Operating at the Intersection of Technology and the Capital Markets
Month: June 2023
I believe that Inflection AI is yet to generate revenue. However, in this AI-bubble world, a $4 billion post-deal valuation on a $1.3 billion capital raise ($1.5 billion in total capital raised-to-date), sounds less crazy than the "AI"-related valuations I see in the public markets. If you have heard Bill Gates talking up "AI agents" … Continue reading Inflection AI. Reasonable as AI Valuations Go?
Here is our weekly update on the Fed's back door QE program, also known as the Bank Term Funding Program (BTFP), also known as a bank bailout program. The Bank Term Funding Program (BTFP, bail out/QE) had approximately $103.1 billion in outstanding loans as of Wednesday this week, up from $102.7 billion (+ $0.4 billion) a week … Continue reading Weekly Update: Bank Term Funding Program
The Fed has to ramp up QT or stop pretending that it is tightening in a meaningful way. The Fed added $4.8 Trillion to its balance sheet over a two year period and the 7% reduction that has occurred over the past 15-16 months is a drop in the QT bucket. There remains far too … Continue reading The Fed’s Balance Sheet Reduction (QT) Update
$67 billion of Speculative Grade Bank Loans and Bonds mature in 2023 per Moody's (see our table below). That figure balloons to $199 billion in 2024. How many of those companies will survive if they are required to rollover debt at 12-15% versus the 4-6% coupon they did their deal at in 2020 or 2021? … Continue reading The Fed Has To Pivot By 2024
The equity market is too sanguine. Things feel too still. Could this be the calm before the storm, or, will another round of Fiscal stimulus and Fed easing abort the storm on the horizon, fiscal debt and inflation be damned? It is difficult to make a call on the fundamentals whether it be the price … Continue reading Nothing To See Here. Or Is There?
The Fed has not removed liquidity from the system despite Powell's rhetoric. A consistent QT program that removed significant liquidity from the system each month would have been far more effective in the battle against inflation and general excess than the Fed's arbitrary lifting of its Fed Funds Rate. As Bank reserve balances have moved, … Continue reading The Fed Hasn’t Tightened Liquidity
The Fed's FedNow payment network goes live next month. FedNow lays the groundwork for a Central Bank Digital Currency (CBDC). FedNow - a CBDC Trojan Horse? It will be interesting to see if any of the large banks opt-in to FedNow. The reason I say this is because if the Fed was to roll out … Continue reading FedNow Goes Live In July. Is A CBDC Next?
In years past AWS (Amazon) was the leading cloud platform from a Revenue standpoint followed by Azure (Microsoft) with GCP (Google) in the third position. All three companies offer broadly-defined "AI" capability, in particular Machine Learning, which customers such as Netflix (an AWS customer), use to track and predict user behavior. When it comes to … Continue reading Generative AI Flips the Script on AWS, Azure and GCP
End of LIBOR: Use of LIBOR has been slowly phased out in recent years and is set to end on Friday June 30th. The FCA will publish 1-, 3- and 6-month synthetic US dollar LIBOR settings until September 30th 2024. The Secured Overnight Financing Rate (SOFR) is replacing LIBOR in the US. What does this … Continue reading Friday Marks The End of LIBOR and The Fed Is A Perma-Dove
A quick glance at sell-side commentary tells a one-sided bearish story. Bearish sellside commentary: One analyst mentions potential Ad headwinds (approximately 78% of GOOGL's Total Revenue is generated from Ads versus approximately 98% for META). "Google is investing to stay in place" says another. (What? Google's product portfolio is not static by a longshot.) "META … Continue reading Google Is Misunderstood
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