A Massive AI Bet Hiding In Plain Sight

The Macro Institute's Weekly Economic Primer

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The Macro Institute
May 11, 2026

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Don’t have time to watch the whole video? Here’s 5 Key Takeaways:

🔹Emerging Market Cycles Are Measured In Years: It has been over a decade since Emerging Markets had a period of prolonged outperformance over the U.S., and while MSCI’s EM Index has performed well to start 2026, it’s too early to draw any conclusions about what will come next.

🔹U.S. Equities Are More Expensive Than EM Equities: This makes intuitive sense. Investors are willing to pay a higher multiple for earnings in a country like the U.S. than they are in an emerging market country that is generally going to be far less stabile and predicable. This gap has widened in recent years.

🔹Technology Is Now A Much Bigger Force In EM: While the MSCI EM Index used to be heavily dominated by the Energy and Materials sectors, it is the Technology sector that now makes up almost 37% of the index.

🔹Emerging Markets Are Largely Bets On AI: Nearly 80% of the MSCI EM Index is in countries that are heavily tied to the AI investment boom. Taiwan, China, South Korea, and India dominate the index and are massive players in the AI space.

🔹Learn How To Pick The Best EM Countries: Level 2 of the Macro Specialist Designation program teaches you a framework for how to pick the emerging market countries that provide the most attractive investment opportunity.

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Macro Data Center

The Macro Week Ahead

📆 Last Week’s Data Key Takeaways

🔹 Jobs Market Stayed Resilient As Payrolls Beat Expectations: Nonfarm payrolls rose +115K in April, with the unemployment rate holding at 4.3%. Healthcare led with 37K new positions, while the household survey showed a decline of 226,000 workers as the participation rate fell to 61.8%, the lowest since October 2021.

🔹 JOLTS Showed The Labor Market Starting To Crack: Job openings were unchanged at 6.9M in March, with hires jumping to 5.6M (the rate hitting 3.5%, the highest since May 2024). The quits rate ticked up to 2.0% from 1.9%. But beneath the surface, layoffs and discharges climbed to 1.9 million, with most of the increase concentrated in tech and Professional and Business Services.

🔹Factory Orders Surprised Higher On AI-Linked Demand: Durable goods orders rose +0.8% M/M in March (vs +0.5% forecast), rebounding from February's revised -1.2% drop. Orders rose sharply for computers and electronic products (+3.7% to $29.6B), aligned with stronger momentum for AI products.

🔹 Michigan Sentiment Hit Record Low As Consumers Got Crushed: University of Michigan Consumer Sentiment fell to 48.2 in May from 49.8 in April (vs 49.3 forecast), marking a fresh historic low. About one-third of consumers spontaneously mentioned gasoline prices and about 30% mentioned tariffs.

🔹 Trade Deficit Widened As Energy Imports Picked Up: The U.S. trade deficit expanded +4.4% to $60.3B in March (vs $61.0B forecast), up from $57.8B in February. Imports rose +2.3% to $381.2B while exports rose +2.0% to $320.9B. Year-to-date, the deficit remains 55.0% below the same period in 2025 as we lap the tariff front-running that dominated early last year.

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