to keep oil prices out of the $95+ Brent range, even though I continue to think markets are living in the borrowed time period between now and October. The first stop for a tighter WTI market is still in the low-100s, though product markets are going to remain tighter with how tight physical inventories are now going into the fall and winter seasons. For Europe - we’re seeing that in TTF tightness.

On the macro side - quiet week in the US - it does not look like Warsh has the balls or gall or move rates up a notch in September - so that is unlikely to occur this year (especially before midterms now) regardless of what energy prices do. The only thing that could derail that is if the spike happens sooner than expected, though like the Powell-Fed, I expect that the Warsh-Fed is a Fed that will react rather than anticipate changes to inflation regimes. With inflation still as hot as it is for as long as it’s been, the i-shaped dynamic continues to ripple and the picture of that is ugly on the economy on an aggregate-real basis. Nvidia earnings this week too, and PCE, but other than that - the focus between now and the end of the year is and will likely continue to be bonds/yields and commodities/energy.

(Dutch TTF - could set its highest weekly close since the 2022 inflation cycle).

Let’s dive in…

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Weekly Macro Note Coverage

This evening - we’re going to cover the commodity picture - including the ag trade, briefly look at energy, and take a look at the Asian markets before shifting into commentary from Six on the latest themes and market trends underway. We’ll also touch on earnings from Nvidia - in which I do not expect a major reaction, and the window dressing we’ll continue to see for equity markets until the OpenAI and Anthropic IPOs… some of the most bizarre in a lifetime.

Weekly Report Schedule

This week we will be moving our regularly scheduled Midweek Macro Note to Wednesday, and the below includes the next Oil and Gas Research strategy notes.

• Tuesday: War Note

• Wednesday: Midweek Macro Note - Oil and Gas Research Strategy Note

• Friday: To Be Announced

• Saturday: Oil and Gas Research Weekly Macro Note

The Commodity Picture & Ag Sphere

Bessent continues to be really cocky about his ability to control a supply shock (and yields) and I think it’s going to burn them badly - even if the burn comes late in the year and carries into next. One of the things that the Admin is struggling with most right now are ags/beef/fertilizer etc, all of which are surging higher. The increased import of foreign beef will kill domestic sellers, and eventually lead to an even tighter market - yet another example of a short term bandaid used by a politician that will cause long-term harm.

Earlier in the year, I traveled to Amarillo with Six to cover just this ‘trade’ - and the theme continues to play out, and will get tighter through the end of the year:

Our wheat experts that we talked to then correctly predicted what is happening with wheat now:

Don’t forget about that corn, too:

And beef:

Oil and Gas Update - Patience Narrative Continues

The two pathways for WTI that I see most obvious are the two below -

(Continued below: Oil and Gas Update, Asian Market Churn, Portfolio Commentary Update - Six)

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The MacroEdge Flagship model portfolio is up 5.01% since July 2 inception. Two meaningful changes to report in this note: one large upsizing of an existing position, and one new sleeve adding right-tail exposure, increasing our gross market exposure from 100% to roughly 110%.

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Good Tuesday evening MacroEdge Readers & Community,

In this edition of the War Note - we’re going to keep it very brief - and discuss the latest developments in the US-Iran War, with the primary focus being the escalation in tanker attacks in both the Bab-el-Mandeb and the Strait of Hormuz over the past week. In just the last 48 hours, there have been ~half a dozen attacks on tankers and cargo ships. What we’re seeing is the dynamics of the war shifting to an economic one - and the Administration in the US is between a rock and a hard place. With the Trump Administration backing off on Canadian tariffs and reducing them to zero overnight as Canada threatened energy-related actions, this is playing out in real time. I continue to harp on energy/commodity cyclical bulls being patient through the October timeframe as the setup takes time to develop. There remains a single, and very important, ‘TACO’ in the chamber - and that will be the next release/allocation announcement from the Strategic Petroleum Reserve. From that point, what we’ll see is a market acknowledge that they may help the front-end very briefly, but the back-end of the curve is continuing to reprice to higher levels. I believe that there is less than a 10% chance that Strait of Hormuz traffic will normalize this year - which means more expensive foodstuffs, goods, etc. On the energy price side - we have diesel trading right under the previous all-time high - with the diesel spread up to $102/bbl - and trading near $200/bbl. Jet fuel is moving higher, and there’s no reason the entire energy and commodity landscape can’t continue to reprice; just give it the next two months for the entire dynamic to continue adjusting.

Markets today moved flat to lower - the tech and AI names got hit hard - and several technical warning signals continue to flash red - including things like the ‘Titanic Syndrome’ - Hindenburg clusters, et al. The ‘TACO-team’ (instead of A-Team) will continue to throw out airbags to roll out Sam Altman’s and Dario’s bags onto everyone’s head sometime in the next 8-16 weeks, and this will of course have implications for market liquidity. We may even see a pivot to crypto and everything else if the 2022 inflation trade is reborn with vigor going into the turn of the year. I am still beyond surprised when I see academics stuck in their textbooks and theories try to drum up reasons for ‘deflation’, ‘disinflation’.... No, no, no. Do they go to the same stores and food places that you and I go to?

