Syz the moment

The U.S. Strategic Petroleum Reserve (SPR) fell by another 6.1 million barrels last week, dropping to 298.7 million barrels. That pushes the reserve below 300 million barrels for the first time since January 1983, and to its lowest level in more than 43 years. The pace of depletion is also accelerating: • Previous week: -2.8 million barrels • Latest week: -6.1 million barrels Since the Iran war began, Washington has relied heavily on the SPR to offset disruptions to global oil supplies and limit upward pressure on crude prices. But that strategy has a limit. The reserve is now entering the estimated 250–300 million barrel operational floor, where extracting additional oil can become increasingly difficult. At the current pace of withdrawals, the U.S. could move deeper into that critical range within weeks. The SPR was built as America’s emergency energy insurance policy. That insurance policy is getting dangerously thin. Source: Global Markets Investor, zerohedge

US federal interest costs have reached roughly $2.85 billion per day, more than $1 trillion a year. That’s around 14% of federal spending and now rivals or exceeds some of Washington’s largest spending categories. Meanwhile, US national debt has crossed $40 trillion. The problem is not just the size of the debt. It’s the cost of refinancing it. The US continuously rolls over maturing debt by issuing new Treasuries. But much of that debt was originally issued when interest rates were significantly lower. Now it is being refinanced at much higher yields. The 30-year Treasury recently reached 5.27%, its highest level since 2007. That creates an increasingly uncomfortable cycle: Higher rates → higher interest costs → larger deficits → more borrowing → even higher interest costs. And this doesn’t stop in Washington. Treasury yields are the foundation of the US financial system. Higher government borrowing costs ultimately feed into mortgages, corporate debt, car loans and business investment. The debt problem is increasingly becoming an interest-rate problem. Source: Bull Theory

Warren Buffet: "Never bet against america" Source: Bloomberg

US tech stocks now account for nearly 50% of US stock market capitalization, an all-time high. This is ~9 percentage points above the 2000 Dot-Com Bubble peak. The top 10 stocks alone represent a record 40% of the S&P 500's market cap, ~13 percentage points above the Dot-Com Bubble peak. Source: Global Markets Investor

Since the Iran war began in February, Washington has repeatedly released emergency oil whenever oil prices surged to stop fuel costs from exploding. Source: Bull Theory

Jensen Huang calls compute “an investable asset.” But there’s another chart worth watching: Nvidia’s credit risk is rising. NVDA’s 5-year CDS has jumped nearly 6 basis points recently. More strikingly, the cost of insuring Nvidia’s debt has almost doubled since late May, rising from 41.6 bps to 77.5 bps—just below the July 29 record of 83.7 bps. At first glance, that seems counterintuitive. Nvidia could potentially unlock hundreds of billions of dollars of additional demand without putting that financing directly on its own balance sheet. That should be positive for Nvidia. But the CDS market may be highlighting the other side of the story: the AI boom is becoming increasingly dependent on leverage. More capital. More infrastructure. More financing. The demand is real—but so is the financial engineering supporting it. Source: Bloomberg, HolgerZ

What happens if the Fed doesn’t hike at all this year? Source: Katusa Research @KatusaResearch

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