Eric

NYTimes bestselling author of PERSUASION and other books. Subscribe to my weekly newsletter & log off this hellsite:

[Eric @EricMLefebvre]

The Crack in the Petrodollar https://t.co/WE8Xcr7Ino

[Eric @EricMLefebvre]

Check out my latest article: Nvidia Is Now the Bank https://t.co/uewQyae5iY via @LinkedIn

[Eric @EricMLefebvre]

Washington taxes Canada at 50 percent and calls it fairness
The administration announced a 50 percent tariff, under Section 338, on a broad list of Canadian goods including autos, alcohol, cheese, hockey sticks, milk and chemicals, effective in about 30 days, with Canadian crude oil pointedly exempted. The stated rationale is discrimination and unfair treatment. The carve-out tells the real story: you exempt the input you cannot afford to make more expensive at home, which is energy, and you tax the finished goods where the leverage is. The phrase to distrust is reciprocal and fair trade, the framing that turns a blunt 50 percent levy into a moral position. A tariff is a tax paid by the domestic buyer and by every US manufacturer that imports Canadian parts, GM among them the same morning it reported. Price the input-cost hit and the retaliation risk, not the slogan, and remember which line item got the exemption.

[Eric @EricMLefebvre]

Nvidia buys 9.3 percent of a customer, and the AI money starts to circle
Nvidia disclosed a 9.3 percent stake in Nebius, a neocloud that exists to rent out Nvidia GPUs, and Nebius shares jumped about 7 percent on the news. It is the latest in a pattern: the chipmaker taking equity positions in the very companies whose entire business is buying its chips. Framed as ecosystem building, it is closer to vendor financing, and vendor financing is how a supplier manufactures the demand that its own revenue depends on. The phrase to distrust is strategic ecosystem partnership, the language that dresses a supplier funding its customers as a vision rather than a prop. Demand you have to bankroll yourself is not the same as demand the market brought you, and it is exactly the circularity Jim Chanos keeps pointing at in the AI build-out. None of this makes Nvidia's silicon less real. It does mean a slice of the order book is being financed by the seller. In an AI capex boom, watch who is paying for the buyer.

[Eric @EricMLefebvre]

The ECB holds while Europe idles : The European Central Bank meets Thursday and is expected to do nothing, holding its deposit rate at 2 percent, and the nothing is the story. The bank paused its cutting cycle because inflation is drifting up again even as eurozone growth stalls, the uncomfortable mix that leaves a central bank with no good move, and Friday's flash PMIs will most likely confirm a bloc barely expanding while the US and much of Asia run hot. The phrase to distrust is "data-dependent, well-anchored, and appropriately restrictive," the ECB's standard incantation for having run out of room. A 2 percent policy rate against soft growth and sticky prices is not a position of strength, it is stagflation-lite dressed in the language of control, with no elegant exit. Keep duration and growth capital where the economy is actually moving, and treat European policy meetings as a holding pattern, not a catalyst.

[Eric @EricMLefebvre]

Japan ends the era of free money: The quietest big story sits in Tokyo. The Bank of Japan has taken its policy rate to 1 percent, the highest since 1995, and the ten-year JGB now yields above 2 percent, a level unseen since the 2008 crisis, with the next policy meeting on 31 July. For three decades the yen was the world's funding currency, the free money that levered every global carry trade and helped anchor the valuation of risk assets everywhere, and that anchor is now being pulled. The phrase to distrust is "normalization will be gradual and orderly," the reassurance offered while a generational shift in the cost of the world's cheapest capital is underway. When Japanese government bonds finally pay a real yield, Japanese institutions and households, the largest creditors on earth, have less reason to send capital abroad, and every asset priced off the carry has to reprice. Watch the JGB yield and the yen, not the soothing adverbs. This is the Asia story that moves everything else.

[Eric @EricMLefebvre]

@ricwe123 Worth watching to see another perspective than the Western propaganda ...

[Eric @EricMLefebvre]

Gold keeps its head while the leverage burns : While the Kospi breaks circuit breakers and Strategy halves, gold sits near 4,066 dollars an ounce, holding close to its record even after slipping on the weekend airstrikes. That is the quiet, important point of the week. The one asset with no earnings call, no buyback, no guidance and nothing to rebrand is the one keeping its value while a leveraged AI trade is margin-called out of existence in Seoul and a bitcoin treasury is forced to sell in New York. Risk-on, soft landing, everything is fine is the ambient message. The hard-money read is simpler and older: as official CPI prints this morning and equity euphoria unwinds in real time, the metal that cannot be printed, levered into a circuit breaker, or renamed as an AI company is quietly telling the truth about the value of the money it is priced in. This is not a call to be a permabear. It is a reminder that ballast is what keeps a portfolio solvent through exactly the kind of week the tape is delivering right now.

