Months ago, the financial headlines were littered with stern warnings that the dollar was depreciating rapidly. There was a popular narrative drawing fear that a dollar demise was imminent. A few short months later, the dollar narrative has flipped. According to today’s headlines and narratives, the tide has turned for the dollar. To wit: we […]
Fed Chair Kevin Warsh used his first major public appearance, a panel at the ECB’s annual forum in Portugal, to formally bury one of the Fed’s most relied-upon tools of the last 25 years: forward guidance. Warsh could not be more direct about his opinion of forward guidance. To wit, when the moderator repeatedly pressed […]
As shown below, the Japanese yen has fallen to levels not seen since the late 1980s. (Note the chart quotes yen per dollar, thus a higher figure represents a depreciating yen) We have written extensively about why the yen matters to US markets: the yen carry trade. The trade is relatively simple. An investor borrows […]
Three weeks ago, we wrote A Supply Tsunami Is Coming. The article discussed why the world’s largest technology companies are choosing equity versus debt to fund their AI infrastructure buildouts. Simply, at 5% interest rates, issuing stock carries no interest expense, no refinancing risk, and no margin pressure. Alphabet raised $80 billion in equity. Meta […]
Last week, Apple raised prices on certain products, citing rising costs of AI memory chips. In a statement to Reuters, the company said it had “never seen a component price increase this much, this quickly” and further that it had been shielding customers from higher costs until now. There is a global shortage of memory […]
Starting this morning, Alphabet will replace Verizon Communications in the Dow Jones Industrial Average. The index change hasn’t gotten much media attention, but it sends a loud message about the economy. The change makes Alphabet one of just 30 companies that Dow Jones & Company deems representative of the US industrial landscape. Verizon, which was […]
Micron left little doubt that the supply-demand equation is grossly out of balance for AI memory chips, benefiting semiconductor companies. In its latest earnings report, Micron reported astronomical growth with revenue of $41.46 billion, up a stunning 346% year over year and 74% versus the prior quarter. Its adjusted EPS of $25.11 beat the $20.28 […]
A recent article by the Wall Street Journal entitled Turbocharged Earnings Are Pushing Stocks Higher. There’s a Catch raises an important issue for investors of the megacap AI-tech companies. Wall Street analysts expect S&P 500 earnings growth to top 20% for a second consecutive quarter; however, the earnings growth is not widespread. The predominant bulk […]
Alan Greenspan, the Federal Reserve chairman from 1987 to 2006, died on Monday at the age of 100. Most of the media’s obituaries are flattering to Greenspan, but many seem to omit his most enduring contribution to financial markets and investors. Simply, when markets are at significant risk or breaking down, the Fed will step […]