We are officially witnessing the biggest wave of infrastructure investment in modern US history. Total investment in data centers and AI infrastructure is projected to average 3.63% of US GDP per year from 2025 to 2032, the highest proportion among major infrastructure buildouts since the 1800s. The previous largest investment, railroad infrastructure, represented 2.24% of GDP per year in 1870-1890. This was followed by highway investment that averaged 1.13% of GDP in 1956-1973, while telecommunications and fiber infrastructure averaged 1.10% in 1996-2003. By comparison, electrification stood at just 0.50% of GDP in 1905-1925, while canal investment accounted for 0.66% in 1836-1841. This comes as AI and data-center infrastructure investment is projected to total ~$10.3 trillion between 2025 and 2032. The AI buildout is the largest infrastructure investment in modern US history.

The US Dollar has lost -23% of its purchasing power since 2020. In other words, if your assets are up +30% since 2020, you have effectively just broken even in real terms. Inflation has now been above the Fed's 2% target for 60-straight months, and the bond market knows this. Own assets or be left behind.

BREAKING: President Trump says he and China’s President Xi have agreed to rename Artificial Intelligence to “Super Intelligence.”

🚨 SOMETHING VERY STRANGE IS HAPPENING IN THE STOCK MARKET. The S&P 500 is near all time highs, but beneath the surface, a completely different market is forming. Almost half of S&P 500 stocks now are moving differently from the overall market. Goldman says this kind of divergence looks very similar to the Tech Bubble. The biggest reason is market concentration. The 10 largest stocks now make up around 40% of the S&P 500, and many of them are riding the AI boom. Because these companies are so large, they can keep pushing the entire index higher even when a large part of the market is struggling. Meanwhile, the rest of the market is dealing with rising bond yields, $100+ oil, a stronger dollar and higher borrowing costs. These pressures are hitting companies that are more sensitive to rates, energy costs and the broader economy. So the S&P 500 being near record highs doesn't mean everything underneath is doing well. A small group of massive companies is making the overall market look much stronger than many stocks actually are.

Absolutely incredible. The US 10Y Note Yield is now up +70 basis points this month. We are now above 5.15% for the first time since June 2007. The bond market is trading like the Fed is hiking rates by 50 basis points at a time. Q4 is going to be interesting to say the least.

Shocking stat of the day: US corporate net interest payments are down to just 0.4% of GDP, their lowest in at least 10 years. This percentage has declined -1.2 points since 2022, despite the Fed hiking rates from 0.25% to 5.50% between 2022 and 2023. This comes as many companies locked in ultra-low fixed rates during the pandemic, protecting their interest costs from the subsequent rise in rates. Over the same period, US government net interest costs have increased +1.2 percentage points to 3.6% of GDP, near their highest in at least 10 years. Unlike corporates, the US government did not lock in enough ultra-low rates in 2020, leaving it increasingly exposed to much higher interest costs as rates rose. The US government is taking the biggest hit from higher rates.