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Broadcom a key test for AI space, but big bad geopolitics still loom.
Summary: Today we run through equity markets trying to reset after the jump and retreat in global yields, possibly linked to the Trump tariff ruling as we await the Supreme Court ruling on tariffs as the next step. Elsewhere, Saxo Equity Strategist Ruben Dalfovo looks at the latest earnings reports yesterday, especially Figma and Salesforce, which both traded lower after their reports. He also previews what we should look for from Broadcom reporting after the close today and profiles precious metals mining companies (see link to article below). This and more, including some dark thoughts on history taking a dramatic step forward this week after China's Xi teamed up with Putin and Kim Jong Un at the Beijing parade. Today's pod hosted by Saxo Global Head of Macro Strategy John J. Hardy.
Listen to the full episode now or follow the Saxo Market Call on your favorite podcast app.
Today’s links
Here is Ruben’s piece on precious metals mining stocks as a leveraged play (in both direction, it very much must be noted) on precious metals prices as well as the important things to look for in a mining company.
The Beijing parade of military hardware was creepy enough, but the hot mic catching Putin and Xi talking wildly extending human lifespans was creepier still. Not ruler-for-life but ruler forever? Hubris, let’s all hope.
I may have said it was Bloomberg, but it was actually a stub Benzinga article I found on the Bloomberg platform that positions Broadcom as a direct competitor with Nvidia in some places in the AI data center with some of its chip-networking solutions - in part on its collaborating with Alphabet’s Google on its AI chips.
The recent news of the breadth of China’s Salt Typhoon hacking operation triggered a bit of Googling, which led me to this article about this specific broad hacking attempt as well as the Volt Typhoon attack on critical US infrastructure, all part of the “fifth domain” within the total warfare framework that the US and China risk fighting somewhere in the future. The article criticizes the US for its leaky, decentralized, privately managed systems versus China’s top-down approach. I would argue as well that even if direct kinetic warfare (we must all hope) never happens, the US is now finally engaging in countering the economic statecraft that has been China’s power grab for at least the last two decades. The Rush Doshi book is the key to understanding the context and impetus behind the Trump Administration playbook (its dumb own-goal excesses in destroying soft power with natural allies aside).
Chart of the Day - Macy’s (Ticker: M)
As emphasized on today’s pod, it’s remarkable what can happen to a stock when expectations are for a glide path forever downwards in revenues and earnings, which has been the case for Macy’s since 2016 except for brief glimmers of hope in 2018 and then 2021 during the US pandemic stimmy check boom. The company reported stronger than expected revenues and even same store sales growth last quarter for the first time in 12 quarters. After trading up 20.7% on the session, though, it still only trades at 8.1 times trailing earnings, 8.7 times forward earnings and about 6 times trailing 12 months free cash flow. Was this a one off or could the company actually managed to build something from here - or even just stabilize a bit and track nominal growth of the economy - rather than atrophying into the sunset in the slow demise that is still more or less the base case, even according to its post-earnings valuation?
Questions and comments, please!
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