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The Iranian conflict took another turn yesterday. When both parties were allegedly going to reach an agreement, the US conducted strikes it called defensive; Iran called them a breach. Neither side has fully abandoned the truce framework as of the latest reports, but it’s under heavy strain. Which begs the question if the true motives of the conflict have changed for the US. Perhaps what started as a rapid conflict to seize a big oil producer and provoke a regime change, is n

The Cleveland Fed's CPI Nowcasting model, which estimates inflation before official data is released, currently stands at 4.18%. This data point has been published this week, as Mr Warsh was swore in. It’s is a welcome message from an economy that is running hot in prices, but it’s not hot in salaries or jobs. Take a look at the chart below: you’re looking at the Index of consumer sentiment in the US. The index is constructed on 5 core questions: (1) personal finances today v

The chart below puts together perhaps the most important combination of rates that will shape the US economy not only for the rest of 2026, but perhaps the rest of the decade. Fed funds futures and the SOFR curve are indicating higher rates ahead. We are talking about a 4ish handle again for Fed funds. At the beggining of this year (and frankly not that long ago, when Trump was pressuring to lower rates quickly) we were debating wether we could go down to 2%. The dot plot tha

The posterchild of AI frenzy reported results yesterday after the market closed. As you can see on the charts below, NVDA reported 85% YoY revenue growth with a net marging of 71%. They can drop the mic right there. Those are incredible results. And the AI hype continues: SpaceX, OpenAI and Anthropic have announced plans to go public. SpaceX has already filed the S-1 form with the SEC. Valuation is expected to surpass $1Tn. And Anthropic has committed $19Bn a year into SpaceX

There is something going on in the precious metal market. It’s no secret that both gold and silver are being manipulated by banks and hedge funds, for different reasons, suppressing the value in the west and creating incredible arbitrage opportunities with the east, where both metals trade much higher. Yesterday, Hong Kong authorities announced they are creating a hub for clearing physical gold. It will be a government-owned mechanism (in other words China will own it) and wi

The official playbook for the newly appointed Fed chairman consists of decreasing the Fed’s balance sheet and cut rates. In his mind, and we will not disagree with him, inflation is primarily caused by money printing, not by low interest rates. And here lies the big irony: currently, the Fed is doing exactly the opposite. Take a look at the charts below: the market is now expecting higher interest rates (blue line, top chart), following the Fed indications. And if you look at

Yields in Japan continue to go up. The 30 and 40 year JGBs are already above 4% and, looking at the chart below, it appears they are on a parabolic trend. The 10 year and the 20 year are following the same path. The UK curve (not on the chart) is above 5% from 9 year gilts up to 30 years, which is getting too close to 6% (5.86%). This is very important is several fronts: (1) with elevate levels of debt, the cost of servicing new debt at this levels will increase significantly

In 1 month, there will be a new FOMC meeting, this time presided by Kevin Warsh, the recently appointed Chairman of the Fed. He wil need to abide to the dual mandate of price stability and full employment, but he has mentioned his views differ on what the Fed has been doing for decades. His take, simplified: (1) the Fed’s balance sheet needs to be small out of crisis. (2) inflation is a choice (3) you can lower rates and decrease the balance sheet at the same time and inflati

Investment into Artificial intelligence infrastructure continues to grow at an incredible pace. Hyperscalers are expected to pour $1Tn in 2017 into data centers , chips, engineers, and whatever else is needed to win the race. But the AI game is an infinite game, only the one that survives wins. And the Mag 7 are desperately trying to be that one. Take a look at the charts below, starting with the bottom one: America is spending more money constructing data centers than buildi

It’s interesting to watch Trump and Xi having good words for each other in public, but it would be more interesting to see the tone of their conversations in closed doors, where they tackle the world problems, their rivalry on AI, access to resources such as rare earth elements or geopolitics. In similar fashion, the S&P 500 keeps reaching new highs, and everything looks good, but in this case we do have some visibility behind the curtain. Please take a look at the charts bel

