A Short Macro Summary

This week’s batch of US economic data and corporate earnings largely confirmed our positive view of an American economy that keeps absorbing punches, productivity gains that are translating into real numbers, and a labor market that’s stable even without aggressive hiring. Big Tech is throwing enormous amounts of money at AI. Put together, capex guidance from Amazon, Alphabet, Meta, and Microsoft climbed to $715bn for 2026, roughly twice the $376bn they spent last year. On the policy side, both the ECB and the BOE sounded tougher than the Fed, and the Fed itself wasn’t exactly dovish. The result was a sharp drop in the dollar, which usually helps global liquidity. The version of this trade we’d really want to see is the dollar weakening because growth abroad is finally catching up and capital is rotating out of the US, but that cleaner outcome looks unlikely over the next few quarters and the odds keep slipping. Investors should be ready to scale back risk over the next few weeks if the rising temperature between the US and Iran turns into actual combat. That kind of escalation would probably keep the Strait of Hormuz closed longer and convert what has been a supply chain concern into a liquidity squeeze.