GeoMarketSignal

Yesterday, the Federal Reserve raised its policy rate by 25 basis points to 3.75%–4.00%. Yet the AI boom is still running. The technology is real, productivity gains may be emerging, and the investment surge is undeniable. The bubble question begins not with whether AI works, but with whether the expected return on the next AI project can keep exceeding the full cost of the capital required to build it.  Including myself, investors and market watchers have repeatedly compared today’s AI rally with the Internet boom of 1995–2000. The comparison is useful. But the way most people remember that period is too simple. The Internet boom was not a choice between real innovation and a financial bubble. It was both. Technology transformed the economy. Productivity accelerated, investment surged, and businesses poured capital into information technology and communications infrastructure. Financial excess developed alongside those genuine economic gains.   Research by Stephen Oliner and ...

A U.S. 10-year yield near 5% may reveal more than a debt-supply problem. The institutions that once absorbed long government bonds are changing too. The First Number I Check Every Day I monitor dozens of indicators every day to understand financial markets and equity markets. But there is one number I usually check first: the U.S. 10-year Treasury yield.

  Europe can remain one of the world’s richest regions while becoming less central to how the global economy grows, finances innovation and exercises power. The phrase “Europe in decline” is usually where useful analysis goes to die.

The danger is not simply higher yields. It is the slow refinancing of increasingly different fiscal paths inside one monetary union.

A country that never received the peace dividend is unusually well prepared for a world rediscovering hard power. That does not mean its defense stocks are cheap.

Why Korea’s market transformation may be broader than the AI boom—and why the real test has only begun. As I watched the Korean stock market drift lower through much of 2024, one concern kept returning to me. South Korea’s population have peaked in 2020 and begun declining. Could an aging, shrinking economy ever command a meaningfully higher valuation in the stock market?

AI can become transformative infrastructure without rewarding every company—and every bond investor—financing its construction. When Big Tech began turning to the bond market to finance its great AI buildout, my first thought was relatively simple. Perhaps borrowing allowed these companies to preserve cash, maintain strategic flexibility, and continue returning capital to shareholders rather than paying for every data center and GPU directly from their own balance sheets. But as I have been watching the AI arms race intensify—with the largest technology companies spending ever larger sums to secure chips, data centers, electricity, land, and computing capacity—I began to think about the other side of that trade. What happens if this competition eventually produces clear winners and losers? The question is not whether AI succeeds. Its industrial potential can be big. But an industry can succeed spectacularly while some of the companies financing that success earn disappointing returns. ...