The market is caught between a deal-driven cyclical recovery and persistent conflict deepening stagflation. Structural themes like European defense spending (Germany's €144B) and drone cost asymmetry are underappreciated. Input costs are rising but not fully passed to consumers, which will hit Q2/Q3 earnings. A deal would benefit European cyclicals and tech.

Aluminum prices are grinding higher due to Gulf production losses (9% of global, 4-5% lost) with 12-month restart timelines. Gold is behaving as expected in a supply shock (bond yields up, liquidity source). Central bank buying structurally continues, with China increasing purchases. Supply restrictions and stockpiling are becoming global themes, raising medium-term metal forecasts.

The energy shock is less severe than 2022 or 1970s by multiple metrics. Risk assets have been resilient because expectations remain positive (oil futures in backwardation, credit spreads tighter). Bull catalysts (AI, tariffs down, fiscal stimulus) remain intact. European equities would benefit most from a deal. The VIX is an endogenous variable that can force policy U-turns.

Turning increasingly bearish on the AI bubble. The economy depends on the wealth effect from a booming stock market. If the stock market suffers, consumers consume less, creating a negative spiral. Conditions are ripe for this tipping point. The instinct to buy the dip is strong, but real economics may squeeze dip buyers.

The impact on LNG/gas is not as bad as it should have been due to supply response (US exports), logistical flexibility (storage, pipelines), and demand response (China destocking, fuel switching). The US has transformed into the largest gas exporter. The issue is not molecule availability but infrastructure (pipelines, terminals). Europe needs to address its electricity mix to remain competitive.