September 2025 DDD

[ducati996]

Stuff that I find interesting from all over the internet. I will steal from everyone, alive or dead.

This is really just a market diary of stuff that is happening day-to-day in the markets. A pulse. I don't necessarily agree or disagree. I don't highlight my opinions, but you will (if you follow this) will come to recognise my voice in the posts.




Friday, September 26, 2025

Moscow’s restrictions on fuel exports, including a full export ban on gasoline and a partial one on diesel, have lifted ICE Brent futures above $70 per barrel this week, further buoyed by market participants distrusting OPEC+’s unwinding of its 2.2 million b/d voluntary cuts, seeing only a fraction of promised barrels in the market. Iraq will be the key price indicator of the upcoming weeks, with the potential restart of oil flows via Turkey adding to Europe’s regional supply.

Iraq Doubles Down on Kurdish Restart. Having signalled the restart of Kurdish crude deliveries via the Kirkuk-Ceyhan pipeline earlier this week, Iraq’s federal government reached agreements in principle with 8 oil companies producing 90% of Kurdistan’s output, specifying that first oil will flow on Saturday.

Russia Extends Gasoline Export Ban. The Russian government extended its ban on gasoline exports until the end of 2025, seeking to keep all barrels at home following a barrage of Ukrainian drone strikes on refineries, whilst also introducing a ban on diesel exports for non-producers, i.e. trading middlemen.

Traders Continue Their Global Expansion. Having previously bought Italy’s Saras refinery and Sweden’s Preem, global trading house Vitol has expanded further into upstream, having finalized its purchase of a 30% stake in Cote d’Ivoire’s multi-billion-barrel Baleine field from Italy’s ENI (BIT:ENI) for $1.65 billion.

Trump Cancels $13 Billion in Renewable Funds. The US Department of Energy plans to cancel $13 billion in funds dedicated by the Biden administration to subsidize wind and solar parks as well as electric vehicles, coming a day after President Trump dismissed climate change as the ‘greatest con job’.

Oil Majors Scale Back 2026 Buybacks. French major TotalEnergies (NYSE:TTE)might have pioneered a new trend of downscaling its share buyback programme next year, with its board voting to restrict quarterly buybacks to $0.75-1.50 billion, down from previous pledges of $2 billion per quarter.

US Drillers Remain Sceptical. The latest Dallas Fed survey on oil and gas activity in key oil-producing states of the US has brought forward the ‘twilight of shale’ as executives voiced their frustration with Trump’s tariff policies, with the company outlook index falling from -6.4 in Q2 to -17.6 in Q3.

Canadian Gas Producers Curb Output. Record low natural gas prices in Canada, with Alberta’s benchmark AECO spot prices trading at an average of -$0.18 per MMbtu this week have prompted the country’s oil and gas companies to aggressively cut output, absent any incremental LNG offtake outlet.

Serbia’s Only Refinery Awaits Its Ordeal. The Trump administration will impose sanctions on Serbia’s Russian-owned oil company NIS from October 1, according to the country’s President Aleksandar Vucic, citing Gazprom Neft’s 44.9% stake in the company that operates the 100,000 b/d Pancevo refinery.

French Unions Look Forward to Week-Long Strikes. France’s largest industrial trade union CGT vowed to disrupt port operations and block ships from discharging until its salary demands are met, prompting terminal operator Elengy to invoke force majeure at three sites, temporarily halting cargo discharges.

BP Scales Back Its Renewable Ambition. Publishing its annual Energy Outlook, UK oil major BP (NYSE:BP) pared back its call of global crude demand peaking in 2025 at 102 million b/d, pushing peak oil out to 2030 (at 103.4 million b/d), blaming the change on weaker-than-assumed energy efficiency gains.

World’s Most Important Copper Mine Grinds to a Halt. US mining giant Freeport-McMoran (NYSE:FCX) declared force majeure at its Grasberg mine in Indonesia, one of the largest copper and gold mines globally, after a landslide blocked access to underground parts of it, trapping seven miners and killing two.

Russia to Build Four Nuclear Plants in Iran. Tehran has signed a $25 billion agreement with Russia’s state nuclear corporation Rosatom to build four nuclear power reactors in the country, with Iranian media suggesting the 5 GW capacity site would be located in the southeastern province of Hormozgan.

Europe Plans Tariffs on Chinese Steel. According to German newspaper Handelsblatt, the European Commission plans to impose tariffs of 25% to 50% on Chinese steel and related products over the upcoming weeks, even though Europe accounts for only 4% of China’s steel exports, as of end-2024.

Small-caps are stepping into the spotlight after sitting on the sidelines for a long stretch. These stocks have been waiting for their moment, and it looks like that moment is finally here. The Russell 2000 ETF just closed at new all-time highs for the first time in 969 days — ending its longest drought ever. In fact, the Russell 2000 ETF finally closed at new all-time highs for the first time in 969 days — ending its longest drought ever.

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​ ​ ​ Now it’s their turn to go on offense and prove they can sustain this strength. If small-caps can keep leading from here, it would be a huge confirmation of risk appetite and a fresh tailwind for the broader market into the year-end. A lot of these names are already participating — Industrials, Tech, Gold miners. These are offensive groups pushing higher. And really, it’s tough to picture this bull market wrapping up before small-caps even register a clean breakout. That’s been a key reason we’ve stayed constructive and eager to keep putting money to work in equities. Our Chief Market Strategist Steve Strazza walked through this yesterday in a live session, highlighting actionable setups. One standout: the 2-to-100 Hunt.​ ​ ​ ​

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• The S&P 500 ($SPX) fell for the third straight day, but the pullback has been mild, slipping just -2% on an intraday basis and -1.3% on a closing basis.
  
  
• Frank notes that short-term momentum swiftly corrected from extremely overbought levels on Monday to nearly oversold levels. Importantly, it didn't quite reach oversold today, indicating a resilient underlying bid.
  
  
• Before pulling back, RSI confirmed the last all-time high on Monday, rather than diverging like it typically does before significant tops. However, immediate follow-through is necessary, and a potential oversold reading would suggest a deeper pullback than the previous ones.

The Takeaway: A -2% decline was all it took for short-term momentum to correct from extremely overbought levels to nearly oversold levels. It avoided oversold territory today, signaling resilience, but immediate follow-through is necessary, and a potential oversold reading would be a red flag.

