Morning Macro 12th November
US Equities continue their rally back towards all-time highs but under the hood AI stocks are seeing increased volatility (Oracle -25.6% in the last month, and CoreWeave -36.8% in the ten days). Meanwhile secondary employment data continues to deteriorate but the OIS only prices 64% chance of a 25bp cut at the next FOMC meeting on 10th December.
ADP data indicates jobs declined by an average of 11,250/week over the four weeks through Oct 25.
“Official Nonfarm Payrolls Will Show a Decline of 50k in October Due to a Large Hit from the Government Deferred Resignation Program” – Goldman
Young adult unemployment at an all-time high going back to 1947. (Chart 1, Bloomberg)
CONTAINER SHIPPING VOLUMES FROM ASIA TO THE US ARE COLLAPSING CARGO SHIPMENTS FROM CHINA TO THE UNITED STATES HAVE DROPPED TO THEIR LOWEST LEVEL IN AT LEAST TWO YEARS
Lumber futures fall to lowest level in over a year. Obviously correlated with home building.
Q3 Revenue Growth, YoY % Change… Palantir +63%, AMD +36%, Meta +26%, Microsoft +18%, Netflix +17%, Google +16%, Amazon +13%, Tesla +12%, Apple +8%, S&P 500 +6%………..
Meanwhile Oracle falls 25.6% in the last month, and CoreWeave (cloud computing company purpose-built for artificial intelligence workloads) falls -36.8% in the last ten days.
Corporate CDS market is saying AI ‘bubble’ watch out. (Chart 2, @gherkinit)
JPMorgan says the next five years could require $5T to $7T in total investment. About $1.5T may come from investment-grade bonds, plus $150B from leveraged finance and up to $40B a year in data-centre securitizations. Even then, there’s still roughly a $1.4T funding gap likely filled by private credit and governments. (Chart 2, Bloomberg)
BESSENT: DON’T BELIEVE TARIFFS ARE A TAX ON CONSUMERS
BESSENT: ‘WE ALREADY HAVE A PROFIT’ ON ARGENTINA SWAP LINE
Data today – German inflation, OPEC monthly report.
