The World’s Most Crowded Trades, the MAX Pain Scenario, and the Best Opportunities on Watch.
September is underway. Positioning is all over the place — be careful out there. Walking through a MINE FIELD — the world’s most crowded trades, and the dangers of being consensus. Nice moves in Tech & AI this week — focusing only on the very best options on the board (continued). Heading into one of the most important weeks of the year for Macro… strap yourself in — this could be one for the history books.
Could More ‘Treasury QE’ Explain Bitcoin’s Recent Rebound?
We view liquidity as circulating through two distinct channels: the financial economy and the real economy. We often express this idea by saying that all money that is anywhere must be somewhere; it cannot occupy two places simultaneously. In broad terms, liquidity in the financial sector supports bond prices and risk assets, while liquidity in the real economy fuels commodity markets, business activity and corporate profits. When liquidity shifts between these two circuits, equity P/Es may fall as bond yields rise, but stronger earnings can offset that pressure to a greater or lesser degree.
What’s driving this trade, what assets are in it, and how much further will it go?
Back in the fall of last year, when the rally in gold and precious metals was at its peak, I did a series of posts on the “debasement trade,” summarizing what we know and don’t know. This trade is a new phenomenon, so it’d be foolish to think it’s well-defined or encompasses a fixed set of assets. Neither of these things are true. What’s clear is that this thing is increasingly entering the mainstream vernacular and growing in popular appeal. So this post updates my summary of what we know. I’ll cover the underlying driver of this trade, what assets are in it, and how much further it has to run.
Bitcoin started selling off from its all-time highs of over $126K last October, tumbling to under $58K two months ago. Question is, have we seen the worst of this Bitcoin bear market yet?
Bitcoin started selling off from its all-time highs of over $126K last October, tumbling to under $58K two months ago. Question is, have we seen the worst of this Bitcoin bear market yet?
Netflix Having a Blockbuster Moment?; Cyber Game Done Changed; Data Center Job Boom Continues Apace
Charts has already observed that one of the challenges for prospective entry-level hires (other than the fact that entry-level hires have always been a relatively small share of tech hiring) is that existing tech workers appear to be getting older. Why that’s the case is some combination of aging-in-place, plus remote work unlocking a broader pool of talent, plus perhaps some premium for more experienced workers–and while AI may have something to do with it, as well, the evidence for that is pretty weak.
This was a decently boring week that ended just about where it began. The S&P 500 closed Friday at 7,718.60, up a rounding-error 0.1% for the week; however, that flat headline hid a decently bumpy five sessions. Stocks dipped early as oil spiked on fresh Middle East hostilities, recovered midweek when Fed Governor Chris Waller struck a dovish note, and yields eased, then handed it all back Friday when the August jobs report landed hot.
Could ‘Speculation’ Investment Regime Be Extended By More ‘Treasury QE’?
Markets are being asked to accept three widely held assumptions: that rising US bond yields reflect a loss of confidence in US assets, that higher rates are inherently bearish, and that recent US Treasury and Federal Reserve interventions amount to disguised yield curve control (YCC). The evidence suggests otherwise.
A quarter or two ago, the line was “the Fed cannot print molecules”. The past month or two, the molecules moved continents: the genuinely tight energy market is European Nat Gas, where storage sits 25 points below seasonal norms and EU law forces price-insensitive buying into the hole. Including: the USD update (the trade now runs on the GROWTH channel, not the inflation spread), what Waller and Williams just told us about September, TWO In Focus sections... the gas squeeze (with the Romanian trades) and the OpenAI comeback via GPT-6 Astra... plus a salty portfolio note on the “peak AI” pundits who have re-emerged exactly on schedule...
Data Center Moratoriums, OpenAI Agents Gone Rogue, NVIDIA-Hugging Face Marriage, Moonshot-Hyperscaler Revenue Share
I just returned from a trip with my young family to Shenyang, my place of birth, so my almost two-year-old son can meet and hangout with his almost 95-year-old great grandmother. It was a filial piety trip.
