Abandon Ship! Topics: midterm elections, Spring thaw in US economic data, Strait of Hormuz oil rationing timeline, AI and data center update, Gulf State pipe dream, Congressional redistricting and Mythos update

Summary: Despite improving US leading indicators and economic/stock market resilience, GOP House members are abandoning ship at a record pace. The midterm challenges for the GOP include declining blue-collar employment, soaring ACA premiums, a surge in commodity prices, rising inflation expectations and some unorthodox choices at the Department of Justice.

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Salem’s Lot: an update on the Gulf War. Topics include international commodity price pass-throughs to the US, the limits of energy independence, Gulf temperatures and their relevance to US military options, the proposed Iranian toll on the Strait of Hormuz, the cost per payload of asymmetric warfare and our commodity price tracker. Also: the history of Presidential firings of senior US military officers, and a US fossil fuel reliance fever dream.

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Fighting Words. This year we look at energy arguments, battles and debates: the impact of data centers on power prices, the cost of solar plus storage as baseload power, the “primary energy fallacy” that ignores waste heat, the true cost of small modular reactors, Germany’s decision to shut down nuclear, China’s dominance of renewable supply chains, solid oxide fuel cells as turbine alternatives, the materiality of demand response, staffing cuts at the EIA, the hype around geothermal and geologic hydrogen, the misplaced fascination with small country energy transitions, satellite vs factor-based oil & gas basin methane emissions, the mostly profitless EV industry, xAI mobile gas plant permits, negligible progress on carbon capture and renewable fuels, and the unfavorable economics of charging my Jeep Wrangler hybrid.

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New York City now has one of the tightest housing markets since 1960.

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In this year’s EOTM Outlook by Michael Cembalest, we focus on four risks: US power generation constraints, China on its own, Taiwan and hyperscaler profits.

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On the surface not much has changed since our last review two years ago.

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While the prior decade was defined by disruption in content distribution, the next decade will be defined by disruption in content creation, augmented by generative AI. This month’s Eye on the Market looks at the rapidly shifting fortunes in legacy cable/broadcast shares vs streaming, the rise of social media as a platform for consuming all forms of content, rising acceptance of user-generated content and the increasing democratization of text-to-video tools used to create it, the value of the legacy content moat in film/tv libraries and the best movies of the 21st century (as ranked by me).

Mad Libs. This piece is not about how mad liberals are at the administration, although the latest polling data indicates that it could be. Instead, it’s a fill-in-the-blank exercise regarding the impact of tariffs and immigration policy on growth, the impact of Chinese critical mineral export restrictions, Oracle’s debt levels and borrowing capacity, central bank gold reserves and the gender balance of psychiatric medication.

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In this piece, we look at the AI and data center takeover, and the OpenAI-Oracle deal; the US government equity investment in Intel, the origins of TSMC and how many countries support national champions via industrial policy; efforts in China to reduce excess capacity and consequences for equity investors; crime and municipal solvency in Chicago and Illinois; how tight net new equity supply has been supporting US equity markets since 2011; and pictures from Chilliwack, Canada.

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Assessing US earnings and economic trends during one of the broadest policy shifts since FDR; partisan redistricting, the Supreme Court, the Census and the balance in the US House of Representatives.

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Every summer, I answer questions from the Eye on the Market client mailbag.

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