Volatility Pulse - Big Mac or a Blackwell?
Big Mac or a Blackwell?
Nvidia and McDonald's both trade at roughly 19x forward earnings. One is growing revenue 91% with 65% operating margins into the largest infrastructure buildout in history. The other says its U.S. business was 'slightly negative' in August.
Source: @StockSavvyShay
The hyperscaler bet requires $2 trillion in cash flow
Consensus expects hyperscaler operating cash flow to grow from $600 billion in 2025 to $2 trillion by 2030. Capital expenditure is forecast to reach $1.5 trillion. If revenue growth disappoints even slightly, free cash flow goes negative.
Source: Apollo
Semis and hyperscalers stopped moving together
The 30-day correlation between semiconductor stocks and hyperscalers just hit -0.31, the lowest reading on record and the 0th percentile of the last decade. The median is 0.70. The two groups that built AI together are trading like strangers.
Source: @warrenpies via 3Fourteen Research
Industrials are more expensive than tech
Globally, the IT sector trades at 16.2x forward earnings while Industrials sit at 19.4x, Healthcare at 17.7x, and Consumer Discretionary at 18.7x. Tech's PE has fallen below its 20-year median while three other sectors re-rated above it.
Source: Goldman Sachs
When do global markets start to respond?
Since 2008, US equities have finished in the top two among major regions in 15 of 17 years. Before that, emerging markets led for most of the 2000s. The quilt flips, and it might be due.
Source: Schroders via @MebFaber
Oil and Rates are getting reacquainted
The 3-month rolling correlation between oil prices and the 10-year Treasury yield just reached its highest level in 35 years. The last time oil and rates locked step like this was the buildup to the 1990 Gulf War.
Source: Cboe
Not so fast my friends
Two hundred days after the start of hostilities with Iran, oil remains roughly $25 above its pre-war price. At the same point following Russia's invasion of Ukraine, the shock had reversed and prices were $7 below.
Source: FactSet via @nicktimiraos
Satoshi Claus is coming to town?
Bitcoin jumped 13% in a single week to $86,000. Polymarket now prices a 42% chance it reaches $100,000 by year-end.
Source: @unusual_whales
Nasty Round Trip
The iShares 20+ Year Treasury Bond ETF is down 1.5% since its 2002 inception and negative on a total return basis since the start of 2012.
Source: @bespokeinvest
Vol is priced like nothing can go wrong - time to hedge?
Both SPX and Russell 2000 one-month implied volatility are sitting near the bottom of their 2-year percentile rankings. Goldman's top quant trader calls it 'a remarkable amount of macro uncertainty priced remarkably cheap.'
Source: Goldman Sachs
Copper's decade of deficit starts in 2027
A projected shortfall in copper supply opens from 2027 and widens every year after, reaching a deficit of more than 12 million tonnes by 2040, according to Bernstein estimates published in the FT.
Source: Bernstein via FT
Just Because...
Wombats Poop in Cubes
Wombats are the only animal on Earth that produces neat cube-shaped poops, 80 to 100 of them a night. Scientists found the corners form inside the gut from stiff and soft intestinal zones, and won an Ig Nobel Prize for proving it.
