Copper-Gold Ratio Flashes GDP Growth Warning

Global stocks push higher on upbeat earnings and rising Fed-cut odds, even as AI debt risks mount and the copper-gold ratio flags cooling growth.

Key Takeaways

• Earning Beats Fuel the Stock Market Rally: We wake up to another positive day in the equity market, with U.S. futures well in the green column. Positive news from FedEx and AMD is helping provide the lift. European markets are ripping +0.8% higher — the majority of companies are beating their EPS estimates and, on average, by a hefty +8% which is double the historical norm — explaining why the Euro Stoxx 50 is up +18% year-to-date.

• Yields Dip as Cut Odds Rise: The 10-year T-note yield is playing “catch down” to yesterday’s global action. Helping out is the move in the swaps market, which is back to pricing in roughly 70% odds of a December Fed rate cut, up from 63% this time yesterday. The copper-gold ratio, dropping to new lows, is flashing a warning sign for the economic outlook.

• AI Debt Risks Take the Headlines: Must-reads of the day go to Why Debt Funding Is Ratcheting Up the Risks of the A.I. Boom on page B1 of the NYT and Investor angst over Big Tech’s AI spending spills into bond market on page 10 of the FT. A message here for those who don’t see any comparisons to the late 1990s bubble.

While We Were Sleeping

We wake up to another positive day in the equity market, with U.S. futures well in the green column (led by a rebound in the Nasdaq) — positive news out of FedEx and AMD is helping provide the lift. European markets are ripping +0.8% higher (the majority of companies are beating their EPS estimates and, on average, by a hefty +8%, which is double the historical norm — why the Euro Stoxx 50 is up over +18% year-to-date versus a little more than +16% for the S&P 500). As for Asia, pretty well up across the board: Korea (+1.1%), Hong Kong (+0.9%), India (+0.8%), Taiwan (+0.6%), and Singapore (+0.5%) were all up. Only China’s Shanghai Composite (roughly flat) and Thailand (-1.1%) were holdouts.