Syz the moment

"Most value has accrued to the semiconductor ecosystem ($130B+ in revenue this year from AI) and the data center buildout (number of US data centers is expected to double in the next four years). Energy is a legitimate bottleneck to the data center buildout, and hyperscalers/developers are aggressively acquiring real estate with power availability. The cloud companies are at a ~$20B run rate, with Microsoft generating ~$5B of that. We’re seeing increasing interest in AI applications but little large scale value creation yet. The AI app layer will ultimately determine the value of the industry as the current infrastructure buildout will become a bubble without value creation on the back end". Source: @EricFlaningam, Felicis

Source: Visual Capitalist

Is this the start of a secular change in leadership? Source: Charlie Bilello

Since the June 2023 peak, full-time job count in the US has fallen by a whopping 1.5 million. Meanwhile, part-time employment rose by 1 million year-over-year in August. Additionally, the number of permanent job losers jumped by 324,000 year-over-year, to 2.5 million, the highest since November 2021. This was the 16th straight month of part-time job gains, the longest streak since the 2008 Financial Crisis. The US job market is cooling down. Source: FRED, The Kobeissi Letter

Meanwhile, the market see quarterly ECB rate cuts - see chart below. - European Central Bank (ECB) Governing Council member Gediminas Simkus told Econostream Media that he saw a “clear case” for an interest rate cut in September but regarded the potential for another one in October was “quite unlikely.” - Executive Board member Piero Cipollone told France’s Le Monde newspaper that recent economic data so far had confirmed that inflation was slowing, giving scope for the ECB to lower borrowing costs. “There is a real risk that our stance could become too restrictive and harm the economy”. - However, Bundesbank’s Joachim Nagel continued to warn about premature easing, given elevated wage growth and services inflation, in an interview with the Faz newspaper. Source: Bloomberg, T Rowe

- Global economic growth is normalizing, but recent macro data, particularly in the US and Europe, signal an increased recession risk. While a soft-landing remains the core scenario, the likelihood of a hard landing has grown since H2 began. - The US labor market is showing signs of slowing, with a looming risk of a sudden and significant increase in unemployment. - The Fed is anticipated to make cuts. The question on everyone's mind is whether we will see a substantial jumbo rate cut (50bps) initially. - While sector and style rotation is underway, the defensive lean is proving to be more pronounced than initially anticipated. - Volatility is on the rise, with some moderation thus far (aside from August 3rd). The big question is whether we will experience real market stress leading up to the elections.

Trump, who has long embraced protectionist trade policies, said the dollar has been “under major siege” for 8yrs. China, India, Brazil, Russia, and South Africa discussed de-dollarization at a summit last year. By contrast, Trump has said he wants the dollar to remain the world’s reserve currency, a pledge he renewed at Saturday’s rally. While Dollar dominance has lessened in recent decades, the US currency still accounted for 59% of official FX reserves in Q1 2024, w/Euro 2nd at almost 20%. Source: Bloomberg, HolgerZ

Value of global bonds rose 0.3% this week to $69.29tn, almost a fresh ATH. Source: HolgerZ, Bloomberg