Economics

This week on ABC Statewide Drive, I discussed the recent sell-off in AI stocks and whether the AI bubble is beginning to burst. We explored how rising bond yields, growing debt burdens and uncertainty around profitability are putting pressure on the sector. While AI has the potential to transform industries, the current investment boom may face further challenges before more sustainable opportunities emerge.

Tune in here: ABC Statewide Drive 

by Roger Montgomery Posted in Economics, Market commentary, Radio.

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I joined Juliette Saly on Ausbiz to discuss the growing risks surrounding the artificial intelligence (AI) boom and whether the billions being invested in infrastructure can deliver sustainable returns. We explored the industry’s reliance on debt-funded hyperscalers and venture capital-backed startups, and how a slowdown in funding could trigger a domino effect across the sector. We also discussed the disappointing Firmus IPO, CoreWeave’s recent share price decline, and the risk of excess data centre capacity if demand fails to meet expectations.

Watch here: Too much Ai, too little return. continue…

by Roger Montgomery Posted in Economics, Global markets, Insightful Insights, Investing Education, Market commentary, Market Valuation, TV Appearances.

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If only to arm you with arguments you might not be apprised of, it’s worth repeating artificial intelligence (AI) critic and author, Ed Zitron’s most recent warnings about the AI bubble, starting with a reference to the potential insolvency of OpenAI and Anthropic: continue…

by Roger Montgomery Posted in Economics, Insightful Insights, Market commentary, Market Valuation.

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Daily stock market commentary is replete with warnings of storm clouds forming over global equity markets. But major indices are registering all-time highs with daily, boring monotony, and those dark clouds seem in no imminent danger of producing rain, let alone a storm.

So are the bearish experts wrong?

A healthy, resilient bull market is typically broad-based, with companies across diverse sectors participating in the upward momentum. What we have today is the precise opposite. According to a widely circulated Goldman Sachs report, equity market breadth has plummeted to levels unseen since the dot-com bubble. continue…

by Roger Montgomery Posted in Economics, Market commentary.

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In my latest article for The Australian, I examine the growing tax burden on Australian businesses and individuals, and the implications for investment, productivity and economic growth. With government revenue and spending continuing to rise, I argue that sustainable prosperity depends on encouraging private enterprise, rewarding innovation and supporting wealth creation, rather than relying on higher taxation and redistribution.

Download the article here: Labor is taxing the goose that lays the golden egg continue…

by Roger Montgomery Posted in Economics, In the Press.

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In my article for The Australian, I explore why global bond yields continue to rise while equity markets remain largely unfazed. From persistent inflation and geopolitical tensions to growing government debt and artificial intelligence (AI) infrastructure spending, several forces are keeping interest rates elevated. I also examine whether expectations of AI-driven earnings growth can continue to support share prices, or whether higher borrowing costs will eventually weigh on equity valuations.

Download the article here: High interest rates and bond yields threaten global sharemarket rally continue…

by Roger Montgomery Posted in Economics, Editor's Pick, In the Press, Insightful Insights, Market commentary, Market Valuation.

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In the past six years, French Government ten-year bond yield has jumped from negative 0.3 per cent to 4.9 per cent, the highest level in 24 years. Investors are starting to differentiate between each euro-denominated country with German and Dutch ten-year bonds yielding 3.5 per cent and 3.6 per cent, respectively. Meanwhile, Greek and Italian ten-year bonds yield 4.55 per cent and 4.65 per cent, respectively, indicating potential contagion as confidence appears to be in short supply. continue…

by David Buckland Posted in Economics, Editor's Pick, Feature Article, Global markets, Insightful Insights, Investing Education, Market commentary.

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For decades, the 60/40 Balanced Portfolio was zealously and even religiously adhered to. The fixed income component was the dependable anchor, providing a steady yield, protection against stock market volatility, while allowing investors to sleep soundly at night.

More recently, bond returns have given sleeping investors a rude awakening.

U.S. analyst Ben Carlson recently highlighted this shift, pointing out that modern bondholders have endured a catastrophe, describing the market as “…the most brutal bond market in modern finance history,” adding, “It’s no wonder bonds are the most hated asset class in the world.” continue…

by Roger Montgomery Posted in Economics, Editor's Pick, Feature Article, Global markets, Insightful Insights, Investing Education, Market commentary.

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In the stock market, equity analysts are typically bottom-up researchers. That means they start their analysis of an individual company with specific financial metrics and fundamentals, rather than macroeconomic trends or overall industry outlooks.

Instead of starting with Gross Domestic Product (GDP) growth, interest rates, or sector tailwinds, a bottom-up analyst focuses on a company’s internal strengths, business model, and valuation.

A problem arises because modelling a specific company using the bottom-up approach occurs in a vacuum. 

Analyst A assumes Company A will take market share away from Company B. Analyst B assumes Company B will hold its market share and grow sales by 10 per cent. Analyst C assumes Company C will benefit from lower commodity prices, while Analyst D assumes the commodity producer will raise prices. continue…

by Roger Montgomery Posted in Economics, Editor's Pick, Energy / Resources, Global markets, Insightful Insights, Market commentary.

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The narrative surrounding global equities is subtly shifting. Once dominated by momentum-driven optimism, especially for artificial intelligence (AI), today’s market discussions instead focus on structural frictions.

The most bullish equity strategist of note is U.S. researcher Edward Yardeni, whose Fabulous Earnings Momentum (FEMO) thesis has driven his estimate for the S&P500 to reach 8,400 – 10 per cent higher than where we are today. Originally, this target was slated for the end of 2026, but now Yardeni has moved it to the middle of next year.

He notes the recalibration isn’t a reassessment of FEMO, but an acknowledgement of macro headwinds that limit immediate price to earnings (P/E) multiple expansion. continue…

by Roger Montgomery Posted in Economics, Editor's Pick, Global markets, Insightful Insights, Investing Education, Market commentary, Popular.

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