Tomorrow evening we launch the Oil and Gas Strategy Note series - covering positioning, portfolio strategy, operated & non-operated opportunities - and you don’t want to miss anything our Oil and Gas Research team is putting out. Subscribe below:

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In other news, the Saudi government has pulled funding for the F1 team for the 2027 season as lower exports start to bite:

Let’s dive in.

Tanker Attacks Accelerate - Hormuz/Bab Update

Hormuz transits are between 0 and 5 per day right now on the inbound/outbound readings:

I suspect that there is some traffic not being counted (even in the counters that are supposedly tracking shadow readings), but there is between 3-5mmbd leaving Hormuz, and the total outage is likely around 7mmbd. Still off the cycle high, but the effect is compounding as reserves continue to plummet, especially in the US. Expect another draw tomorrow in the EIA data, and I expect the next SPR announcement to come around the end of September window if there’s anything left to sell.

Bab traffic is dipping as tankers come under attack, too. The Iranian-Houthi proxies know that they can do real damage if they make the route uninsurable…

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Good Sunday evening MacroEdge Readers & Community,

This weekend was almost unusually quiet - but this is to be expected now, heading into midterms, with almost disastrous GOP polling/prediction market data rolling through - and the President trapped in a predicament regarding the Strait of Hormuz and Bab-el-Mandeb (also to be expected) as projected by many, including us here at MacroEdge, from before the war even started. We continue to sleepwalk toward a much more significant energy and commodity-related crisis (including the food-basket commodities) the longer both Straits remain impeded. On Tuesday evening, we’ll discuss the food-focused commodities in greater detail - but for the time being, I expect that the Trump Administration is going to start to get increasingly panicky about the Strait as we approach September. October is really the month of greatest return - but with the SPR approaching a sub-290mmb reading - we will soon be at another reading where they will have to announce an additional allocation for sale to the market - which I expect them to do now. After the DoE comments of last month about being able to run the SPR down to 70mmb (completely laughable without total structural destruction of the cavern infrastructure) - this is something that could, of course, occur as we head into the October timeframe with little sign of any Hormuz traffic flows.

(Hormuz traffic flows through 8/15).

In the overnight markets - which I would take with an absolute grain of salt given the low volume and final vacation week for most that’s ahead before school season gets into full swing - markets are flat across the board - with the Nasdaq up .15%, WTI spot up .5%, Bitcoin flat, and the Dow down slightly. Not much action in natural gas either - but that’s to be expected given current forecasts through the end of August.

We’ve got a lot of fantastic updates and strategy notes in the report pipeline this week - so stay tuned for everything in store.

For the evening - we cover the report schedule for the week, take a look at the macro week ahead - including what’s important from a macro data release (not much anymore) and earnings that might matter, discuss a brief update on energy/commods/& bonds, take a look at the latest from Asia, and provide an update on our Global Bubble Index for August - which we have not updated since early June. There’s a lot to cover, so let’s dive in…

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Report Schedule for the Week:

• Tuesday -> (War Note + Portfolio Strategy Note - Food Commodity Discussion)

• Wednesday -> (Oil and Gas Research Strategy Note - Thiel Goes Long Shale)

• Thursday -> (Midweek Macro Note)

• Friday AM -> (Midyear AI Bubble + Data Center Report Pt. 3 of 5)

• Saturday -> (Oil and Gas Research Weekly Macro Note)

• Sunday -> (Weekly Macro Note)

We will also be discussing the release date(s) for both the Oil and Gas Portfolio Strategy and broader Flagship Portfolio Strategy Basket. Strategy discussions will begin on Wednesday for Oil and Gas Research for both public and private markets.

Macro Week Ahead

I am expecting another snooze fest this week as we continue to march towards midterms and Jackson Hole / next FOMC meeting. It looks less likely now that the Fed will consider a rate hike in September - though I believe it’s the last chance they consider such an action this year with midterms coming up. Inflation remains hot relative to the 2% mandate, and continues to compound, and things like electricity prices continue to charge higher. Fools on X do things like adjust electricity prices chained to 1973 without adjusting for purchasing power decline, rendering such datapoints useless in real terms.

This week, macro data-wise, Japan GDP growth already came in slow, while in the US we have the NY Empire State data, NAHB release, permits/starts, industrial production, and claims data in the pipeline. None of this is particularly market-moving or relevant - and as highlighted below - energy, commodities, and bonds will likely be the driver of market action now through the end of the year.

Energy, Commods, and Bonds - The Key Themes for August - The Illusion of Abundance

The pattern on WTI is constructive and could continue to take several months to play out - the floor has moved higher here in the 72-74/bbl range - but no real reason to rush into anything directly as it pertains to spot price. Equities themselves in the E&P/drilling spaces remain much more attractive as they begin to reprice higher for longer energy prices as the Hormuz reality catches up to markets:

Continued below with Ozone —>

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Good Thursday evening MacroEdge Readers & Community,

This week validated our projections on both CPI and PPI - with t-ball inline prints that should be taken only at face value. These prints (designed for some midterm padding by the Administration) will not help the November numbers - and Iran continues to dig in as it pertains to Hormuz and Bab traffic - with ship attacks happening now for the last 11 days. I see it as very unlikely (and increasingly so) that we see Hormuz traffic levels normalizing before the end of the year - because Iran (by proxy of China) knows the damage that will inflict on the incumbent party.

