Bears are out again, even for AI
Daily Data: Signs of slowdown, and some skepticism that AI capex will generate enough returns anytime soon
🚨🚨Before the main event, just a quick plug: please upgrade to a paid subscription.
If you like Random Walk, and aren’t a paid subscriber, it would cost less than dinner and drinks, to show your support. 🚨🚨
A change to the zeitgeist, and it’s definitely gloomy
healthcare makes all the jobs, and construction too, but probably not for much longer
even sell-siders are worrying “is AI capex head over skis?”
rest-assured, though, capex as a share of revenue tells a different story
👉👉👉Reminder to sign up for the Weekly Recap only, if daily emails is too much. Find me on twitter, for more fun. There is a palpable vibe-shift amongst the commentariat that is decidedly a bit bearish.
‘Unambiguous slowdown’
Others have noticed that the job market isn’t so hot, and they are beginning to wonder where growth might come from next.
Or rather, because they confused “catch up” with strength, and catch-up is now basically done, experts are starting to wonder whether some of the rosier forecasts for earnings growth are, well, a bit too rosy.
A 10% correction? Don’t mind if I do!
Agh, the bankruptcies are coming!
June had the highest number of bankruptcies in any single month since the very beginning of the pandemic.
Some commentators are even speculating about a “middling” or “stagnation” outcome, where things are not so bad that would justify expansion-mode from the Fed, but not so good that the good times will otherwise roll.
Others still are wondering if it’s apparently the case that healthcare makes all the jobs, then what else is going to make some jobs?
Construction employment has been pretty resilient, as well, but with residential and commercial construction starts falling into the abyss, does it mean that construction employment is likely to follow?
I mean, probably, but maybe data center construction will fill the void?
You already know what Random Walk thinks.
As of now, healthcare makes all the jobs, and extend and pretend cannot go on forever. If there’s something more exciting on the horizon, a great industrial overhaul perhaps, Random Walk is on high alert for signs of game.
AI Capex ‘head over skies’
Unfortunately, data centers, etc. haven’t escaped the sentiment-shift, either.
Some folks are even beginning to raise doubts about the intensity of AI capex.
Not just any folks, but generally bullish sell-siders like Goldman Sachs, and Barclays.1 What kind of blasphemy is this?!
This kind, apparently.
Barclays’ Ross Sandler says the numbers don’t add up:
Keep reading with a 7-day free trial
Subscribe to Random Walk to keep reading this post and get 7 days of free access to the full post archives.