Operating at the Intersection of Technology and the Capital Markets
The price increases of goods and services in 2021, 2022 and YTD combined with higher interest rates have ensured that a recession will follow. The economic damage is done. The Fed could take interest rates to zero percent tomorrow and restart QE and it would not stave off this recession. Prices for goods and services … Continue reading This Economic Recession Is Baked In
We have written about the Cybersecurity space off and on since 2017 and the one constant over that period is that corporations (and many individuals), do not give cybersecurity enough thought. For example, I do like the fact that many companies have adopted Apple Pay, G-Pay, Samsung Pay and the like as paying with these … Continue reading Cybersecurity: AI Is A Leverage Point, However..
The hype around all things "AI-related" is starting to feel like the 1999 Internet Bubble. The chatter that AI is going to save the U.S. from falling into recession (I believe we are already there), is delusional. I would short that thesis all day. There simply is not enough Enterprise Customer demand for AI / … Continue reading More AI Hype – The Latest Clickbait Phenomenon
The Fed resumed QT the week ending May 31st having modestly reduced its Treasury and Government Agency security holdings (modest in comparison to the Fed's former QE buying program). Treasuries: The Fed’s Treasury security holdings decreased by $31.1 billion for the week-ended May 31st and decreased by $59.9 billion on a rolling 4-week basis. Agencies: The Fed’s … Continue reading The Fed’s Balance Sheet Reduction (QT) Update
The Bank Term Funding Program (BTFP, bail out/QE) had approximately $93.6 billion in outstanding loans as of Wednesday this week, up from $91.9 billion (+ $1.7 billion) a week ago. The “other credit extensions” line item of $188.1 billion includes the FDIC loans made to regional banks. This figure is down from $192.6 billion (- $4.5 billion) … Continue reading Weekly Update: Bank Term Funding Program
GOOGL shares have come a long way since we wrote that they looked attractive on Feb 27th 2023 (HERE). Do MSFT shares deserve the premium they have versus GOOGL shares? (Table below). Not in my view. I appreciate that MSFT does not have the Advertising exposure that GOOGL has, but the valuation premium seems too … Continue reading Google, Microsoft, Amazon and AI
One lesson I've learned over the past 28 years in the Capital Markets is that companies should not feed into hype in order to bolster their Enterprise Value. Rather than feed into hype, CEOs and management teams ought to focus on driving the business and educating investors. The average institutional investor does not understand the … Continue reading Public Company CEOs Should Not Feed the AI Hype
Our view is that M&A activity will further slow from here (especially within Tech), given that valuations have rebounded to a large degree year-to-date (Tech in particular), but sales pipelines are not any more robust than they were in Q4'22 nor Q1'23. Further, the macro economic environment is not any stronger today than it has … Continue reading We Expect Less M&A Deal Activity in 2H 2023
Many companies will fail in their implementation of various AI projects. Many companies underestimate the cost and effort associated with advanced automation / "AI" projects. In addition, companies often fail to clearly define the business problem they wish AI to solve upfront in their AI project process. 1.) Define the Business Problem: This is not … Continue reading AI Failure: Many Companies Will Fail To Scale Their AI Projects
The present market hype around all things AI has driven equity valuations beyond what is reasonable. Is it rational that NVDA shares are up 30% over the past 5 days? NO. Is OpenAI worth the implied $29 Billion as a result of its recent $300 million venture round? NO. Is C3 ai's (ticker: AI) 5 … Continue reading AI Hype and Equity Valuations
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