Subscribe to receive these charts every morning!

1. Ray Dalio says many years of big deficits and unsustainable debt growth has brought the US economy to the brink of a debt crisis.

Dalio says a politically-weakened central bank will undermine confidence in the Fed defending the value of money and will also make holding dollar-denominated debt assets less attractive.

De-dollarization trends, questions over Fed’s independence, sustainability of US fiscal position, and central bank buying will further increase demand for Gold.

2. Yields on 30-year UK gilts have reached their highest levels since 1998.

When interest rates were near zero for several years, many governments borrowed heavily—especially during the pandemic. As rates got back to normal, the need to refinance older bonds at today’s higher rates and issue new debt has gotten more painful.

Long-term bond yields have to climb to make them attractive to prospective investors.

The higher they get, though, the greater the odds of a crisis that tanks Britain’s currency and economy.

Economies with similar issues could be the next dominoes to fall. In the U.S., for example, annual federal interest costs have quadrupled since the financial crisis and are now more than defense spending. Gross debt as a share of the economy has doubled.

3. With power demand on the rise, fueled by the AI boom, clean energy stocks might be on track for further gains.

Donald Trump’s crackdown on the industry is being felt and US presence goes hand in hand with lower returns in the stock market for renewable energy companies.

Still, the US market outlook is not all doom and gloom. Ultimately, it comes down to where stocks are on the cost curve for power, with onshore wind and solar seen as most attractive.

“The primary driver for the adoption of renewables has shifted from ethical or ESG considerations to pure economics, as solar, in particular, has become the cheapest form of new power generation,” says Peter Burke-Smith, a portfolio manager at Lombard Odier Investment Managers.

“From a medium to long-term perspective, now is exactly the time to take a close look at the industry.” “In terms of sentiment, we’ve seen the low point, the bottom. And from here, things can only get better.”

4. Alphabet shares jumped as US court ruling eases antitrust concerns but Google’s win is even bigger for Apple.

In the court ruling, Alphabet was not required to sell its Chrome browser, but it would have to share data with competitors.

Most importantly, it could maintain its current deals to pay companies for featuring its search engine as the default option.

The ruling preserves Alphabet's ability to deepen its partnership with Apple and potentially integrate its Gemini AI into future iPhones. Google's payments of $20 billion to Apple amount to only about 5% of Apple's total annual revenue but 15% of operating income.

5. Trump placed 50% tariffs on the country that exports most of diamonds.

India cuts and polishes most of the world’s diamonds, while America is the largest consumer of diamond jewelry.

Tariffs also apply to lab-grown diamonds because India is one of the top producers of those as well. But wholesale prices on those are very low to begin with, and the cost of producing them keeps coming down, so the impact won’t be that consequential.

Natural diamonds have been stuck in a bad cycle over the past few years: Margins on lab-grown diamond jewelry have been so high that retailers have been tempted to sell bigger, cheaper synthetic stones over the natural variety. This has eaten away at the market share and prestige of natural diamonds. Retailers’ gross margins on lab-grown diamonds are around 71%, compared with around 33% for the real thing, according to diamond industry analyst Edahn Golan.

Source: WSJ

Not a subscriber yet?