The historic period of American exceptionalism in the stock market is over.
That ended last year and the rest of the world had been playing catch up throughout 2025.
While the United States stock market is on pace for another epic year, it’s actually one of the worst-performing countries in the world.
That’s not so much a knock on America as it is an impressive run from foreign equities.

Foreign Investors Didn’t Get the Memo​

We have the data. We see the changes in dynamics between U.S. and foreign markets.
But the investors themselves still haven’t pivoted.
Here’s a great chart from our friends over at Ned Davis Research. Foreign investors now have a record allocation to U.S. equities:

This chart shows the value of foreign-held U.S stocks as a percentage of foreign held U.S. financial assets.
It’s never been higher – now above 30%. Notice how this was just 12% 15 years ago.
Foreign investors had little to no confidence in U.S. stocks at the moment when U.S. stocks went on the most important run of global outperformance in stock market history.

Now that this run is over (in our opinion), foreign investors have never had this much faith in U.S. stocks.
Perfect.
I’m happy to take the other side of that.

China Bull ​

When it became obvious last fall that Donald Trump was going to win by a landslide, the question was simple: What’s the trade?
Based on consensus at the time, everyone assumed Trump 2.0 would be bad for China.

Even the Chinese didn’t want Chinese stocks.
They still don’t.
No one wants Chinese stocks.
I do.

They’re working really well. And my bet is they’ll keep working on an absolute basis and also outperform the U.S.
Just when the rest of the world finally realized how dominant the U.S. stock market has been, we’re flipping that around and letting them have it.
I’ll happily take the foreign equities, thank you.
Stay sharp,

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Data: Bureau of Economic Analysis; Chart: Axios Visuals
For all the sense of angst about the U.S. economy of late, the American consumer continues powering growth forward.

• New data out this morning confirms that trajectory continued through late summer.

Why it matters: All those recessionwarnings from earlier in the year are looking flat wrong. When consumers keep spending (which they are) and businesses keep investing (which they also are), the economy can't — almost as a matter of arithmetic — fall into a contraction.
Driving the news: Personal consumption expenditures rose 0.6% in August, the Commerce Department said this morning, or 0.4% adjusted for inflation.

• The spending bump was particularly strong for physical items, with a 0.8% rise in both durable and nondurable goods.
• Personal income rose as well, though only by 0.4%, meaning that the higher spending was fueled by a lower savings rate.

By the numbers: The Atlanta Fed's GDPNow model sees a blockbuster 3.9% rate of GDP growth for the third quarter, which ends next week.

• It follows on the heels of revisions to second quarter GDP, released yesterday, that showed much stronger consumer spending in the April through June quarter than first estimated, and a 3.8% pace of growth.

What they're saying: "After they hunkered down in the spring, recent data show consumers resumed spending over the summer, especially those with higher incomes," said Richmond Fed president Tom Barkin in a speech this morning at the Peterson Institute for International Economics.

• "And why wouldn't they?" Barkin continued. "Unemployment is still low, nominal wages are still increasing, and asset valuations are near all-time highs."

The intrigue: Consumer sentiment measures have been depressed lately, especially among lower-income groups. The labor market is showing meaningful cracks, particularly in the pace of job creation.

• As our colleague Emily Peck has reported, there is a range of evidence indicating that it is affluent Americans propping up spending, even as lower-income people are pinching pennies more.
• Those low-income groups are less likely to have rising wealth thanks to the booming stock market, and more likely to be financially stressed by tariff-fueled inflation.
• Confirming the bad vibes, the University of Michigan consumer sentiment survey for September, out this morning, fell 5% from August and is down 21.6% from a year ago.

Yes, but: The overall economy — which is a story of averages and aggregates rather than how things feel, or how different segments of the population are doing — looks just fine.
The bottom line: "The economy has continued to surprise to the upside, and despite the negativity captured in surveys and expressed by commentators, actions speak louder than words and consumers continue to spend," writes Chris Zaccarelli, chief investment officer for Northlight Asset Management, in a note.[/td]

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​ On Thursday, the $144B consulting giant, Accenture $ACN, beat its headline expectations and suffered a -1.29 reaction score. The company posted revenues of $17.60B, versus the expected $17.38B, and earnings per share of $3.03, versus the expected $2.98. We also heard from the $23B electronic components company, Jabil $JBL, which was also punished for smashing its top and bottom line expectations. They reported revenues of $8.30B, versus the expected $7.59B, and earnings per share of $3.29, versus the expected $2.92. Last, but not least, the $7B auto & truck dealership company, CarMax $KMX, missed expectations across the board and crashed lower as a result. In the report, they delivered revenues of $6.59B, versus the expected $7.01B, and earnings per share of $0.64, versus the expected $1.04. Now let's dive into the fundamentals and technicals

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​ ACN resolved a massive top on the heels of its earnings report

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​ Accenture had a -2.7% post-earnings reaction, and here's what happened:

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​ Revenues grew 7% year-over-year, and this increase was reflected in the bottom line, with 8% EPS growth over the same period. The company has continued to aggressively expand its AI capabilities, making 23 acquisitions over the past year. The market's negative reaction was less about the past quarter and more about the forward guidance, which was significantly weaker than anticipated.

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​ This is one of the hottest messes in the entire S&P 500, and Thursday's earnings report added fuel to the fire. Its peers, such as Gartner $IT and Infosys $INFY, also appear to be in trouble. Following the report, price decisively resolved a four-year distribution pattern, entering a brand-new primary downtrend. Now, the bears are in complete control. For years, the market has punished this name for reporting earnings, and now the technicals are confirming the bearish fundamental trend. So long as ACN holds below 243, the path of least resistance is decisively lower for the foreseeable future. A close above that level would shift our bias back to neutral.

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​ KMX suffered its worst earnings reaction in 10 quarters

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​ CarMax cratered -20.1% following this earnings report, and here's what happened:

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​ Total sales declined 6% year-over-year, resulting in a 29.6% decrease in net earnings over the same period. With the depressed stock price, the company is aggressively repurchasing shares. During the quarter, they repurchased 2.9M shares for $180M, and they're authorized to repurchase an additional $1.56B (over 20% of the total market capitalization). In addition to the woeful quarter, the management team expects further margin pressure and increased expenses in the coming year.

