Welcome to the WC, wherein you’re trapped in my mind for eight to twelve minutes weekly.
It’s been a heavy few weeks for investors as the global macro climate rearranges itself around America’s evolving policy positions.
ICYMI:
If you’re an accredited investor and want to diversify into any of these areas, let us know. We’ll build a plan for you.
Nothing here is investment advice. Do your own research. Please.
Today, you’ll enjoy lighter fare. Or at least quicker.
What’s on the menu today:
- The AI infrastructure play
- Cat bonds are going off the charts
- Survey says: awful
- It’s [not] business time
Nothing here is investment advice. Do your own research. Please.
Let’s go. 🚀
Before we begin, you’re invited to hang out with us and meet your fellow community members.
From April 28th to May 1st, I’m hosting meetups in New York, Atlanta, and Los Angeles. Each session includes roundtable discussions, drinks, food, and merriment.
Please RSVP if you’d like to join:
- April 28 | NYC Altea Meetup | RSVP
- April 30 | Atlanta Altea Meetup | RSVP
- May 1 | Los Angeles Altea Meetup | RSVP
Meetups are free for Altea members and $95 for others.
You can join Altea today for $99.
Nicho dropping Artful Truth Bombs over pints
Last week’s session in London was… Merry.
Table of Contents
The AI infrastructure play
I ran into Dan and Edward from The Investing Journal at the London meetups last week. Their current obsession is mapping the investment landscape around generative AI.
It’s a fascinating problem. Everyone’s watching ChatGPT reshape entire industries in real time, yet the company behind it remains stubbornly private.
To circumvent this, they’ve identified the “infrastructure play,” focusing on publicly traded companies that provide the essential architecture for AI development rather than chasing pre-revenue startups with questionable business models.
Their research centers around the three pillars supporting the current AI boom: Microsoft’s strategic partnership with OpenAI, Nvidia’s near-monopoly on AI acceleration hardware, and Arm’s increasingly critical role in designing the computational blueprints for everything from data centers to edge devices.
I found their analysis of specialized AI ETFs particularly interesting —essentially, the difference between thoughtful exposure and marketing-driven fund construction.
Some funds are carefully built around genuine AI enablers, while others slap “AI” on technology indexes and call it innovation.
They’ve packaged this research into a guide that cuts through the usual technobabble.
Check it out if you’re curious about their approach. (You’ll subscribe to their newsletter and then get the guide in your inbox)
Cat bonds are going off the charts
We wrote about the catastrophe bond market just a month ago, and it has had what can only be described as a ridiculous start to 2025.
We’re barely past mid-April, and 2025’s issuance has already surpassed the previous January- April record set just last year.
Nearly $7.9 billion in new cat bonds have settled this year, eclipsing 2024’s $7.7 billion four-month total. With the settlement of Zenkyoren’s Nakama Re 2025-1 deal today, the market will hit $8 billion.
What’s truly remarkable is the pipeline ahead. With the deals already in the works, issuance could approach or even exceed $10 billion for the first four months, potentially making this the most prolific four-month stretch in the market’s history.
The math is compelling: adding the current $3.71 billion pipeline to the $7.9 billion already settled puts the market at roughly $11.6 billion.
That’s breathing down the neck of last year’s five-month record ($11.72 billion) and within striking distance of the first-half record ($12.6 billion).
This marks the third consecutive year of record-breaking Q1 issuance, but 2025’s pace is exceptional even by recent standards. The market is experiencing a perfect storm of favorable conditions:
- Improved pricing, attracting both seasoned and first-time sponsors
- Deals consistently upsizing, reflecting strong investor demand
- A wider variety of perils being securitized through the cat bond format
While the full-year record still has some distance to cover, the market is clearly on a trajectory to set new benchmarks across multiple timeframes. The question isn’t whether records will fall – but by how wide a margin.
Survey says: awful
The Fed’s latest Survey of Consumer Expectations reveals Americans are becoming increasingly pessimistic about their economic futures – and the timing aligns perfectly with the recent wave of trade policy uncertainty.
Inflation: The Mixed Signals Show
Short-term inflation expectations jumped significantly in March, climbing 0.5 percentage points to 3.6%, while medium and long-term outlooks remained relatively stable at 3.0% and 2.9%, respectively.
The correlation with recent trade developments is difficult to ignore. As tariff policies shift rapidly – with rates changing multiple times in April alone and varying exemptions being announced – consumers are bracing for price increases where they hurt most.