Prediction markets are seeing the declining chance that I am - over the course of the year - that traffic is going to return to normal, pricing just a 36% chance of that happening.

Markets continue to mechanically tick higher on the back of a record July budget deficit month - nearly $500 billion - and this crazy runaway fiscal train is showing no signs of stopping for the time being until some sort of tax hike comes along (won’t be until post-2028) and both sides simply cannot help themselves by pulling forward everything toward the short-term solutions of today that they are addicted to. For markets - this has meant a continuation of a more ‘third-world’ style equity market - as the lower 90% in the ‘i-shaped’ continues to get bulldozed by stagnant wages and high inflation - and those holding most the assets are seeing the value of those assets compound at a rate that wages won’t ever come close to matching. The tariff refunds and buyback window have provided another short-term stimulative dose for markets and the economy, and conversations I’ve had with business owners have highlighted these refunds acting like a short-term boost for them. Whether or not it’s by design, the operators of the system are simply addicted to the short-term solutions, and that will have long-term consequences, as it has been for the last 20+ years.

Overall, not a very eventful week with some earnings here and there - layoffs remain at similar levels to the last four months - and retirements are surging massively on the back of this equity rally - which is distorting a lot of the employment data.

This evening, we’re going to dive briefly into the CPI/PPI T-Ball, discuss the snoozefest week that this has been, and highlight the continued need for cyclical patience as an energy trader in this record tight oil products market.

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There’s a lot in store this year with Oil and Gas Research and Portfolio Strategy in the pipeline - and you don’t want to miss it.

Let’s dive in.

CPI/PPI T-Ball

Rate hike odds for September have ticked lower - to about 35% on the back of a soft CPI/PPI reading ->

This was completely expected, as the last thing the Trump administration wants is a rate hike one month from the midterm election. While I don’t really think it will impact anything - September is probably the Fed’s last chance to hike this year - and we’ve also got Jackson Hole coming up - where we could get a Warsh that commits to taking this brutal underlying inflation more seriously (though I don’t totally have my hopes up). I continue to believe that regardless of what Warsh does now, energy markets and the bond market are starting to take the driver’s seat on the inflation fight, and that will probably have far more significant implications for the economy than a 25 basis point hike.

The CPI is 5+ years above target and still running hot. Another spike in energy prices, and this will begin ticking back up - feeding back into everything.

PPI saw some reprieve on the back of a softer commodities print:

These are really just noise at the end of the day - with the 10Y ticking slightly lower to close trading today, and we’re sort of right on the threshold where odds for a hike in September start to trend much lower if data continues to roll out in this fashion (even though yields and underlying inflation may not change by a whole lot between now and then).

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Good Wednesday evening MacroEdge Readers,

This evening marks the beginning of our first ‘Portfolio Strategy Notes’ - for the time being, these will continue to operate under Ozone, so if you are subscribed to Ozone - you will get these updates, our commentary, input, and more over the next month or so. Stay tuned for an announcement sometime next week for more.

These notes will be delivered each Wednesday, and we look forward to what’s ahead with all things Portfolio Strategy.

Don

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MacroEdge Flagship Model Portfolio Strategy Note from Six (@SixFinance) - Head of Research

In Portfolio Strategy, we will be doing something different moving forward, something durable and easily trackable, and soon to be investable, but more on that very soon. The Portfolio Strategy notes will be focused on a discussion around an actively managed portfolio, utilizing securities that are easily traded without extensive trading permissions, and are not overly derivative heavy. We have spent the last six weeks testing out a new interface and semi-actively managing a model portfolio, on which more details will be shared shortly.

The above holdings make up the current composition of the MacroEdge Flagship portfolio, which will be adjusted dynamically, and position-level updates will be shared as changes are made. In fairness to investors in the product itself, this may be done with a lag. The Portfolio Strategy notes are designed to share insight into how the Flagship model portfolio is being managed and why.

Key Points:

1. The book is currently structured to endure a stagflationary environment of low growth and inflationary tailwinds. Should the Iran war reach a real conclusion, adjustments will be made.

2. Hard assets and international equities make up a large percentage of the book’s positioning, as we look for value and diversify risk from overheated U.S. markets.

3. Rate hike odds for September are dwindling, and recent payrolls combined with an in-line CPI report today should be sufficient to forestall a September hike.

What we think is happening:

The market is at odds with an ongoing energy supply shock which has impacted roughly 1/5th of global oil and LNG supplies. Transits through the Strait of Hormuz have dropped to effectively zero. Oil is held down by consistent rhetoric from the Trump administration that a deal is right around the corner. Levered speculators are being washed out of their positions by this rhetoric, punishing active speculators and warding off marginal potential speculators.

Iran has pivoted to the insistence of large reparations, sanctions relief, and permanent tolling of the Strait of Hormuz, something that is politically untenable for the United States. They have publicly stated their goal of outlasting Trump politically, which signals that the Iran conflict is likely to add tailwinds to inflation for some time and is likely to create a favorable climate for energy equities over the medium term.

The United States is running a deep fiscal deficit, and is courting a large 2027 military budget increase. Simply returning to long-run annual budget deficit levels would mathematically induce recession.

