Executive Summary Problem: The world’s two largest economies have been locked in a grinding trade war since April 2025 — tariffs topping 140%, rare earth export controls weaponised, and now a three-month Iran war that has closed the Strait of Hormuz and driven up global energy costs. Neither side can absorb indefinite pain. Observation: Trump arrived in Beijing on May 13 — his first visit in nine years — with a dozen CEOs in tow, including Musk, Cook, Jensen Huang (last-minute addition, boarded Air Force One in Anchorage at a refuelling stop), Fink, and Boeing’s CEO. Xi received him with full military ceremony and then proceeded to spend the first two-hour-fifteen-minute session making Taiwan the centrepiece of China’s messaging — which the White House readout then omitted entirely. That g

The AI Capex Supercycle: $725 Billion, Bottlenecks Everywhere, and ROIC Hanging in the Balance I am long the AI buildout. I am also willing to name the number that nobody is clearly stating. Goldman Sachs calculates that maintaining current returns on capital would require these companies to realise an annual profit run-rate of over $1 trillion by 2027. Consensus projects $450 billion. That is a 2x gap — and it will not resolve uniformly across all four hyperscalers. Through my Asian lens is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber. The numbers first: $725B combined 2026 capex — Google, Amazon, Microsoft, Meta. Up 77% from 2025’s record. 94% of operating cash flow consumed by AI infrastructure before debt financin

My Investing Muse (11May2026) Layoffs, closures and Delinquencies Klarna was forced to rehire staff after an AI implementation failure. What are the lessons that we can learn? What do we need to navigate with confidence in the AI ocean. How can we avoid these mistakes during our AI deployment? We are seeing a downward trend in job creation. We are expecting more news of layoffs, and some of them, like Amazon, will be massive. Vibe Coding There is mixed feedback about vibe coding. Some developers have admitted defeat when some point to an undesirable outcome. Are there more successes or failures in this domain? Are we jumping too fast into a new solution without a strong, proven track record? Is this a corporate FOMO? US Farmers Are we heading to a “man-made” famine? More importantly, is Am

News and my thoughts from the past week (11May2026) The CEOs of SLB, Baker Hughes, and Halliburton, the 3 companies that run the global oil industry's infrastructure, just said the same thing on earnings calls: The Hormuz closure exposed that the global energy system is fundamentally fragile. The system wasn't broken by the war. It was already broken. "Systematically underinvested for a decade." The war just proved it. - X user Mario Nawfal Yes, Kraft Heinz CEO Steve Cahillane said exactly that in a recent interview: “They’re literally running out of money at the end of the month.” He added that lower-income consumers are seeing negative cash flows and dipping into savings. The "most people" part is a slight generalisation. Trump admits he expected oil to hit $200-250 and says "even if

Market Outlook of S&P500 (11May2026) Technical Analysis Overview MACD Indicator The Moving Average Convergence Divergence (MACD) indicator for the S&P 500 is trending up. Chaikin Money Flow The Chaikin Money Flow (CMF) stands at 0.40, indicating there is more buying momentum than selling pressure in the market. Moving Averages Examining the moving averages, the most recent price action shows the last candlestick has been above the 50-day moving average (MA50) and the 200-day moving average (MA200). This pattern indicates a bullish shift in both the short and long term. Notably, both the MA50 and MA200 lines have begun to trend upwards, which indicates a bullish outlook in both the short and long term. Exponential Moving Averages The exponential moving average (EMA) lines are s

Earnings Calendar (11May2026) The coming week includes several notable earnings releases, including NU, Sea Limited, Alibaba, Cisco, and Applied Materials. Alibaba Alibaba stands out as one of the key names to watch this week ahead of earnings. Recent performance: The stock is up 11.78% from a year ago. Analyst view: Technical analysis points to a strong buy, and analyst sentiment also remains strongly positive. Price target: The average analyst price target is about $185, implying upside of roughly 32% to 35% from recent levels. Valuation: With earnings per share around 5.73 and a price-to-earnings ratio of 23.2, the valuation appears relatively attractive. Financial performance Key financial trends from 2021 to 2025 are summarised below (figures in RMB). · Revenue inc

Economic Preview: Key Data Releases (week of 11May2026) Housing Market Existing home sales for April are forecast at 4.05 million units, up from the previous 3.98 million. This is a useful indicator of the overall health of the real estate market. Inflation Data The most closely watched economic release in the coming week will be the April Consumer Price Index (CPI). The forecast is 3.7%, compared with the previous 3.3%. If inflation rises as expected, market volatility may increase. Core CPI will also be important to watch, with a forecast of 0.3% versus the previous 0.2%. Bond Market Signals The bond market remains an important reference point as investors weigh opportunities in stocks versus bonds, with interest rates playing a key role in that decision. This is why the upcoming 10-year

Key Outlook for 2026: The world faces a high-impact year marked by the likely onset of a strong El Niño event and a significantly elevated risk of a mega earthquake in Japan. These factors combine to create an unprecedented environment for concurrent climate and tectonic disasters with far-reaching implications for societies and economies worldwide. Japan was hit by a 5.7 magnitude earthquake on 02May2026 as I was preparing this article Climate Conditions: Transition to El Niño is highly probable by mid-2026, with a 1-in-4 chance of reaching “Super El Niño” strength by year-end. Global land and sea temperatures are forecast to be above normal nearly everywhere. Regional Weather Impacts: Severe drought and heat: Australia, Indonesia, Central America, Caribbean, northern South America, south

