The Daily Spark

With the three largest passive S&P 500 funds now holding more than $2.6 trillion combined, and Vanguard's VOO alone crossing $1 trillion this month, prices are increasingly set by mechanical flows rather than by anyone judging what companies are actually worth. See chart below.

There is 10 times more gold stored in Fort Knox than in the New York Fed gold vault, see chart below.

The Silicon Data Token Expenditure Index, which tracks total spending on large language model usage, has roughly doubled since late 2025 even as the price of a single token has fallen more than 90% since 2023.

This is Jevons paradox in action. As tokens get cheaper, companies don't spend less but instead run more AI agents, automate more workflows and generate more code, pushing aggregate expenditure higher even as the unit cost of intelligence collapses.

Software private equity is sitting on an aging inventory, with nearly 900 of roughly 3,250 active portfolio companies held five years or longer and most of the rest bought during the 2020 to 2021 zero-rate era, see chart below.

Clogged exit channels since the Fed began hiking in 2022 are keeping GPs holding software assets well past the typical 3- to 5-year window, pressuring distributions back to LPs for investors in software companies.

The chart below tracks how much more investors are paying to protect a typical single stock against big swings compared to protecting the whole market. That premium has climbed steadily over the past decade because index-level gains have been driven by a handful of giant tech names.

Investors are increasingly nervous about specific companies rather than the market as a whole, worrying that the gap between the tech winners and everything else could snap back through company-specific shocks like earnings misses, management changes or competitive threats. Adding to this, a surge in zero-day options trading concentrated in the big tech names has pushed up demand for single-stock protection, widening the premium further.

In short, even when the overall market looks calm, investors see more risk in betting on any single stock.

If AI were triggering a jobs crisis, we would expect job openings to collapse and unemployment to climb, yet the opposite is happening.

The number of job openings per unemployed worker has started to rise again and is now back above 1.0, meaning there are still more jobs available than workers to fill them, see chart below.

The May jobs report reinforced this with nonfarm payrolls jumping by 172,000, confirming that there are no signs of workers being replaced by ChatGPT.

The first chart shows that revenue per employee is rising for the Mag 7 and falling for small-cap companies.

The second chart shows that profit margins are rising for the Mag 7 but flat for the S&P 493.

The bottom line is that Fed hikes and higher all-in yields continue to bite for companies with weaker credit fundamentals, and there are not yet signs that AI is boosting revenues or profit margins outside the Mag 7.

Startup formation has surged in recent years, with solo founders driving nearly all of that growth, suggesting AI tools may be making it dramatically easier for individuals to launch businesses on their own. If even a fraction of these firms scale, the employment implications could be significant. It is Jevons paradox in real time, see also here.

Visits to the Statue of Liberty are down 20% relative to last year but remain within the post-pandemic range, see chart below.

The closure of the Strait of Hormuz is increasingly showing up as a working-capital problem for US corporates, see chart book available here.

With limited traffic through the Strait over the past three months, supply-chain bottlenecks are rising, delivery times are slowing and inventories are becoming insufficient, forcing companies to rebuild buffers at a time when interest rates higher for longer make carrying more inventory increasingly expensive.