FX Drivers, AI Flows, and Sector Flows on a Cross Border Basis
Capital Flows
· Capital Flows
· May 13, 2026 at 04:11
· ⏱ 6 min read
| Read on Substack ↗
Summary
AI capex is the dominant cross-border capital flow of 2024-2026, driving US mega-cap equity outperformance and FX dynamics. The current CPI-driven pullback is a healthy washout, and crude oil is the swing variable for near-term markets. The author views the first Hyperliquid ETF (THYP) as bullish for PURR due to PURR's unique tools like share buybacks and a credit facility.
•AI capex is the single largest cross-border capital flow of 2024-2026, and where it lands dictates every other macro variable.
•The first Hyperliquid ETF (THYP) launched, which the author argues strengthens the PURR thesis because PURR offers tools an ETF cannot match (share issuance, buyback optionality, credit facility, leadership network).
•CPI came in hot on headline but contained on core; inflation swaps are rising, bonds are dragging on equity multiples, but the author calls this a healthy washout after a 17% rally.
•Crude is the swing variable for the next two weeks: a breakdown sets up short squeezes in DAX, Euro Stoxx, gold, silver, and copper; continued strength leads to range trading in equities.
•FX will signal the next bear market before equities do — foreigners buying US mega caps without hedging dollar risk will eventually have to sell US equities to repatriate if the dollar falls.
•The author maps each country's 'impossible trinity' position: US absorbs flows into mega cap tech, Japan forces FX as release valve, Europe sees equity sectors absorb pressure through underperformance, China's trade balance absorbs everything.