Operating at the Intersection of Technology and the Capital Markets
Month: July 2023
Here's betting that Real GDP for Q2 2023 will be revised downward in the months to come. Many investors don't pay attention to downward revisions, but they are coming in my view. My view is that Real Gross Domestic Income (GDI) better reflects the state of the economy than does Real Gross Domestic Product (GDP). … Continue reading Gross Domestic Income (GDI) Tells A Different Story Than GDP
Sure, Palantir (ticker: PLTR), is a fine Info Services company with a predictive analytics platform at its core. However, given the heavy nature of its customer deployments, PLTR can't scale the way AWS, Azure and GCP scale. In fact, Palantir sits on top of AWS, Azure and Google Cloud. So, what are investors so excited … Continue reading More AI Madness
One would expect Amazon's AWS business to slow when the company reports earnings this Thursday August 3rd. Our position on the Big 3 (AWS, Azure, GCP), is unchanged since January (read that article HERE). AWS revenue growth will slow as a result of fewer startup creations and headcount reductions over the past year combined with … Continue reading Amazon Reports Thursday. Here Are Our Thoughts On AWS.
The tune Fed Chair Jerome Powell is whistling is called "Dance of Death", and portends the death of commercial banks, especially small commercial banks. A close look at the chart below (click caption to expand), shows that as the Fed has raised its Fed Funds rate (blue stepped line), Retail Money Market Funds AUM has … Continue reading The Fed’s Dance of Death
I detest CEO hype. I much prefer honesty without hype. CEOs can be honest and upbeat without the hype. Nadella drank his own Kool-Aid. Microsoft CEO Satya Nadella fell victim to the AI hype earlier this week when Microsoft reported (HERE) as we told you he would (HERE). It's Nadella's job as Microsoft CEO to … Continue reading I Detest CEO Hype. Better To Be Honest With Investors.
The Fed includes a healthy dose of "Art" in its decision-making, which allows for wiggle room. The Fed could take rates higher in September so as to avoid the zero bound when it eventually takes interest rates lower. While PCE data shows cooling inflation, don't believe that all of the Fed's actions are data driven. … Continue reading The Fed Could Raise Rates Higher In September
The money supply and commercial bank deposits are shrinking as interest rates move higher - which suggests a forthcoming credit crunch. However, if you want a less academic leading indicator, look to the venture capital industry. The NVCA and Pitchbook have published Q2 venture data HERE. The data shows shrinking deal velocity, volumes and valuations. … Continue reading The Money Supply, Bank Deposits and Venture Investing As Leading Indicators
I haven't seen the detailed sell-side estimates for SS&C Technologies (SSNC), but I am willing to wager that the sell-side did not properly model rising interest expense, thus SSNC missed on the EPS line. Also, SSNC ought to have used its inflated stock back in 2021 to pay down debt. Can't say I did not … Continue reading Can’t Say I Did Not Tell You So
Powell ought to continue to drive QT while maintaining rates where they are. QT is the more effective of the two monetary policy tools as it is more of a Capitalist free market solution than the Central Bank arbitrarily manipulating its Fed Funds rate. This was a quiet week for Treasury maturities and an active … Continue reading The Fed’s Balance Sheet Reduction (QT) Update
Bank of California agreed to acquire PacWest earlier this week. M&A is an example of a Capitalist, free market solution to the regional bank debacle. Filing for Chapter 11 protection is another market-based solution. The Bank Term Funding Program is a bailout program, plain and simple. The Bank Term Funding Program (BTFP, bail out/QE) had approximately $105.1 … Continue reading Weekly Update: Bank Term Funding Program
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