Institutional investors are sitting on the sidelines (neutral), but individual investors have been the incremental buyer all year. Because institutions are on sidelines, short and shallow dips are likely as there is room for people to get more invested.

Finra margin loan growth was at a 35% pace recently, faster than in 2020 when rates were 0%. This shows ravenous risk appetite. When you play with fire, you get burned. Bitcoin has diverged from meme stocks for months, preceding recent price action.

The key takeaway is that AI is actually a competitive market, unlike near-monopoly legacy businesses. The arms race and leapfrog capability of Gemini vs. OpenAI suggests less pricing power and potentially lower return on investments.

We are still in the capex build-out cycle, which will be different from the application cycle. The challenge is the entire market and economy have become incredibly indexed to AI.

It's fascinating that OBBB (accelerated depreciation) has been in place for over six months but hasn't shown up in broader manufacturing data. PMIs have not been a good leading indicator for industrial profits, which remain strong.

The digital world is very physical. Uplift in industrial commodities like copper suggests an underpinning of an inflationary dynamic, different from the deflationary trend of the last 15 years.

Geopolitical events should be faded if they don't impact U.S. corporate earnings. European defense stocks rallied on fears but earnings estimates didn't change, so they've come off the boil.

If a geopolitical event affects earnings, it's likely through oil prices. Currently, oil markets aren't especially tight, and the SPR has been building, providing a cushion.

Partially Bank of Japan, but a lot was the Costco story. If tariffs are ruled illegal and money has to be refunded, it creates a bigger hole in the budget, meaning more treasury issuance, pushing yields higher on the long end.

Bitcoin is an important gauge for liquidity and risk appetite. The fact it wasn't making new highs as other parts of the market were was uncomfortable. If liquidity is tightening and risk appetite waning, low-quality speculative leadership should be in question.

The most important compass is the equity market itself. The ratio of equal weight discretionary vs. staples in an uptrend suggests the aggregate consumer deserves the benefit of the doubt. However, the aggregate consumer doesn't reflect the average consumer due to the K-shaped economy.

The high-income consumer actually loves higher rates because they have termed-out mortgages and big cash balances. Rate cuts could hurt the high-income consumer more than help them because they don't rely on floating-rate debt.