Fed Gov Waller is hawkish—he doesn’t think the Fed should rush to cut rates, per the FT. He wants “at least a couple of months of better inflation data.” If they didn’t cut rates this year, I guarantee vol doesn’t just hover. Right now implied vol is low by historical standards. Remember, US markets are closed tomorrow.
First obvious note: JPM is warning about crowding in the momo factor, per BBG. If you’re just figuring out 6 stocks made the most money, and it’s the job of many firms to chase momentum, then you need to read Arrows more.
Second obvious note: the VIX and VStoxx gauges embed expectations of spiking volatility around the US election, per the FT.
Third obvious note: Carnival Cruise says it will avoid the Red Sea for the rest of 2024 and early into next year, per Reuters. Otherwise, they’d have to change their slogan—It’s a Cruise to Die For. Sorry if that is a little morbid before your second cup of coffee.
Blackstone’s Schwarzman provided a positive spin for the private credit industry, laughing at bubble concerns. “Our default rate on these types of loans is three-tenths of 1%,” he said. They’re doubling down with more retail-investment products in Japan. So, take that, naysayers. He thinks you’re waiting for the never-credit-burst. In another story on BBG, investors are hiring their own private eyes to figure out why valuations across firms for the same investment vary so much. Short-oriented firms are saying that in extreme cases, lending terms are too good to be true. The collateral promised to investors for lending is actually pledged to others, sometimes multiple times over. Ruh Roh.
SBF faces a 40-to-50 year prison term in his fraud case sentencing today. To be fair, FTX expects to repay $8 bn in missing customer funds. But to be even fairer, should they ever have gone missing? Let’s move on. Next!
Yes, it is too soon to talk about the Baltimore bridge disaster without mentioning the sad loss of life. At the same time, if you’re running money, you have to care about implications of events. This is going to be one of the largest marine insurance payouts in history, per Lloyd’s CEO. In the multi billions, per BBG.
AMZN is plunking down $150bn on data centers to capture a big piece of the AI boom over the next 15 years, supposedly. The co wants to keep its lead in the cloud services market, where it’s about 2x MSFT. BBG has an interesting story. Folks who live by these data center farms say there is an incessant hum. Why not go all the way? I think AMZN or AAPL should create a modular house. It arrives quickly (next day with Prime), you can choose the colors and read the reviews before customizing, it will sit on top of its own data center (so the humming can be more of a comforting buzz to put you to sleep), you can charge the devices on any surface (because we will have 100x the devices), and walls will incorporate AI functionality to answer any question you have, such as “Why do I have an 11th toe?”
A study found that Novo’s Ozempic diabetes drug can be made for under $5, per BBG. So, if you’re paying >$1k to get that shot, you can question how much profits are required to spur R&D. Cue the Congresspeople to show rage and then do nothing.
Govs across the pond are considering rules for cigarette co’s new zero-tobacco heat sticks, such as the nicotine-infused tea stick, which were introduced to counter a new EU ban on flavored heated tobacco products. They’re not a huge rev driver (yet), but they were a strategic development that had started to become really popular. Maybe the co’s should just spend resources on other addictive products like social media.
All time highs for equities. Gold poppin’ too. Mixed messages?
