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Corporate earnings are on a historic run, both on top and bottom lines, but at what point does “good” become “too good”? Take a look at the top chart below: S&P 500 quarterly EPS is now further above its long-term trend channel than at any point since 1955. Not since the mid-’50s has profitability run this hot relative to its historical baseline, not during the dot-com boom, not during the mid-2000s credit expansion, not during the post-COVID recovery. At the same time, the b

The U.S. is closing in on $40 trillion in debt, and the pace this month is worth a special mention. Please take a look at the top chart below: as of July 1, 2026, total debt was $39.39Tn. By July 30th, it was $39.84Tn. That’s roughly $452 billion added in just 29 days, about $15.6 billion per day. Interestingly, the debt actually ticked down slightly in the first week of July before accelerating sharply in the back half of the month. Let’s do an exercise that probably has li

The Long end of the curve is where the story is right now. Every long end of every curve. The US 10Y is near 4.7%, highest since Jan 2025; 30Y broke 5% and hit a ~19-year high near 5.2%. The Fed has passed the batton to the bond market to produce rates forward guidance. That implies volatility. Sticky inflation plus a Fed now debating hikes, not cuts, is repricing the whole curve. in the UK, 30Y gilts are near 5.7–5.8%, the highest since the late 1990s. New spending pledges f

A rare move has occurred in currency markets: the U.S. just stepped in to defend the yen. It’s even more rare if we consider the context: No natural disaster, war, or recession/depression is happening in Japan, and yet, on Friday, the Federal Reserve Bank of New York, acting on behalf of the Treasury, sold euros to buy yen. It’s the first time Washington has intervened directly to support the yen since 2011, and reportedly the first time it’s used euro sales to do it in over

On Thursday night, the yen jumped from around ¥162.80 to ¥157 against the dollar in about an hour. Japanese financial authorities intervened to prop up the currency, which had been trading near a 40-year low. Friday’s Bank of Japan meeting confirmed the backdrop: the BOJ left its benchmark rate unchanged, having just raised it from 0.75% to 1% back in June. Notably, hawkish board member Hajime Takata dissented, pushing for a hike to get ahead of inflation risks. This isn’t

Yesterday’s FOMC meeting concluded with rates held at 3.50%–3.75%. But the real story was the vote; three officials (Hammack, Kashkari, Logan) dissented in favor of an immediate hike. That’s a serious “family fight” playing out in public. Then came Chair Kevin Warsh’s press conference, and it was a philosophical shift as much as a policy update. Warsh doubled down on the 2% inflation target, refused to signal a path forward, and essentially told markets: the data, and the bon

What started as a rumor is little by little being shaped into a full worry by the credit market. Nvidia’s credit default swaps just told a different story than its earnings ever have. On Monday, NVDA fell nearly 5% to close at $196.51, but the more telling number was in the credit market, not the equity market. The cost of insuring Nvidia’s debt against default posted its biggest single-day jump since CDS contracts on the company began actively trading. That’s notable for one

Take a look at the chart below. It shows most developed economies M2, rebased at the beggining of 2004. As you can see, those economies have printed money like there is no tomorrow. Japan, by a wide margin, has printed the least. If “money supply growth debases a currency” were a clean, standalone rule, the yen should be the strongest G7 currency over this period. USD/JPY just hit 163.79, up 7.4% over the past six months alone, and near 2-year highs. The yen has been one of t

This week’s Fed meeting is one of the more interesting ones in a while, not because a rate move is likely, but because of the mixed signals policymakers are sitting with. The FOMC meets Tuesday and Wednesday (July 28–29), with the decision landing Wednesday at 2pm ET. This isn’t a “dot plot” meeting, so no fresh economic projections. Just the statement and Chair Warsh’s press conference. But that doesn’t mean it’s uneventful. Here’s the tension shaping the discussion: (1) Oi

The AI capex bill is coming due, and the market hasn’t fully priced it in. For instance, Google just reported its first quarter of negative free cash flow in the company’s history. Two decades of steadily climbing FCF, wiped out in a single quarter, the direct result of the scale of data center and AI infrastructure spend. You can see that in the bottom chart below. It’s not just Google. BofA’s aggregate hyperscaler FCF forecasts have been revised down sharply and repeatedly,

