Screaming About Recessions

This Week on The Compound

August 25, 2024

This Week on The Compound

PRESENTED BY MOBY: Global Liquidity Hits Record Highs of Nearly $175 Trillion

Global liquidity is on the rise. Last week, it slowly climbed $1.13 trillion, pushing the total to an unprecedented $174.67 trillion, marking a new all-time high. This influx of capital into the global financial system indicates an overall increase in access to capital across international markets and an approving nod for risk-on assets, including equities and high-yield bonds.

With more capital available, global markets could see some momentum in stock markets, especially in sectors sensitive to economic growth, which bodes well for the U.S. and global economies as increased liquidity can fuel economic expansion and boost investor confidence.

If global liquidity continues to rise, financial markets may strengthen further, with equities likely continuing their upward trajectory. A persistent increase in liquidity would likely lead to lower borrowing costs and stimulate economic activity, but it would also raise concerns about asset bubbles and financial stability.

Get the full insights into how global liquidity highs might affect the future of portfolio management with Moby. {Click Here}

This week on TCAF, Josh and Michael were joined by Talmon Smith, an economics reporter at the New York Times, and our very own Ben Carlson. They discussed the gap between hard and soft data, how to predict a recession, where the Fed stands, and what’s like to work for the New York Times.

INSIDE THE COMPOUND

ICYMI, Josh has a new book coming out next month. (You can pre-order the book at your favorite bookseller at this link.) This week he dropped a sneak peek over at Scott Galloway’s No Mercy/No Malice entitled ‘Optimism as a Default Setting.’

It’s much harder to have the imagination and the courage to talk openly about what might go right. What might improve. What unexpected thing could have a remarkable impact on how we work and live and change things for the better. Paradoxically, these types of improvements come along all the time. Given the long-term trend toward progress and convenience and lengthening lifespans, we ought to be more comfortable discussing the positives than we are.

Joshua Brown

FRIENDS OF THE COMPOUND

Source: Sparkline Capital

This week Kai Wu at Sparkline Capital released a report on the use of AI in financial analysis and portfolio management. While he finds that AI can replace some roles on a team, it’s not ready to be used directly in forecasting stock prices. Wu writes:

At least for long-term investors, we believe the “brute force” approach of training AI on reams of historical stock returns is mostly a dead end. Instead, the path forward requires the more difficult task of improving AI’s ability to reason from first principles. As we saw in the prior section, current AI models are not there yet but are rapidly improving.

Kai Wu

COMING SOON

Next week on TCAF, Josh and Michael will be joined by Paul Hickey, co-founder of Bespoke Investment Group, and Gunjan Banerji, lead writer for The Wall Street Journal's live markets coverage.

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