WealthyReadings
Everyone is talking about a rotation happening and we can clearly see it on the charts.
But that doesn’t mean what worked in 2025 will stop working in 2026. Tech & several other winning sectors still offer great value and potential returns.
What it means is that our focus for the next narratives has to shift. We need to start fishing where we weren’t fishing this year.
The AI trade isn’t over, far from it, but the best returns might not come from there next year - not from the obvious names at least.
New narratives are opening up, let's be ready to catch them
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Everyone is talking about a rotation happening and we can clearly see it on the charts.
But that doesn’t mean what worked in 2025 will stop working in 2026. Tech & several other winning sectors still offer great value and potential returns.
What it means is that our focus for the next narratives has to shift. We need to start fishing where we weren’t fishing this year.
The AI trade isn’t over, far from it, but the best returns might not come from there next year - not from the obvious names at least.
New narratives are opening up, let's be ready to catch them
tweet
Offshore
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Wasteland Capital
Philippe charges 2/20 on $80bn of AUM, yet was unable (or unwilling) to hire even one single bright-enough person who could tell him that $GOOG was going to be the AI winner.
He didn’t even bother to put Google in his top 40.
It wasn’t even worth a logo. https://t.co/pXpeN8h1zl
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Philippe charges 2/20 on $80bn of AUM, yet was unable (or unwilling) to hire even one single bright-enough person who could tell him that $GOOG was going to be the AI winner.
He didn’t even bother to put Google in his top 40.
It wasn’t even worth a logo. https://t.co/pXpeN8h1zl
I bet these dots cross again! tweet
Offshore
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Wasteland Capital
Altman expected to burn through $500bn in cash until 2030…. Yikes.
Good luck bro.
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Altman expected to burn through $500bn in cash until 2030…. Yikes.
Good luck bro.
HSBC forecasts that OpenAI is going to have nearly a half trillion in operating losses until 2030
https://t.co/j2aYV6umvM tweet
Offshore
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EndGame Macro
A Market Held Hostage And Why Pending Sales Are Stuck at 25 Year Lows
This chart makes something obvious that headlines still dance around: the housing market isn’t cooling…it’s stuck. Pending home sales are sitting near the lowest levels in almost 25 years and running close to 30% below what used to be normal. And it’s not a quick dip or a temporary shock. The line has been pinned down here for nearly two years. That’s the signature of a market where the problem isn’t demand or supply in isolation but more so a breakdown in the ability of buyers and sellers to meet at the same price. For most of the 2000s and 2010s, pending sales stayed in a tight band. Even after the financial crisis, once rates fell and the economy healed, buyers came back and contract volume snapped toward normal. This time is different. The market spiked during the 2–3% mortgage era and then flipped straight into a deep freeze as financing costs doubled. That freeze has barely budged.
The Airbnb Overhang and Seller Psychology
Part of the distortion comes from the short term rental boom that exploded during COVID. A lot of people bought second homes on 2–3% mortgages based on assumptions that only made sense in 2021. Demand was off the charts, nightly rates were inflated, and occupancy felt endless. Now the economics look very different. STR supply has surged, travel patterns have normalized, fees are higher, and local regulations tightened. A meaningful share of those owners would love to exit but can’t accept that their numbers no longer pencil at today’s 6–7% borrowing costs. They anchor to the price they paid or the peak listing they saw down the street. Meanwhile, any new buyer has to size the same property at a monthly payment that is dramatically higher, which means the price would have to fall to make the math work. Sellers won’t move, buyers can’t reach, and the result is almost no contract activity, exactly what this chart captures.
What Pending Sales Tell Us About the Cycle
Pending home sales are the purest read on housing because they show real agreements, not listings or intentions. And right now they’re telling you the market is gridlocked. We get moments where mortgage applications tick higher when rates dip, especially among FHA and VA buyers looking for any opening, but the MBA data makes it clear those surges are coming off historically depressed baselines. Affordability is still stretched, credit standards are tightening, delinquencies are rising, and younger buyers, usually the engine of first time home demand are dealing with higher unemployment and falling credit scores. That combination is not how durable recoveries start.
