Global Macro Monitor

Whoever becomes the leader in this sphere [A.I.] will become the ruler of the world – Vladimir Putin

Since the end of November the firm’s market capitalisation has soared from under $400bn to $925bn—accounting for a fifth of the rally. Add Nvidia’s surge to the growing market capitalisations of the 13 other firms with AI exposure and a remarkable 73% of the broader rally is explained. The boom in AI stocks has comfortably outstripped the wider tech rebound. The nasdaq is up by a fifth since November, compared with a third for the most AI-exposed firms. – Economist

QOTD:  Quote of the Day

Today it holds over 80% of the market in specialist AI chips…Even if AI mania cools, the technology is bound to be more useful than crypto, another craze that Nvidia cashed in on. – Economist

Fabless chip makers are companies that produce semiconductors for use in various types of electronics, such as digital cameras, smartphones, and the new technologically sophisticated “smart” cars.

The term “fabless” means that the company designs and sells the hardware and semiconductor chips but does not manufacture the silicon wafers, or chips, used in its products; instead, it outsources the fabrication to a manufacturing plant or foundry. – Investopedia

The U.S. stock market is surprisingly calm right now…A key reason: a growing divide between mainstream investors, who have largely been sitting out the 2023 stock rally, and the machines whose buying has been driving it…The market’s steady rise has puzzled analysts and portfolio managers as the S&P 500 has churned more than 9% higher this year (and the technology-focused Nasdaq Composite has risen 24%). One explanation: Quant funds, or those relying on computer models and automated trading, have been doubling down on equity markets as other investors have stepped back, citing high valuations and concerns about the likely course of the U.S. economy. – WSJ

College enrollment has declined by about 15% in the past decade, according to federal data. The reasons include the high cost of university education, colleges closing and uneven returns from getting a degree, as well as the hot job market. 

The college-enrollment rate has fallen for both men and women in recent years, but more so for men. Last year 66.1% of women who graduated from high school, ages 16 to 24, enrolled in college, nearly 10 percentage points higher than the rate for young men, which economists attribute to women enjoying greater financial returns from college. – WSJ

Money Points:

• The college enrollment rate for recent US high-school graduates, ages 16 to 24, declined to 62% last year from 66.2% in 2019.
• The rate topped out at 70.1% in 2009.
• The decline was steeper among men than women.
• The trend is driven by a strong labor market for less-educated workers.
• The shift is also being driven by a growing number of high-school graduates who are choosing to enter the workforce directly.
• Many employers are offering higher wages and benefits to attract workers.
• Some employers are also offering training programs and apprenticeships.
• The trend is being driven by a combination of factors, including rising tuition costs and student debt.
• Many students are also questioning the value of a college degree.
• Some students are choosing to pursue alternative forms of education, such as vocational training or online courses.
• The trend is expected to continue in the coming years.
• Some experts warn that the trend could have negative long-term consequences for the US economy.
• They argue that a highly educated workforce is essential for innovation and economic growth.

There are 11 emerging nations with dollar debt trading at a risk premium of at least 10 percentage points — a distressed level that signals the threat of default. 

Lebanon, Sri Lanka, Zambia and others have already tumbled into default, locking the economies out of international capital markets until a deal can be struck with creditors.  – Bloomberg

Money Points:

• A shakeup is brewing in the $1.6 trillion universe of emerging-market sovereign debt.
• Government defaults are rising to a record in the developing world.
• The debate is growing frantic over how to solve these debt crises.
• The International Monetary Fund (IMF) is pushing for a new global bankruptcy framework.
• The IMF’s proposal would allow countries to restructure their debts in an orderly way.
• The proposal has been met with resistance from some investors and governments.
• Some investors are concerned that the proposal would give too much power to debtor countries.
• Others worry that it would make it too easy for countries to default on their debts.
• The IMF argues that its proposal would help prevent future debt crises.
• The debate over how to solve sovereign debt crises is likely to continue for some time.
• Investors will need to be vigilant as they navigate this uncertain landscape.
• The stakes are high, as sovereign debt crises can have far-reaching economic consequences.