There is a bubble in artificial intelligence supply chains, namely semiconductors, as the AI buildout has powered this highly cyclical industry to levels and multiples that will prove difficult to sustain in the medium to long term. Semiconductors broadly are uninvestable at these levels, although they remain tradeable.

Cybersecurity is undergoing a secular demand boom, as new AI models and the coming (albeit further out than many of the quantum equities are currently pricing) quantum threat to legacy systems drives huge demand for protection.

Korean investors and U.S. AI funds like Situational Awareness and Value Aligned Research Advisors have induced a parabolic rise in many AI supply chain stocks that has now culminated in a washout in positioning, delivering the sector. With positioning reset, and hyperscaler earnings behind us, a relevering may occur. It will be difficult to get as much firepower back into that trade as on the initial parabolic move higher. Jensen is raising $500B for AI infrastructure, and Anthropic rushes to IPO into a positive liquidity environment.

The fiscal backdrop is broadly supportive of equity prices, and the Trump regime has shown itself to be highly supportive of risk assets. Shiller CAPE ratio is at the 99th percentile; this is one of the most expensive equity markets in history by that metric.

Much of the earnings boom seen this year is a result of circular investment over tangible end demand. Also contributing to this earnings boom are the mark-to-market gains of private market investments and SPCX that have been reported as other income by hyperscalers. This doesn’t presently have a substantial impact on our positioning, but it is on our radar.

Against this favorable backdrop for equities, sector rotation has been a major driving force, with sectors quickly coming in and out of favor, and hot money ruling short-term pnl’s. In this regime, selective trough buyers in out-of-favor industries are likely to be rewarded more quickly than in other market regimes, if inflections can be identified and prepositioned.

Current Positioning

Metals

Real rates have risen dramatically, sending gold and other precious metals into a bear market. Gold is now emerging from that bear market, and central bank gold purchases remain robust. Gold functioned the way a reserve asset is supposed to function, and was sold in the early days of the Iran crisis. The metals complex now appears to have built a base and is now breaking out again. This is a largely technicals-driven trade, and new lows would give us the impetus to exit these positions.

EIDO

Indonesia represents one of the most interesting macro opportunities on the board right now. A threatened downgrade from EM2 to Frontier market status caused a collapse in the equity market. Large institutions are sidelined until the decision is derisked, while the Indonesian government has responded forcefully and rapidly to make the adjustments in line with retaining EM2 status. If Indonesia is not downgraded, there will be a large initial pop that managers will be forced to chase.

BABA

Alibaba represents a single representation of the Chinese hyperscalers thesis that we have been discussing. Alibaba owns a large chunk of just about every major AI company in China, and their Qwen models power much of Asia. Cloud intelligence grew 38% YoY, and EPS is expected to aggressively ramp. This position is still in our book but has grown from a $101 basis.

CRK

Comstock Resources is majority owned by Cowboys owner Jerry Jones and is somewhat of a “wildcatter” natural gas play. Natural gas is oversupplied in the US currently due to an inability to export more natgas to supply global demand, but export capacity is rapidly ramping over the coming years.

WOLF/FRMI

These are sized small for upside exposure to datacenter power. Wolfspeed is a vertically integrated silicon carbide manufacturer, which is where the puck is going in semis, and Fermi has finally locked in its first tenant after a tumultuous entry into the public markets.

SE

Sea is a rapidly growing e-commerce business in Asia. It complements the broad Indonesian exposure.

TM

Toyota is, despite being a juggernaut in automotive, a sleeper in robotics, with the Toyota Research Institute and Woven City sitting at the forefront of robotics development. A multiple re-rating is in the cards for them once they start leaning into robotics PR, similar to how Hyundai did with Boston Dynamics.

HRL

Consumer staples play, offering branded pricing power, a conservative balance sheet, and a long history of dividend performance. This is somewhat of a cash alternative within the portfolio and may be reallocated to riskier assets depending on market conditions.

ZS/S

Cybersecurity laggards. While the PANW and CRWDs have seen parabolic share price appreciation, we believe that the current cybersecurity wave is a rising tide that lifts all sector boats, and these offer much better asymmetry than chasing after the sector leaders at this stage of the rally.

CAI/XRAY

CAI and XRAY were both added to the model deep in the hole. CAI offers high beta to the genomics theme, while XRAY is the leading supplier of dental equipment and is non-cyclical.

ZROZ

Zero-coupon bond ETF. Long-duration yields are likely near their cycle highs, and this position offers extreme convexity to any weakening of the economy, while providing a hedge and a source of funding for future risk positions.

We will be pushing out updates as we make model portfolio adjustments, and we will provide an update soon on accessing the model portfolio.

For more details, please refer to our Terms and Conditions.