Inflection: Part II — portfolio construction after the major crypto inflection
I make portfolio decisions on probabilities, and the balance of evidence has continued to move in favor of the major-low thesis. Although it remains early, the market has delivered enough confirmation since my aggressive mid-July deployment to justify further changes to the portfolio.
The US tried to move the Iran war from the Strait to the balance sheet in August; the IRGC dragged it back to the water, and Washington now answers with “tanker for tanker” and a standing campaign against the Iranian coast. At the same time, Berlin has formally blamed Moscow for the Leipzig airport drone and rockets that hit a Brandenburg grid substation.
Warsh is holding out on inflation. The data is about to come his way.
Kevin Warsh stood up at Jackson Hole on Friday and told us he isn't convinced on inflation yet. He named PCE as the gauge he will act on, said financial conditions are not restrictive, and left a rate hike on the table for the coming months.
Warsh was not the productivity dove I had hoped for, and the market now treats a September hike as the base case. But run the language through a quant lens, and he did NOT set a new hawkish peak. The repricing was the LACK of dovishness after soft CPIs, not added hawkishness.
We expect some confusion as AI labs start reporting GAAP financials, as business mix and revenue recognition can vary.
We expect some confusion as AI labs start reporting GAAP financials, as business mix and revenue recognition can vary. Similar to how UBER and LYFT are in the same core business yet gross bookings and net revenue have different definitions, comparing AI labs may prove difficult.
A look at the upcoming week for the US economy and equities — covering key drivers including earnings, positioning, breadth, valuations, sentiment, seasonality, and the Fed.
Closing one of the Best Months of 2026 — Portfolio NEXT STEPS, plus CORE September Framework.
September is setting up to be a choppy month for markets. Stay disciplined, take only the best risk-reward setups, and watch Bitcoin as a signal for risk assets.
I’m Going to Jackson, I’m (Not) Gonna Mess Around…
Hotta than a pepper sprout it was not. Kevin Warsh’s low-key Jackson Hole speech offered little fresh guidance on the Fed’s intentions, which makes the sell-off in gold look overdone. Still, Chair Warsh did reinforce several points:
Greetings, fellow Investors and speculators! Welcome to another edition of the RV Entry-Level Portfolio. The aim of this publication is to combine technical structure with macro context to identify where capital is flowing within the cycle, and why, in an increasingly reactive market environment, understanding that flow is becoming more important than ever.
This is the first of a new monthly format. Once a month, instead of adding something new to the book, we'll go back to positions we already own and review them properly: what has actually changed since we last wrote them up, how they're moving now, and whether the framework still supports them. This month it's the three crypto majors, and the timing isn't accidental... crypto sits at exactly the point in the cycle map where the next few months decide the sequence.
SaaS wasn’t dead; the labor market wasn’t dead... but Anthropic will still IPO with that backdrop
The software doom-porn marked the EXACT bottom; the labor market never died... it just stopped hiring while margins exploded, which IS the productivity everyone claims is missing. AI on TOP of vertically integrated software is a token-demand machine, the macro case around the Anthropic IPO (the fastest revenue journey in corporate history, chart included), the panic behind the SpaceX deal, why I am tempted to prefer the OpenAI pipeline... and an In Focus on Nvidia handing its margins to the memory companies. Plus, the Warsh verdict: very little news, a Fed deliberately making itself SMALLER for markets... and a stand-pat base case that survived Wyoming fully intact.
A look at what happened today impacting US equity, Treasury, and selected commodity markets, and what to watch for tomorrow
US equity indices were little changed into Chair Warsh’s Jackson Hole speech Friday, then parted ways as large caps initially lifted while small caps fell.
A look at what happened today impacting US equity, Treasury, and selected commodity markets, and what to watch for tomorrow
US equity indices opened higher led by tech shares as a bullish outlook from Nvidia Corp and strong results from software firm Salesforce bolstered confidence that the rapid growth in artificial-intelligence spending is likely to run for longer.
Charging per token is becoming the default for AI companies. For most AI applications, it is a mistake.
Token pricing began in the right place: the model layer. When OpenAI launched its API in 2020, charging for the computation a model consumed was a sensible way to meter raw inference.
Overall, my guess is it’s more likely bond yields will decline significantly during the balance of 2026 than it is that a bond vigilante will bring justice to the financial markets.