If rates fall meaningfully or if unemployment rises enough to force more realistic pricing from owners, the freeze eventually breaks. But until then, we’re living in a market where the fundamental desire to own a home is still there, it’s just trapped inside a price to payment mismatch that neither side can solve on their own. This chart doesn’t just show a slowdown; it shows a housing market holding its breath, waiting for the next catalyst to decide which direction this cycle goes.
Chart credit: Nick Gerli (@nickgerli1)
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A Market Held Hostage And Why Pending Sales Are Stuck at 25 Year Lows
This chart makes something obvious that headlines still dance around: the housing market isn’t cooling…it’s stuck. Pending home sales are sitting near the lowest levels in almost 25 years and running close to 30% below what used to be normal. And it’s not a quick dip or a temporary shock. The line has been pinned down here for nearly two years. That’s the signature of a market where the problem isn’t demand or supply in isolation but more so a breakdown in the ability of buyers and sellers to meet at the same price. For most of the 2000s and 2010s, pending sales stayed in a tight band. Even after the financial crisis, once rates fell and the economy healed, buyers came back and contract volume snapped toward normal. This time is different. The market spiked during the 2–3% mortgage era and then flipped straight into a deep freeze as financing costs doubled. That freeze has barely budged.
The Airbnb Overhang and Seller Psychology
Part of the distortion comes from the short term rental boom that exploded during COVID. A lot of people bought second homes on 2–3% mortgages based on assumptions that only made sense in 2021. Demand was off the charts, nightly rates were inflated, and occupancy felt endless. Now the economics look very different. STR supply has surged, travel patterns have normalized, fees are higher, and local regulations tightened. A meaningful share of those owners would love to exit but can’t accept that their numbers no longer pencil at today’s 6–7% borrowing costs. They anchor to the price they paid or the peak listing they saw down the street. Meanwhile, any new buyer has to size the same property at a monthly payment that is dramatically higher, which means the price would have to fall to make the math work. Sellers won’t move, buyers can’t reach, and the result is almost no contract activity, exactly what this chart captures.
What Pending Sales Tell Us About the Cycle
Pending home sales are the purest read on housing because they show real agreements, not listings or intentions. And right now they’re telling you the market is gridlocked. We get moments where mortgage applications tick higher when rates dip, especially among FHA and VA buyers looking for any opening, but the MBA data makes it clear those surges are coming off historically depressed baselines. Affordability is still stretched, credit standards are tightening, delinquencies are rising, and younger buyers, usually the engine of first time home demand are dealing with higher unemployment and falling credit scores. That combination is not how durable recoveries start.
If rates fall meaningfully or if unemployment rises enough to force more realistic pricing from owners, the freeze eventually breaks. But until then, we’re living in a market where the fundamental desire to own a home is still there, it’s just trapped inside a price to payment mismatch that neither side can solve on their own. This chart doesn’t just show a slowdown; it shows a housing market holding its breath, waiting for the next catalyst to decide which direction this cycle goes.
Chart credit: Nick Gerli (@nickgerli1)
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Offshore
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EndGame Macro
Chicago Business Barometer: When a 36 Reading Says the Cycle Is Turning
The Chicago business survey isn’t subtle this month. The index fell to 36.3, which is deep contraction territory. You don’t see numbers in the 30s unless something is genuinely weakening under the surface. They’re also reminding us that Chicago has now spent two straight years below 50, meaning two full years of shrinking activity. That’s not a blip or a mood swing, that’s a trend.
What makes this more important is what’s happening inside the report. New orders dropped sharply, backlogs collapsed to levels we haven’t seen since the aftermath of the financial crisis, and employment softened again. When orders dry up and backlogs evaporate at the same time, businesses usually do the same thing: cut output and slow hiring. That’s exactly what you would expect to see late in a cycle when demand starts slipping.