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As you can see, this earnings report sparked an epic downside resolution from a prolonged consolidation. At Thursday's intraday low, the price was down 25% from the previous day's close. The short-term momentum is currently at one of its lowest levels ever, so a consolidation is likely needed. But make no mistake, the bears are in complete control of the trend, and another leg lower likely isn't far away. Given the current trajectory of this company, we wouldn't be surprised to see it removed from the S&P 500 soon. They don't deserve to be in it anymore! So long as KMX holds below 55, the path of least resistance is decisively lower for the foreseeable future. A close above that level would shift our bias back to neutral.

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​ [td] While the S&P 500 remains overbought in price (>1 standard deviation above its 50-DMA), its 10-day advance/decline line actually moved near oversold territory yesterday. The 10-day A/D line measures the average number of daily advancers minus decliners in an index over the last ten trading days. It's a helpful measure of short-term market breadth. When the 10-day gets overbought, it's a sign that stocks have had a large upward thrust over the last two weeks, often preceding some downside mean reversion. The opposite is also the case: when the 10-day gets oversold, it's a sign that stocks within an index have struggled in the short-term, and thus upside mean reversion may be in store. Usually, an index's price and its 10-day track each other, but for the top-heavy S&P, there can be divergences because of how large the mega-caps have become. Because the mega-caps have held up well over the last two weeks, it has masked underlying weakness in the majority of stocks. From a mean reversion perspective, the oversold 10-day suggests that the average stock could be in store for a bounce, while the mega-caps causing the S&P's price to remain overbought could take a breather. ​

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​ [td]Record High Price to Sales, But With a Catch As shown below, the S&P 500’s price-to-sales ratio has climbed to historically elevated levels, recently hitting 3.33. For context, the Dot-Com bubble peak in 2000 topped out at 2.27, and the post-COVID boom peaked at 3.21 before valuations pulled back. While strong corporate profitability and the AI growth theme have gotten us to these levels, this chart highlights just how extended valuations have become relative to revenues.​

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​ [td] But there's also a catch... The equal-weighted version of the S&P 500 tells a different story, with its price-to-sales ratio currently sitting at 1.66, well below its 2021 peak of 2.18. This highlights the outsized role that mega-cap stocks have played in driving overall index valuations higher, as the typical stock trades at a much more modest multiple of sales compared to the market-cap-weighted index. While still elevated relative to the early 2010s, the equal-weight P/S ratio is right in the middle of its 12-year range. While valuation excesses are concentrated in the largest companies, much of the broader market is trading at far more reasonable levels.​

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​ [td]Quantum Stocks Surge Quantum computing stocks have had another parabolic run recently. There are now four "quantum" stocks with market caps in the billions, and we provide recent price charts of them below. IonQ (IONQ) is up the least of the bunch with a gain of 1,000% since its lows late last year. Quantum Computing (QUBT) is up the 3rd most with a gain of 1,433%, while Rigetti (RGTI) and D-Wave Quantum (QBTS) are both up more than 2,400%.​

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​ [td] At their core, these "quantum" companies are working on the long-term promise of quantum computing: leveraging quantum mechanics to perform computations exponentially faster than today’s computers. The technology has the potential to transform industries such as cryptography, pharmaceuticals, and logistics, but the reality is that commercial viability remains decades away. Systems are still experimental, error-prone, and difficult to scale, with many breakthroughs required before they can solve real-world problems at scale. That hasn't stopped speculators from bidding up quantum stocks to ungodly valuations, though. As shown below, IONQ is projected to do $91.3 million in sales this year, which is the most of the group. Its market cap is all the way up to $24.4 billion, however, which gives it a price to sales ratio of 267! And that's the smallest P/S ratio of the four stocks shown. 2025 sales estimates for RGTI are $8.2 million, while they're $24.6 million for QBTS and just $400k for QUBT.​

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Nobody wants to talk about coal. Politicians hate it, ESG funds avoid it, and climate activists want it banned yesterday. Yet coal still powers ~35% of the world’s electricity (IEA, 2024). China alone consumes more coal than the rest of the world combined. India continues to build coal plants because renewables can’t keep up with demand growth. Even Europe — the poster child for clean energy rhetoric — quietly boosted coal imports after the Russia-Ukraine war disrupted natural gas supplies. And investors who ignored the narrative and just watched price action? They’ve been rewarded. Look at the Dow Jones Coal Stock Index.

After years of being left for dead, it’s broken out to multi-year highs (Black Line). That’s not a dead cat bounce. That’s demand showing up in price. On the multi colored bar chart (Top) you can also see that it is outperforming the US SPY ETF this year. The seen is AI stocks. The unseen is that every AI server farm, every data center, every Tesla charging station is powered by electricity that — in no small part — still comes from coal.

Full:https://www.wsj.com/world/iran-shah...b?st=oRopKo&reflink=desktopwebshare_permalink

Full:https://paulkrugman.substack.com/p/why-is-trump-bailing-out-argentina

Full:https://quartr.com/insights/edge/american-express-an-empire-of-plastic

Full:https://www.construction-physics.com/p/whats-happening-to-wholesale-electricity

• As investors, we either adapt or we fail.
• We've changed some definitions.
• We play based on reality.

On September 22, 2025, the definitions changed.

Small-caps, mid-caps, large-caps — the way we've classified companies for decades no longer fits the reality of today's market. The world has moved on, but the numbers everyone keeps using are stuck in the past.

I'm here to update the rules. You don't have to like it. You don't even have to agree with me. But this is where we are now. And if you want to keep up, you'll need to adjust.

So let's start at the beginning. What even is a "small-cap" stock? How small is too small? How big is too big?

According to ChatGPT, a small-cap stock is worth between $300 million and $2 billion. Gemini says the same thing.

Fidelity also says $300 million to $2 billion.

Meanwhile, Wikipedia says it's between $250 million and $2 billion. So does Investopedia.

But, respectfully, they're all wrong.

"We've Always Done It This Way"​

Near the turn of the century, when I first started in this business, the market-caps were set.

Small-caps are companies between roughly $300 million and $2 billion. Micro-caps were anything smaller than $300 million.

On the other side of the spectrum, large-caps are any stock worth more than $10 billion, while mid-caps are the "Jan Bradys" of the world – anything between $2 billion and $10 billion.