High-quality bonds usually provide steady predictable income and small price movements and consequently are considered safe but boring investments. But bonds are boring … until they’re not!
One of the first reports Citrini ever circulated was a thesis arguing that Silicon Valley Bank was technically insolvent and at serious risk of failing. In March 2023, SVB collapsed and the report (along with a handful of tweets detailing the setup) began to make the rounds.
Our goal at Citrini is to identify trends that are going to sustain longer than a few good earnings reports. And while the collective attention of market participants has been fixated on building out compute, capital cycles where the duration and magnitude are both underpriced…
In this edition of our 'Breaking the data' series, which focuses on interesting data that show how our Nine Themes are shaping the future, we explore why manufacturing data are much less relevant to the whole economy than in the past.
The macro setup heading into the most important month of 2026
For the first time in the history of US, the national debt crossed $40T, and the 30-year yields hit its highest level since 2007. On the same morning Treasury Secretary, Scott Bessent, announced he’s doubling the government’s bond buyback program.
5 Idea Wednesday: deflation abounds; 'cheapest' model isn't the cheapest model; private credit's other problem child; China's beggar thy neighbor; Still no housing shortage (nor renovation boom)
Demand is justifying all the spending, but the spending is getting harder to unwind
Is AI a bubble? Not yet. Our updated dashboard tracking the investment wave currently has no gauges in the red, two in amber, and the rest in healthy green (just).
The case for VERY low inflation... But maybe also growth?
My old mentor's forward-looking regression says the US cycle rolls over... I say the surveys feeding it are lying to him. The live data points to the rarest mix in macro: VERY low inflation AND decent growth, driven by a war-energy unwind, a tariff PAYBACK and a services labor market losing steam... meanwhile, the only real inflation left hides in DRAM, megawatts and refinery margins, where the CPI never looks. Plus: why the Fed's June forecasts are about to age like the finest milk.
Welcome to the first edition of this note as its own publication. It's the same weekly note I hand-write on the MIT dashboard, now also landing directly with every Alpha member each week. Right, to work.
We maintain a positive stance on the equity market, expecting continued supportive Growth - Inflation tradeoff, with corporate earnings a tailwind. Internal participation is broadening, and Cyclical sectors are likely to keep rallying. We look for new highs at index level into year end, including for SXXP. In this report, we refresh our thematic positioning, with focus on Europe.
A look at the upcoming week for the US economy and equities — covering key drivers including earnings, positioning, breadth, valuations, sentiment, seasonality, and the Fed.
Bitcoin at the Break — volatility compression, liquidity and the next regime
Bitcoin has entered a genuinely unusual state of volatility compression. Extreme compression usually tells us that Bitcoin is approaching a transition, often within the next one to two months, but the compression itself is not the edge. Once price leaves the range, upside breaks have historically been much more reliable than downside breaks.
The stars are aligning with our nowcasting: soft(er) inflation, cyclicals rebounding, the Fed slowly repriced towards on hold, but the dollar refuses to budge against >2 standard deviations of spec longs. The missing link runs through the Hormuz Strait, and NOT via crude — via the products. Plus: why we would rather buy OpenAI than Anthropic on costs, and a loaded catalyst pipeline in the small-cap biotech sleeve.
When the same pattern appears in markets, cities, biology and machines, that’s not coincidence, it’s the architecture showing through. A short essay reading 2025’s record tourism through the lens of the universal code: Europe as the reward circuit of the global intelligence economy, Japan locked out of the same loop, and the choice between producing intelligence again or settling for being beautifully maintained.
A look at what happened today impacting US equity, Treasury, and selected commodity markets, and what to watch for tomorrow
A look at what happened Wednesday impacting US equity, Treasury, and selected commodity markets, including the latest CPI print and Fed rate hike expectations, plus a look ahead to Thursday’s PPI report.
Cycles don't die of age; they die of central banks
Our CB decision index, the best medium-term leading indicator we run, projects a cycle peak in Q4... but the oil impulse, a trillion in unused eSLR capacity, and a Fed that just got a -23k payrolls report all argue that the executioners may holster the weapon this time. Here is the full cycle rundown.
