Great chart @Scot1963

NVIDIA is a monster. Still, while I don't have a strong opinion as to its valuation, depending as it does on future profits, which depends on how the fast moving AI landscape continues to change.. I note that (according to Yahoo! Finance) it's on a forward PE of 28x. Even trailing it's on 47x.

Looks tame next to some of our local tech names.

Yes @Mujo - it's likely to be a fun year. An interesting one anyway. Not a boring year. The two paragraphs below are from Marcus Padley's MarcusToday Saturday weekly-wrap newsletter yesterday:

An interesting week. And if you believe the reports, things are about to get more interesting with tariffs about to hit. That should stir things up a bit. Mexican Avocados in the US are about to get more expensive, and Maple Syrup from Canada. You can see why Powell and his board were a little reluctant to do anything this week. So much can change in the blink of an eye and a Sharpie pen.

As I have written this week, you have to keep an eye on the horizon. Being tossed around on a Trumpian sea can cause vomiting and distress. The best way to combat this is to fix your eyes on the horizon and try to ignore the Siren calls from the rocks. Trump is pro-business. His ‘ratings’ measurement is the Stock Market. He will put America first in everything. First equal with his own interests that is. Money is flowing into the US as countries cower in front of the juggernaut. What ultimately is good for the US is good for the ASX.

Also:

There have been two big external events this week. The Fed and the DeepSeek revelation. The Fed is pretty much in neutral. Many suggest that we may get one more cut this year, but it all depends. The DeepSeek denouement shows us that there is Life on Mars. America’s tortured brow. We are not alone. At least Nvidia and all the tech bros are not the only ones out there. It has been a close encounter of an AI kind. Did we really think that no one else was working on an AI LLM model? A ‘Temu’ version of ChatGPT and its offshoots. Of course not. The Chinese are just as innovative as US companies. Who had heard of TikTok five years ago? Now they want to make it American. And then you have Temu itself. That must be hurting Amazon.

And for all the promise of AI, and we saw some of that this week with tech results, I am still yet to see the monetisation of the technology. The ROI so far has been rubbish! It has been stunning for the chipmakers. As Python once said, ‘Blessed are the chipmakers for they shall inherit the earth’. The big US tech companies are in an arms race. All those tech bros at the inauguration trying to outspend each other and justify the huge investment. But consumers are really not buying it. Yet. Zuckerberg was waxing lyrically about how much AI had changed Meta and the advertising algos. That is certainly true. My Facebook feed is absolutely random as heck these days. Crazy stuff. It looks like someone up there is spinning a chocolate wheel. Some of the ads and promoted feeds are completely stupid. So, not sure you have sorted that AI stuff just yet FB.

News overnight, too, that Apple, which rallied on the Temu AI news (mainly because they are missing the AI boat!), has abandoned its augmented reality glasses project. Another one bites the dust for Apple. No car. No specs.

--- end of excerpts ---

AI and Trump - two very different concepts.

I found the video in this ABC article a good watch. Click here

It's not groundbreaking or revolutionary at all, but it tells the story of another country that relatively recently had big tariffs on many imported goods, in order to save its manufacturing industry. That country is Australia. I thought it was done well and tells the story of Australian consumers having to pay ludicrous prices for goods that were available far cheaper in countries around the world.

The depressing thing is that these trade shenanigans will only make everyone worse off, on net. Of course, there will be some vested interests that are well served but, in general, it ultimately means higher consumer prices, and in turn lower tax revenue. Not to mention a misallocation of resources and mal-investment that always results from any distortion of free and open markets

The optimistic take is that they are just a technique to pressure trade partners to get what you want -- and that will likely be the narrative that is pushed if/when they are rolled back. But these things have a way of escalating.. so who knows!?

I totally agree that Trump's measure of success (or at least one major one) is the stock market and asset prices -- and will do whatever it takes to ensure it plugs forward. But no one person -- not even the US President -- can grow corporate earnings by sheer force of will alone, and certainly not by policies that distort free markets. So the only option, IMHO, is some form of stimulus, be it direct or indirect, fiscal or monetary (and fiscal is ultimately monetary in a structural deficit scenario).

In other words, the end game here is "money printer go brrrrr"

And that ultimately means extended and elevated inflationary pressures. Nominal growth in lieu of real growth, and of a kind that only exaggerates wealth inequality.

The best defense if to hold high quality assets and avoid excess leverage (counterintuitively, some debt is actually good under this scenario -- so long as there are no forced margin calls and you can comfortably and confidently service).

Interesting times.

Speaking of sovereign debt, there was a good piece from, Jeffrey Gundlach in the AFR today:

https://www.afr.com/world/north-america/i-m-the-guy-barron-s-called-the-bond-king-here-s-why-us-debt-is-a-problem-20241218-p5kzej

tl;dr

In the coming decade USD debasement or debt restructuring (both a type of default) is a near mathematical certainty. Interesting times.

@Strawman i have no reason to doubt your numbers but i will put a little twist on it. we do not know the future and there are many paths it can follow. one argument i see put forward, over and over again, even by really experienced smart guys, is that Government debt is the same as a debt an individual or a corporation carries. I just don't see it that way, and this quickly becomes a political philosophy discussion (and i don't want to go down that rabbit hole). i look at government debt, more like if I owe you $10m dollars, fine i pay the interest on that you to and you have a call in case of default on my assets. with the government, there is a huge difference, the Govt has a call on your income and your assets to help pay its debt down (no one else has that option). from that lens, it comes down to who owns the debt and what changes can be made to finance that debt. there are many levers and i see some being pulled or tried in the future. an example is after WW2 forced buying of Govt debt by savings institutions. The trouble comes when the debt is financed by foreigners who refuse to play the game and have the legal standing not to. that is not so much the case for the US and a handful of others. no doubt fireworks will come at some stage, but the game may not lead down the obvious path. food for thought

Great points @Solvetheriddle -- things are very different when you can print your own money and seize assets. But either way, financial repression isn't a desirable outcome. I agree that we'll see capital controls and mandated investment before any default (hard or soft) occurs, but that's just forced mal-investment imo, and has very real (and shitty) consequences for most people.

