Oracle rewarded for betting its capex farm on AI.

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Today's links

Here’s Ruben’s investor’s guide to the Klarna IPO.

Here’s US Treasury Secretary Scott Bessent’s blistering editorial on the Fed’s power overreach (as the government slept, arguably) in recent decades. Similarly, after yesterday’s enormous -911k downward revision to Apr 2024-Mar 2025 payrolls from the BLS review yesterday, it is worth considering whether the Fed should manage policy using entirely different tools due to its embarrassing record on measuring what is even going on in the economy - especially in the inflation and labor markets post-pandemic.

Here’s a useful FTAlphaville article noting the debt dynamics for the major economies, arguing that UK fiscal fragility fears are overblown. Some great charts and comparisons. I would insist that the UK is still one of the most vulnerable economies and sterling one of the most vulnerable currencies, however, in the event of any systemic stress across global markets due to its twin deficit and very negative net international investment position (NIIP).

From FTAlphaville’s further reading today, a rather depressing article on what gun violence in the US incurs in the way of costs to the system above and beyond the psychological terror of the violence itself. US remains a weird outlier on its attitudes toward guns, even as a strong majority think it is too easy to gain legal access to them.

Chart of the Day - Gold versus long bond term premium

Today - as we consider the key drivers for gold, it is worth noting the significant difference between this cycle and prior cycles, where the focus was on “real yields” - how high yields were going relative to inflation, or at least the attempt by central banks to establish the narrative that policy would stay tight enough until inflation was tamed. Back in late 2022, the market was a believer in eventual CB success, arguably, as the premium for the 30-year yields over 10-year yields fell and fell as stock markets cratered by late 202 on the massive surge in interest rates. Note the exception of Japan’s experience in 2022 due to yield curve control out to 10-year yields. This time around, central banks have eased while long rates have headed higher as the market is more concerned about long term debt sustainability dynamics - in real terms - and suspects that central banks will maintain rates at more accommodative levels relative to inflation. This shift in the mindset has seen gold flourish even as the longest yields are offering more yield compensation for the risk than ever before in some cases, like in Japan. One challenge to this idea: the longest bonds rallied smartly in recent days without spot gold paying much heed - a blip or falsification of this narrative or have the gold bugs gotten carried away with the success in this bull run?