A look at the upcoming week for the US economy and equities — covering key drivers including earnings, positioning, breadth, valuations, sentiment, seasonality, and the Fed.
Payrolls printed MINUS 23k this morning, below even our street-softest call, while the Fed was busy discussing a HIKE... so forgive the victory lap. The short version of this week: A second Hormuz deal is coming and you should NOT chase the price of crude lower; the July momentum rout was liquidity and not information; and the hyperscaler order books tripled while everyone was busy panicking...
Morgan Stanley's August 2026 US Equity Strategy Data Pack argues that the cycle is moving from early to mid cycle, favoring quality, with momentum rotating away from semiconductors while hyperscalers remain attractive with important dispersion risk.
TMT Equity Sector and Multi Strat hedge funds at the center of July’s deleveraging
• Preliminary data from Pivotal Path suggest that TMT Equity Sector hedge funds lost an unprecedented 10% in July excluding the Situational Awareness loss. Multi Strat funds lost 2.3% in July, the fourth largest monthly loss in their history. • The severe loss in July makes it likely that the capacity of TMT Equity Sector and Multi Strat hedge funds to hold tech exposures would be structurally more limited going forward. • If this assessment proves correct and the capacity of hedge funds to hold tech exposures is structurally reduced, the tech trade would become over the longer-term even more dependent on retail investors and thus more susceptible to the swings emanating from leveraged ETFs, retail option buying and retail margin accounts. • Covering of yen shorts post fx intervention in a similar fashion to end-April/early-May. • Room for policy uncertainty to push UST term premia higher. • The flows into hyperliquid ETFs stalled in July and August after surging in May and June. • Flows & Liquidity will not be published next week due to holidays. The next issue will be published on August 19th.
In early 2025 we argued that a series of dynamics would broaden out the returns available for investors, increasing the rewards to diversification. In the fifteen years that followed the financial crisis, equity markets were very bifurcated. The US equity market dominated regionally, Technology consistently outperformed sectorally, and Growth persistently outpaced Value. Since 2025, and again through this year, the opportunity set has shifted. Equities have performed well, but the geographical spread has widened (Exhibit 1). The US has been the weakest of the major regions.
AI investment is a key focus of macro markets, but measuring it is not entirely straightforward. The most frequently cited measure is the projection for almost $800bn in 2026 capex from US hyperscalers. However, this estimate ignores investment by private and foreign companies and captures non-US and non-AI investment.
Was July the month the AI trade broke? The evidence says it was the month one balance sheet broke. A single thematic fund carrying roughly four times its capital in gross exposure met a collateral call, sold its whole listed portfolio to one counterparty, and on the way out, took the momentum factor to its worst month on record. Memory pricing, order books and backlogs all improved while the shares fell. Consensus read the exit of a forced seller as a verdict on the theme. It was a verdict on his leverage.
The war moves in sinus waves, but the market doesn’t
Trump has paused the HUGE attacks because “the perimeters of a deal has been agreed to”... exactly like last time. But the real story of the weekend was not in the Gulf, it was in Tokyo, where Bessent literally wrote “Buy Japanese Yen $5-10 bil” on his to-do list, and then DID it. We stay short the USD…
A look at the upcoming week for the US economy and equities — covering key drivers including earnings, positioning, breadth, valuations, sentiment, seasonality, and the Fed.
The sharp reversal in Momentum has become the defining factor event of recent weeks, with investors rotating away from the AI tech-oriented winners and back towards valuation-sensitive exposures. While the breadth of Value outperformance, rising style dispersion, and falling correlations point to a meaningful shift in leadership, the evidence remains regionally uneven. Developed Markets are exhibiting the early characteristics of a broader Value-led rotation, Emerging Markets particularly continue to display the hallmarks of a positioning-led corrections, with losses concentrated among former Momentum leaders. Our interpretation is therefore one of an emerging rotation in DM alongside a correction in EM, rather than the start of a synchronized global change. As such, we view the recent Momentum sell-off as a reset in leadership rather than a definitive end to the broader Growth and Momentum cycle.
