Today is my last note for ZMS. When I launched this newsletter, I didn't know what to expect. I had a view of the world, and a blank page. What came back was overwhelmingly positive and, frankly, humbling. Thank you all for coming along with me on this journey. Watch this space for the news.
Read AnalysisAlarm bells are ringing over the financing AI infrastructure. I share those concerns. Like every major innovation, AI will end up overcapitalized and eventually bust, while delivering massive productivity gains. I'm an AI optimist and a financial realist. The two are not mutually exclusive.
Read AnalysisOil sold off hard last week on hopes of a breakthrough with Iran. It is back near $95 today, after Tehran said it would keep restricting passage through the Strait. The bigger story came out yesterday: U.S. factories are running stronger for longer.
Read AnalysisInflation stays hotter for longer. The economy stays stronger for longer. Those are unfolding simultaneously, and it's going to take more than one more hike from here to change that. Own inflation assets.
Read AnalysisThree years ago I published “What Got Us Here Won't Get Us There” to describe how a rising 10-year treasury yield would fundamentally alter the way we think about returns. Today's environment may not have a direction; it might just churn. That challenges yet again what we think about investing.
Read AnalysisDiesel prices rose 24.1% in August. That single line explains more than a third of the entire increase in final demand goods, and energy explains over three-fourths of the 1.1% rise. Both hands of the government are on the same curve, pulling opposite ways. That is a flattener.
Read AnalysisWe are in a historic buildout of AI, and I think this goes the way of every other revolutionary advance. Boom, then bust. This time is not different. Phase One gets the headlines. Phase Two gets the compounding.
Read AnalysisYields going higher? Whoever is short here is not simply betting against a market. They are betting against a buyer who shows up every month with $4 billion, has said in public that he is willing to buy more, and writes the issuance calendar besides.
Read AnalysisThe Fed has two meetings left before the November election. Hike odds have been sliding after two soft inflation prints. So the question is whether the calendar itself has ever mattered. Does the Fed pull its punches before voters show up?
Read AnalysisThe backward-looking inflation data is good. The forward-looking picture is more complicated. 3 things sit between the print we just got and the all-clear: oil, household wealth, and a tight labor market. I remain in the hike camp for September.
Read AnalysisThe price war developing in AI is not about price. A price war can be reversed; a download cannot. Publishing weights is different than cutting price; the weights are the model. Own the compute, not the models.
Read AnalysisReflexivity: the idea that a policy action can change the fundamental it is acting on, in the direction that reinforces itself. The Fed is running that experiment right now: four years of tightening keep failing to tighten anything for the households driving inflation.
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