Food price expectations hit 5.2% – the highest since May 2024. Medical care costs are projected to surge 7.9%, while rent is expected to jump 7.2%.
When essential costs outpace wage growth by this magnitude, something has to give – and that something is usually discretionary spending.
Labor Market: From Confident to Concerned in Record Time
The most telling numbers come from the labor market outlook, where Americans are showing anxiety levels not seen since the early pandemic.
The probability of higher unemployment a year from now spiked to 44.0% – the highest reading since April 2020. This broad-based surge in pessimism coincides with new trade investigations into semiconductor and pharmaceutical imports – two massive employment sectors.
Meanwhile, the perceived probability of losing one’s job climbed to 15.7%, with low-income households feeling particularly vulnerable – precisely the demographic most sensitive to price fluctuations on everyday goods.
Financial Outlook: From Cautious to Outright Gloomy
The share of households expecting their financial situation to worsen reached 30% – a level not seen since October 2023. Stock market optimism has plummeted despite recent rallies, with only 33.8% expecting higher prices a year from now.
What’s fascinating is the contrast between these sentiment shifts and official messaging. While Treasury officials speak optimistically about “clarity” in the 90-day tariff pause window, consumers are clearly reading between the lines.
In an environment where tariff rates can change dramatically within days and exemptions appear unexpectedly for certain product categories, long-term planning becomes challenging for both businesses and households.
It’s [not] business time
Speaking of struggling businesses…while consumers are expressing their anxiety through surveys, businesses are voting with their actions – and the verdict is unmistakable.
Tourism’s Cliff-Edge
According to recent data, foreign tourism has fallen off a cliff.
International arrivals plummeted 9.7% year-over-year in March 2025, with visitors from every significant market showing steep declines. Canada, Mexico, Europe, and Asia registered double-digit drops by the end of March.
This isn’t just a statistical blip – it’s a $100 billion domestic industry concentrated in economic powerhouses like NYC, southern Florida, southern California, and Las Vegas. Hotels, airlines, restaurants, and tour guides are already reporting significant pain points as international visitors suddenly vanish.
America is hosting the World Cup alongside Canada and Mexico next year, which will be interesting to say the least.
Manufacturing’s Forward-Looking Pessimism
concerning picture. Forward-looking indicators for the next six months show steep declines across nearly every metric:
- General business conditions crashed 20.1 points
- New orders plunged 22.1 points
- Shipments collapsed 27.8 points
- Unfilled orders dropped 14.5 points
Meanwhile, price indicators are moving in the opposite direction – “Prices Paid” jumped 7.4 points with 70.5% of manufacturers reporting higher input costs. More concerning still is the “Supply Availability” index, which plummeted to -18.0, suggesting significant expected disruptions to supply chains.
Ocean Bookings: The Trade Collapse in Real-Time
The most dramatic data point might be the week-over-week collapse in ocean freight bookings. Comparing the first week of April to the last week of March:
- Global container bookings dropped 49%
- Overall US imports plunged 64%
- US exports fell 30%
- US imports from China specifically crashed 64%
These aren’t gradual slowdowns—they’re emergency stops. When businesses suddenly halt international shipments, it signals extreme uncertainty about near-term trade conditions.
The Economic Impact Takes Shape
Goldman Sachs has dramatically revised its 2025 growth outlook, now projecting just 0.5% GDP growth for the year – far below the Bloomberg consensus of 1.5%.
Their forecast shows particularly weak Q2 and Q3 periods before a gradual recovery in late 2025 and 2026.
Perhaps most telling is the U.S. dollar’s trajectory – down 8.11% year-to-date, with April showing particularly sharp declines.
The currency markets appear to be pricing in both economic turbulence and the potential for emergency monetary policy responses.
The Business Calculation
When planning horizons collapse, businesses typically respond by:
- Freezing discretionary investments
- Delaying hiring or even reducing headcount
- Running down inventory rather than placing new orders
- Shortening supply chains and reducing reliance on uncertain sources
The data suggests all four responses are happening simultaneously and at scale. The crucial question is whether this represents a temporary pause while businesses assess the new trade landscape, or the beginning of a more prolonged economic realignment.
For investors, the challenge is determining which sectors might benefit from supply chain reshoring versus those caught in the crossfire of trade tensions with no clear path to adjustment.
Or invest elsewhere.
Let us know if you’re an accredited investor and want to diversify internationally. We’ll build it for you.
Nothing here is investment advice. Do your own research. Please.
That’s all for this week; I hope you enjoyed it.
Cheers,
Wyatt
Disclosures
- Nothing to see here.