The rotation out of Tech began on cue two months ago from the top of its long-run trend channel (Tech Comes Full Circle, May 15 2026), and in our reading, the rotation back has also begun on cue after hitting the bottom earlier this week. MCG & Tech positioning fell sharply from elevated levels to near neutral this week and has bounced slightly higher (62nd percentile). It is in line with earnings growth around 20%, i.e., already implying a sharp slowing from the 52% it is tracking for Q2 (Q2 2026 Earnings: Broad Based Acceleration, Jul 31 2026). We see the rotation into Tech having further to go with a typical outperformance of 20pp. This would be the 5th such rotation in the last 3 years with the market focus repeatedly swinging between stellar growth and bubbles fears at an increasing rate. Within Tech, we see the best risk-reward in the hyperscalers whose relative performance to the S&P 500 is just off the bottom of a 3-year range.
July central bank meetings reinforced our view that a broad DM hiking cycle is on the horizon. While we look for one hike from each G4 central bank before year-end, markets appropriately price in the risk of earlier and more action. This risk bias is linked to the rising possibility that the Fed starts earlier than our forecast for December. The anticipated 2H26 moderation in US inflation and consumer spending should stay the Fed’s hand until a clearer tightening in labor markets is established. While data surprises may prompt earlier action (we forecast a 4.3% July u-rate next week), this week’s FOMC meeting highlights another reason why the committee may act earlier.
Trump has ended the ceasefire, the Strait is on fire again, and cracks are at record highs. But the oil math looks very different from March. Here is why I am not panicking (yet), and what would make me change my mind.
The KOSPI’s recent decline has substantially normalized leveraged ETF and hedge-fund positioning. With valuations and earnings momentum still supportive, the report sees Korea’s setup as attractive on balance.
Have policymakers been deliberately holding down oil prices and bond yields?
Late investment cycle signs continue to accumulate, from bearishly flattening yield curves, through strong commodity markets to persistently positive economic data surprises. Weekly Global Liquidity data also reveal choppiness, as the chart below confirms, but with a trend towards weakness that has proved sufficient to pull down the liquidity-sensitive BES$ crypto basket (60% BTC$; 30% ETH$ and 10% SOL$). We explain this slide mostly through the crowding impact of a rapacious real economy, but there are also gathering signs that several central banks are starting curtail liquidity impulses.
In today’s report: “EXIT TO THE LEFT.” Today I want to update on critical new ideas, including extreme positioning, sentiment, oil, rates on the edge, volatility, and a confluence of signals I’m getting concerned about. Plus timely new topics: Bounce, or breakdown? A BIG upgrade to our toolkit — and much more to come. Have a great week ahead!
The biggest inflation divergence between the Eurozone and the U.S. in years
Our nowcasts show the U.S. decelerating on inflation while the rest of the world re-accelerates on the back of the Middle East. Meanwhile, the earnings “wall of worry” is built on the most mean-reverting consensus forecasts I have ever seen...
A look at the upcoming week for the US economy and equities — covering key drivers including earnings, positioning, breadth, valuations, sentiment, seasonality, and the Fed.
The broadening out story is shifting to a quality rotation as we exit the early cycle phase of the rolling recovery. Our factor analysis supports this view led by the sharp reversal in capex/sales. Semis still underperform hyperscalers, but AI adopters likely to outperform both.
The equity market has once again been in a tight range, in place for 2 months now, accompanied by notable rotations, echoing the period from November to February (Rotation Continued Amidst The Chop, Jan 2026). This week it fell to near the bottom of the range as positioning slipped to neutral. While the Q2 earnings reporting season so far confirms the boom that began in Q1 is accelerating, it has been overshadowed by the gloom around surging Tech capex, escalating geopolitical risks, climbing oil prices and rising rates. We note:
Writing to you from a cabin next to the tigers, while Trump threatens HUGE attacks on Iran (again). Oil is bid, products are calmer, our July nowcast is still remarkably soft, and we are upping our conviction in hardware after Alphabet officially became a hardware store.
I’ve been promised robots my whole life. So have you. Not just the walking, talking, science-fiction kind, but the whole zoo of them, the arms and the wings and the wheels and the blades; all of it always twenty years out and somehow staying there for seventy years straight...