[Eric @EricMLefebvre]

@saylor blinks, the man who would never sell is selling : The purest hard-money tell of the week is not a slogan, it is a trade. Michael Saylor's Strategy, which built an entire identity on never selling Bitcoin, sold 3,588 Bitcoin for about 216 million dollars in early July, and separately raised 466.7 million dollars selling its own shares while buying no Bitcoin at all. The stock is down about 56%, Bitcoin sits near 63,900 dollars, roughly half its 126,000 October peak, and Strategy still carries around 847,363 coins funded by a preferred-and-convertible stack that has to be serviced whatever the price does. The phrase to distrust is we will never sell. It lasts exactly until the financing stack elects a seller for you. This is the same lesson as Seoul in a different suit: leverage, not conviction, decides when you become a forced seller, and the louder the never, the closer the margin clerk.

[Eric @EricMLefebvre]

The rebrand parade, from wool shoes to AI infrastructure : When the business is thin, the ticker puts on a costume, and this week the costume department is busy. Allbirds, a maker of wool sneakers, is reorienting toward Smartbird and pitching itself as an AI infrastructure company, and the stock jumped about 800% on the announcement without a single GPU cluster built. Days later a small electric-vehicle shell renamed itself Azio AI Holdings on the strength of one undisclosed 27.9 million dollar hosting agreement, changing its ticker to AZIO. The phrase to distrust is we are an AI company now. It is a valuation trick deployed precisely when the cash flows are absent, and the tell is unmistakable: the announcement moves the stock 800% while the income statement does not move at all. Own the company actually being paid to supply compute. Fade the one that merely renamed itself after it, and remember that a market willing to pay eight hundred percent for a press release is telling you where we are in the cycle.

[Eric @EricMLefebvre]

The banks report into a hot inflation print, so read the cash : Two events land on the same morning: the June CPI at 8:30 and the big US banks right after, JPMorgan, Wells Fargo, Citigroup and Bank of America. The market wants both a boom from the banks and a benign inflation number, and it cannot comfortably have both. Before believing the bank boom, strip what does not repeat. Trading revenue was flattered by the Iran-driven volatility spike, which is episodic. Investment-banking fees were boosted by the SpaceX IPO, a single event, not a run-rate. And a slice of any per-share growth is buybacks quietly shrinking the count, with consensus near 5.68 dollars for JPMorgan and 1.72 for Wells Fargo. Then the real test: whether any profit beat is pre-provision operating profit or simply a loan-loss reserve release, last year's caution rebooked as this year's earnings. The phrase to distrust is record results and strong capital return. A buyback is capital return, not earnings, and a released reserve is not a better loan book. Read net interest income and whether lending actually grew, and read the CPI for whether disinflation is still intact or the tariffs have finally reached the goods line.

[Eric @EricMLefebvre]

Korea's margin call, the supercycle is being liquidated
Follow the leverage. The Korea AI supercycle that carried the Kospi to a record 9,385.59 intraday on 19 June is now unwinding through forced selling, not opinion. On Monday, Black Monday, the index closed 6,806.93, down 8.95% and below 7,000, its seventh circuit breaker of 2026, more halts in six months than in all of 2008. Today it extended the slide toward the 6,600 level, tripping a Kosdaq sell-side sidecar as retail investors dumped about 2.2 trillion won. The index is now down roughly 30% from its June peak and about 20% in fourteen sessions, and the won has broken 1,500 to the dollar at 1,503.4. This is a leverage story, not a fundamentals story. Retail margin debt hit a record near 38 trillion won at the top, brokerage margin loan rates ran close to 10%, and forced liquidations have reached around 307 million dollars in ten days, with a single day near 94.9 million. SK Hynix fell 15.37% on Monday, its largest one-day drop on record, and Samsung 10.7%, because two chips are the index. The phrases to distrust are value-up and AI supercycle. The receipt is a margin call. When a whole crowd owns the same two names with borrowed money, the cycle and the crash are the same position, and retail now fleeing the wreckage into crypto, about 4.1 billion dollars of it, is not an exit but the next leveraged bet.

[Eric @EricMLefebvre]

@emppahah Olet todella kaunis ...

[Emppa @emppahah]

#UusiProfiilikuva

[Eric @EricMLefebvre]

China's numbers do not add up, and the surplus is understated: The comfortable story of a slowing, de-risking China with a 735 billion dollar current account surplus is contradicted by its own customs data, which shows a goods surplus near 1.2 trillion. Brad Setser's forensic read finds a customs to balance of payments gap of roughly 184 billion in 2024, and about 260 billion in 2023, tidied to keep net errors near zero, which means the true external surplus is probably larger than reported, not smaller. The June activity bounce was not demand, it was exporters front-loading US bound shipments to nearly 90% of 2024 levels, up from about 70% a year earlier, to beat feared tariffs, a pull forward that should reverse by late summer. "High quality development" is the phrase. Capital trying to leave, 800 billion to 1 trillion dollars of it in 2025 past a 50,000 dollar annual cap, is the data. Read the invoices, not the official print.

