Sonu Varghese
@sonusvarghese
Musings only. Chief Macro Strategist @CarsonGroupLLC. Advisory services through CWM, LLC, Registered Investment Advisor. Manage $7B+ for clients.
1.6K Following 15.9K Followers
@twinsight_x @RyanDetrick Was looking back to what I wrote at the start of the year (before the Iran war) ... 10 months later, and its the same story
The stock market is more than just AI 😉
Being bearish on AI may mean being bearish on the stock market (S&P 500), but not bearish on “stocks”
The problem is concentration, but we don’t have to play that game. New blog 👇
@RyanDetrick @CarsonResearch
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The AI buildout is massive and hence the enormous stakes 😬
Last 2 days
S&P 500: -4.4%
Nasdaq: -4.2%
Dow: -0.5%
Why the nerves? $1.4T in AI capex planned for 2027, plus $4T+ in off-balance-sheet commitments🤯
New blog 👇
@ryandetrick @CarsonResearch
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Nominal growth🔥
ISM Manufcturing PMI at 55.5
Prices index eases, but still hot at 75.2
Notable comment 😎
"Any commodity consumed by AI/data centers is in a crunch, both for supply and pricing. We keep wondering when the madness will stop."
@RyanDetrick @CarsonResearch
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Fun fact: the equal-weight S&P 500 outperformed the market-cap weighted S&P 500 for 12 straight months between July 2000 and June 2001
From 2000-2002, the equal-weight index outperformed the S&P 500 in 24 out of 36 months!
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Is there no safety in “quality”?
From Oct 6 - Oct 31st
S&P 500: -3.0%
GS Broad AI Index: -17%
$QQQ: -9.4%
$MAGS: -7.5%
$QUAL: -1.7%
Meanwhile …
S&P 500 ex AI Index: + 6.8%
$SPLV: +6.7%
$XLV: +10.6%
$XLE: +9.8%
$XLP: +9.3%
@RyanDetrick @CarsonResearch
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Concentration’s the problem … so when tech suffers, no matter the amount of rotation and outperformance by a majority of sectors/stocks, the overall index goes nowhere (or is even down)
Pleasure chatting with @RemyBlaireNews about this 👇
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The AI trade's outperformance over non-AI stocks has collapsed from ~49 percentage points in June to 5–10 today.
"When technology catches a cold," the entire index tends to flatten out.
@sonusvarghese of @CarsonGroupLLC tells @RemyBlaireNews.
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Facts vs Feelings Social Hour with Alvin Wang Graylin (Ep. 6)
What a great day to have @AGraylin joining us for our latest Social Hour! 🍻🥂
We will be all about AI, technology, policy, and the future. Sign up below and join us an hour before the close!
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Second this from @conorsen
The dot com bubble didn't end in a crash, it ended in rotation 👇
Note: recession didn't start until March 2001, and in fact, NBER said they may not even have "called it" if not for 9/11
Also right now, deficit ~ 6% of GDP
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Q3 Real GDP growth 3.4% (ann) 🙌
Y/Y: 2.1%
Final private demand @ 4.9% 😎
Y/Y: 3.3%
2023-'24: 3.3%
2010-'19: 3.0%
Powered by AI investment. Q3 🥂
IT equipment: +37%
Software +10%
Q3 Nominal GDP @ 5.6% 🔥🔥
Y/Y: 5.9%
2023-'24: 5.7%
2010-'19: 4.1%
@RyanDetrick @CarsonResearch
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Two weeks later … yields still tracking the AI trade
It’s all one trade, AI or bust 👇
Including yields btw (hopefully this week puts to bed the notion that yields were going up just because of oil)
Another good day for breadth tomorrow 🤔
After hours
$AMZN: -7.4% (-4.3% at close)
$INTC: -23.5% (-3.6% at close)
Note: both are in the Russell 1000 Value & S&P 500 Value Index 🤦♂️
@RyanDetrick & I talked about the AI wave & breadth on our latest Facts vs Feelings ep 👇
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Bookmark this and read it a few times.
Amazing work from @sonusvarghese and Blake Anderson (aka little Dan Ives) on our team regarding the Anthropic S1, AI buildouts, Javons' Paradox, and so much more.
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Maybe these should be used as “income products” (and at least they get cap gains treatment) unlike some of the other “income” ETFs 😃
Wanna seem something frightening?!
Here's 50 mutual funds paying out 21% to 56% capital gains this year.
If you're the board why wouldn't you require them to convert to ETF?
56%!
Happy Halloween!
Via @MorningstarInc
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Hawkish hold? Quoting McEnroe: “You cannot be serious!”
June '24 vs Now
Nominal GDP: 6.2% vs 5.9%
UE Rate: 4.1% vs 4.2%
Core PCE: 2.8% vs 3.1%
Fed funds: 5.4% vs 3.9% 🤔
Only so many ways to say the Fed's running it hot!
New blog 👇
@CarsonResearch @RyanDetrick
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🚨WE GOT BREADTH🚨
As predicted 😁
9/11 sectors in the green 🥂
Mid/small caps positive 👏
S&P 500 -0.30%
Concentration 👎
@RyanDetrick
Alphabet $GOOG down 9% after hours
ServiceNow $NOW down 17% after hours
If this carries into tomorrow, and tech is hit, it may be a great day for market breadth 😂🥳
Recall that total hours worked in Q3 ran 1.3% SAAR. This implies productivity growth of roughly 2.0% in Q3. Golden Age?
Q3 Real GDP growth 3.4% (ann) 🙌
Y/Y: 2.1%
Final private demand @ 4.9% 😎
Y/Y: 3.3%
2023-'24: 3.3%
2010-'19: 3.0%
Powered by AI investment. Q3 🥂
IT equipment: +37%
Software +10%
Q3 Nominal GDP @ 5.6% 🔥🔥
Y/Y: 5.9%
2023-'24: 5.7%
2010-'19: 4.1%
@RyanDetrick @CarsonResearch
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But let’s wait for more data 👏👏👏
And you had folks here calling the Fed decision a “hawkish” hold 🤦🏽♂️
Economists who map the CPI and PPI into the PCE expect core prices to have increased 0.34% in September (4.2% annualized, 3.1% year-over year)
This would be the highest monthly reading since January's 0.40% core PCE print
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