EndGame Macro
This looks like a demand and utilization story. When corporate budgets tighten, consulting is one of the first areas to get trimmed…strategy work, long transformation projects, anything that isn’t directly tied to near term cash flow. McKinsey hired aggressively coming out of the boom, and now the pipeline isn’t there to justify that headcount. AI probably makes it easier to cut around the edges, especially in research and support roles, but if AI were the real driver you’d expect strong demand with fewer people needed. A slow, multi quarter reduction reads more like clients pulling back, partners protecting margins, and the firm resizing to a world where companies are choosing caution over ambition.
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This looks like a demand and utilization story. When corporate budgets tighten, consulting is one of the first areas to get trimmed…strategy work, long transformation projects, anything that isn’t directly tied to near term cash flow. McKinsey hired aggressively coming out of the boom, and now the pipeline isn’t there to justify that headcount. AI probably makes it easier to cut around the edges, especially in research and support roles, but if AI were the real driver you’d expect strong demand with fewer people needed. A slow, multi quarter reduction reads more like clients pulling back, partners protecting margins, and the firm resizing to a world where companies are choosing caution over ambition.
McKinsey to reportedly cut thousands of jobs over the next 18-24 months
#MacroEdge tweet
X (formerly Twitter)
MacroEdge (@MacroEdgeRes) on X
McKinsey to reportedly cut thousands of jobs over the next 18-24 months
#MacroEdge
#MacroEdge
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EndGame Macro
Builders Are Cutting Prices for a Reason
Builder sentiment ticked up to 39 in December, but that number matters less than where it sits at well below the 50 breakeven, and it never crossed 50 once in all of 2025. Historically, that’s not a soft patch, it’s builders telling you conditions feel meaningfully restrictive. Current sales are weak (42), buyer traffic is outright depressed (26), and the only thing holding up is expectations six months out (52), which says more about hope tied to easier policy than demand that’s already here.
What really jumps out is behavior. Two thirds of builders are offering incentives, 40% are cutting prices, and they’re doing it back to back months at levels last seen during crisis periods. That’s inventory needing to move in an affordability constrained market. Builders aren’t choosing to discount; they’re being forced to.
Why this looks recessionary, not just cyclical
This is a classic tight money housing setup. Mortgage rates stayed high long enough to drain demand, while construction costs, labor, and regulatory friction never came back down. Builders are squeezed from both sides. Even with the Fed easing late in the year, financing conditions didn’t prove loose enough to restart traffic, and rising resale inventory is now competing directly with new builds. That combination usually shows up late cycle, not at a fresh expansion point.
The most deflationary signal here is buyer traffic stuck in the mid 20s. Historically, traffic turns first. Prices and starts follow later. Builders can stay solvent by cutting prices and offering incentives for a while, but that behavior tends to foreshadow slower starts, weaker construction employment, and softer downstream demand. The market is functioning, but it’s defensive.
My View
The NAHB index is telling you the floor is being tested by affordability, not supply. Builders see relief only if rates fall enough to revive traffic and so far, that hasn’t happened. When sentiment sits this low for this long, history says housing stops being a growth engine and starts acting like a drag. That’s a quietly recessionary signal, even if the surface data still looks okay.
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Builders Are Cutting Prices for a Reason
Builder sentiment ticked up to 39 in December, but that number matters less than where it sits at well below the 50 breakeven, and it never crossed 50 once in all of 2025. Historically, that’s not a soft patch, it’s builders telling you conditions feel meaningfully restrictive. Current sales are weak (42), buyer traffic is outright depressed (26), and the only thing holding up is expectations six months out (52), which says more about hope tied to easier policy than demand that’s already here.
What really jumps out is behavior. Two thirds of builders are offering incentives, 40% are cutting prices, and they’re doing it back to back months at levels last seen during crisis periods. That’s inventory needing to move in an affordability constrained market. Builders aren’t choosing to discount; they’re being forced to.
Why this looks recessionary, not just cyclical
This is a classic tight money housing setup. Mortgage rates stayed high long enough to drain demand, while construction costs, labor, and regulatory friction never came back down. Builders are squeezed from both sides. Even with the Fed easing late in the year, financing conditions didn’t prove loose enough to restart traffic, and rising resale inventory is now competing directly with new builds. That combination usually shows up late cycle, not at a fresh expansion point.
The most deflationary signal here is buyer traffic stuck in the mid 20s. Historically, traffic turns first. Prices and starts follow later. Builders can stay solvent by cutting prices and offering incentives for a while, but that behavior tends to foreshadow slower starts, weaker construction employment, and softer downstream demand. The market is functioning, but it’s defensive.
My View
The NAHB index is telling you the floor is being tested by affordability, not supply. Builders see relief only if rates fall enough to revive traffic and so far, that hasn’t happened. When sentiment sits this low for this long, history says housing stops being a growth engine and starts acting like a drag. That’s a quietly recessionary signal, even if the surface data still looks okay.
Home builder confidence ticked up one point in December in the NAHB/@WellsFargo Housing Market Index (HMI). The 39 reading is the highest in six months, but still underwater. https://t.co/PKv2zYV18W #realestate #housing https://t.co/lcUyOfi2Ig tweet
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Wasteland Capital
$AEO +155% now at $26.74, new 52 week high.
Consensus Feb-27 YE EPS now at $1.63 (I’m at $1.80) as Aerie lingerie sales exploding higher.
Trust the DD. https://t.co/feUStn6wNg
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$AEO +155% now at $26.74, new 52 week high.
Consensus Feb-27 YE EPS now at $1.63 (I’m at $1.80) as Aerie lingerie sales exploding higher.
Trust the DD. https://t.co/feUStn6wNg
Sydney Sweeney doing the fall campaign at $AEO.
Consensus EPS next year is $1.23 (Feb-27), which implies 8.5x P/E at the $10.50 price. Stock’s beaten down due to poor (-3%) Q1 SSS & tariff-induced margin pressure.
I think they can do $1.60 in EPS, which would be $24 @ 15x P/E. https://t.co/SiNGjPetF8 tweet
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App Economy Insights
$ADBE Adobe is valued at ~14x FCF.
• ARR growing 12% Y/Y.
• Subscription-based business.
• 30%+ net margin still expanding.
• Incorporating AI tools everywhere.
Value play or value trap? https://t.co/c32E9IBHdF
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$ADBE Adobe is valued at ~14x FCF.
• ARR growing 12% Y/Y.
• Subscription-based business.
• 30%+ net margin still expanding.
• Incorporating AI tools everywhere.
Value play or value trap? https://t.co/c32E9IBHdF
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EndGame Macro
Understand what is happening https://t.co/9jPbycMj3f
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Understand what is happening https://t.co/9jPbycMj3f
Oil price is like the speed of the global economy; it needs to go fast enough for the economic wings to lift all those jobs and companies. At slow speeds, stall will create a tail spin & crash. https://t.co/IEAZsDHfPe tweet
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Fiscal.ai
MercadoLibre is currently trading near its lowest gross profit multiple in a decade.
Why wouldn't this work from here?
$MELI https://t.co/WjIUE2v5sI
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MercadoLibre is currently trading near its lowest gross profit multiple in a decade.
Why wouldn't this work from here?
$MELI https://t.co/WjIUE2v5sI
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