Good Wednesday morning MacroEdge Readers & Community,
It’s very early morning in the Pacific Time zone and I wrapped up a packed day… There’s more in store tomorrow and then Thursday I will be back on the move. From a macro perspective - we started the week off as expected coming off of a Friday with overly negative sentiment, which signaled enough of an upside potential in a squeeze rally for longs to begin playing ball. What I am observing now, however, is the red flags we have mounting in the data center and AI ecosystem, in addition to what we have going on on the war front. It’s very possible now that we see escalation in the conflict once again prior to midterms - and Iran may be waiting for the week prior to deliver a maximum pain campaign to the party in power… With diesel at $7/gal and WTI at $100/bbl - I continue to get asked of late: what’s the upside from here? That will be out soon with our initial 1H outlook and review that is currently in the works.
This evening - we’re going to keep things relatively short and to the point since we have both Strategy Notes coming out tomorrow evening - for Macro Research, under Ozone, and for Oil and Gas Research.
Charts are starting to present themselves as being deeply degraded - and that doesn’t mean that we cannot see further upside, bounces, or rallies - as all of the above can be seen, I simply want to highlight the structure of where we’re at in this cycle versus the peaks in previous cycles - measured beyond the dot-com bubble, etc… I had several conversations today - particularly on the data center front - and I couldn’t, couldn’t, couldn’t believe what I was hearing… These conversations only served to further reinforce my belief that Jensen Huang & the other backers of this once-in-a-lifetime bubble are in their final window of time to either decide to get out themselves, or play musical chairs until the entire thing breaks… There was some general confusion regarding a tweet I put out that ‘this cycle is over’ - which was specifically referencing the AI and data center cycle as we begin to transit this plateau period we now find ourselves on.
Welcome, my friends, to the plateau.
This evening we’re going to cover two sections - with the first looking at the early signs that the AI and data center cycle are done - and the second providing an update to the MacroEdge Global Bubble Index.
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