Summary: The market is taking Oracle at its word in its longer term guidance on cloud infrastructure growth potential. We wonder instead whether an AI bubble is incipient here and if so, which dozen or so stocks should be in the "AI Bubble Basket" we are considering identifying as a talking point from here. Also on today's pod, a discussion of other key single stock news and Adobe earnings incoming tonight, the key macro data incoming, gold correction risks, the US political storm set to intensify on the assassination of conservative activist Charlie Kirk and much more. Today's pod hosted by Saxo Global Head of Macro Strategy John J. Hardy.
Listen to the full episode now or follow the Saxo Market Call on your favorite podcast app.
As mentioned on today's podcast, but now with fifteen stocks that I would argue belong in an AI Bubble Basket if we do indeed have an AI bubble on our hands. Plenty more to discuss on this front in future posts and we will track this once the basket contents are set on an equal-weight basis. Please let me know your thoughts on additional names (of a reasonably large size) you think belong or don’t belong on the list by commenting on this post by commenting on the John J. Hardy substack version of this post.
The obvious Mag7 candidates: Nvidia, Alphabet, Amazon, Microsoft, Meta
Others: Oracle, Broadcom, AMD, Micron, KLA Tencor, Lam Research, Coreweave, Arista Networks
The bubbliest: Applovin, Palantir
Another shoutout to eurointelligence.com, one of the best sources of commentary on European issues, which get insufficient play in the English-language press.
Another shoutout, this one to Wolf Richter’s Wolfstreet.com, which provides excellent perspective on US economic data, particularly on housing. Thanks for a quick answer to my query yesterday, Wolf!
As we absorb yesterday’s PPI and today’s CPI, worth considering the US manufacturing Prices Paid versus final demand figures to emphasize the tax-like, potentially stagflationary impact first round effects of tariffs.
Ben Hunt at Epsilon Theory has a unique framework for commenting on our current age, as he argues that there is no turning back on the path we are headed down, which is toward financial repression, protectionism and … socialism? I do agree that the breaking of constitutional precedence is the most remarkable perhaps in US history and that the mid-term elections next year could trigger a profound constitutional crisis.
Michael Every is out with an update that scores how things are proceeding with the US’s “Grand Macro Strategy” - a useful framework for understanding US- and Trump administration policy in this new era.
The Chart of the Day can’t be anything else today: Oracle’s move yesterday was perhaps the most remarkable day in market history for a single stock as Oracle shares added more the 250 billion in market cap, rising nearly 36% after exceeding a 40% ramp intraday. (I can’t think of any comparisons for a company approaching Oracle’s size). This far exceeds Nvidia’s stunning response to its early 2023 earnings report, when the stock jumped 24% the following day after noting an acceleration in data center sales. The company went on to more than triple its revenues over the ensuing 12 months on demand for its AI chips. A Barrons headline perhaps put it best “ Oracle May Be Having Its Nvidia Moment. Or It Could Be a Repeat of 1999.” Indeed, the stakes are high and the wriggle room limited for Oracle and all AI stocks from here after a move like this.
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