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Pssst...Europe has AI stocks, too.
Podcast 25 minutes to read
Summary: Today we profile European companies with exposure to AI with Saxo Equity Strategist Ruben Dalfovo, as we continue to wonder what AI names may be in a bubble. Elsewhere, we note ongoing divergences in this market, largely brush off the impact of yesterday's US economic data as we focus on a possibly pivotal week ahead, given the FOMC is set to meet Wednesday and the Bank of Japan on Friday. This and much more on today's pod, which is hosted by Saxo Global Head of Macro Strategy John J. Hardy.
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The Week Ahead in Macro Event Risks
These are the highlights only based on best efforts at accuracy, discussed in today’s podcast.
Today’s Links
Ruben’s article on the kinds of AI exposure you can achieve in a variety of European names.
Economist Steve Keen goes through way housing markets are still a problem and what drives their direction - momentum in mortgage lending. If Michael Every is correct that in this new era we should wonder “What is GDP for?” If we are rational, it wouldn’t be about having over-priced housing that keeps your younger and less well-off population out of reach of property ownership via excessively accommodative monetary policy and transmission of excessive credit into housing, or having private credit competing with individual homeowners to buy property.
The financial historian Barry Eichengreen wonders if USD dominance is on the wane, with some rather simplified, but still very relevant history on the US dollar and why any future lack of Fed independence endangers its status. (this article behind a WSJ paywall, but if you are a Saxo client on the English version of the platform, WSJ content is a perk of having an account with us - just go to Research-News-Latest and search for “dominance”. I found it quickly that way.
Haven’t listened to this one yet, but apparently a rising star in the Substack universe, Chris Irons, who is interviewed by the very, well, thoughtful Adam Taggart over at Thoughtful Money on why stocks are “pornographically” overvalued as the US economy is supposedly grinding to a halt. We have to be careful with these warnings, of course, even if you and I agree with them, as the stock market is flow-based and that means passive- and buyback based. Something needs to transpire to get people to start pulling money out of this market, until then, valuations are merely an abstraction at the margin or those names less impacted by passive flows.
A hilarious New Yorker article detailing a provocative writer’s abuse of various AI therapy software/AI algorithms to reveal their inanity. AI has a long way to go to realistically pass any true Turing test.
Chart of the Day - Warner Brothers Discover (WBD)
Warner Brothers Discovery received a rich bid from Paramount Skydance (PSKY), with the former up 28% and the latter up 15% - obviously the market sees some synergies here. Netflix was down heavily yesterday on concerns linked to this new competitor. Looking out over the horizon, I wonder it one thing that generative AI might disrupt is content itself, or certainly legacy passive-content entertainment shows. People may become increasingly interested in interacting with AI companions and in realms that they create and manipulate themselves. Will this steal attention share from passive content? Alternatively, perhaps these content providers can harness AI to provide premium services that allow subscribers to insert themselves into their favorite shows or even create new episodes and communities that work together to create alternate plot lines. The possibilities are endless.
Questions and comments, please!
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