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Sunday Thoughts

First, let me start this Sunday note by wishing my US readers the very best of times on this celebratory weekend. Two hundred and fifty years is no small milestone, and whatever one’s politics, market views or macro anxieties, it is worth pausing for a moment to recognise what the United States has represented, achieved and inspired over that period. So, happy 250th birthday to America. Here is to another 250 years. As a special offer, I am introducing a 20% discount on annual subscriptions for July. Click the link below.

I have always had a deep fondness for the US. A trip a few years ago broadened my view of the country in a way that stayed with me. It reminded me that America is not just about the big cities and financial centres. It is the sheer scale of the place, the variety of its landscapes, the energy of its cities, the warmth of its people and, yes, the amazing food that still somehow surprises me when I think I have seen it all.

Every country has its problems, and the US clearly has its own. It would be foolish to pretend otherwise. But I remain in awe of what the American spirit really entails. There is a positivity you are greeted with almost everywhere, a belief that tomorrow can be better than today, and a unifying identity that people seem able to apply regardless of where they, their parents or their grandparents came from. That is rare. It is also easy to underestimate from afar, especially when the noise of politics, markets and media becomes overwhelming.

As macro investors, we spend most of our time dissecting what can go wrong. We measure fragility, we decompose growth, we worry about funding channels, we argue about reaction functions, and we try to locate the point at which optimism becomes complacency. But sometimes it is worth remembering that the same country capable of producing excess, imbalance and bubble-like behaviour is also the country that has repeatedly reinvented itself through waves of innovation, capital formation and entrepreneurial risk-taking.

That brings me to this week’s work.

Below the paywall, I take a deeper look at the current balance of US growth and, more specifically, the increasingly important role of AI-related capital spending. The purpose is not to write another breathless AI piece. There are enough of those already. The aim is to step back and ask a more macro-relevant question: what is actually driving US growth at the margin, how unusual is this composition, and what happens if one very powerful engine begins to dominate the rest of the economy?

To do that properly, we need to look beyond the headline GDP number. Growth is not just growth. Its composition matters. A consumer-led expansion, a government-led expansion, an investment-led expansion, and an export-led expansion all carry different implications for markets, inflation, rates, credit and the durability of the cycle. The US consumer still dominates economic activity, but that is not the same as saying the consumer dominates the marginal impulse. That distinction is at the heart of the analysis.

I also look back at previous capex expansions and how they have shaped the US growth profile over time. The post-war economy has seen different engines take the lead at different moments: consumption booms, government surges, housing cycles, technology waves and investment manias. Some capex cycles broadened into productivity and durable growth. Others created powerful but unstable impulses that eventually required a period of digestion. The current AI buildout needs to be understood in that historical context rather than viewed in isolation.

The central question is whether today’s AI capex wave is simply another investment boom or the early stage of a broader productivity cycle that eventually feeds into the rest of the economy. That difference matters enormously. If the spending broadens, the US may once again prove that betting against its ability to innovate is a dangerous game. If it remains concentrated, import-heavy and increasingly dependent on continuous funding, then the economy’s growth mix becomes more fragile than the headline numbers suggest.

As always, I try to frame this in scenarios rather than certainties. The US has a remarkable ability to surprise to the upside, but macro investors cannot live on national admiration alone. We need to understand where growth is coming from, which parts are sustainable, which parts are cyclical, and which parts are vulnerable if financial conditions tighten or corporate confidence shifts.

So, on this 250th birthday weekend, the message is twofold. America remains extraordinary, and the spirit that built it is still visible in its people, its companies and its willingness to take risk at scale. But the market question is whether the latest wave of risk-taking — this AI-driven capex expansion — becomes the next great productivity chapter or simply another powerful but narrow growth engine.

That is what we explore below, in addition to the usual lineup of Macro D’s latest FX spreadsheet and performance, the weekly calendar, the latest dashboard analysis and the output of the asset allocation model.

Let’s go!