Good Tuesday evening MacroEdge Readers & Community,

This evening we’ll be going over the start of the week, some of the latest war developments, preview what’s ahead for the remainder of the week, and more. This week has been largely uneventful - and we’re turning our attention to the ‘next best thing’ being a CPI report. There’s not a whole lot else this week other than a few earnings events in the sub $500bn market cap category, and we continue to monitor energy prices closely. Today, markets traded slightly flat to sideways - oil moved higher about a point, and diesel is nearing its highest daily close for the cycle - advancing overnight to its highest reading since April 7th. Many are surprised by how wide the spreads are versus refined products vs front month spot on WTI/Brent - but there are many contributing factors to that. Tomorrow evening, we’ll have the first of many energy strategy notes in the months and years ahead - these will arrive every Wednesday evening - and discuss on the public equity market side of things opportunities that the Oil and Gas Research team sees. It will also feature updates and discussions on movements to the Oil and Gas Portfolio Strategy - which will soon be trackable through a third party resource for those subscribed. Subscribe to Oil and Gas Research below:

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Oil and Gas Research will be foundational to many reports for the rest of the year, as I suspect it is going to play an important role in how market dynamics evolve between now and midterms - and from there on out through early into Q1. This year just seems to be accelerating in pace, and with school starting once again - soon we’ll blink, and midterms will be a weekend away, and then we’re looking at the holidays. The most important things to watch out for over the next few months will be bonds and oil/energy prices - spot & not. We’re also seeing the yen give up gains from the massive intervention round, and the Administration is seeking to run inflation white hot going into election day now to get assets pumping. The KOSPI is up over 4% overnight (Korean local time), and below we’ll look at the technicals of the major US indices in ‘flag or drag’.

A cool CPI tomorrow could send yields tumbling down temporarily and kick assets into overdrive once again -

Every report since Erika has been booted from the BLS has come in-line, so do I really expect a surprise tomorrow? Not really, because that would be ammunition for a 25bp move in September - which they want to avoid strongly. Either way, the AI trade will start to vibrate violently if rates are increased - just as we saw in 2000…

This evening we’ll take a look at the next reports in our research sequence, talk about the continuing standby in the war - and the dynamics of oil and diesel prices (with the potential for WTI to enter a new cyclical bull come November), and also explore the technicals of the major US indices in ‘Flag or Drag’, and continue on with a CPI Preview.

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Reports in the Sequence

• (Wednesday) Oil and Gas Research Note -> Strategy Note

• (Thursday) Midweek Macro Note

• (Friday) Part 3 of 5 - Midyear AI Bubble and Data Center Construction Update

• (Saturday) Redeye Macro Note - Ozone, Oil and Gas Research Macro Briefing - O&G

• (Sunday) Weekly

The Standby Continues

The *war* is now in a standby state - with Hormuz traffic effectively closed (about ~5mm barrels) transiting through on a daily basis on a 7-day rolling basis, so about 8 million/bbl lower than pre-war. While China demand has remained suppressed, that has begun recovering, and China cannot keep their foot off of the demand pedal forever. We’re also starting to see US exports drop sharply, which explains the large build today in the API report; the EIA report tomorrow will likely show something similar, and that will begin adjusting next week. The market will continue to digest data as it comes in - and patience is warranted through October and this midterms period as we figure out what’s going to happen with both Hormuz and Bab, and the conflict itself.

WTI - in a compression formation - I would call this highly pre-cyclical for something like an 08 move - so be patient.

For gasoline - the large flag is a bit different - but same sentiment as above:

Diesel is the tightest market - just shy of cycle highs - which should see $6/gal return for diesel in many states:

(Continued below with Ozone - The Standby Continues, Flag or Drag, CPI Preview for July, Gold’s Rebound and It’s Warning - John Galt)

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Good Sunday evening MacroEdge Readers & Community,

This evening since, I am starting the Weekly Macro Note considerably later than usual due to my laptop croaking while on the move, this update will be slightly more brief than anticipated. That’s actually an okay thing - since there is going to be no shortage of things to discuss this week, with reports coming Tuesday, Wednesday, Thursday, Saturday, and Sunday. If you missed the Welcome Note from our new MacroEdge Oil and Gas Research team, make sure to catch up on that. The link to Oil and Gas Research is below:

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In the Redeye Macro Note we discussed, briefly, some of the geopolitical events that have transpired over the weekend. The Administration is seeing an internal rift between those that want to continue the war in Iran and those who continue to seek out an offramp. Iran has been emboldened to the point of making their own demands, and it’s getting increasingly unlikely that the Strait of Hormuz reopens to pre-war traffic levels for at least the remainder of the year.

(Bloomberg - Renegade Resources)

The Houthis are also growing increasingly bold, striking Aramco facilities at will - and with midterms three months out now - I expect that the Trump Administration will try to navigate a tightrope with the situation to avoid an immediate spike in energy prices. The structural setup continues to look quite positive for oil - and as I’ve stated numerous times over the past several weeks - this bull thesis will require patience through October to start clicking into place now:

The tightening range should be positive for E&P names, and $79/bbl is really a sweet spot balance between consumers not getting crushed (yes - spreads are crazy) and producers doing very well. Keep an eye on the close for XLE this week:

Outside of the spin cycle continuing for the war - the macro-data continues to be overweighted by those on X and Substack for the time being - I do not think it’s going to be particularly important until midterms now. Oil and the bond market are going to play a much higher level of importance than the former items - and with data quality in the absolute tubes - I’m not sure why we’re obsessing over these releases like they’re a sports draft. The CPI reading should show those negative MoM base effects rolling off from the June print & same goes for PPI. Look for any signs of real retail sales slowing down - though I do not think this shows up until August/September data based on early signals I am seeing. Some of these datapoints will shift the September odds - and CPI will play a role in a possible September hike. If the Fed doesn’t hike in September, the bond market will do the work for them going into midterms.