[Eric @EricMLefebvre]

China's walled-in wealth and the stealth surplus: The most honest indicator on China is not the GDP print, it is the direction of capital. By credible estimates, somewhere between 800 billion and 1 trillion dollars left China in 2025, and it did so against a system where an ordinary citizen may move only 50,000 dollars abroad per year. Behind that wall sit roughly 50 trillion dollars of renminbi deposits earning very little, parked next to a property market that has not healed and an equity market that has underperformed for years. The number of family offices in Hong Kong rose about 25% to 3,384 by the end of last year. Meanwhile Brad Setser's work shows the official balance-of-payments data understates China's true external surplus: the customs figures capture a goods-and-services surplus on the order of 650 billion dollars for 2024 and a net investment position near 4 trillion dollars in interest-bearing assets. Michael Pettis keeps making the structural point, that debt compounds because the growth target can only be met with non-productive investment, and involution is the word for competing harder over shrinking margins. The slogans are high-quality development and common prosperity. The behavior is capital trying to get out and a state understating the size of its own surplus. I weight the behavior.

[Eric @EricMLefebvre]

The beat that isn't
Earnings season is a test of reading discipline. The headline is written to be quoted. The second line is written to be true.
This week's Asia tape is a good drill. Tata Consultancy Services grew 13.9%. In constant currency, stripping the weak rupee, growth was 3.2% year over year and 0.4% sequentially. That is a stall, and operating margin fell 130 basis points to 24%. Seven and i reported operating income up 122.4%, but that is a like-for-like figure that excludes the businesses it has deconsolidated, and the actual driver was volatile US fuel margins; merchandise same-store sales rose 1.4%.
The US is no cleaner. PepsiCo trumpeted the highest rate of organic volume growth since 2022. That rate is 1%, and the year-on-year comparison flatters because the prior-year quarter carried 1.86 billion dollars of impairment charges. Delta reported GAAP earnings of 2.44 dollars a share against adjusted earnings of 1.56, meaning roughly 0.88 of non-operating gains is sitting above the operating number, the reverse of the usual direction.
The honest exception this week was Fast Retailing, the Uniqlo owner, whose operating profit rose 45.7% on genuine international demand with almost no financial engineering, and which candidly warned that the weak yen has turned from tailwind to headwind.
Follow the cash conversion and the constant-currency line. That is where the truth is.

[Eric @EricMLefebvre]

ESG quietly folds : The clearest signal about a corporate commitment is what happens to it the moment it becomes expensive.
The UN-backed Net-Zero Banking Alliance paused its operations in August 2025, after losing most of its largest members, the US majors, the Canadian banks and several European names, many of which kept the net-zero language while quietly dropping the binding targets.
In the same period, according to the 2026 Banking on Climate Chaos report, global banks financed fossil fuels with a record 906 billion dollars in 2025, and 8.7 trillion dollars since the Paris Agreement.
I have no quarrel with banks financing energy. That is arguably their job, and the world runs on it. The point is narrower, and it is about credibility. An institution that wore the badge while it was free of cost, and dropped it the moment it constrained lending, was never managing to the target. It was managing the appearance. Price the substance, discount the theater.

[Eric @EricMLefebvre]

Europe announces, does not build : The most reliable pattern in this cycle is the gap between what Europe says about technology and what Europe builds.
On 1 June, at Choose France, President Macron said the country was clearly bridging the gap we had in computing capacities in Europe and would be by far the leading country hosting data centres. He announced 93 billion euros of investment and called it historic.
Set that against the capacity. The EU hosts under 5% of the world's supercomputing performance. The United States hosts close to 75%. And the 93 billion euro figure, spread across sectors and years and consisting largely of pledges rather than disbursed capital, is roughly half of what a single American company, Alphabet, will spend on capex this year alone.
This is not anti-Europe. It is the allocation reality. The US and Asia build the compute. Europe convenes, regulates and announces. Von der Leyen's 800 billion euro defence surge is the same shape: only 150 billion of it is actual EU money, the rest a projection resting on member states that have mostly not acted.
Position accordingly. The announcement is not the investment.

[Eric @EricMLefebvre]

The neocloud mirage: There are two ways to lose money in a capital boom. Miss it, or own the wrong layer of it.
The AI buildout is real. Hyperscaler capital spending in 2026 is running at an estimated 725 billion dollars, up around 77% on last year's roughly 410 billion. That demand is genuine. The question is where the losses land when the cycle turns, and the answer is rarely the chip maker.
@jimchanos has been blunt about the middle layer, the neoclouds that borrow to buy GPUs and rent them out. He reads them as equipment-leasing businesses with real depreciation risk, priced as if they were software compounders. He makes the same point about the AI power trade: electricity is 5 to 7% of a data center's revenue, yet the names selling it trade at 50 to 70 times earnings.
This is 1999 to 2000 in a different costume. The technology was real then too. The telecoms that over-ordered the equipment are what disappeared.
Back the genuine thing. Fade the leasing business dressed up as technology.