That's it. Those are the levels.

And, to many, these numbers still apply.

"Because we've always done it this way" is the worst excuse a human can use, especially for market professionals.

Take Nvidia (NVDA). At $4.2 trillion, it's worth more than the entire Russell 2000 small-cap index combined. Trillion-dollar companies didn't even exist until 2018, when Apple (AAPL) became the first to cross the mark.

Since then, Microsoft (MSFT), Alphabet (GOOG), Amazon.com (AMZN), Meta Platforms (META), Tesla (TSLA), Broadcom (AVGO), and even Berkshire Hathaway (BRK.A) have joined the club.

The world has changed. Market-cap inflation is real. And if you're still pretending a $10 billion company belongs in the "large-cap" bucket, you're playing a game that no longer exists.

As investors, we have to adjust. Sticking with outdated definitions isn't just lazy. It's dangerous.

The New Rules​

Earlier this week, we decided to officially change the rules. Now, small-caps are between $1 billion and $10 billion.

If you're not at a billion, then I can't even take you seriously. Below $1 billion and your stock is a micro-cap.

In the old days (and according to many sources this is still the case), any stock above $10 billion was a "large-cap." That's laughable. By our math, $10 billion still makes you a small-cap.

Officially, a large-cap stock from now on is worth between $30 billion and $200 billion.

And mid-caps are the companies larger than small-caps ($10 billion) but smaller than large-caps ($30 billion). There are currently about 350 companies in the United States that fit this new mid-cap criteria.

Finally, there are 50 companies in America right now worth more than $200 billion. Those are now officially the mega-cap stocks.

At the end of the day, markets evolve, and so should the way we define them. Pretending 20-year-old thresholds still make sense in a world where single companies are worth trillions is lazy at best, irresponsible at worst.

That's why I've redrawn the lines.



Call it market-cap inflation. Call it common sense. Either way, these are the new rules.

Stop clinging to outdated definitions. If you want to navigate today's markets, you need to frame the playing field as it actually exists — not as it did in the 1980s.

Someone had to set the record straight. I just did.

Now the only question is, are you going to keep pretending, or are you going to play by the rules of reality?


Earlier this week, this Substack noted that there was a divergence between market views on precious metals being ‘overbought’ in comparison to data showing that silver and platinum, in particular, are facing extraordinary London shortage in the face of increasing global demand.
The metal shortage in the world’s largest physical precious metals market in London signaled by extreme implied lease rates for silver and platinum and price backwardation tell us that there is a run into physical precious metals.
Gold has the greatest liquidity due to central banks supplying their metal to market and is thus currently showing the least stress.

Since the September 17, 2025 US Fed announcement that it was further lowering interest rates, which will further debase the US dollar (USD), long duration US Treasuries (using the ‘TLT’-NY 20 year+ Treasury ETF as a proxy) are 2.20% lower while gold’s price is +1.4%, silver is +6.5%, and platinum is 10.2% in USD terms.​

The world is selling bonds and securing precious metals at an increasing rate.​

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Figure 1 - Long Duration (20 year+) US Treasuries (TLT-NY ETF as Proxy), Gold, Silver, and Platinum Price Trends September 17 to 25, 2025; source: TradingView.com

The Global Run On Physical Precious Metals Is Terminal To The Leveraged London Cash Metal Market​

In 2025, gold priced in USD is up 41%, silver is up 52% and platinum is up 63%. Compare those returns to bond yields.

Bruce Ikemizu Chief Director of the Japan Bullion Market Association (JBMA) reports that this year through August, Chinese customs data show that China is importing platinum at a run rate of 58% of global mine supply.​

Further market data show that US COMEX vault holdings have surged from 140,000 oz. to 600,000 oz. while liquid available vault holdings of platinum in London appear near zero.​

As noted above, the London silver market is also showing signs of silver supply distress.

The leverage scheme in London where several times the annual mine supply of precious metals are extant as cash/spot ownership claims for bars of physical gold, silver, platinum, and palladium creates a situation that is extremely unstable as the world moves from paper to real assets in response to decades of central bank and bullion bank monkey businessdestabilizing global metals markets, bond markets, and the global economy.​

Unless the markets are suspended from war or a market panic generated to sell-off assets in general, the London precious metal market is moving toward a rapid failure or rupture.​

Data from the London precious metals markets are intentionally opaque and exact timing is impossible to predict.
What we can say is that given the world’s increasing move toward the security of real asset ownership and possession, we can see data showing an accelerated rate of metal demand moving toward sudden failure in the London precious metals market.
Failure of one metal’s leverage scheme in London will likely trigger sequential failure of the others.
Asset quality, ownership, and possession then becomes the primary concern.



jog on
duc​

 

[ducati996]

Summary

Indices: Russell 2000 +0.97% | Dow +0.65% | S&P 500 +0.59% | Nasdaq 100 +0.44%


Sectors: All of the 11 sectors closed higher. Utilities led, gaining +1.63%. Consumer Staples lagged, but still finished positive +0.24%.

Commodities: Crude Oil was flat at $65.19 per barrel. Gold rose +0.25% to 3,790 per oz.

Currencies: The US Dollar Index fell -0.27% to $98.18.

Crypto: Bitcoin is currently up +0.42% to $109,484. Ethereum is up +3.88% to $4,026.

Volatility: The Volatility Index dropped -8.61% to 15.29.

Interest Rates: The US 10-year Treasury was unchanged at 4.174%.

• Despite today’s bounce, Bitcoin is on pace for its worst week since March, down -5% with two days left in the week. It's still up +1% for September with three days before the monthly close.
  
  
• Alfonoso notes that Bitcoin is testing a critical area of support between $107k - $110k. It peaked at this level after the election and again in January, before breaking out and turning into support this Summer.
  
  
• The AVWAP from the April low further reinforces the significance of this area. Price has formed a potential Head & Shoulders Top in recent months. However, breaking above the right shoulder at $118k would invalidate the top and open the door for fresh highs.
  

The Takeaway: Bitcoin is on track for its worst week since March as it tests a critical area of support around $107 ~ $110k. The outcome of this test will be very revealing as Bitcoin has been an excellent leading indicator for Stocks and risk appetite.



One of the best ways to read the market is by watching where money is moving.