This evening we’ll take a look at the macro week ahead - looking at data releases and earnings, discuss the homebuilder situation update, take a look at the transportation sector, and highlight the bulls that we see back over their skis - as gauges like the BofA sentiment reading hit all-time highs and we’re seeing deli-shop workers and salespeople quit their jobs to trade and sell courses full-time.

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Report Schedule for the Week

• (Tuesday) War Note

• (Wednesday) Oil and Gas Research Note - Portfolio Strategy Briefing #1

• (Thursday) Midweek Macro Note

• (Saturday) Oil and Gas Research Note - Macro Briefing, Ozone - Redeye Note

• (Sunday) Weekly Macro Note

Macro Week Ahead

• Wednesday - CPI

• Thursday - PPI

• Friday - Retail Sales, UMich Prelim - watch the inflation reading signals here, if for anything

Earnings >$300bn market cap: CSCO, AMAT

Homebuilder Situation Update

Builders popped last week but they’re sitting on near-record unsold inventory.

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Good Saturday Evening MacroEdge Readers & Community,

It was a very warm week last week and felt shortened by my travel on Monday. I had a very successful few days in Arizona, and it’s good to be back in the office and firing on all cylinders. This is going to continue to be a very busy second half of the year, and everyone at our organization is rocking and rolling full steam ahead while it seems that many others have logged off for their final summer ‘siestas’... Now, don’t get me wrong - I don’t mind a siesta every now and then; it just seems like a large part of our society lives on a perpetual vacation subsidized by a smaller and smaller group of producers - and I think that math is going to be very, very problematic in the long run for Western countries.

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This evening we’re back with the Redeye Macro Note to cover the latest geopolitical events from the Friday evening & first half of the weekend, discuss the *hilarious* BLS release on Friday morning, and other pertinent macro data from the previous week. It continues to look very unlikely that we’re going to see any meaningful shift as it pertains to the Strait of Hormuz for the time being - with ship traffic remaining near zero on a moving-average basis - the clock to the *red alert* days continue to tick lower:

While we continue to subsidize demand with the SPR for the time being - this dynamic is not sustainable on a long-term basis, and cyclical energy bulls should remain patient through October while this hot potato dynamic continues to mold itself into form. US officials are starting to get antsy about getting out of the conflict due to advanced munitions shortages (that are also impacting Saudi Arabia, Kuwait, Bahrain, & Iraq) - but today, it was noted in an Israeli news report that they may attack again if the US Administration is unwilling to take said actions to continue the conflict. Just as I said from the beginning of this thing - the general theme is that there seems to be absolutely no plan or objective to this day - and fighting a war in the Middle East against the most formidable regional opposition in the region (in hindsight) is never, ever, a good idea. All of this to say, I continue to think the clock is ticking on *everything* right now - from the AI/data center trade, to the labor market, price levels on everything, and many of the other things going wrong in the United States right now. When the majority of a society has to resort to gambling and nihilism to stay above water on the cost of living, and we see travel data like we’re seeing now - there are many flashing lights that things are going wrong under the surface (and frankly, have been for a long time)... This isn’t some doomer take - for the Wall Street economists and portfolio strategists who think things are just dandy - I suggest they get out and take some of the trips that I’ve taken this year to get a perspective on the real world beyond the guard gates & golf courses… It’s quite eye-opening.

Anyways, for the next couple of months now on the energy front - we’ll continue to ‘knock on Heaven’s door’ as we TACO-waltz around the minefield and continue to drain critical energy supplies. They’ve bitten off more than they can chew - and it’s going to sting them… yet inflation is the only tool they have to keep nominal growth going… what a bizarre dynamic we’ve fallen into.

This evening - we’re going to briefly cover the following:

• Latest Geopolitical Events

• Bizarre BLS Release and Nonfarm Summary

• Pertinent Macro Data from the Last Week

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Next Reports in the Queue:

• Sunday: Weekly Macro Note: Macro Week Ahead, Homebuilder Situation Update, A Looking at Transportation, Bulls Over Their Skis for a Month or Two More

• Tuesday: War Note

• Wednesday: Oil and Gas Research (Portfolio Strategy & Briefing #1)

Latest Geopolitical Events

The US has paused attacks for a third straight week - as we head into midterms - there’s going to be a growing rift on attacks during this period. There’s now between 8 and 12 weeks before things get to *red alert* levels on the oil inventory front - and some are looking for a way out of the conflict - but I think it’s rather unlikely now that we see Strait traffic normalize… We’re shifting to the ‘denial… acceptance’ cycle among officials right now - and while there are still TACOs to come to control the front of the oil curve, gas prices are notably higher right now than they were when RB futures were at these levels at the earlier low of the year.

