James Brodie
Head of Learning & Development, Flux
Alphabet Falls On Headlines, China Returning to LNG, NASDAQ in Range
Yields hit new highs as rate bets build. AI capex weighs on tech, while bullish positioning and leverage reach extreme levels.
2-year yields make new cycle highs, with 30-year just 5bp away (Chart 1: Bloomberg). The OIS now prices 42bp hikes by the FED by year end (33% chance they hike next week). ECB 48bp hikes by y/e, BOE 46bp.
Since 2007, the Treasury market has ballooned to $31 trillion from $4.5 trillion while debt as a percentage of US gross domestic product has doubled to exceed 100%. All told, years of excessive spending have propelled annual interest cost above $1 trillion.
Alphabet beat, stock falls 3%
Alphabet beat on every headline number - revenue up 24% to $119.8 billion, Cloud up 82%, EPS of $9.11 - but most of that EPS came from paper gains on equity investments rather than operations, with adjusted EPS closer to $2.85. The company also swung to negative free cash flow for the first time since going public as capex guidance rose to $195-205 billion, while long-term debt roughly doubled and buybacks paused. Shares fell about 3% despite the revenue and Cloud beat. (Chart 2: FT)
China is returning to the LNG market, with weekly LNG imports more than doubling to 22-month high.
Even if Hormuz opens, we don't think Europe can reach target gas storage level before winter Equinor CFO
Tesla sold more cars than ever this quarter, but it had to cut prices and offer more incentives to make it happen. More sales. Less profit per car. Stock fell 3% after hours…. Meanwhile SpaceX hits its lowest level since IPO at $118.3.
Global investors have rarely been this bullish: Bank of America's Bull & Bear Indicator is up to 9.6 points, the highest since December 2020. The gauge measures equity and bond fund flows, hedge fund and fund manager equity positioning, credit market conditions, and market breadth. This metric is now at its 3rd-highest level in 24 years, indicating an extremely positive market sentiment. (Chart 3: BofAmerica)
Nvidia stock higher, CDS wider. Scratch head! (Chart 4: Michael J. Kramer) More Americans own Bitcoin (18.6%), than Gold (10.8%)
Nasdaq Comp remains in a tight converging range. 25,000 remains critical support. (Chart 5: Bloomberg)
“NYSE margin debt is reaching historic levels:” Deutsche Bank analysts. (Chart 6: Deutsche Bank)
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