Capital flows tell you who’s leaning in, who’s sitting back, and how much risk investors are willing to take.

A favorite tool I use for this is the Consumer Discretionary vs. Consumer Staples ratio

Historically, when this ratio points higher, it signals an environment where market participants are rewarded for buying stocks, not shorting them.

And right now, it is breaking out to its highest level ever.


So whenever you doubt, look at this chart.

New highs like these are exactly the kind of evidence that suggests we should be focusing on stocks to buy, not stocks to sell.

It’s been working pretty well so far. And as long as it holds, the path of least resistance remains higher — giving the bull market plenty of fuel into the year-end.

Of course, a more "cautious" scenario exists if the breakout fails and the ratio drifts back into its old range.

But for now, everything points to a market environment that rewards those leaning into risk.

Are we in an AI bubble?

That's the question on a lot of investors' minds right now. Nothing seems to matter more given how much the generative-AI boom has helped drive the U.S. stock market in recent years.

Since OpenAI's ChatGPT launch in November 2022, the S&P 500 Index has returned around 70%. And Nvidia (NVDA), Microsoft (MSFT), Meta Platforms (META), and other mega-cap tech stocks have added more than $15 trillion in market value.

Sam Altman, founder of OpenAI, sounded a somewhat tepid warning in August saying that people might be getting “overexcited” about AI.

More recently, Mark Zuckerberg, founder and CEO of Meta Platforms, admitted that it's "quite possible" that we're in an AI-induced bubble, or at least headed for one.

Zuckerberg drew parallels between the current AI boom and other large infrastructure build-outs in the past that led to bubbles, such as the 19th century railroad mania and the late 1990s dot-com bubble. And he alluded to the hundreds of billions of dollars that Meta Platforms and other hyperscalers are throwing at data centers and other AI-related investments, with little regard for return on investment.

Indeed, there are striking similarities between the current environment and that of the late 1990s.

Judging from equity valuations, few investors are truly worried right now. But the big worry should be that we’re headed for a repeat of the dot-com bust.

The bad news is that there probably will be a bust after such unrestrained investment.

The good news, if you could call it that, is that the comparisons between the peak of "irrational exuberance" in the late 1990s and the current AI boom are misguided.

I think many people have forgotten just how bonkers the dot-com era was.

In the lead up to the bubble peak, people lost their minds...

It was a proper mania complete with unbelievably reckless trading, out of control price action, and beyond absurd valuations.

While things may seem crazy now, in many ways there’s no comparison to the situation in late 1999 and early 2000.

Here are five reasons why the dot-com bubble was bigger and badder than the current AI boom, and why we’re not in a mania phase… at least not yet.

No. 1: Dot-Com Era IPO 'Pops' Remain Unmatched​

Nothing screams "FOMO" (fear of missing out) like a massive IPO return on the first day of trading...

Last March, Newsmax (NMAX) went public in a $75 million IPO. The offer price was $10 per share. Inexplicably, buyers were so aggressive that the stock closed its first day of trading above $83 – up more than 730%. The IPO set a record for its first-day "pop."

There have been other spectacular IPOs this year. For example, Figma (FIG) and Circle Internet (CRCL) posted first-day gains of 250% and 168%, respectively.

The dot-com bubble featured its own massive IPO pops. For example, on December 9, 1999, shares of computer server and workstation company VA Linux Systems were up nearly 700% on their first day of trading.

However, the dot-com IPO market was far more ludicrous than the one today.

In 1999, there were more than 470 U.S. common stock IPOs with an offer price of at least $5. The average and median first-day return from the IPO offer price to the close on the first day of trading were about 71% and 57%, respectively.

The momentum continued into 2000, when 380 companies went public. Shares popped an average of 56%.


There have only been 67 IPOs this year. And their average and median first-day gains were 35% and 14%, respectively.

While the new-issues market is certainly getting hot, the IPO fever isn't nearly as intense as it was during the dot-com bubble.

No. 2: The Dot-Com Bubble Had Crazier Stock Price Moves​

In 1999, telecom company Qualcomm (QCOM) decided to shed businesses to focus on advanced wireless technology and chip design.

The market loved the strategy so much that Qualcomm's stock rocketed 2,600% higher that year, rising from a market cap of about $4 billion to more than $113 billion.

Moves like that helped power the Nasdaq 100 Index, which was the epicenter of the dot-com bubble. The Nasdaq 100 includes the 100 largest nonfinancial companies listed on the Nasdaq stock exchange. And it contained many of the high-flying tech and telecom stocks, like Qualcomm, that went parabolic during the late 1990s bull market.

From early 1995 to March 2000, the S&P 500 returned more than 260%. But the Nasdaq 100 soared by an amazing 1,080%.

Since the lows in 2020, the Nasdaq 100 is up about 240%. That's solid, but it's nothing compared with the late 1990s bull run.

The following chart shows the Nasdaq 100 since 1985.


It's a log chart, so equal distances on the y-axis have the same percentage changes. It also shows the long-term trend line and standard deviation channels.

The dot-com mania is clearly visible as the big outlier. All the other moves look tame in comparison.

No. 3: Index Valuations, When Measured Properly, Are Still Below Record Levels​

You may have seen the scary headlines warning of sky-high valuations, like this one from the Wall Street Journal last month:

U.S. Stocks Are Now Pricier Than They Were in the Dot-Com Era

Here's another one from Yahoo! Finance:

This Warren Buffet indicator is bright red. Why it could be worse than the 1999 bubble – and how to prepare.

Then there was a research note from Torsten Slok, the chief economist at private-equity and alternative asset management firm Apollo Global Management:

AI Bubble Today Is Bigger Than the IT Bubble in the 1990s

It went on to assert that the top 10 companies in the S&P 500 today are more overvalued than they were back then.

I could go on and on.

It can be confusing for investors reading these warnings because there's no universally agreed-upon way to value the broader stock market. And every valuation metric has flaws.

Take the price-to-sales (P/S) ratio. Put simply, it compares the market value of a stock or index with annual sales (revenues).

Currently, P/S shows the market to be far more expensive than it was in 2000. Yet, the P/S ratio is one of the worst metrics for valuing the S&P 500 because it's blind to margins and profitability.

