Picked up tickets

Pumped to see you again and Compound and Friends live!

Goldman raises 2025 core PCE estimate to 3.5% on tariffs

But they think Fed cuts 3 times in 2025, on growth scare/UE rate rising to 4.5%. Probability of a recession over next 12M is 35% (up from 20%)

Am skeptical Powell & co will cut at all if core PCE is heading above 3%!

We’re looking at increasing odds of the Fed not cutting rates at all in 2025

Good piece here

Though it may be more interesting to swap out US mid/small cap industrials and financials for European industrials and financials

As opposed to US large value ...

While lots of talk about tariffs and recession risk now, this is the most underrated story in macro now:

Henry Hub Natural Gas prices have moved from $2.67 on election day all the way past $4.50.

That will matter for utility bills. And it will matter for the AI boom and the future of the IRA

David Sacks @davidsacks47 Follow Just a few minutes ago, President Trump signed an Executive Order to establish a Strategic Bitcoin Reserve. The Reserve will be capitalized with Bitcoin owned by the federal government that was forfeited as part of criminal or civil asset forfeiture proceedings. This means it will not cost taxpayers a dime. It is estimated that the U.S. government owns about 200,000 bitcoin; however, there has never been a complete audit. The E.O. directs a full accounting of the federal government's digital asset holdings. The U.S. will not sell any bitcoin deposited into the Reserve. It will be kept as a store of value. The Reserve is like a digital Fort Knox for the cryptocurrency often called "digital gold."

Incredible, the “Strategic Bitcoin Reserve” is just Bitcoin that was already seized via forfeiture. No actual purchases.

Mistaking belligerence for strength again are we

Also, if EU ever got on a war footing and started running big fiscal deficits and investing domestically, $ GDP would be up 40-50%

EU can easily increase population via migration if it wants, every young person is fleeing Russia

Amazing stuff … totally come full circle to open borders and free trade 🤷🏽‍♂️

Port of LA is set for busiest December on record

Port of Long Beach on track to have its best-ever year

Some of this due to disruptions on East coast/ Gulf ports and maybe import rush ahead of tariffs.

But be wary of the whole reshoring narrative!

Something to think about … what if there’s no tax bill or rate cuts in H1 2025 😕

Ideally, tax bill goes through the first time around.

Second bites of the legislative apple are not quite successful …

One note: core services ex housing is being dominated by financial services, which are imputed prices

Market-based PCE (which does include shelter) shows a more benign picture

That said, residual seasonality in Q1 & higher stock prices could prevent the Fed from cutting until June (after Dec cut)

The (somewhat) sweet irony of the whole crypto melt up is that the biggest winner is Blackrock

IBIT now has $53bil AUM and the fee has jumped from 12bps to 25bps

👏🏾👏🏾👏🏾

+1 right now!

And this time humdrum policymaking (including avoiding a fiscal cliff on 1/1/26) has to be done with a 220-215 majority in the House (likely 217-215 for the first 3 months)

86 bps 🤷🏽‍♂️

Completely simpatico with this!

Case in point: NVIDIA

bsky.app/profile/sonu...

This Is Why the Dollar Is Surging, and Why It Could Pose Risks An underrated story right now is the US dollar, which has appreciated by over 6% since the end of September. A big driver of the dollar is relative growth rates between the US and everyone else. So, t...

Some thoughts on the recent dollar surge, what it means and 3 big risks it poses, including headwinds for

1) US exports
2) Earnings
3) international equities (USD investors)

More here 👇

www.carsongroup.com/insights/blo...

Thanks for sharing 🙏🏿

Such a great read (especially in the wee hours of the morning as I fight jet-lag on a quick trip to India). So much to think about.

🙏🏿🙏🏿🙏🏿

Who’s buying stocks and bonds in 60/40 split?

NVIDIA 😉

Some fun data from their 10Qs 🧵

NVIDIA’s AI-based operating income
+115% from a year ago
+1900% from 2 years ago 🙌

So … a ton of cash coming in, but what’re they doing with it 🤔

1/

This was so great by Michael!

About the same … via Goldman

Wrapping it all up 👇

NVIDIA’s overall purchases of stocks and bonds over the past year -

Stocks (their own): 59%
Bonds/Cash: 41%

Looks like NVIDIA likes the 60/40 portfolio, albeit with a wee bit of concentration 😉

/End

What about the rest of their cash?

They’re buying bonds!

Holdings of “marketable” securities 👇
Year ago: $12.8B
Q3: $29.4B

Increase of $16.6B split almost equally across treasuries & corporates

Cash equivalents (57% MM & 30% treasuries): +$3.6B to $9.1B

4/

Stock buyback flows -
Year ago: $3.8B
Q3 ‘24: $11B 🔥 (“only” 0.3% of market cap)

Over the last year, NVIDIA has bought back stock worth $28.6B 🙌

Buybacks are a way of returning cash to shareholders

Dividends & debt repayment: negligible

3/

Free cash flow -
2 years ago: $1.5B
Year ago: $10B
Q3 ‘24: $20B 😱🔥

Not a huge amount going into capex (relative $ terms)
Year ago: $278m
Q3: $800m

But for the most part, NVIDIA is buying stocks and bonds, in a 60/40 split

More 👇

2/

Who’s buying stocks and bonds in 60/40 split?

NVIDIA 😉

Some fun data from their 10Qs 🧵

NVIDIA’s AI-based operating income
+115% from a year ago
+1900% from 2 years ago 🙌

So … a ton of cash coming in, but what’re they doing with it 🤔

1/

😀 🤷🏽‍♂️

Doesn’t look like the trade deficit is going down … if that is even a goal 🤷🏽‍♂️

*Americans traveling abroad count as imports