Friday Charts: The Investor’s Crystal Ball Reveals FOMO Storms Ahead

Markets quiver as speculative winds shift—bulls and bears lock horns over the next big move.

Decoding the signals: When FOMO crashes the party, volatility becomes the uninvited guest.

Traders cling to charts like holy texts, but even crystal balls get foggy.

Bonus jab: Wall Street’s ‘predictions’? More like horoscopes with Excel spreadsheets.

M2 money supply is growing again, thanks to increased bank lending and deficit spending (I think). There should be a lot more of both to come. The FT writes that the AI boom has created “a race among private capital providers to offer more and larger loans” to build data centers.

The capex race:

ChatGPT fired the starting gun and the race seems to be just getting going. The big four hyperscalers are expected to spend $350 billion on data centers in 2025, and another $400 billion in 2026. 

Cash flows won’t cover it:

Morgan Stanley forecasts that the hyperscalers will spend $2.9 trillion on data centers over just four years, and that their cash FLOW will cover less than half of it. 

Don’t forget the little guys:

Based on the surging number of new businesses, Torsten Slok says “the US remains the most dynamic economy in the world.” Thanks to AI, some of these might soon be one-person unicorns (i.e., $1 billion companies with a single employee).

Transitory?

Producer prices were sharply higher in July, suggesting that companies are starting to pass the cost of tariffs through to consumers. Economists at Goldman Sachs estimate that consumers absorbed just 22% of tariff costs through June, with businesses absorbing the other two-thirds (through lower margins). Goldman expects those numbers to flip-flop by October, with consumers bearing two-thirds of tariff costs.

What tariffs?

Brad Setser notes China’s trade surplus in goods (exports minus imports) continues to rise despite the trade war with its largest customer.

Time to renegotiate the rent:

Data from the Cleveland Fed shows an unprecedented collapse in the cost of renting, as measured by new rental agreements. Jeff Weniger speculates it’s the result of non-citizen residents “self-deporting.”

End of an era?

The rate of wage growth for low-income workers has dropped below the rate for high-income workers for the first time in 10 years. “The era of big raises for low-paid workers is over,” according to the Wall Street Journal. If so, it was an excellent run.

FOMO valuations:

27.2% of stocks in the S&P 100 trade at a P/E of at least 50. Just one trades 10x.

All-time greatest FOMO?

At nearly 100x next year’s sales, The Economist says Palantir might be the most overvalued stock of all time.

Are markets still in the prediction business then?

I think they are — and I think they’re predicting good things.

For investors, at least.

Have a great weekend, predictive readers.

• The Breakdown: Decoding crypto and the markets. Daily.
• 0xResearch: Alpha in your inbox. Think like an analyst.
• Empire: Crypto news and analysis to start your day.
• Forward Guidance: The intersection of crypto, macro and policy.
• The Drop: Apps, games, memes and more.
• Lightspeed: All things Solana.
• Supply Shock: Bitcoin, bitcoin, bitcoin.