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Our leading indicators show that both global growth and inflation impulses are now firmly negative. The chop we have seen in our global growth diffusion has ended with a clear negative impulse. This suggests both growth and inflation surprises are biased negative over the next 6 months.

If history is to rhyme (at least in terms of market psychology and behavior), then we should see NVDA peak first, similar to dotcom cisco, then the weaker players get hit, ie coreweave as sycamore networks, then we get the liquidity sink IPO (Anthropic IPO, SpaceX unlocks) as equivalent to juniper networks dotcom IPO

Interesting data points on the GPU depreciation/obselence debate. While VCs need to talk their book, the numbers are the numbers. DRAM prices also holding up.

Inflation breadth still looks pretty muted. Trimmed mean PCE is annualizing around 2%, while just under half of the CPI basket is rising at more than 2% annualized. Inflation remains an energy shock story, but the ability of companies to pass this onto a tapped-out consumer with real income headwinds seems limited. Sure the upper-K with AI or equity exposure is still doing ok, but inflation is about the median consumer.

USD rally looking pretty exhausted, with breadth rolling over. Hawkish monetary policy is already priced in, but the market is not yet worried about the hit to housing and consumers from higher yields.

US refined product inventories remain at decade lows. This is a known unknown but the energy tail risks remain too large to dismiss. Diesel export bans are normalizing beggar-thy-neighbor policies, while the risk of a food shock into this enegy shock means it is no longer just a markets problem, it becomes a social stability problem.

Europe needs to issue a lot of debt. Who is the natural buyer? From a global imbalance point of view, it has to be the surplus countries. China is the default surplus country.

Slowing Eurozone growth outlook, lagged effect of previous yield rises feeding through

energy shock + food price shock is a very dangerous social cocktail. Policymakers won't sit idly by; they'll address it via fiscal.

US Inflation breadth is surprisingly muted, while Iran and El Niño remain tail risks. US Inflation leading indicators still rolling over.

Central banks are forced to prioritize inflation credibility due to a poor track record since Covid, so they're more willing to accept growth downside risks today.

China Growth LEI weakens further on domestic demand drag, getting closer to policy pivot. it has fallen four months straight.

M&A volumes are peaking, a typical late cycle sign as financing/credit conditions tighten

Central banks are hiking into weakening growth and the inflation impulse is already negative. Our Inflation input diffusion is very weak. Outside energy, the trend is disinflation.

Consumers might be the weak link. Their margin of safety is thin. Real disposable income per capita has stopped falling, but is only growing around 1% annualized. That's near cycle lows.

Around the dot-com top, there's a sequence. And we're seeing the beginning of it.