Weekly Macro Note: Data Center Report Part 2 - Troubles Ahead, Crypto Shows Cracks, Air Travel Troubles Continued, Portfolio Strategy Update

In this Weekly Macro Note - we release Part Two of our 'data center report' series, talk about troubles ahead in the space this year, highlight cracks in crypto, air travel weakness, & more.

Don Johnson (@DonMiami3), Chief Economist

Good Sunday evening MacroEdge Readers & Community,

I hope you had a fantastic weekend. I have gotten fully adjusted to the timezone and look forward to continue sharing reports through the week as we have one more day before our conference here in Europe. Thus far, there’ve been many great experiences, and people have also been fantastic. As we continue to expand in 2026, becoming a global firm, rather than a North American firm, has been a key goal. This trip has allowed us to identify market opportunities thus far, especially in our key focus areas, and in the second half of the year, we will make our offerings available in some EU markets (including through Transform & Economic Advisory).

In the meantime, North America and the Western Hemisphere remain our major focus, given the sheer market size and opportunity to do so much more then we already have, so you’ll see myself & business partner occupied with that over the next six or so months. A ‘barn burner’ year is how I would describe my calendar looking towards the next six months… Our intellectual power house and capacity is available for your enterprise, fund, or (even personally) - and you can learn more about everything we’re doing at MacroEdge.net.

Turning our attention to a possible midterm signal - there was a very interesting election result out of Fort Worth, TX & Tarrant County, which saw a huge blue shift in a low-turnout midterm race. While the Twitter/X crowd may scream about low turnout, that’s exactly the reason people should pay attention to some of these early bellwether elections, based on history. Low turnout is exactly what the out-party wants, as their motivated voters and base will show up in greater numbers. With the ‘i-shaped’ economy accelerating, and promises to voters not holding up from the GOP in power, look for voters to switch on a time - especially the huge growing number of independents - things could be very interesting going into November. From a polling standpoint, I’ve found that prediction markets are far more useful for their predictive powers, so I will also watch those as well over the next nine months.

As we continue into earnings season, there will also be some important macro data releases this week - with the main focus being employment and bonds. Globally, Japan remains in a very fragile place, being a core driver of the AI bubble - and global bond market volatility is up - with many yields near cycle highs from the 2022-24 hiking cycles. Without further deterioration in the labor market (which we’ll cover our forecasts on Wednesday, US EST time), yields could push higher and put elevated pressure on risk assets across the board.

This evening - we’re going to cover the key data releases for the week ahead, highlight the latest on data centers for the full-month of January (Part 2 of this new 2x per month series), discuss weakness in the crypto space - which we accurately forecasted in September of last year, talk about energy opportunities, air travel weakness, and the weekly schedule for our reports this week while I am on the road.

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Macro Week Ahead

A key focus week for the USD, and employment data. Let’s see if the Warsh nomination continues to be supportive of a stronger DXY in the short-term, along with Bessent stepping in to defend key levels on the dollar index. Weaker dollar policy = inflation risks abound, and we saw that today in statements from Hassett - saying low rate policy would go away if inflation risk reacceleration showed up again. Given the volatility that’s picked up across the board - especially in cryptos, currencies, and bonds - I am keeping a close eye on these things over the next several weeks.

Monday: ISM Manufacturing (USA)

Tuesday: JOLTS (USA)

Wednesday: ADP Employment Change (USA), ISM Services PMI (USA), BoJ Minutes (Japan)

Thursday: n/a
Friday: BLS Employment Report (USA), UMich Consumer Sentiment (USA)

Earnings (companies >$500bn market cap)

• Alphabet

• Amazon

• Eli Lilly

The Latest on Data Centers (Data Center Deep Dive), Part 2

Georgia and Maryland are the two states to watch for new data center regulation in their next respective legislative sessions. Georgia is pursuing a 12-month moratorium on the construction of data centers to assess the significant impact data centers are having on the grid, communities, and more - and lawmakers are looking to substantially reduce the tax benefits provided to these data centers. I continue to expect that further political headwinds will mount against data centers in the months to come, and especially during the midterm cycle, because of the very valuable political capital they provide to opportunistic politicians.

(Read below: Data Center Deep Dive Part Two, Crypto Shows Signs of Cracking, Air Travel Troubles Continued Pt. 2, Portfolio Strategy & Commentary Update)…