Houthi forces carried out two attacks on Aramco assets this evening (US time):

Continue reading below with Ozone (Latest Geopolitical Events… Continued, Bizarre BLS Release and Nonfarm Summary, Pertinent Macro Data from Last Week, and More)…

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Good Thursday evening MacroEdge Readers & Community,

This week has absolutely flown by with my Monday travel day - and it already feels like we’re nearing the end of it. Hopefully you had some time yesterday evening to catch up with our announcement relating to Oil and Gas Research. This addition to MacroEdge is going to be transformative - especially as we continue to navigate a complicated global energy landscape. Much of theme for the remainder of the year in Oil and Gas Research I expect to revolve around being patient for the next few months as the inventory situation and reality catch up to markets - but with things remaining as dynamic as they and governments intervening as much as they are around the globe - we will be providing all of the necessary information and data to remain diligent and make good decisions during this murky period of time. Make sure to subscribe to Oil & Gas Research below, and don’t miss the Saturday welcome note from the team:

MacroEdge O&G Research

In markets today, we saw some of the euphoria from the front half of the week fade as it has become clear that the headline lies can only work for so long from a market manipulation standpoint. While they aren’t done being deployed, the clock continues to tick on the oil inventory situation both in the United States and globally. Notably, July marked the first time in decades that the US imported no oil from Saudi, and with our declining exports in recent weeks, it’s clear that barrels are starting to be re-routed domestically as the market for them becomes more competitive. The ‘TACO trade’ will remain intact through the midterm period, but that’s just 3 months away now, and the Iranians know they can inflict maximum pain by simply doing very little, keeping the Strait effectively closed, and attacking tankers in the Red Sea through their proxies in Yemen. While the entire region seems to be on the verge of ‘tinderbox’ status once again, there’s also the entire market situation ex-oil everywhere else in the globe that remains completely unhinged, too.

Tomorrow is a non-farm payroll day, which we’ll discuss briefly below - and I expect that the Trump Administration will likely cook something mid-range or to the downside in order to cap a further yield rise in the interim. With a rate hike very much on the table for next month (about 70% pricing for a hike this year) - bond vigilantes have arrived on the scene late, but will play an important role in potential Fed action for the remainder of the year. I think if we get a hot labor print for July, again - even not putting much weight into these initial NFP reports any longer - a September rate hike will shift to 80-90% odds immediately following and then retreat over the coming weeks. If there’s a super hot print, it may actually have an opposite reaction than implied in a ‘good headline’ as the market is looking for lower yields.

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This evening - we’re going to cover:

• Reports for the Remainder of the Week

• The Energy Situation This Week

• NFP Preview - July

• Asia - Clock Ticks On

Reports for the Remainder of the Week

• (Friday) AI Bubble and Data Center Construction Situation Part 3 of 5

• (Saturday) A Welcome Note from the Oil and Gas Research Team - O&G Research

• (Saturday) Redeye Macro Note - A Brief Recap on NFP and the Week, MacroEdge Global Bubble Index Update

• (Sunday) Weekly Macro Note

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The Energy Situation This Week

Oil traders (and bulls) just need to keep their heads screwed on and stop looking at 5-minute charts, as I continue to see on X:

The current setup continues to look very constructive - even in the face of the relentless ‘TACO’.

Continued below… “The Energy Situation This Week Continued… NFP Preview, July… Asia - Clock Ticks On’ - read the full report with Ozone:

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Good Wednesday evening MacroEdge Readers and Community,

This evening is full of exciting updates as to what we are rolling out this month under our Macro Research offerings over the course of August. Part 3 of 5 of our Midyear AI Bubble & Data Center Construction series will be available on Friday afternoon - between the Midweek Macro Note - available tomorrow evening, and the Redeye Macro Note - available Saturday evening.

MacroEdge Ozone will continue to serve as the backbone of our global macro research, data, strategy, commentary, and more - but these new offerings serve as enhancements for those individuals and firms looking to build on the MacroEdge experience and take it to the next level. Many will find the experience of all three: MacroEdge Ozone, MacroEdge Oil and Gas Research, and MacroEdge Portfolio Strategy - to be the best way to experience MacroEdge, and I would recommend it as such for a variety of reasons. Each offering will bring something unique and different to the table - as outlined below.

This update is going to be kept brief to go over each one of our new offerings on an individual basis, and we’re going to skip the non-op oil and gas component until Saturday - when we’ll have more time to cover it in greater depth.

As for the next Ozone Reports - and Oil and Gas Research Reports - the schedule is as follows:

• Thursday (Midweek Macro Note)

• Friday (Midyear AI Bubble and Data Center Construction Report, Part 3 of 5)

• Saturday (Redeye Macro Note) and Welcome to Oil and Gas Research (O&G Research team)

• Sunday (Weekly Macro Note)

Below you will find the breakdown of each offering and the soft and hard launches - two of three of these additions will be expanded here within the Substack ecosystem - and will be extremely easy to access and subscribe to for the nearly 23,000 of you reading and following us now on Substack.

Also - a very nice comment to echo the sentiment I have about everything we’re building both here at MacroEdge, and beyond in our other portfolio companies - thank you to Em from Japan:

MacroEdge Oil and Gas Research

Arriving Saturday 8/8 for Soft Launch, Wednesday 8/12 for Full Launch

Follow the Oil and Gas Research team on X at @MacroEdgeEnergy

@MacroEdgeEnergy on X

The welcome note will be available on Saturday 8/8, while the first report will be available on Wednesday 8/12.