How It Fits With the Bigger Picture
Step back and connect it to everything else going on. Household credit is cracking at the edges with auto loans, credit cards, and student loans are seeing rising delinquencies. Credit rejection rates are high. Pending home sales are sitting near 25 year lows despite the population being much larger than it was two decades ago. Mortgage activity is bouncing around in that fragile, rate sensitive way you only get when affordability is stretched and buyers are trying to catch falling financing costs.
At the same time, the Fed has already cut rates twice, QT is hours from turning off, new Treasury purchases kick in next month, and regulators are loosening capital rules to give big banks room to absorb more Treasuries and keep liquidity flowing. These aren’t decisions you make when you think the economy is strong. They’re decisions you make when you see the slowdown building and want to make sure the plumbing doesn’t seize up.
Now add a major regional business survey screaming contraction. Chicago often leads turning points in national activity. When it’s printing mid 30s and doing it consistently, it usually means the broader economy is losing momentum.
My Read on What’s Really Happening
The economy isn’t falling off a cliff, but it’s not healthy either. What we’re seeing is stress accumulating in multiple places: households stretched by inflation and debt costs, housing frozen by affordability, banks tightening credit, and now business activity in one of the country’s economic hubs slipping into a deeper contraction.
My conviction is that this is the beginning of a steady weakening that eventually shows up in national employment numbers and corporate earnings. The Fed sees it, the credit markets feel it, and now the business surveys are reflecting it.
This report doesn’t tell you the end is near. It tells you the turn is already happening…quietly, steadily, and in a way that the surface level resilience stories can’t fully hide.
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Chicago Business Barometer: When a 36 Reading Says the Cycle Is Turning
The Chicago business survey isn’t subtle this month. The index fell to 36.3, which is deep contraction territory. You don’t see numbers in the 30s unless something is genuinely weakening under the surface. They’re also reminding us that Chicago has now spent two straight years below 50, meaning two full years of shrinking activity. That’s not a blip or a mood swing, that’s a trend.
What makes this more important is what’s happening inside the report. New orders dropped sharply, backlogs collapsed to levels we haven’t seen since the aftermath of the financial crisis, and employment softened again. When orders dry up and backlogs evaporate at the same time, businesses usually do the same thing: cut output and slow hiring. That’s exactly what you would expect to see late in a cycle when demand starts slipping.
How It Fits With the Bigger Picture
Step back and connect it to everything else going on. Household credit is cracking at the edges with auto loans, credit cards, and student loans are seeing rising delinquencies. Credit rejection rates are high. Pending home sales are sitting near 25 year lows despite the population being much larger than it was two decades ago. Mortgage activity is bouncing around in that fragile, rate sensitive way you only get when affordability is stretched and buyers are trying to catch falling financing costs.
At the same time, the Fed has already cut rates twice, QT is hours from turning off, new Treasury purchases kick in next month, and regulators are loosening capital rules to give big banks room to absorb more Treasuries and keep liquidity flowing. These aren’t decisions you make when you think the economy is strong. They’re decisions you make when you see the slowdown building and want to make sure the plumbing doesn’t seize up.
Now add a major regional business survey screaming contraction. Chicago often leads turning points in national activity. When it’s printing mid 30s and doing it consistently, it usually means the broader economy is losing momentum.
My Read on What’s Really Happening
The economy isn’t falling off a cliff, but it’s not healthy either. What we’re seeing is stress accumulating in multiple places: households stretched by inflation and debt costs, housing frozen by affordability, banks tightening credit, and now business activity in one of the country’s economic hubs slipping into a deeper contraction.
My conviction is that this is the beginning of a steady weakening that eventually shows up in national employment numbers and corporate earnings. The Fed sees it, the credit markets feel it, and now the business surveys are reflecting it.
