On a slow news day like today, it’s worth remembering what the ‘ol timers say about the markets: watch what they do, not what they say. The same holds true in geopolitics.
This week, the center of American power projection is not in Brussels or at a G7 summit — it’s in Riyadh, Doha, and Abu Dhabi. That’s not by accident.
And for investors — especially those managing their own capital in a world that feels increasingly detached from old certainties — this shift deserves closer attention.
President Trump’s four-day Middle East visit has been described as transactional. That’s true. But it’s also reflective. This is where the United States now looks when it needs to fund its ambitions — not just militarily, but digitally, industrially, and strategically.
For fifty years, the petrodollar system linked U.S. energy consumption to global dollar demand. That quiet arrangement underwrote American exceptionalism, financed deficits, and kept the Treasury market liquid — without headlines.
Now the needs are different, but the structure is familiar.
The U.S. is carrying $36.8 trillion in debt, with trillion-dollar deficits baked into the forecast. At the same time, it must compete in the world’s fastest arms race: artificial intelligence, energy transition, and the infrastructure to support it.
Does America need Saudi capital to stay competitive with China?
That’s no longer a provocative question. It’s an operating assumption. The pageantry of Trump’s visit — arms deals, energy coordination, and yes, AI data centers — is not just diplomacy. It’s balance sheet management.
👑 Deals, Jets, and Long-Term Signals
The president’s trip includes potential investment pledges exceeding $1 trillion, the revival of arms and aerospace partnerships, and a symbolic handoff: a $400 million Boeing jet from Qatar, slated for use as Air Force One and later, Trump’s presidential library.
Critics have focused on optics, but for those managing wealth, the deeper message is that the post-Cold War economic order is quietly reorganizing. The U.S. is leveraging historical alliances — not just for influence, but for capital.
🤖 AI Ambitions and the Next Infrastructure Race
Global AI, a U.S. startup, is partnering with Saudi Arabia’s newly launched Humain venture to develop sovereign AI infrastructure.
These are not yet profit-making enterprises. But the scale of the ambition matters. Data centers, chip capacity (via Nvidia), and AI-as-a-service for energy, health care, and finance — these are the tools of national competitiveness going forward.
For now, building them requires foreign capital and foreign partners. That may be hard to reconcile with traditional ideas of American industrial independence, but ignoring it is not an option.
🏥 Health Costs and Structural Friction
Back home, UnitedHealth Group just suspended its outlook. The CEO stepped down. Shares fell 10%. The reason? Surging medical costs. This isn’t just a stock story — it’s a warning about structural inflation in areas that CPI doesn’t cleanly reflect.
Rising health care costs eat away at real income for retirees, regardless of what the index says. President Trump’s recent Executive Order to slash prescription drug prices will be fought tooth and nail in the courts. If Trump prevails, health care stocks will become a pariah for investors.
🏡 Mortgage Tensions Remain
Mortgage rates inched higher to 6.88% this week. The housing market hasn’t cracked — but it’s still cool. And it will be as long as interest rates, the driver of mortgage rates, stay near 15-year highs.
Slower activity, tighter lending, and higher carrying costs make real estate a tougher asset for rotation or liquidity. If you’re counting on property for flexibility, the window may be narrowing.
📉 Surface Calm, Structural Strain
Markets are drifting higher in early trading. Bitcoin is pushing past $103,000. Coinbase is joining the S&P 500. JPMorgan has pulled its recession call. It all feels… steady.
But the labor market hasn’t improved meaningfully since October. Insured unemployment claims remain flat at 1.88 million. CPI dipped to 2.3%, but the relief is uneven and fragile. You don’t need a collapse to lose capital. You just need a market that convinces people the danger has passed when it hasn’t.
Social media sites are abuzz. This is classic bear-trap terrain: soft numbers, strong sentiment, and structural issues lurking just below the surface.
🌾 CPI Falls, But So Does Confidence
April’s CPI number suggests disinflation. But look closer: prices dropped in categories like used cars and apparel.
Food, shelter, and medical costs are still sticky. You feel it. So do your peers. And so do corporate boards, making tough calls about earnings guidance. A broad-based decline this is not. A reprieve, maybe. But not a reset.
Where Does That Leave You?
If you’ve embraced the spirit of the Grey Swan view over the years, you already know what to do in moments like this: avoid the noise. Trust your own skepticism. See past short-term optimism to long-term positioning.
The world is shifting from one built on global trade and soft diplomacy to one where capital is king, and influence is monetized in hard assets — data centers, defense systems, and energy access. The U.S. is adjusting accordingly. Even forcing the issue.
To Trump, that doesn’t mean decline — it means a new cost structure for dominance and new risks for investors who mistake surface calm for stability.
So no, this isn’t the moment to chase returns. It’s time to build resilience. Focus on income-generating assets. Hold liquidity where it matters. Be patient when others are breathless.
With gold prices down on yesterday’s China news, it may be time to pick up gold and leading gold mining companies. And don’t overlook the power of energy, which we see playing a role, not just in Saudi Arabia, but in exporting America’s energy wealth.
~Addison
