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Today’s Links

My new look FX Update, now called The FX Trader, as I try a new format that is hopefully a bit more engaging and looks more explicitly at levels. I have the intention to deliver it more regularly - hope I succeed on that front, too.

Daniel Lacalle argues that government spending and money printing is killing the middle class as inflation outstrips wage growth, certainly an important point. And lowering the short rate to allow better financing terms might only provide partial relief as it would likely further super-charge asset markets. As a good friend of mine pointed out after I passed him the link to this article “We so need a debt jubilee, paid for by super tax on Mag 7”. I dunno what the answer is, though I like the idea of reducing debt. The problem may be that raising incomes for the bottom 50-75% in real terms might only be achievable by destroying the wealth of the top 1-10% to clear out the impacts of too much wealth (the flip-side of indebtedness) or financialization in our societies.

A great conversation over on the Forward Guidance podcast, with some older Gen Z’s (and a Millenial?) discussing everything from the justified angst of their generation - due to the K-shape and the serial bailout of the wealthy - as well as discussions of divergences that we have also noted, market structure and more.

On Germany, following the Zeitgeist, we have a the-Germany-economy-is-doomed piece from FT citing the things we all know so well, while my friend Peter sent a link to a great Erik Nielsen substack pointing out the positive sides of Germany relative to the US, particularly in terms of quality of life, but even in quality-of-GDP terms, especially from low relative costs of security in Germany and vastly lower levels of crime.

Endgame Macro also weighed in yesterday on the troublesome aspects of Coreweave’s earnings report and financial projections. The market seems to be listening - the share price is in freefall, down another 15% in yesterday’s session.

WSJ was out with an exclusive discussing China’s apparent intent to enforce an intrusive “validated end users” policy with its rare earth minerals exports to ensure they aren’t going toward military applications. Good luck.

Caveat: I don’t know the quality of the source here, but this is remarkable stuff, and as I mentioned on the podcast, if it is true and the US government isn’t ginning up popular outrage, what are we supposed to infer, that it wants to take things carefully with divorcing from China because US national security in supply chains terms is so vulnerable? Talk about asymmetric warfare - the US defense infrastructure must be scrambling like mad on things like this: the US Air Force base harboring much of its strategic nuclear fleet of bombers shares a fence with a trailer park owned by CCP-linked operatives. Remember Ukraine’s drone attacks on Russian aircraft?

Wolfgang Münchau on the EU needing to get serious about the threat to the euro from stablecoins.

Chart of the Day - 2025: K-shape gone wild

The chart below compares the trajectory of the US Nasdaq 100 Index with that of Goldman Sachs’ Middle Income Discretionary Basket, both indexed to 100 on the last trading day of 2024. The GS basket is intended to represent stocks most exposed to the discretionary spending of the broader middle class, for example in apparel, restaurants/leisure/amusement parks. Today’s challenge: see if you can spot any divergence this year relative to last. (Hat-tip to Forward Guidance for highlighting this same GS index on their recent podcast (see link above), I am simply copying their point in the chart below).

Questions and comments, please!

Listen to the full episode now or follow the Saxo Market Call on your favorite podcast app.

Today’s Links

Meta shows 15 billion higher risk of scam ads per day, possibly driving 10% or more of its revenue, a very ugly case of the company doing insufficient KYC checks or having reasonable oversight over its platform. You can do better, Meta.

A very cool story about solar power infrastructure transforming life in many places in Africa, much like telco-based micropayments transformed commerce in Kenya and many countries there and elsewhere zipped quickly into the internet age via mobile infrastructure that didn’t require corrupt or poorly organized and capitalized governments to make any investments. Roads might be a different matter, but some interesting implications here and the collapse in solar panel prices is truly staggering, even within the last few years. Yes, a lot of it is Chinese overcapacity, but still.

Tobias Carlisle on X has a number of useful charts showing that equal weight stock indices have performed better in much of market history, but that hasn’t been the case since 2015 (all the usual concentration stuff we have discussed, Mag7 etc, behind this) and as he says, it could end tomorrow or it could keep going for a decade. I doubt the latter, as our societies will explode within that time frame if we continue down the current path - but let’s see what gives. By the way, on the podcast I said it was Tobias that compared top decile vs. bottom decile stocks, but that was Mike Green responding to a Tobias post.

If you missed the Macrovoices podcast with Brent Johnson, who is out on the podcast circuit with a view on how the US is possibly leveraging stablecoin infrastructure to help back the US treasury market and ensure the US dollar’s dominance, he was on Thoughtful Money with Adam Taggart, who usually does a great job of prodding guests for a deeper explanation of their theories and thoughtful additional questions.

Cryptic story that Foxconn is set to produce humanoid robots in Texas to help produce AI servers. Okay…but can they dance like the Tesla Optimus?

Open AI has USD 1.4 trillion in commitments and USD 13 billion in revenues. Discuss.

Chart of the Day - Meta (META) weekly

This is a hideous chart, one in freefall for now until further notice on the companies massive capex, with some of it even hidden off balance sheet in an SPV with a private equity outfit. If the US legal system can find any way of functioning when it comes to Big Tech malfeasance, there ought to be a mass class action lawsuit against the company for its lack of oversight and its profiting on scams and frauds as noted in the story linked to above. Sorry, mind the Schadenfreude here, but even if there is no major legal action against the company, more investors, private and institutional might begin to feel that owning the company is the moral equivalent of owning a tobacco company in terms of harm to, in this case, mental health even beyond the outright financial frauds. Next stop 500?

Questions and comments, please!