Energy markets are not governed by financial abstraction or surface-level headline narrative. They are driven by physical realities, structural capital cycles, and complex wellhead economics.

MacroEdge Oil & Gas Research is our entry-level intelligence platform built explicitly for those deploying capital across the energy value chain. We bridge the gap between high-level global commodity macro: tracking structural underinvestment, physical supply-demand imbalances, and capital flows, and ground-level asset performance across upstream operations and non-operated working interests.

While consensus follows lagging data and rear-view financial modeling, MacroEdge evaluates the structural drivers moving the sector before they manifest in price discovery. Whether you are an upstream operator, non-operated working interest holder, private equity sponsor, family office, or independent investor, our platform provides the empirical rigor and actionable strategy required to navigate volatility, manage downside risk, and capitalize on structural market dislocations.

What’s Included with Oil & Gas Research

Subscription Pricing:

• Standard Tier: $75 / month (or $750 / year)

• Team Tier: 20% discount for 3+ users

• Corporate Tier: $2,000 – $5,000 / year (Custom institutional seat allocations & direct advisory access)

Subscribe at MacroEdgeEnergy.substack.com/subscribe to upgrade.

Subscribe to MacroEdge Energy

1. Weekly Oil & Gas Macro Update (Every Saturday)

The Pulse of Oil & Gas: Every Saturday morning, we deliver a deep-dive macro synthesis dissecting the physical and financial forces driving the energy complex. We look past headline noise to map out structural shifts across:

• Physical market fundamentals (crude & natural gas balances, inventory draws/builds, decline rates)

• Global capital expenditure trends, cost of capital, and rig/frac spread dynamics

• OPEC+ strategy, geopolitical friction points, and global trade flow dislocations

• Broader macro liquidity, monetary policy impacts, and inflation dynamics

2. Weekly Strategy Update & Live Portfolio Access (Every Wednesday)

The MacroEdge Oil & Gas Portfolio: Every Wednesday, we release our dedicated Strategy Update, walking through our active positioning across public equities in the energy sector. As a subscriber, you get real-time transparency into how we translate macro frameworks into actionable risk management and portfolio execution.

• Real-Time Portfolio Access: Continuous visibility into active holdings, asset allocation, and cash positions.

• In-Depth Commentary & Analysis: Comprehensive breakdowns of the fundamental thesis behind every position.

• Trade Update Notes: Instant alerts and notes published as trades, rebalances, and exits are executed in real time.

3. Real-Time Intel, Market Event & Headline Flash Notes

Energy moves fast, and structural dislocations do not wait for a weekend column. Throughout the trading week, subscribers receive frequent, high-conviction updates covering:

• Breaking market events, supply disruptions, and policy/regulatory shifts.

• Real-time analysis of earnings, M&A activity, and A&D deal flow across key basins.

• Tactical trade setups, opportunistic entries, and strategic risk-mitigation notes.

Position Your Capital Ahead of the Market

In an era defined by capital discipline, geopolitical realignments, and shifting energy regimes, static analysis leaves money on the table. MacroEdge Oil & Gas Research equips you with the institutional-grade data, field-tested expertise, and forward-looking clarity needed to act before the crowd catches on.

Subscribe at MacroEdgeEnergy.substack.com/subscribe to upgrade.

Subscribe to MacroEdge Energy

Looking for More for More? MacroEdge Oil and Gas Economic Advisory Services and Offerings Available on Tuesday 9/1

At MacroEdge, we view energy through the dual lens of global macroeconomic drivers and ground-level asset economics. We provide specialized economic intelligence and strategic advisory designed specifically for those operating and deploying capital in the oil and gas ecosystem.

With decades of combined experience in the industry, our vantage point is fundamentally different from traditional financial desk research. We look past rear-view economic indicators to focus on leading physical signals: rig counts, wellhead economics, infrastructure bottlenecks, and capital flows. By synthesizing macro liquidity and global supply dynamics with micro-level asset performance, we pinpoint emerging market dislocations, supply-side constraints, and asymmetry in risk well before they manifest in consensus forecasting.

We partner alongside private equity, family offices, upstream operators, and non-operated interest holders to translate macro volatility into a competitive advantage. Whether evaluating deal flow, hedging exposure, or timing capital deployment across the commodity cycle, MacroEdge delivers the rigorous, data-driven foresight required to position capital ahead of the market.

Interested in custom institutional research, bespoke modeling, or strategic board-level advisory? Contact our team directly to discuss full Economic Advisory engagements.

O&G Economic Advisory

MacroEdge Portfolio Strategy

Arriving August 27th for Soft Launch, August 29th for Full Launch

Portfolio Strategy is a subscription offering at $85/mo or $900 annually, giving members book access to our flagship strategy vehicle. Subscribers get access to both MacroEdge Portfolio Strategies — the MacroEdge Global Macro Flagship Strategy and the MacroEdge Oil and Gas Strategy — along with strategy notes, ongoing updates, and a once-a-week Portfolio Strategy update to keep you positioned as the market moves.

More information available next Wednesday, following the first official Oil and Gas Research publication.

I am thrilled to see where these new offerings take us for the rest of the year and beyond, and look forward to enhancing decision-making around the globe for you, our readers, clients, and community members.

Have a great evening, and catch you tomorrow.

Don

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