2024 is expected to be a year of interest rate cuts
Here's what's currently priced in markets of who does what when. Source: Bloomberg, David Ingles
Latest Bianco research presentation highlights Big Tech risk:
The current top 5 companies by market cap make up ~26% of the S&P 500, The last time the top 5 had a greater concentration in the S&P 500 was 1964 w/AT&T, GM, Exxon, IBM, Texaco. Source: HolgerZ
Capital allocation framework
Source: invesquotes
Interesting market action... Bitcoin and Gold just moved in sharply opposite directions after weeks of similar price action. Beginning late Sunday night, both assets jumped sharply
Since then, Bitcoin is up 6.5% while gold prices have posted a massive $100 reversal. Some shift from gold to digital gold? Or just a random short-term divergence? Source: The Kobeissi Letter
How do you say CHIPS act* in one chart?
Not all fiscal policy has to be a bad thing... this could indeed lead to a big increase in the productivity we will see over the coming years due to this. Source: Ryan Detrick, Carson * CHIPS Act -> In July 2022, Congress passed the CHIPS Act of 2022 to strengthen domestic semiconductor manufacturing, design and research, fortify the economy and national security, and reinforce America’s chip supply chains. The share of modern semiconductor manufacturing capacity located in the U.S. has eroded from 37% in 1990 to 12% today, mostly because other countries’ governments have invested ambitiously in chip manufacturing incentives and the U.S. government has not. Meanwhile, federal investments in chip research have held flat as a share of GDP, while other countries have significantly ramped up research investments. To address these challenges, Congress passed the CHIPS Act of 2022, which includes semiconductor manufacturing grants, research investments, and an investment tax credit for chip manufacturing. SIA also supports enactment of an investment tax credit for semiconductor design.
As highlighted in the Kobeissi Letter and in the chart below from Tavi Costa >>> Annualized interest expense on US Federal debt is nearing $1.1 TRILLION
To put this in perspective, 2023 defense spending was $821 billion. This means the US is on track to spend 34% MORE on interest expense than defense spending. In 2023, the US government produced $4.4 trillion in revenue. This means that 25% of receipts in the entire 2023 are equivalent to Uncle Sam's annual interest expense. Rising rates and falling tax revenue are both occurring at the same time. A tricky combination
WHO HOLDS AMERICA' DEBT?
Source: WinSmart, The DailyShot
Political position of the largest party in each European country
(map by try.balkan/instagram) Source: OnlMaps
