The orange bars are the price of European natural gas. The white bars are the yield on Italy's 10-year government bond.

As you can see, the rise in European natural gas prices, due to the structural supply shock in the middle east, has resumed since the beginning of July. 

And because of what a sustained spike in energy prices does to the fiscal situation in the weaker spots in Europe, Italian 10 year yields are rising with it step for step.

That's part of the doom loop formula for Europe, that we revisited yesterday.

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. And the chart above tells the story.

Let's talk about the boom loop.

The market has spent two days selling the AI trade. Chip stocks, memory makers, the whole supply chain. The second shakeout in six weeks.

But let's look at what's actually happening. 

ASML raised its full-year sales forecast — for the second time this year.

IBM told us its customers raided software budgets to buy servers and memory chips before prices rise again.

A Chinese lab just released the largest open-weight AI model ever built. How was it built/trained?  With a lot of computing power.

And on that note, we heard from Taiwan Semiconductor this morning. TSMC manufactures nearly every advanced AI chip on the planet. It sees every order book in the industry.

They reported record revenue (up 36%), record profit (up 77%). They raised full-year revenue growth forecast to more than 40%. They raised capital spending plan by $8 billion, to as much as $64 billion, and said the next three years will be "even more significantly higher."

They continue to build more capacity to meet more demand. 

They committed another $100 billion to fabs in Arizona. And the Chairman said, "our conviction in the multi-year AI megatrend remains very high."

The stock fell.

The one caution in the report was on consumer devices, where rising component costs are beginning to bite. It's not a demand problem, it's a bottleneck problem — another "scarcity" story. Every major tech player is aggressively over-ordering to secure scarce capacity.

So, the evidence this week went one way. The stock prices have gone the other.

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.

That's what our two portfolios are built around. Our AI-Innovation Portfolio owns the scarce physical inputs the buildout cannot exist without. Our Billionaire's Portfolio owns the still-undervalued producers of the hard assets that feed it.

Two portfolios driven by one thesis. If you're not yet a member, it's a good time to get positioned. Learn more here.