The U.S.-Iran conflict has moved well past the “limited strikes” phase, and it’s now tangled up with domestic politics in ways worth understanding before the November Mid Terms. First, the military options: the White House has been weighing a range of options beyond the current nightly strike campaign: seizing Kharg Island (the hub for 90% of Iran’s oil exports), bombing underground facilities tied to Iran’s nuclear program, and further degrading Iran’s grip on the Strait of

For most of this year, two lines moved almost in lockstep: the cost of running AI inference (token expenditure) and hyperscaler stock performance. It does makes sense; more AI demand meant more spend, more spend meant more revenue for the cloud giants selling the compute. From late February through May, both climbed together. Token costs nearly doubled, and hyperscalers rode the wave right along with them. AI demand was the story, and the market rewarded it. Then, something s

Recessions are becoming rarer and shorter. If you look at the table below, you can see the numbers. The pattern shows up just as clearly when you flip the lens to individuals. Someone born in January 1900 spent nearly 43% of their first 40 years living through a recession. Someone born in the mid-1980s? Under 8%. What has changed? (1) Central banks got more tools, and got faster with them. Modern monetary policy (rate cuts, forward guidance, and since 2008, large-scale asset

The Japanese Yen just broke above 163 vs the U.S. dollar, a level the pair hasn’t traded at since 1986, and the technical breakout matters as much as the macro forces feeding it. Two forces are colliding: (1) The rate differential. BOJ’s policy rate sits at 1.00% (highest since 1995) vs. the Fed’s 3.50–3.75%. A ~250–275bp gap still rewards the yen carry trade even as the BOJ tightens. (2) An energy shock. Japan imports 90%+ of its crude through the Strait of Hormuz. Renewed U

A recent Nikkei investigation has put a spotlight on a massive but largely overlooked aspect of the AI infrastructure boom: Alphabet, Microsoft, Amazon, Meta, and Oracle collectively hold approximately $1.65 trillion in off-balance-sheet obligations. That’s more than their combined $1.35 trillion in reported on-balance-sheet debt. How can that be possible? Well, because under US GAAP (primarily ASC 842 for leases), companies are not required to recognize certain lease obligat

Yesterday, almost simultaneously, two different worlds coexisted. One dominated my feed with joy: extra time, a golden goal, a nation celebrating. The other headline is harder to look away from: the US carried out its ninth consecutive night of strikes on Iran, following the collapse of a ceasefire reached just weeks earlier. Iran has retaliated with missile attacks reaching Jordan, Bahrain, Qatar, Kuwait, and Oman, and has renewed threats to the Strait of Hormuz, the corrido

Overnight, Iran struck US military positions across the Gulf again; drones and missiles aimed at bases in Bahrain, Jordan, Kuwait, Oman and Qatar, with air defenses scrambling to intercept incoming fire. It’s the latest round in an escalation that has now damaged multiple US-linked bases, hit a Kuwaiti desalination plant, and has significantly affected tanker traffic through the Strait of Hormuz. At the same time, Ukraine kept up its deep-strike campaign into Russia: drone at

SpaceX’s public market debut has been a lesson in how fast sentiment can shift. The IPO priced at $135 in mid-June. Shares spiked to an all-time high above $220 within days, then spent the following month grinding lower. As of this week, SPCX is trading around $131, below its IPO price, as you can see on the top chart below. Whats’s going on? A few things are compounding the pressure: (1) Share float is expanding fast. Only 5% of total shares were unlocked at IPO, but early-

Energy markets remain one of the most powerful transmission channels between geopolitics, economic growth, and consumer prices worldwide. With two fresh data points in front of us, the picture is worth watching closely. If you look at the 2 charts below, you can see it clearly. First, China’s crude net imports have not recovered to pre-tensions levels. If you look at the top chart, you can see that the red line (2026) shows a dramatic drop versus the 2025 trajectory (blue). Y

The June 2026 CPI came in at 3.5% YoY, down sharply from 4.2% in May and well below consensus expectations around 3.8%. On a monthly basis, headline prices fell 0.4%, the largest drop since April 2020. Core CPI (ex-food & energy) also cooled to 2.6% YoY from 2.9%, with flat readings month-over-month. The headline number was driven heavily by energy. The energy index plunged 5.7% in June, with gasoline prices dropping 9.7%. This reversal follows earlier spikes and appears tied