Other metrics, such as market cap to gross domestic product (or gross national product) and Tobin's Q have their own fatal flaws. The cyclically adjusted price-to-earnings ("CAPE") ratio, one of the most popular valuation metrics, has faults, too. The CAPE ratio is the real (inflation adjusted) index value divided by the 10-year average of real earnings for the index. It smooths out the variation in earnings over the business cycle.

The CAPE ratio peaked at more than 44 in 1999. It's currently around 40, suggesting this is the second-highest valuation the market has ever attained.


Faith in the CAPE ratio has waned because there has been a structural shift in the indicator only seen with the benefit of hindsight. The CAPE ratio's average up to 1990 was 14.6. Ever since, the average has been 27. And it has been above 27 since 2016.

Valuation metrics can be useful tools. But if the tool you followed made you bearish since 2016, then how was the tool of use?

It's nice to smooth out earnings volatility. But averaging 10 years of trailing earnings is like staring in the rearview mirror with binoculars.

The S&P 500 is now dominated by Big Tech companies. They're highly profitable and growing quickly.

Nvidia, Microsoft, Apple (AAPL), Alphabet, Amazon (AMZN), Meta Platforms, Broadcom (AVGO), and Oracle (ORCL) now account for about 35% of the S&P 500's market cap.

Aggregate earnings for these companies have grown from about $90 billion a decade ago to around $560 billion today – a more than sixfold increase.


Not only that, but these Big Tech companies are also expected to earn $670 billion over the next four quarters. Perhaps these estimates are a bit too high. But the growth has been undeniable and is one reason why the CAPE may be overstating current valuations.

Arguably, the trailing price-to-earnings (P/E) ratio, based on the last four quarters of earnings, and the forward P/E, based on consensus analyst estimates, are better.

These metrics have their flaws as well. But we can still use them to make a reasonable comparison between periods.

Here's the forward P/E for the S&P 500 since 1995:


It's currently at 23, which is high but not quite as high as the dot-com-bubble peak of around 26.

No. 4: The Largest Companies in the S&P 500 Are Still Cheaper​

Microsoft led the bull market in the late 1990s...

Its stock peaked in December 1999, three months before the broader market. But the company remained the largest in the S&P 500, with a roughly $560 billion market cap when the index topped on March 24, 2000.

On that day, Microsoft's trailing P/E and forward P/E were both above 60. But that was nothing compared with the second-largest company, Cisco Systems (CSCO), which had a forward P/E of 137. Oracle was another top-10 stock in the S&P 500 with a triple-digit P/E of around 118.

The table below shows the full list of the top 10 stocks on March 24, 2000.


The average forward P/E was 53, although that was dragged up by the triple-digit outliers. The median forward P/E was about 35.

I've also included P/E ratios that treat these stocks as a 10-member market-cap-weighted index, called S&P 10. (Note, this is not the same as a market-cap-weighted average of the P/E ratios.)

The S&P 10's forward P/E ratio was nearly 39 back then. And I think that's the most relevant number.

The table below shows the same ratios and statistics for the largest stocks in S&P 500 as of September 22, the day of the highest index close as I write.


There's only one set of triple-digit P/Es, and that's Tesla (TSLA). Microsoft is the only company that appears on both lists, and its forward P/E is about half of what it was in March 2000.

Every summary statistic in the AI boom table is below its corresponding value in the dot-com bubble table.

The chart below compares the S&P 10 P/Es.


This clearly shows that the largest stocks in the S&P 500 are still cheaper now than they were at the height of the dot-com bubble. (This is also true using free-cash-flow yield, a valuation method that deserves its own write-up.)

The largest companies today might be expensive, but they're not record expensive. I know that's hardly comforting, but its further evidence that we're not at mania levels.

I will also concede that the S&P 500 is more concentrated than ever. The top 10 stocks in the index accounted for around 25% of total index market cap at the peak in 2000. Today, they total roughly 40%.

No. 5: The 'P/E Above 100' Club in the Dot-Com Era Was Larger​

The Nasdaq 100 was completely devastated as the dot-com bubble burst. From its peak in March 2000 to the end of 2002, it fell as much as 83%.

That's why headlines today warning about record valuations catch people's attention. It suggests that a similar outcome is possible, or even likely.

Yet, the Nasdaq 100 reached a truly absurd valuation in 2000. Its trailing P/E reached nearly 100.


On the bright side, the largest stocks in the Nasdaq aren't nearly as expensive as they were during the dot-com bubble. The Nasdaq 100's trailing P/E is currently about 34. On the other hand, the index is also well above the 10-year average P/E of about 27.

A triple-digit P/E is a nosebleed valuation. Only companies with great businesses that are growing very quickly deserve a P/E that high. And even then, those stocks will probably be decimated from time to time as they grow into their valuations.

To look at stocks with a P/E above 100, I will broaden my universe out to the top 1,000 largest U.S. companies by market cap. (Note, this is not the Russell 1000 Index. It includes companies that aren't in any index.)

Among the largest 1,000 stocks, there are currently 29 with a forward P/E greater than 100. Their median P/E is 137.5.

I already mentioned Tesla. The "P/E above 100" club also includes highfliers like Palantir Technologies (PLTR), Cloudflare (NET), Snowflake (SNOW), Roku (ROKU), CrowdStrike (CRWD), Figma, and Circle Internet.

Not to be outdone, the dot-com bubble had its own list of crazy valuations, such as Cisco, which I mentioned earlier. Stocks with forward P/Es greater than 100 in early 2000 also included Broadcom, VeriSign (VRSN), eBay (EBAY), Qualcomm, Time Warner, and Oracle.

On March 24, 2000, there were 62 stocks with forward P/Es greater than 100. And their median P/E was nearly 247.


So, there were more than twice as many egregiously valued large- and mid-cap stocks during the dot-com bubble as there are today. And their valuations were much more extreme back then.

The Verdict: We're a Far Cry from Peak 'Dot-Com' Territory​

So, there you have it... The dot-com bubble featured a hotter IPO market and more shocking price moves. It was more broadly expensive than the current market. That's also true for the top 10 stocks. And tech stocks were far more expensive in early 2000 than they are now. Plus, the number of stocks with nosebleed valuations was far higher during the dot-com bubble.

Don't get me wrong... Things are getting crazy.

The stock market has gotten extremely expensive. Just because it's not at a record valuation doesn't mean we shouldn't be worried. At the very least, we should expect relatively low, long-term returns from here.