Also, BRICs nations alone represent something like 17% of all US foreign owned debt (and they have been fast reducing exposure), so they could really have an impact if relations deteriorate enough.

But, as you say, these things are super hard to predict -- certainly in outcome, and especially in terms of timing. I guess my point is that the number of 'good' outcomes is rapidly shrinking the further things get kicked down the road.

@Solvetheriddle and @Strawman just thinking about this practically, what might happen if an auction of US Treasury Securities failed?

Sure the Government can do things, but just think of the reaction in bond markets and what that might do systemically? A melt-down in bonds would then spill over to other asset classes.

I think there are ample systemic nightmare scenarios simply in the mechanisms of how everyday, ongoing market operations work.And that's before you factor in malign efforts by hostile foreign actors (even if they would presumably be shooting themselves in the feet).

For example, one thing I am thinking about at the moment, is a possible contagion risk arising out of a Government Debt problem in France driven by political instability and political brinkmanship in approving a budget. We've seen events of sovereign debt problems creating systemic risks before in high risk countries, but France is showing many of the indications of becoming a "basket case" at the moment. Just think of what happened in Greece in 2009, and multiply that by 10x or so. (Greek government debt was worth around Euro300bn at the time of the crisis. France today is Euro3,200bn. Both around 110-115% GDP)

As debt levels and debt service requirements continue to grow, aren't there just more and more potential "ignition points"? Lot's of frogs in lots of pots slowly being boiled alive - but gaining comfort in looking across at each other and assessing each is not getting that warm on a comparative basis.

It's all fun and games until the US seizes Russian paid US bonds because "they did a bad thing".

That catalyst has shown the true power of the US and why foreign entities need to be self sovereign because the US can act first and ask questions later, and in the game of international politics and war, it's always complicated.

I think in this instance whether U.S showed their hand it may have kicked off the undoing of their fiscal irresponsibility.

Godspeed Donald Trump and your band of Misfits.

History is definitely on the debasement side, but the timing is very wobbly--as in decades. Ill have to dust off my MMT and have a think.

i do carry some bullion, even gold shares proved non-effective in the 1987 crash (they held for a day or two as i recall). outcomes can be difficult to predict, BTC you are on your own lol

Not really familiar with the US options but in Oz the two obvious buckets of wealth are residential property and superannuation that im sure Treasury have done work on.

Perhaps an attempt at taxing unrealised gains might materialise?

From what i understand the US has a taxing problem not a spending problem.

If a treasury sale doesn’t sell, markets will panic and the federal reserve will start buying again is my expectation.

Sorry I'm going off a tangent from the US, but the UK pound has broken through 50p!

I have a UK bank account with money that has sat there since the exchange rate was 45p.

So this is such welcome relief after making a fateful decision of short Aussie versus the UK when leaving a large amount of pounds sitting in my UK bank account instead of transferring and closing the account..Still awhile before I break even or even reach 33p - currency trading is hard.

Big picture it is hard to see what this means other than UK isn't so much of a basket case compared to Australia any more - no insult to the aussies here!

I may be able to take that holiday in the UK soon, grab those pounds and finally close that bank account.

I have some pounds in a wise account @edgescape that i keep there for maintenance of a house my parents live in. I noticed the exchange rate and had thought maybe move them to aud and wait for rate to change and swap them back. Then I realised I'm funding wise to do this and went back to my next red vino. Sanity prevails. Can't win at currency activities my friend! Not at my fund levels.

Apart from a holiday in Europe to extinguish some loose change (I have a ton of Euro coins and old UK pound coins that need to be deposited to the bank as they can't be used for legal tender) in addition to the large pound balance in my UK account, there are probably easier options on the ASX I guess

Anyone earning money in the UK and Europe would be a start. I guess that's why EOL is doing well.

Others include EML, GTK and maybe XRF?

Add Smart Parking to that list. They're predominantly earning pounds and some of their larger costs are in the Aussie peso.

@Noddy74 It is almost a crime to leave the top Strawman favourite SPZ off that list of UK earners ;)

But it has been pretty obvious anyway they are in the UK. I only listed the more obscure ones that get no attention.

The consensus is wrong: America’s economy is chronically ill - Chris Leithner | Livewire Another decent article that perhaps articulates it a bit more.

Agreed

And we’ll keep running this way until something breaks dramatically.

It’s human nature.

We’ll test the new tyres until they blow, then we’ll know !

( how much they can take that is)

This thought bubble brought to you by Morgan Housel…lol

The numbers from Alan Kohler's nightly report sums it up well for me. Government money and immigration are the only reason headline numbers are in positive territory. Turn off those taps and we are in real trouble. Per capita GDP/real household income per capita are the figures that actually matter to the average person. It feels like a weird scenario at the moment where government can say we aren't in a recession but for the average person we have seen a significant reduction in living standards just like a recession.

Alan's graph showing the slowing of per capita GDP growth since 2009 shows both sides of politics have failed to maintain previous per capita GDP growth through policy. Scary considering given the amount of debt taken on by government over that period which you would expect to help that figure.