Market Sells AI Trade, Scarcity Trade Still On

The rise in European natural gas prices due to the structural supply shock in the Middle East has resumed since the beginning of July. Expensive energy drives European inflation. Inflation forces the ECB to hike. Hikes drive up the borrowing costs of Europe's most indebted governments. The gas price is a bond market problem. The market has spent two days selling the AI trade. But the underlying theme continues to strengthen. In a world racing toward abundance, you want to own the scarce things that abundance can't exist without.