From Marc to Market:
The US election results initially spurred a sell-off in tech shares as Democrats may be more interested in regulating AI than the current administration, and local initiatives on ballots seemed overwhelmingly to support limits on the data center build out. That said, the amount of territory or percentage of data center plans seem relatively modest. While equities have recovered, the dollar remains broadly lower. The intraday momentum indicators are stretched, and the greenback has begun consolidating after session lows were recorded in the European morning.
The dollar’s drivers, including the outlook for Fed policy and the economy, are likely to be more supportive over the next 48 hours or so. The US sees the ADP private sector jobs estimate today, alongside the final services and composite PMI, ISM services, and the September trade balance. Several Fed officials speak tomorrow and Friday, and those that have spoken recently seem to support a rate hike next month. And then on Friday, is the October jobs growth is seen a little more than 60k, which would be better than the three-month average....
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Also at Marc to Market:
Surplus: The History of Too Much and the End of Economic Primacy
Surplus: The History of Too Much and the End of Economic Primacy
The Puzzle
The United States carries more than $40.5 trillion of debt. Neither party has the appetite to address it. Yet adjusted for inflation, real interest rates remain subdued. While nominal yields are near multi-decade highs, real yields are modest. The US 10-year yield is a little below 4.95% now, and US CPI was 3.7% in September.
Scarcity cannot explain this. There is too much capital chasing too few outlets, and that is the argument of Surplus. The S&P 500 could fund the entire $5.2 trillion AI build-out with about 2.5 years of profits. Buybacks happen not because senior executives are generous; US corporations are now net lenders. Return the hot potato, the surplus capital to investors. Let them figure out what to do with it.
Politics and Economics Rejoined
Harold Lasswell, a founder of modern political science, defined politics as "who gets what, when and how." To the modern ear that sounds like economics....
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