This report doesn’t tell you the end is near. It tells you the turn is already happening…quietly, steadily, and in a way that the surface level resilience stories can’t fully hide.
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Offshore
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Quiver Quantitative
JUST IN: Senator Tina Smith has sold her position in Huntington Bank stock, $HBAN.
She sold it for up to $250K.
Smith sits on the Senate Committee on Banking. https://t.co/zWnOkoIIDP
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JUST IN: Senator Tina Smith has sold her position in Huntington Bank stock, $HBAN.
She sold it for up to $250K.
Smith sits on the Senate Committee on Banking. https://t.co/zWnOkoIIDP
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AkhenOsiris
This account is hardcore macro bear 🐻 porn every night 😂
Is Kolanovic running this on evenings?
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This account is hardcore macro bear 🐻 porn every night 😂
Is Kolanovic running this on evenings?
US FORWARD-LOOKING INDICATORS SUGGEST A FURTHER DECLINE IN JOBS:
WEAK CONSUMER EXPECTATIONS ABOUT THE LABOR MARKET AND FALLING SERVICES & MANUFACTURING PMI EMPLOYMENT INDEXES SIGNAL A DROP IN U.S. PAYROLLS IN THE COMING MONTHS. tweet
Offshore
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EndGame Macro
When the Bell Curve Peaks: Why M2 Velocity Has a 0% Chance of Spiking Back Up
M2 velocity measures how often each dollar actually moves through the economy. When velocity rises, people feel secure enough to spend. When it falls, they sit on cash. And across the last sixty years, the pattern is almost perfect: velocity climbs during expansions, forms a rounded top, then rolls over when the cycle weakens. Every major peak has lined up with tighter policy, fading demand, or a recession.
The long chart breaks into eras. Before 2000, velocity generally trended higher, money circulated freely and wasn’t trapped in deposits or reserves. After 2000, especially post 2008, the slope turned down as QE caused M2 to balloon faster than nominal GDP. By the time COVID arrived, velocity sat near multi decade lows. Then the pandemic hit and velocity collapsed toward 1.1 as stimulus flooded accounts while spending froze.
The Rebound And The Stall
The rebound after 2020 wasn’t economic strength, it was the mechanical effect of reopening. Nominal GDP jumped thanks to inflation and pent up demand, while M2 stopped growing and even shrank as emergency programs ended and QT drained deposits. With GDP rising and the money stock flat, velocity moved up.
But now it has stalled in the high 1.3s well below the 1.5–1.8 range of the pre 2008 world. That plateau is the real tell. Households have burned through savings to keep up with higher prices and debt costs. Businesses used their buffers to defend margins. The easy gains from stimulus are over.
And historically, once velocity forms a bell curve top and flattens, it never spikes back to new highs. If you translate the entire 65 year history into a probability question of how often does velocity top, roll over, and then surge again? the answer is essentially 0%. Four major tops in early 70s, mid 80s, early 90s, and the dot com peak, all rolled into secular declines. You get small bumps, never new peaks.
Even the post COVID rebound, the biggest pop since the 80s, only took velocity to 1.39 still far below past levels. It wasn’t a breakout; it was a partial recovery from an unprecedented collapse. So the historical odds of a real spike after a rollover are effectively 0%, or at most 5% if you stretch the definition to include brief counter trend moves.
What Happens Next And Why The Lag Matters
Liquidity shifts don’t hit the real economy immediately. There’s a lag often 18 to 24 months between changes in velocity and changes in spending, hiring, and earnings. Rising velocity can cover up stress for a while because households are still drawing down savings. But once those buffers fade, the slowdown shows up quickly: rising delinquencies, weakening surveys, frozen housing activity, and softer job growth. That’s the pattern emerging now.
My view is that this plateau in velocity is a classic late cycle marker, the end of the stimulus driven rebound, not the beginning of a new expansion. If velocity rolls over while M2 stays flat or declines, nominal demand cools. When nominal demand cools, earnings weaken and unemployment follows.
