I recently read the musings on Substack of a British citizen who is watching “the country I was born in dissolve into a managed, bureaucratic, state-dependent puddle of its former self.” They say, “Britain is not failing. Britain has failed,” and they’ve assembled a comprehensive solution. I wonder to what extent their economic reforms should be applied to Australia. Do you think any of it makes sense for us? Are we failing as a nation? Do these ideas represent solutions? Some ideas would have labels attached to them, such as ‘regressive’ and ‘protectionist’, but forget the labels. You have to look at the whole, not the individual measures, which, of course, is how we got to the mess we are in. Perhaps we need a telescope not a microscope. Would it be better than what we have? Continue…

by Roger Montgomery Posted in Economics, Market commentary.

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In this video insight, I explain why I believe investors should look beyond the strong earnings and seemingly reasonable valuations driving enthusiasm for artificial intelligence (AI). I examine questions surrounding optimistic market assumptions, insider selling incentives, the economics of AI, rising debt levels, weakening cash flows, and whether reported earnings are overstating the sector’s underlying profitability. I also argue that low price-to-earnings (P/E) ratios do not necessarily protect markets from significant corrections and suggest the real bubble may lie in AI earnings expectations rather than share prices. Continue…

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

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I recently read a fascinating Substack explaining why “Champagne Socialism” is now the ultimate luxury belief.

The post implies the ultimate status symbol for today’s elite isn’t a yacht or a luxury watch; it is a loud, performative nod to radical left-leaning politics.

While the term isn’t new, today’s manifestation of the Champagne Socialist is deeply insidious because it’s a dynamic familiar to the Australian Labor Party (ALP) and its socialist/Labor Left factions, yet one that alienates and financially ruins the working class that Labor claims to champion. Continue…

by Roger Montgomery Posted in Market commentary.

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The Australian Competition and Consumer Commission (ACCC) needs to follow California’s lead and get on this! 

I want to tell you about a product called Kalibrate Fuel Pricing. Kalibrate, the company that provides artificial intelligence (AI) driven fuel pricing and market analytics software, is owned by the private equity firm Hanover Bidco.

Kalibrate Fuel Pricing requests petrol station owners to provide sensitive, non-public data, including historical gas sale costs, volumes, forecasted costs, and margins. Using this private data alongside publicly available information, it offers pricing recommendations for petrol. Kalibrate describes this approach as “competitor-led fuel pricing decisions” and claims to provide “complete visibility on your competitors.”

That all sounds reasonable when thinking about an individual station using the service. Continue…

by Roger Montgomery Posted in Companies, Editor's Pick, Energy / Resources, Market commentary.

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I joined Jess Maguire on ABC Statewide Drive to discuss the recent sell-off in technology shares and why rising interest rates, weakening cash flows and growing questions around artificial intelligence (AI) economics may be shifting investor sentiment. We explored how reported earnings across the major AI companies may be overstating the underlying picture, why relatively modest price-to-earnings (P/E) ratios do not necessarily rule out a market correction, and why diversification remains important in an increasingly uncertain environment.

Listen from 1:44:13: ABC Statewide Drive  

by Roger Montgomery Posted in Economics, Market commentary, Technology & Telecommunications.

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I joined Nadine Blayney on Ausbiz today to discuss why I remain cautious on the artificial intelligence (AI) investment theme, despite strong earnings from the major technology companies. While reported profits continue to rise, I argued that much of the spending on AI infrastructure is being treated as capital expenditure rather than an expense, making earnings appear stronger than underlying cash flows. I also suggested that today’s relatively modest price-to-earnings (P/E) ratios may not tell the full story, noting that markets can still suffer significant declines even from low valuations if earnings prove unsustainable. Ultimately, I believe the key risk is not that AI share prices are too high, but that investor expectations for future earnings may be too optimistic.

Tune in via Ausbiz here: The reason Roger reckons AI is a “bubble” Continue…

by Roger Montgomery Posted in Technology & Telecommunications, TV Appearances.

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Artificial intelligence (AI) has become the market’s biggest investment theme, with strong earnings and seemingly reasonable valuations convincing many investors the rally still has further to run.

But beneath the surface, several warning signs suggest the picture may not be as strong as it appears.

Big claims, bigger questions

Elon Musk says SpaceX’s Total Addressable Market (TAM) in Enterprise AI is US$26.5 trillion. Outside estimates suggest $US50-$300 billion. This leaves the ‘buyers’ and the ‘sellers’ with some important questions. Continue…

by Roger Montgomery Posted in Companies, Market Valuation.

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A layman’s guide to CrossBorder Capital’s latest financial outlook.

The core problem: A tsunami of government debt

Macroeconomic research house CrossBorder Capital’s Michael Howell recently summarised the dilemma confronting the U.S. Federal Reserve under newly appointed Chair Kevin Warsh.

For most, the use of proprietary indicators and the esoteric interpretations is likely to be skimmed over, but sometimes a bit of additional attention pays dividends. Right now might be one of those junctures.

The U.S. government funds its budget shortfalls by issuing bonds – essentially IOUs to investors. To keep this system running smoothly, two things are required: balance-sheet capacity (the financial ability of large institutions to buy and hold these bonds) and market liquidity (the amount of readily available cash circulating to trade them). Continue…

by Roger Montgomery Posted in Economics, Editor's Pick, Insightful Insights, Investing Education.

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