There are also signs of excessive speculation everywhere, including soaring options volumes, ballooning leveraged exchange-traded fund assets, meme stock (and coin) pumping, pre-revenue companies attaining multibillion-dollar valuations, and quantum-computing stocks going nuts.

By all means, be disciplined and follow your investing strategy. Make sure your portfolio is diversified. Hold some defensive stocks. Sell stocks that have unrealistic expectations built into their valuations. Hold some cash.

But whatever you do, don't claim that this market is crazier than the peak of the dot-com bubble.

Full:https://www.espn.com/soccer/story/_...l-glazers-man-united-americans-premier-league



jog on
duc

 

[ducati996]

Essentially evidencing that 'momentum' is slowing in stocks, bonds and BTC, but steady in gold.

Monday: One of the largest integrated freight & logistics stocks, FedEx $FDX, beat its headline expectations and rallied +2.7% as a result. This snapped a streak of 4 consecutive negative earnings reactions. Following a mixed report, the $33B residential construction giant, Lennar $LEN, suffered its 8th consecutive negative earnings reaction. No stock in the S&P 500 has a longer beatdown streak than this one. ​

​

Tuesday: There were no S&P 500 earnings reactions on Monday, so we couldn't help but tell you about one of the hottest growth stocks in the market, American Battery Technology $ABAT. Over the past year, ABAT's sales have increased more than 11x, and the price is on the cusp of climbing out of a massive bearish-to-bullish reversal pattern. With the technicals confirming the fundamentals, we think this name is going much higher. ​

​

Wednesday: The only earnings reaction on Tuesday came from the $69B specialty retailer, AutoZone $AZO, which had a slightly negative post-earnings reaction after the company posted worse-than-expected headline numbers. As we told in the last Weekly Beat, we were expecting another negative earnings reaction because of the bearish fundamental trends that have developed over the past few quarters. This latest quarterly report reiterated those negative trends. ​

​

Thursday: On Wednesday, the provider of corporate uniforms, Cintas $CTAS, beat its headline expectations, but had a slightly negative earnings reaction. Despite the short-term weakness, this is one of the best long-term stocks in the market, highlighted by 42 consecutive years of dividend increases. We also heard from the world's fifth-largest semiconductor company, Micron Technology $MU, which was punished for smashing its top and bottom line expectations. As we mentioned in the last Weekly Beat, we have very low conviction in this stock's technical breakout because the fundamentals do not confirm it. ​

​

Friday: On Thursday, the $144B consulting giant, Accenture $ACN, beat its headline expectations and suffered a -2.7% post-earnings reaction. The market's negative reaction was less about the past quarter and more about the forward guidance, which was significantly weaker than anticipated. Last, but not least, the $7B auto & truck dealership company, CarMax $KMX, missed expectations across the board and crashed lower as a result. This company is a complete disaster, and we believe it should be kicked out of the S&P 500. ​

What's happening next week ​

​ ​

Next week, we'll be focusing on the world's largest footwear & accessories company, Nike $NKE. The stock is coming off one of its best earnings reactions ever, and we believe the bulls are likely to show up again after this quarter's earnings report. Beyond NKE, we’ll also be watching: The cruise line giant, Royal Caribbean $RCL. The Wall Street firm, Jefferies Financial $JEF. And the human resources software behemoth, Paychex $PAYX. In addition, we'll hear from the egg producer, Cal-Maine Foods $CALM, the frozen foods producer, Conagra Brands $CAG, and the precious metals explorer, Novagold Resources $NG. This is one of the final weeks before the end of the current earnings season, so it'll be on the slower side. However, there will be plenty to cover at the Daily Beat. Now, let’s dive into the top setups heading into next week. ​

Here's the setup in NKE ahead of Tuesday's earnings report ​

​ ​

Nike is expected to post $10.99B in revenue and EPS of $0.27 after Tuesday's closing bell. Heading into the report, the price is retesting a key level of interest. This is the same place that marked the top back in 2015, and it was flipped into support in 2018 and 2020. Now, we're back at the scene of the crime. The bears tried to break this key level during the Tariff Tantrum earlier this year, but failed miserably. Last quarter was the best earnings reaction ever as the company posted better-than-expected results and forward guidance. We believe the squeeze is on in NKE as long as the price holds above 68. ​

Here are the past 3 years of earnings results & reactions for NKE ​

​ ​

Nike is coming off one of its longest beatdown streaks ever. From late 2023 to early this year, the stock had six consecutive negative earnings reactions. This historic bearish streak came to a decisive end last quarter, and the odds favor a new bullish technical and fundamental regime. In addition, the key level of interest we mentioned previously adds to our conviction. We highly doubt one of the greatest American brands ever will complete a massive top amidst a raging equity bull market. We expect another significant upside move in NKE following Tuesday's earnings report. ​

Here's the setup in CCL ahead of Monday's earnings report ​

​ ​

Carnival is expected to report $8.10B in revenue and EPS of $1.32 after Monday's closing bell. Ahead of the call, the price is flirting with the resolution of a massive multi-year bearish-to-bullish reversal pattern. A positive reaction this week could be the catalyst to decisively mark the beginning of a brand-new primary uptrend, which could last for years. Its biggest competitor, Royal Caribbean $RCL, has already broken out to new all-time highs. We believe there's a good chance CCL will catch up soon. We're looking for CCL to gap-n-go above 31 following its earnings report. If that happens, the path of least resistance will be higher for the foreseeable future. ​

Here are the past 3 years of earnings results & reactions for CCL ​

​ ​

As you can see, the EPS growth for Carnival has been horrendous over the past three years. However, last quarter, this changed in a significant way, and the market responded with one of the strongest earnings reactions in years. The market is expecting similar earnings growth this quarter, and if the company delivers, we anticipate the market will respond positively. Also, notice the post-earnings drift. Before the paradigm shift last quarter, the stock had experienced negative post-earnings drift in seven consecutive quarters. The tide is turning for this company, and we expect another strong earnings report before the opening bell on Monday. If the CCL gaps above 31, we expect there to be a big chase higher for the foreseeable future, creating a textbook gap-n-go. ​

​

We start with the best sectors, then drill into the subgroups. We pick one, and then take a look at the top stocks in it. This week’s standout is Energy, which just jumped to the second spot in our sector rankings.