Berkshire is sitting on $397 billion worth in cash. Nothing to buy.  Nothing to see. $Berkshire Hathaway(BRK.B)$  

After 34 years of service, one of America’s most recognizable low-cost carriers Spirit Airlines has officially shut down its operations permanently  All flights have been canceled, and customer service systems have gone offline 17,000 jobs lost. Fuel costs are up. Unemployment is up. And businesses can’t afford to stay affordable. Other ULCCs like Frontier Airlines are under similar pressure from sky-high jet fuel costs (doubled amid Iran-related oil disruptions), debt loads, and thin margins. Allegiant and some European/Indian carriers (e.g., SpiceJet) have also flagged risks of cuts or worse.  Majors like Delta/United are raising fares, slashing unprofitable routes, and hiking fees to weather it instead of folding. Broader industry consolidation likely ahead. The above is taken

My Investing Muse (04May2026) Layoffs, closures and Delinquencies Germany is rapidly heading towards a severe economic crisis. Germany's unemployment rate reached 6.4%, the highest since the Covid-19 peak, which also was at 6.4%. - X user Megatron Cognizant to cut 4,000 jobs as consulting industry continues to see mass job shedding - MacroEdge UK business closures average 71,000 every quarter Chegg is now down 99% from its peak because AI has killed its business entirely. Chegg was a $14.7 billion edtech company that charged students $20 a month for homework answers from a database of 79 million solutions built over a decade. Then ChatGPT launched in November 2022. Five months later Chegg’s CEO admitted it was destroying their business. The stock dropped 48% in a single day. Revenue droppe

News and my thoughts from the past week (04May2026) We are seeing a historic earnings boom. The current year-over-year blended earnings growth rate for the S&P 500 is a whopping +27.1%, more than DOUBLE the +13.1% expected. With ~63% of S&P 500 companies reporting Q1 earnings thus far, we are on track for the highest earnings growth rate since Q4 2021. Meanwhile, Magnificent 7 companies alone are now guiding over $700 BILLION in CapEx spend for 2026 alone. There has never been a more historic time to own assets than now. Asset owners are winning. - X user The Kobeissi Letter UN boss Guterres just went full doomsday mode on the Strait of Hormuz chaos: If it drags on, we’re staring at global recession, inflation exploding past 6%, 32 million more people shoved into poverty, and

Market Outlook of S&P500 (04May2026) Technical Analysis Overview MACD Indicator The Moving Average Convergence Divergence (MACD) indicator for the S&P 500 is trending up. Chaikin Money Flow The Chaikin Money Flow (CMF) stands at 0.46, indicating there is more buying momentum than selling pressure in the market. Moving Averages Examining the moving averages, the most recent price action shows the last candlestick has been above the 50-day moving average (MA50) and the 200-day moving average (MA200). This pattern indicates a bullish shift in both the short and long term. Notably, both the MA50 and MA200 lines have begun to trend upwards, which indicates a bullish outlook in both the short and long term. Exponential Moving Averages The exponential moving average (EMA) lines are s

Earnings Calendar (04May2026) In the coming week the most anticipated earnings releases include that of Palantir, Tyson, Berkshire Hathaway, AMD, PayPal, Walt Disney, KKR, and McDonald’s. Who is KKR? KKR & Co. Inc. is a leading global investment firm founded in 1976 that pioneered the private equity industry. As of early 2026, it manages approximately $744 billion in assets, operating across private equity, credit, infrastructure, real estate, and capital markets. Known for its hands-on “one-firm” approach, KKR aims for operational excellence in its portfolio companies, holding investments for 5–7 years. The firm has evolved into a diversified alternative asset manager, including a major insurance business through Global Atlantic. Led by co-CEOs Joe Bae and Scott Nuttall, KKR operates

Economic Preview: Key Data Releases (week of 04May2026) International Market Closures China will be closed on Monday and Tuesday as the country observes Labor Day celebrations. This holiday may impact trading volumes and activity in Asian markets during these days. Key U.S. Economic Indicators The S&P Global Services PMI for April is projected to be 51.3, indicating an expansionary trend in the global services sector. New home sales data for March will be released, offering valuable insight into the current health of the real estate market. Several labour market indicators are scheduled for release in the coming week. JOLTS job openings for March will be published, with the previous figure at 6.882 million. This data will serve as an important reference for the Federal Reserve when con

The chart from Crescat shows analyst estimates for the next-4Q rolling FCF of AI hyperscalers (MSFT, AMZN, GOOGL, META, ORCL) rising for years but now plunging sharply into 2026—with Oracle flipping negative and combined FCF collapsing. Implication: Massive AI capex is projected to outrun revenue growth, squeezing cash flows hard. This divergence from the rising S&P 500 flags valuation risk and potential margin pressure in big tech despite the hype. Estimates can shift, but it's a clear "race to the bottom" warning on profitability. Source is from Crescent Capital. (The above from Grok.) $Apple(AAPL)$ $Microsoft(MSFT)$ $Alphabet(GOOG)$

good summary by my Substack friend Tiger Capital Research. $Vanguard S&P 500 ETF(VOO)$