Volatility Pulse - Sector Whiplash
Tariff Whiplash
90% of Tariffs Fell on Americans
NY Fed research indicates nearly 90% of tariff costs were borne by US firms and consumers through November 2025, while international markets experienced minimal impact.
Source: Liberty Street Economics
AI Boom to AI Doom
The $690 Billion Bet
Magnificent Seven companies are projected to spend approximately $690 billion on AI infrastructure in 2026—nearly their entire operating cash flow versus a historical 40% average. Amazon alone plans $200B, creating negative free cash flow for the year.
Source: Evercore
NVDA > GDP of Japan
NVIDIA's $4.5 trillion market capitalization now exceeds the combined GDP of Japan, Germany, India, and the United Kingdom.
Source: Disruption Banking
AI Imports Hit $400B
US AI-related imports have surpassed $400 billion on an annualized basis, representing a 142% increase year-over-year. Data center computer imports alone approach $300 billion annually.
Source: @JosephPolitano
The AI Metal Nobody Talks About
Data centers supporting AI consume three times more copper than conventional facilities. According to S&P Global's analysis, a 10 million metric ton copper shortage could occur by 2040 without significant supply growth.
Source: S&P Global
The Great Rotation
Energy's Best Start in 25 Years
Energy leads S&P 500 sectors year-to-date with +23% returns—the strongest opening quarter in 25 years. However, institutional portfolio allocations remain below 3%.
Source: Raymond James
Value Is the New Momentum
Fund managers increasingly expect value stocks to outperform growth over the next 12 months, with 43% net bullish positioning—the highest level since April 2025.
Source: BofA
Global Breakout
MSCI country indexes trading more than 2% above their one-year peaks reached their highest concentration since 2004, indicating the broadest global equity rally in two decades.
Source: Bloomberg
Money Fleeing America
US share of global equity flows reached its lowest level since 2020, while cumulative four-week international equity inflows hit record highs.
Source: BofA
Volatility Corner
Tax Refunds + Tariff Relief = XRT Upside
Retail sector (XRT) upside call options may present attractive risk-reward opportunities given tailwinds from tariff moderation and $106 billion in retroactive tax refunds expected in March/April.
Source: Bloomberg
Claude Code Crushes Cybersecurity
Anthropic's Claude Code announcement pressured cybersecurity stocks including PANW, CRWD, OKTA, and TENB lower. Call spread strategies may offer tactical rebound opportunities on select names.
Source: Bloomberg
Smart Money vs Dumb Money
Everyone Hates the Dollar
Bank of America's dollar positioning aggregate reached its most bearish level since 2012 collection began. Extreme consensus bearish sentiment often precedes reversals.
Source: BofA
Just Because...
Cotton Candy Was Invented by a Dentist
Dr. William Morrison, a dentist, invented cotton candy by envisioning spun sugar confections. He sold nearly 69,000 boxes at the 1904 World's Fair, demonstrating remarkable entrepreneurial irony.
Source: Britannica
— Vinay Tolia, Marine Layer Advisors