The meeting between Trump and Xi has started. Polymarket was betting on the length of the handshake between the two leaders: 14 seconds. That’s a long handshake even for the land of symbolisms. Trump was guarded by the 30 CEOs of the biggest companies in the U.S, as a sign of respect, trying to feed Xi’s ego. In the first interactions, Xi spoke about the importance and the need for the two nations to have a fluid and constructive relationship. He also brought up the concept o

The U.S. published its inflation report for the month of April yesterday. Headline CPI was up 3.8% YoY. Core CPI (excluding Energy& food) was up 2.8%. In terms of headline CPI, this is almost 100% more than the Fed target measure. You can see that in the top chart below. But perhaps that was during Powell era. The senate just confirmed a new sheriff at the Fed, Kevin Warsh, which may or may not think the same way. But even the sheriff has a boss, and in this case, the boss is

Risks in the market keep piling up. To the concentration, we need to add leverage. Take a look at the top chart below: AUM for leveraged and inverse single stock ETFs have quadrupled since 2024 to $38Bn. On top of that, the whole leveraged ETF AUM (single stock and indices) has seen $115Bn of inflows over the last month, mostly in tech, and mostly in semiconductors. But the most staggering statistic on leverage is the following: the average stock holder is using 86% of her av

A big week for inflation data in front of us. China just published its numbers, and as you can see in the chart below, there is no more deflation or disinflation: both PPI and CPI came out stronger than expected at 2.8% and 1.2% respectively. India, Brazil and the U.S. wil report tomorrow and price increases are also expected. At the same time, GDP growth rates are coming weaker than expected, which points to a stagflationary scenario, where central banks don’t know what to d

The US is awaiting Iran’s formal response to its latest proposal for an interim deal to extend the truce and move toward a final settlement. Iran says the proposal is still “under review” with no set deadline. Tehran prefers a phased approach: addressing regional conflicts, sanctions lifting, and Hormuz access before deeper nuclear concessions. In the meantime, Hormuz continues to be closed. It’s blocked by both the U.S. and Iran. As a consequence, oil is not flowing freely a

Is the damaged caused by the conflict in Iran permanent or temporary? That might be THE question that investors need to ask and find an answer. There are deflationary forces, mostly caused by technology, more specifically AI, combined with inflationary forces, caused by money printing and now, an oil supply shock. Who wins that battle will depend on how things evolve and how long they last. If the technology boom continues, it might be able to balance the (hopefully) short li

Japan has always been different. In 1945 the country was devastated by WWII, but by 1989, it was the second largest economy in the world. The collapse in real estate prices brought deflation and recession, and the Nikkei spent almost 3 decades until it could regain the highs of 1989. Then came the debt. Massive 250% of GDP. The monetización of debt followed. The BoJ owns, still today, 50% of the outstanding government debt. To do that, it printed money (yen) and used it to bu

The US and Iran are actively negotiating and reportedly closing in on a one-page memorandum of understanding aimed at ending their recent two-month conflict but no final deal has been signed. The key points are no strangers to past demands on both ends: (1) Formally end hostilities and open the Strait of Hormuz. (2) Moratorium on nuclear enrichment (a major US demand). This could include handing over or limiting its stockpile of enriched uranium. In exchange, the US would lif

Market concentration in many levels has been a hot topic: (1) concentration is USD investments, (2) concentartion in US stocks, (3) concentartion in Growth stocks, (4) concentartion in Tech stocks, (5) concentration in Mag7 and AI. The last one, on top of concentration, suffers from inter dependence among the hyper scalers. The chart below quantifies it, and it’s becoming scary: open AI and Anthropic, perhaps the most popular AI agents builders, have combined investment commi

The oil shock due to the conflict in Iran is becoming more permanent than anticipated, and it’s bringing unintended consequences. 66 days into the conflict and the strait of Hormuz continues to be effectively closed, and we’re just one missile away from a re escalation of the conflict. Brent is up playing with $120/barrel, and there seems to be no clear solution to the glut in the short term. The two charts below are self explanatory: no ships crossing the strait imply higher