Energy was the best-performing sector this week, with $XLE reaching its highest level since early April. Beneath the surface, many individual stocks are breaking out of short-term consolidation patterns. This suggests we could see some follow-through leadership from energy in the coming weeks. Here’s a look at our overall industry rankings, which show Energy Equipmentstocks reaching the sixth spot.

This group supplies the machinery, tools, and services that energy producers rely on to explore for and extract oil and gas. The relative strength from equipment names has been off the charts of late. This is a risk-on signal for the broader energy trade. Below are the Top 10 names in the Energy Equipment subsector, ranked by relative strength.

This week’s spotlight stock is Solaris Energy Infrastructure $SEI:

The stock carries a massive 30% short interest with a 5x days-to-cover ratio as price presses against the upper bounds of a one-year base.

Just when you think things couldn’t get any more nuts... On the day before this market started to slip – after hitting yet another high – a tweet with this videostarted making the rounds. If nothing else, it showed just how far the sports gamification of securities trading has become. Here’s a screen shot...

​

Did that mark the tippy top? Is this the beginning of the end of this edition of the ease of the squeeze? To repeat what I always say: I have no idea. But as I wrotelast week in “The Trillion Dollar Question,” the velocity of what we’re seeing in some of these names is simply not normal. Neither are scenes like the ones above, which happens to be at something called Perp-DEX DAY in South Korea, which its promoters tout is “reimagining perpetual futures trading with the energy and excitement of an esports championship.” YEEEEhaw!! At least that’s the way it was explained in various Instagram posts, like this one...

​

So far, this mostly involves crypto. But as the Wall Street Journal explained a few days later in an article on the topic...

Known as perps, the contracts give traders access to extreme leverage and have exploded in popularity during a rally that has sent bitcoin prices up more than 70% over the past year. Though popular in other parts of the world, perps were largely unavailable until recently to U.S. traders on regulated venues. Their emergence is a sign that financial markets, which have steadily grown riskier since 2020, will likely keep growing more speculative.

That this is in South Korea should be no surprise. “Korean Capers,” as I’ve called it, has been evolving as a tail-wagging-dog element of this market for quite some time. This is the latest list of the most active U.S. stocks traded in South Korea...

​

Among the top 25, note the number of super-duper leveraged ETFs, plus the others – all of them on one speculative list or another. No wonder some of these names are trading more on hype – and maybe not even hope – than fundamentals. As I’ve pointed out previously, but is worth a mention again, perhaps nobody has put this in perspective better than Owen Lamont, a portfolio manager of Acadian Asset Management, who in January 2024 wrote...

Unfortunately, in recent years the U.S. has been following Korea on the road to crazytown. What Americans call ‘meme stocks,’ Koreans call ‘theme stocks.’ These absurd objects have been a wacky feature of the Korean stock market since at least 2007.

In March of this year he went on to say...

Every market has an iconic group of retail investors who, like George Costanza, exemplify bad decisions leading to wealth destruction. In 1929, it was ‘the little fellow’ buying high leverage investment trusts traded on the NYSE. In 1989, it was Japanese salarymen speculating on land and stocks. In 1999, it was mutual fund investors buying growth funds. In 2021, it was Robinhood investors buying meme stocks. Today, perhaps that group is Korean retail investors.

Not perhaps, I’d argue – it is!

Speaking of speculation, there’s no question we’re in a bubble... Good luck figuring out if and when it pops. Until then, here’s something to keep in mind from my pal John Hussmann of Hussmann Econometrics, who a month ago wrote...

The bubble hasn’t burst yet because investors haven’t quite yet recognized that the highest valuations in history imply the lowest expected future returns in history. A market crash is nothing but risk-aversion meeting a market that’s not priced to tolerate risk. Every fresh record high in valuations amplifies the likely downside when that occurs, but examining the collapse of past bubbles, the “catalyst” typically becomes evident only after the market is in free fall.

This month he added...

Division by zero is known as a 'singularity.' It’s the point where equations break down, values become 'indeterminate,' things stop working normally, and variables shoot toward infinity and suddenly collapse on the other side. The current speculative bubble was driven by a singularity. Avoiding the crash on the other side relies on the willingness of investors to accept the lowest long-term return prospects in U.S. history, forever. Extremely high prices may seem like a beautiful thing, but they’re a corrupt bargain. Unless you actually sell, the cost of “enjoying” record high valuations is that you are locking-in record low future rates of return.

Interpret at will...

[TR]
[td]

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[/td]
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Just returning to this story from last weeK:

Consider:

Full:https://www.reuters.com/markets/cur...ajor-argentina-currency-swap-line-2025-04-08/


From a while back:

Full:https://www.weforum.org/stories/202...a and Chile are,million and Chile 9.6 million.

• Around 60% of identified lithium is found in Latin America, with Bolivia, Argentina and Chile making up the ‘lithium triangle’.
• Demand for lithium is predicted to grow 40-fold in the next two decades due to the energy transition to renewable power and electric vehicles.
• However, there are concerns about the sustainability of water-intensive lithium mining in Latin America and elsewhere.

And as an added bonus:

400,000 barrels of oil.


So essentially, if the US had not stepped in, China would have, thereby gaining control of another stranglehold mineral and oil.


Just in case that was not sufficient reason:

What would happen to the markets if Argentina defaulted? Which Banks are on the hook? Would they fail? This scenario is unlikely because I assume China would step in for the 'loan to own' commodity benefits.


It's definitely a thing:

Full:https://www.cfr.org/backgrounder/ch...rgentina-brazil-venezuela-security-energy-bri


Loan-to-Own is how China is waging economic war on the US

Full:https://www.bloomberg.com/news/arti...up-to-2-billion-yuan-bonds-to-grow-china-ties

What's over there?

Amongst other stuff, Uranium.

Full:https://oec.world/en/profile/countr...t&selector1879id=usd&selector358id=tradeValue

Nuclear power is definitely on the comeback trail, so Uranium supplies are a good thing to control.

Full:https://world-nuclear.org/informati...ng-of-uranium/world-uranium-mining-production


The point being, Krugman and his ilk are so politically partisan and myopic, that reading what they have to say is seriously misleading and worthless blab.



jog on
duc