While inflation, tariffs and geopolitics continue to dominate headlines, another risk emerging for the global economy is the development of a potential “Super El Niño”. El Niño events occur when Pacific Ocean temperatures rise above normal, disrupting weather patterns across the globe. What makes this year’s event unusual is its expected strength. Forecasts suggest there is more than an 80% chance it becomes a “very strong” El Niño, placing it among the most powerful events since records began in 1950. Events of this magnitude are often referred to as “Super El Niños” due to their outsized impact on global weather patterns.

The effects are already being felt across commodity markets. Cocoa prices have risen 37% since the start of June, while coffee prices are up 26%, as traders anticipate weaker harvests due to drought, excessive heat and volatile rainfall. Lower water levels in the Panama Canal have also reduced shipping capacity and increased transit costs along one of the world’s most important trade routes. While weather events rarely drive markets on their own, the knock-on effects through commodity prices, supply chains and inflation mean investors are watching developments closely in the months ahead.

Source: Financial Times, Reuters, Goodbody

The scale of AI usage is becoming increasingly harder to comprehend. In its latest earnings call Google noted that its AI models are now processing around 22 billion tokens per minute, up from 16 billion last quarter. A token is a unit of information and is roughly equivalent to a little less than one English word. To put that into perspective, Goldman Sachs estimates that AI models could be generating 120 quadrillion tokens per month by 2030. That is a massive number when you consider that all the printed works in the US Library of Congress equate to roughly 3 quadrillion. In fact, AI models are already generating more than that amount every month today. That growth is being fuelled by adoption across consumers and businesses, with Google reporting 950 million Gemini users each month and almost 90% of Fortune 500 companies using the platform. What was once a niche technology is now becoming mainstream, and the pace of adoption shows little sign of slowing.

Source: BE Semiconductor, Goldman Sachs, Alphabet, Goodbody

The scale of AI usage is accelerating rapidly. Google first‑party AI models are now processing over 16 billion tokens per minute, up from 10 billion last quarter, with global token consumption projected to rise from roughly 50 trillion tokens per day today to quadrillions by 2030. Tokens are units of data processed by AI models. Generally, 1 token is approximately 4 characters or 0.75 words in English. Over the past 12 months alone, 330 Google Cloud customers processed more than 1 trillion tokens each, while 35 surpassed the 10 trillion mark. Behind this surge sits a growing physical constraint: a single 100‑word AI prompt can consume around half a litre of water, and global data‑centre water demand is expected to more than double by 2030, increasingly concentrating AI growth in regions where water stress is already acute.

Sources: Alphabet, Nvidia, Copilot, Bank of America, Goodbody Asset Management.  

Recent global equity market weakness and volatility stems in large from the increased uncertainty regarding the future direction of US economic policy under the Trump administration. That said, there is little doubt that tariffs are a central part of Trump’s overall economic vision. It is also causing difficulties for the US Federal Reserve. The central bank began easing monetary policy last year but has paused rate cuts more recently as it considers the effects that tariffs might have on both growth (downside) and inflation (upside) within the US economy.

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Source: U.S. Bureau of Economic Analysis, CNBC, Goodbody.