1. The AI factory is in Asia.

Nvidia continues to demonstrate its leading position in the AI buildout across platforms, with today's commentary underscoring its belief that compute remains in shortage and the end users are diversifying.
If not for supply constraints (memory!), revenue could have doubled instead of only +70%, seemingly defying the law of large numbers.
Nvidia was up+5% after market but the big winners are in Asia since every single piece of data center hardware is imported from Korea, Japan, Taiwan.
Below: The South Korea export boom…the AI factory is in Asia!

2. US Debt pressures are becoming accute.

The size of the deficit is wildly inappropriate for an economy at this stage in the cycle.
Some of the blame is on the ballooning interest bill, but additionally the US has the largest deficit in the world in GDP and dollar terms.
Today, we’re only $1.1 trillion away from the debt ceiling and speeding toward it, while the debt/GDP ratio is 25 percentage points higher than it was 15 years ago and the interest bill rises to more than $1 trillion per year. A trillion is 1000 billion, but who’s counting anyway?

3. Foreign demand for US Treasuries is at its lowest level.

For two decades the world's surplus savers - foreign central banks above all - recycled their reserves into Treasuries almost automatically, and asked little in return.
That era is now over.

Below: Foreign central bank buying goes down while total outstanding debt goes up.

4. European banks are no longer a screaming buy.

European banks remain among Citi's overweight sectors, but analysts there are cautioning investors that the easy gains may already be behind them.

The brokerage argues that the drivers of the next leg higher are changing, noting that "upgrades have now broadened to other sectors too, reducing the scarcity value" and that valuations are no longer at screaming cheap levels.
"We remain overweight European Banks but would argue that we are now closer to the end of the current bull run”.

5. Never waste a good political crisis in France.

France is set to move back into focus, with the first of a string of reviews by credit assessors expected this Friday.

Uncertainty on whether a solution for the country’s debt will be found as well as next year’s presidential election have already weighed on sentiment, with the CAC 40 Index trailing the region’s other major benchmarks.

A French “crisette” is always a buying opportunity.

Not a subscriber yet?