America’s oil safety cushion is being drained from both sides.
Since early April, total U.S. crude inventories have fallen by 166 million barrels, from 712M, marking 17 consecutive weekly declines — the longest streak on record. But the bigger story is the Strategic Petroleum Reserve. Washington has released 111M barrels since March, pushing the SPR down to just 305M barrels — its lowest level since 1983. Normally, SPR releases offset shortages in the commercial market. This time, commercial crude inventories are falling too, declining for 10 straight weeks. In other words, the Gulf crisis isn't simply moving oil from government reserves into private storage. America's entire crude buffer is shrinking. That works if the disruption is temporary. But the longer the crisis lasts, the more valuable — and strategically important — those remaining 305M SPR barrels become. The SPR was built for exactly this kind of shock. Now the shock is steadily consuming it. Source: Jack Prandelli on X, Bespoke
S&P 500 profit margins spiked to 16.9% in Q2, which is by far their highest level in history.
“Profit margins are probably the most mean-reverting series in finance, and if profit margins don't mean revert, then something has gone badly wrong with capitalism. If high profits don't attract competition, there's something wrong with the system.” - Jeremy Grantham Source: Charlie Bilello @charliebilello
European equities are regaining investor interest as strong earnings, falling oil prices and diversification away from volatile AI stocks improve the region’s appeal.
Earnings are accelerating: European companies are tracking 22% YoY Q2 earnings growth, the strongest since 2022, with broad strength across sectors. Banks are leading: The Stoxx Banks index is up 21% this year, versus 11.5% for the Stoxx Europe 600, supported by higher rates and strong trading revenues. Flows are returning: European ETFs recorded positive net inflows in July, while BlackRock saw $4.4bn flow into its European equity products. Lower oil helps: Oil below $90 and easing Middle East tensions have reduced fears of a major energy shock for Europe. Diversification appeal: July’s semiconductor sell-off reinforced Europe’s role as an “anti-AI” trade with less dependence on mega-cap technology. Fundamentals improving: Eurozone GDP grew a stronger-than-expected 0.4% in Q2, supporting the rotation. Source: FT
Berkshire Hathaway's massive cash pile declined for the first time in 4 years, meaning it was finally a net buyer of stocks.
Source: Barchart @Barchart
One of the biggest surprise of 2026 is the COLLAPSE of volatility
We have a war in the Middle East, a volatile oil price, a new Fed Chair and mid-term elections ahead. And yet the VIX, a measure of implied volatility in the S&P 500, has fallen to the lowest level since January. Even implied bond-market volatility is nearly 30% below the 5-yr average. So why are markets so resilient? - AI concerns are easing: Strong Big Tech earnings, accelerating cloud growth and expanding backlogs are increasing confidence that AI investment can generate attractive returns. Markets are becoming more selective, rewarding companies with clear monetization. - Earnings are booming and broadening: Q2 S&P 500 earnings growth is tracking around 48%, versus 24% expected initially. Strength is increasingly spreading beyond mega-cap technology. - The economy remains resilient: Manufacturing has accelerated to its strongest level in more than four years, supported by improving demand, production and industrial activity. - Macro risks are fading: Lower oil prices reduce inflation concerns, while a cooling labor market and slower wage growth have lowered expectations for further Fed tightening. - Record highs are not necessarily a warning: Historically, new highs have often been followed by strong medium- and long-term returns. Source: Liz Abramowicz, Bloomberg
The US Department of Defense is putting pressure on the country's defense industry to speed up the production and delivery of weapons.
The call comes amid a domestic debate over the US weapons arsenal, following reports that the war in Iran has led to the country's stockpile of air defense missiles shrinking too quickly. Source: Sweden Herald
The Growing Concentration of Wealth in America
The country’s 400 wealthiest people saw their share of the US’s total wealth shoot up by 146% over the past 30 years, while that of the entire bottom half of the American population declined by 25% over the same period. Source: FT Trevor Noren
Still hard to believe that just 6.5 years ago, the S&P 500 traded for less than 1/3rd its current price...
CAGR since 2020 lows: +20% $SPX $SPY Source: Trend Spider
