Thursday’s selloff, led by Alphabet down 7% and Tesla down nearly 15%, was a great example of a story that has been unfolding throughout most of the year. While the largest stocks led the market lower last Thursday, many other stocks, especially small caps, were flat to higher on the day. That divergence has been […]
In physics, kinetic equilibrium describes a system in which forces are balanced, and motion continues at a steady, unchanging rate. Felix Vezina-Poirier of BCA Research argues that we can apply kinetic equilibrium to the Iran conflict. Unlike most analysts, he believes that oil prices are not the result of the ebbs and flows in the […]
Prediction markets leader Polymarket has a daily contract that bets on whether the S&P 500 opens higher the next trading day. Yesterday’s contract, as shown below, implied just a 30% probability of an up open, despite the index gaining nearly 1% the day before. The prediction market proved correct with the market opening lower. That […]
Alphabet reports earnings after today’s close, and Intel follows tomorrow. Together, they provide a first clue as to whether AI-related spending and investment continue at the brisk pace of the prior quarters. Alphabet represents the demand side for AI models. Google’s Cloud backlog nearly doubled sequentially last quarter to a record $462 billion, growing 63% […]
Moonshot AI, a Chinese company, just released AI model Kimi K3. Kimi K3 is a 2.8 trillion-parameter open-source AI model that the company claims is the largest ever built. With Kimi K3, Moonshot AI believes it can compete with Claude Opus 4.8 and GPT-5.5 across several benchmarks, trailing the leading systems only marginally. The news […]
The national deficit debate usually focuses on entitlement and defense spending. While they have merit, they miss the single largest driver of America’s deteriorating fiscal picture. After the pandemic-related deficits, the cost of borrowing itself, not spending, has been the biggest deficit buster. As shown in the first graph, in 2021, the government paid $482 […]
Kevin Warsh delivered his first semiannual testimony to Congress earlier this week. In it, he used every opportunity to stress the urgency of returning inflation to the Fed’s 2% target. To wit, he stated, “Inflation will be a thing of the past.” He also said the Fed “has no tolerance for persistently elevated inflation.” The […]
A reader recently asked us: “Why are BDCs diverging from corporate junk bonds?” To his point, the graph below shows the ICE BOA index of BB and B yield spreads to Treasuries are at or near 30-year lows. At the same time, BDCs, which hold lower-rated credit loans to small and mid-sized companies, are trading […]
Coming in on Tuesday morning, investors were expecting to sift through earnings from the largest banks and the CPI data. Instead, IBM stunned investors by pre-releasing its earnings 8 days in advance. Its earnings were much weaker than expected, with revenue well below expectations and EPS declining 2% year over year. As shown below, IBM […]