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Investors around the world are desperately trying to discern the future, and in particular, the impact of artificial intelligence (AI) on it.

On the one hand, you have the hyperscalers warning of an apocalyptic future involving mass layoffs, business collapse and the creation of an omnipotent AI god.

Anthropic CEO Dario Amodei says we’re nearing “the exponential”, where AI generates trillions of dollars and the economy grows 10-20 per cent a year. At the same time, Amodei says this new force with God-like abilities, requires regulation around “AI safety.” Continue…

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

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It has struck me as curious that one of the sectors of the global market that was hit after the pandemic lockdowns were lifted but has generally failed to recover, is luxury retail. 

I have long believed that many prestige brands, such as Louis Vuitton, Gucci, Prada, and Ralph Lauren, are now so common on street corners and in shopping centres and malls that they verge on being more mass-market than exclusive, more masstige than prestige. One questions how much longer they can sustain their high margins if consumers become unwilling to pay ever-increasing prices for items that can be bought just about anywhere. Continue…

by Roger Montgomery Posted in Companies, Global markets, Manufacturing, Market commentary.

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I joined Jess Maguire on ABC Statewide Drive to discuss how markets have responded to the recent Middle East conflict, noting that history shows geopolitical shocks often lead to short, sharp sell-offs followed by relatively quick recoveries as investors refocus on earnings and opportunities. I also highlighted that defence and modern warfare technology stocks have been key beneficiaries, while investors who remain disciplined or hold cash can take advantage of volatility, with history suggesting that even if markets weaken, downturns are often followed by strong rebounds. Continue…

by Roger Montgomery Posted in Radio.

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The artificial intelligence (AI) industry is currently grappling with what some experts call a ‘trillion-dollar math problem’. The numbers might not stack up because customers might simply lack the funds to spend on AI tools to allow hyperscalers to achieve a decent return on their AI infrastructure investment.

With hyperscalers projected to spend US$3 trillion on AI infrastructure by 2029, the market faces a substantial revenue gap. To justify current valuations and maintain reasonable margins, AI services would need to generate revenue equivalent to 10 per cent of the entire U.S. Gross Domestic Product (GDP) of US$30 trillion. This represents a massive commercial risk; if expectations of an adequate return on investment in two or three years evaporate, this historic capital expenditure risks producing a multi-trillion-dollar overcapacity. Continue…

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

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How to maximise your savings with higher-yield funds with competitive returns and risk.

Looking to make your money work harder this year? Whether you’re looking to fund a better lifestyle, build your nest egg or simply grow some savings, you may want to read this article.

For many retirees – and particularly people who may be navigating their finances independently for the first time – the stock market can feel less like an ‘opportunity’, and more like a rollercoaster you never asked to board. When you are at a stage in life where preserving what you’ve built is as important as growing it, the daily ups and downs of the stock market can keep anyone awake at night.

The traditional “safe” bets, like term deposits, often fail to keep pace with the lifestyle you’ve worked so hard to earn. So, where do you turn when you want the yield of a high-performer but the stability of a fortress? Continue…

by Roger Montgomery Posted in Aura Group, Insightful Insights, Investing Education, Popular.

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For years, the financial markets operated under a “lower for longer” mantra that pushed investors further and further out on the risk curve. Starting with bonds, then equities, as a tidal wave of money pushed prices higher, investors were forced to consider alternatives such as private equity, cryptocurrencies, non-fungible-tokens (NFTs), and collectables. But as the tide of cheap liquidity slows, we are witnessing a classic sequence of correction. It begins at the most speculative fringes – the “canaries in the coal mine.” We’ve seen Bitcoin tumble from its speculative heights and the tech-heavy NASDAQ ease as investors quietly take money off the table, often driven by broader, unarticulated fears of a structural shift in liquidity and the global economy. Continue…

by Roger Montgomery Posted in Market commentary.

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I was fascinated by this morning’s Australian Financial Review (AFR) article, which pointed out markets appear to be disconnected from reality in the Middle East.

Comparing the current and more disruptive war in the Middle East to Russia’s invasion of Ukraine in 2022, which was far less disruptive to energy markets, the author notes:

“Back in 2022, Brent crude peaked at $US139 a barrel, compared with $US102 now. Back then, European gas peaked at €339 a megawatt hour, compared with €51 now. Back then, the price of urea, an oil by-product vital in the production of fertilisers, peaked at $US910 a tonne, compared with $US660 now. Back then, the S&P 500 fell 25 per cent peak-to-trough. Today, the index is down just 5.5 per cent from its January record high.” Continue…

by Roger Montgomery Posted in Economics, Global markets, Market commentary.

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Yikes! Did the U.S. Federal Reserve (Fed) just propose a material reduction in its balance sheet?

After the war is over, investors will revert to concentrating on earnings and other thematics again, and a recent Fed research paper may give investors something to worry about. Continue…

by Roger Montgomery Posted in Global markets, Market commentary.

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How do you produce a ball of wool? Pull on the thread of a woollen jumper! What was once a fine, handmade piece of clothing can quickly become a jumbled mess on the floor, and all one has to do is pull on the thread.

I wonder whether that’s a fitting metaphor for what’s going on in equity markets right now. Continue…

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

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While many of us here in Australia are left aghast after spending any time doom-scrolling through the latest chaotic headlines from the Republican Administration in the United States, a far more immediate and flagrant brand of political decay is festering closer to home, in the state of Victoria.

It is a curious phenomenon of modern life that we are often more outraged by a tweet from Washington than by the systematic erosion of integrity in our own backyard, yet after twelve years of Labor government, the Garden State has become a case study in self-interest and institutionalised corruption.

Last week, Victoria’s Liberals and Nationals introduced a bill to give Victoria’s anti-corruption watchdog, Independent Broad-based Anti-corruption Commission (IBAC), the powers it has been asking for since 2017 – the power to follow the money and investigate $15 billion of corruption in the Big Build. Continue…

by Roger Montgomery Posted in Market commentary.

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