Our theme heading into 2026 was “Riding the Wave.” As we look toward the second half of the year, that wave continues to roll. In that spirit, welcome to Carson Investment Research’s Midyear Outlook 2026: Still Riding the Wave.
What Can Go Wrong in Britain, Probably Will Go Wrong
In markets, there are no unrelated events. ‘Big State’ is fast-becoming the policy ‘norm’ everywhere: are we are being dragged helplessly towards the Chinese model? Big government has a rapacious appetite and needs feeding. This report adds context to Britain’s economic deterioration and fiscal profligacy. It is set against a backdrop where even Japan, the World’s major creditor nation, faces a sinking currency and persistently rising bond yields. Japanese investors, themselves, have large investments in Europe: mostly purchased when Japanese interest rates were relatively low.
Pivot on Ukraine, Detente with China, all-out war in the Gulf
Three stories this week. The Iran war has roughly two months left on the clock, and it is cash and inventories that will decide it, not diplomacy. Trump’s China accusations are theater, which means the September summit looks safe. And MAGA is pivoting on Ukraine.
Global goods trade has demonstrated remarkable resilience over the past 18 months against formidable headwinds (volatile US tariff policy, Middle East shipping and trade disruption), thanks largely to the AI boom. Last year AI-related goods drove more than 40% of global merchandise trade growth, according to the WTO, despite accounting for just one-sixth of traded goods.
Qualcomm’s Card, the Builder’s Toolkit, Enterprise Spending, and… PEMDAS
Everyone along the AI value chain thinks they can price the piece directly in front of them. The value of the whole, and who gets to keep it, is where there’s less confidence. Against the backdrop of a historic momentum correction, it’s even harder to see through fog.
AlphaSignals package MS analysts’ highest-conviction calls into a globally consistent research data layer. In earnings, the long-only AlphaSignals Earnings Cycle Strategy delivers a 1.49 post-cost Sharpe ratio and 1.23 information ratio, monetizing pre-event anticipation and post-event confirmation.
The broadening trade continues as the equal-weighted market and cyclical industries outperform, while semiconductor leadership corrects and investors focus on earnings quality.
China’s growth momentum slowed sharply in recent months, with real GDP growth falling from 5.3% qoq annualized in Q1 to 3.6% in Q2. Retail sales and fixed asset investment both weakened meaningfully, raising downside risks to the government’s 4.5-5% full-year GDP growth target.
Market activities and sentiment sequentially improved at margin
Transaction volumes increased by 7% and 1% week over week in primary and secondary markets, sending month-to-date July year-over-year improvements in both markets to 6% and 2%, respectively.
Despite the recent correction in July, the KOSPI remains up around 60% year to date and more than 110% from a year ago, boosting household equity wealth by an estimated 17% of GDP.
Household disposable income per capita rose 5.6% year over year in Q2, while household nominal consumption growth increased to 3.8%. Sequential consumption growth softened from Q1.
An unusual memory cycle driven by data center demand
Memory shortages in data center markets continue to intensify, while recent concerns about pricing deceleration, capital expenditure and de-speccing were already visible in the cycle.
Agentic AI is reshaping the enterprise software stack, changing customer priorities and shifting investment budgets while software monetisation moves toward hybrid seat, consumption and outcome-based structures.
Various AI groups have had a challenging spell of performance, with sharp declines across Korea, semiconductors and individual memory stocks as market leadership broadens.
Renewed escalation in the Middle East has pushed oil prices back up, with the Brent futures path above the report’s forecasts of $80 per barrel in 2026Q4 and $75 in 2027.
Say Hello to Kimi. She is going to increase the GPU and memory demand
First, let’s spend a few seconds on what actually worries me, and then we will get to our new friend Kimi from China, which does not worry me at all. At least if you are not a holder of Anthropic or OpenAI stock, where it is a potential issue for them, but not for the hardware trade.
The technology-led selloff weakened positioning across major equity markets. Nasdaq remains vulnerable because long positions are offside, European positioning continues to deteriorate, and KOSPI retains the largest regional deleveraging risk.