We’ve talked in recent days about the American “boom loop,” fueled by the self-reinforcing loop that Jensen Huang described at GTC — compute generates revenue, revenue funds more compute, compute generates more revenue.

Conversely, Europe is facing a “doom loop.”

And a catalyst to put it in motion arrived three weeks ago.  

And it’s in this chart we’ve been watching … 

The U.S. is energy dominant (a net exporter). Europe is energy dependent.

That’s why this ratio has spiked.

And it traded over 7 this morning — a doubling in three weeks. That’s Europe paying seven times what the U.S. pays for energy.

Here’s the doom loop: Higher energy costs squeeze the budgets of the more fiscally fragile countries.  And with that, market interest rates in Europe are rising, which increases debt service costs, which further squeezes the fiscally fragile countries in Europe. That threatens solvency, which pressures bank balance sheets, which tightens credit, which weakens the economy, which can push the fiscally fragile to the fiscally broken.

Why did the energy shock catalyst of this “doom loop” in Europe become more obvious to markets today?

Because an attack on Qatari LNG (a key supplier to Europe) evolved into what could be a potentially large scale supply destruction in the region (from the Trump retaliatory threat on Iranian supply).

With that potential accelerant to the EU doom loop, today, the leaders of the UK, France, Germany, Italy, the Netherlands and Japan issued a joint statement expressing “readiness to contribute” to reopening the Strait of Hormuz.

Two days ago, the President posted that NATO allies (he put allies in quotes) “don’t want to get involved” and that the U.S. “no longer needs, or desires” their assistance.

Today, those same allies offered to help.

That’s a 48-hour flip — from refusal to compliance. And it tells you everything about who has the leverage.

Now, with that in mind, lets revisit my March 10 notes, where we talked about three important meetings that happened within days of each as bombs were dropping on Iran.

Trump had top AI executives in the White House strategizing on the race to AI supremacy and formalizing an agreement to power AI. And he called defense executives to discuss the quadrupling of production of the certain high level weaponry. Then he brought together 17 leaders in the Western Hemisphere to sign a formal military alliance.

As we discussed, this was/is an industrial mobilization and the fortification of the Western Hemisphere for a bigger confrontation — bigger than Iran.

Today, the Pentagon requested a $200 billion supplemental defense budget. That’s not a “quick surgical strike” budget. That’s a multi-year industrial mobilization war chest.

This is about positioning for China. Trump was due to meet Xi in April. It was just postponed.