Could policymakers push M2 up again and force another lift in velocity? Yes and aggressive easing and large fiscal spending can recreate something like 2020–22. But because of that 18–24 month lag, the inflationary consequences would show up long after the policy decisions are made. That’s exactly how the last inflation spike formed.
Velocity isn’t saying the economy is back. It’s saying the liquidity tailwind is gone, the money supply isn’t doing the heavy lifting anymore, and what comes next will depend on incomes, jobs, and credit not leftover stimulus. History is blunt: once velocity tops, the rollover is the beginning of the real story, not a setup for another spike.
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When the Bell Curve Peaks: Why M2 Velocity Has a 0% Chance of Spiking Back Up
M2 velocity measures how often each dollar actually moves through the economy. When velocity rises, people feel secure enough to spend. When it falls, they sit on cash. And across the last sixty years, the pattern is almost perfect: velocity climbs during expansions, forms a rounded top, then rolls over when the cycle weakens. Every major peak has lined up with tighter policy, fading demand, or a recession.
The long chart breaks into eras. Before 2000, velocity generally trended higher, money circulated freely and wasn’t trapped in deposits or reserves. After 2000, especially post 2008, the slope turned down as QE caused M2 to balloon faster than nominal GDP. By the time COVID arrived, velocity sat near multi decade lows. Then the pandemic hit and velocity collapsed toward 1.1 as stimulus flooded accounts while spending froze.
The Rebound And The Stall
The rebound after 2020 wasn’t economic strength, it was the mechanical effect of reopening. Nominal GDP jumped thanks to inflation and pent up demand, while M2 stopped growing and even shrank as emergency programs ended and QT drained deposits. With GDP rising and the money stock flat, velocity moved up.
But now it has stalled in the high 1.3s well below the 1.5–1.8 range of the pre 2008 world. That plateau is the real tell. Households have burned through savings to keep up with higher prices and debt costs. Businesses used their buffers to defend margins. The easy gains from stimulus are over.
And historically, once velocity forms a bell curve top and flattens, it never spikes back to new highs. If you translate the entire 65 year history into a probability question of how often does velocity top, roll over, and then surge again? the answer is essentially 0%. Four major tops in early 70s, mid 80s, early 90s, and the dot com peak, all rolled into secular declines. You get small bumps, never new peaks.
Even the post COVID rebound, the biggest pop since the 80s, only took velocity to 1.39 still far below past levels. It wasn’t a breakout; it was a partial recovery from an unprecedented collapse. So the historical odds of a real spike after a rollover are effectively 0%, or at most 5% if you stretch the definition to include brief counter trend moves.
What Happens Next And Why The Lag Matters
Liquidity shifts don’t hit the real economy immediately. There’s a lag often 18 to 24 months between changes in velocity and changes in spending, hiring, and earnings. Rising velocity can cover up stress for a while because households are still drawing down savings. But once those buffers fade, the slowdown shows up quickly: rising delinquencies, weakening surveys, frozen housing activity, and softer job growth. That’s the pattern emerging now.
My view is that this plateau in velocity is a classic late cycle marker, the end of the stimulus driven rebound, not the beginning of a new expansion. If velocity rolls over while M2 stays flat or declines, nominal demand cools. When nominal demand cools, earnings weaken and unemployment follows.
Could policymakers push M2 up again and force another lift in velocity? Yes and aggressive easing and large fiscal spending can recreate something like 2020–22. But because of that 18–24 month lag, the inflationary consequences would show up long after the policy decisions are made. That’s exactly how the last inflation spike formed.
Velocity isn’t saying the economy is back. It’s saying the liquidity tailwind is gone, the money supply isn’t doing the heavy lifting anymore, and what comes next will depend on incomes, jobs, and credit not leftover stimulus. History is blunt: once velocity tops, the rollover is the beginning of the real story, not a setup for another spike.
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