Just how bad could the bond market get?

AI, Cheap Money, Tesla and Coffee.

Blain’s Morning Porridge 23rd July 2026 “There is only one thing worse than having too little money, and that is having too much.” It’s a wake up and smell the coffee sort of morning in the AI markets. AI is here to stay. Everyone is using it. Why are prices tanking? It’s about competition, adoption and data sovereignty. Maybe it’s time for a rethink? How did it get so huge so fast? That’s a question about overly cheap liquidity and speculation, which is why Tesla’s numbers are so interesting.  Yesterday Google confirmed the pace of its AI infrastructure spend will increase to $205 bln dollars next year. Second quarter income hit $112 bln, but it’s eaten into free-cash flow to the tune of negative $6bln while raising more debt, to “capitalise on the AI opportunity,” said the CFO. Exactly what is that opportunity? The other hyperscalers will say much the same thing when they report on Thursday next week. Collectively the four hyperscalers are expected to spend upwards of three-quarters of a trillion dollars next year on data centres, networks, energy, water and chips. The rest of the AI sector reports next month, when we’ll learn more about adoption and the picks and shovels of the current investment Klondike. Collectively they are taking so much liquidity out the capital markets bond analysts believe the scale of the AI build-out underlies the current steepness of the US yield curve – the AI spend is “crowding out” the US government. It is the biggest private investment programme in global history. But suddenly it feels a little wobbly. What comes next in AI? You can read the Morning Porridge by subscribing on ⁠www.morningporridge.com⁠ [http://www.morningporridge.com], and have it delivered fresh to your inbox every morning!

Burnham’s New Regime and Why Social Housing could be a winner!

Blain’s Morning Porridge July 22nd, 2026 “Here comes the new boss, same as the old boss…” Regime Change occurred in the UK with relatively a few headless corpses left on the field of political failure… Burham is juggling with talent, spending and tax constraints, to maintain confidence. To succeed he needs to get radical. Social Housing is one avenue to growth he could pull off, and it could be funded off-balance sheet. The UK ain’t finished yet!  We are at a very interesting point in the markets… with so many potential flashpoints threatening to erupt into crises – which will prove minor speedbumps? What will be the consequences as the Iran crisis deepens with the Houthis about to open a second front in the Red Sea? What would a full-blown reversal of the AI narrative do to the US economy as the new Chinese Open-Weight models threaten to overturn the expectations around adoption, profits and spending? All Topics for later this week as I catch up from a brief sailing break. Let’s start with matters close to home in the UK where our fractured politics have become a case-study in topsy-turvy modern politics. Will the new “improved” Burnham Labour V2.1 regime make it any more successful than the already forgotten Starmer/Reeves effort? You can read the Morning Porridge by subscribing on ⁠www.morningporridge.com⁠ [http://www.morningporridge.com], and have it delivered fresh to your inbox every morning!

A market running downwind hard and fast is a dangerous thing

Blain’s Morning Porridge 20th, July 2026 “The pessimist complains about the wind; the optimist revels in it; the realist adjusts the sails.” There may be multiple storms and whirlpools on the horizon, but the market remains convinced it will weather them all. That’s a sign of dangerous times. There are times to let the boat run free, and times to trim the sails and slow before something breaks with catastrophic consequences: will it be the AI Bubble, Debt, Iran & Oil, or a No-See-Um?  Sorry for all the sailing allusions today, but we’re sailing for home after a fantastic week on the Solent. Well done Spain! How did Trump stay awake? I didn’t. You need to be an optimist to play this market. And an optimist you need to be, because market returns are not based on the brilliance of your own utterly brilliant analysis, but on what the whole herd of the market collectively believes – which is “nothing to overly worry about”. Contrarians are only right when the crowd is proved wrong – which doesn’t happen as much as it should (for reasons discussed below.) The best investors are the ones who can strip out the crowd’s noise – often by taking long-term “patient” views on the basis even the market crowd cannot resist the long-term consequences of financial gravity. I’ve been thinking about it while sailing in the bright sunshine weather on the South Coast of England. I constantly see parallels between reading the markets and the tau of using the weather and tides to drive the boat. You can read the Morning Porridge by subscribing on ⁠www.morningporridge.com⁠ [http://www.morningporridge.com], and have it delivered fresh to your inbox every morning!

Why Is America so Successful compared to Europe?

Blain’s Morning Porridge July 16th, 2026 “Oh, would some power give us the gift to see ourselves as others see us…” In the past 15 years the US economy has left Europe in the rear-view mirror. While America booms, Europe appears to be flatlining. The question is why? Americans say it’s entirely Europe’s fault: bad policies, failing politics, and lack of unity. However, the consequences of the (as yet unresolved) European Sovereign debt crisis triggered by the Global Financial Crisis of 2008 was the speedbump. This morning’s quote is from Robert Burns. It’s from “To a Louse”, which is very apt for this Morning’s Porridge. Sometimes we just don’t know how stupid, daft or misguided we are. Many of us are too thin-skinned to listen. Others take criticism with a pinch of salt – railing back against those who find fault on the basis our detractors are often blind hypocrites! But it’s worth listening to what folk say about us… even when it hurts. Recently an American Hedge Fund chum lambasted myself and an audience of Europeans for Europe’s failure to match US growth over the last 15 years – back then the two continents were about even in terms of per-capita GDP. Europe’s share of Global GDP has since tumbled from 30% to 17%. US GDP per capita is now double Europe’s. The USA is leading the innovation of tech and has become far more productive than Europe. My chum made some painful observations on European policy mistakes and explained the data. His point was simple – Europe should stop blaming Trump for its’ problems and focus on the internal reasons it is failing. It was one of these moments to listen and ask why it happened. So, I did listen. Europe has failed in many ways.   You can read the Morning Porridge by subscribing on ⁠www.morningporridge.com⁠ [http://www.morningporridge.com], and have it delivered fresh to your inbox every morning!

Is Norway the model other economies should follow?

Blain’s Morning Porridge July 13th, 2026 – Is Norway the model other economies should follow? “There is a huge benefit coming from a small country like Norway.” C’mon. England won, but Norway was sparkling. It’s a genuine shame they are out the World Cup, but didn’t they do well? There is much that Norway’s successful blend of capitalist social democracy could teach the rest of the West. Most countries squander their abilities and resources – not Norway. I’m notionally on holiday this week... but I will be writing brief comments on whatever amuses and intrigues me while sailing… This morning… Norway. I agree with the England manager Thomas Tuchel’s assessment of Saturday night’s Norway match. England were sloppy, and they were lucky – lucky to have Jude Bellingham so focused and skilled. On Wednesday England face Argentina as marginal favourites – the probability markets say between 52%-57% likely the Three Lions will reach the final. Messi vs Bellingham? Atlanta will be a marginally better venue that the Maimi pressure cooker. I have been relearning the chords for Wonderwall on my guitar! But Norway have been the absolute stars of the tournament. There may be a lesson in their success. You can read the Morning Porridge by subscribing on ⁠www.morningporridge.com⁠ [http://www.morningporridge.com], and have it delivered fresh to your inbox every morning!