Insights on markets, emergent trends, history, innovation, risk management, global economics, strategy, policy, and other topics that catch our attention. Inspired by ongoing research, conversations and events. Written and edited by Osbon Capital Management and published every Thursday morning.
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2024 will bring more positive novel surprises. New years always do. In 2023, it was the dramatic acceleration in AI, which touches nearly every industry, and the early stages of an answer to the obesity epidemic with GLP-1s. Here is a list of what’s on our minds going into 2024.
Google, Private Credit, Moon
Google getting competitive I’ve wondered for years why Google didn’t continue to add basic features to their most popular products like Google Docs, Calendar or Chat systems. It could be to avoid feature bloat or to focus only on the highest-priority opportunities. It’s not like they didn’t have the capital or the talent to add features. Still, they ignored particular…
Active Ownership
Osbon Capital launched in 2006 as an index boutique focused on ETFs and the emerging index strategy. At that time, Vanguard had just passed $1 trillion in assets under management and indexing and ETFs were still a relatively young concept. ETFs held just $300B in total assets at the time, and John had the foresight to predict that index ETFs…
Urban Housing Inflation, China, Nvidia
Urban Housing and Inflation This week, I wanted to address the housing component of the inflation calculation. Shelter represents roughly 35% of CPI inflation metrics and 20% of the core PCE inflation. Shelter is the slowest metric to change as landlords can often afford to be patient, and 12-month leases take time to roll over. Owner occupancy (people who own…
Interest, GLP-1s, AI
Interest Expense I’m not sure this story is going to get the coverage it deserves, especially as the election news begins to dominate news cycles over the next 18+ months. The US government’s interest expense has reached a $1 trillion annual run rate. This is the interest paid on Treasury securities. You can keep track of the reported figure here….
Rents, Credit, Divide, Data
Rents Softening + Global Inflation Issues The SF Fed recently produced a study on the potential for rent inflation to slow and even possibly turn negative by next year. Real estate owners are patient by nature and rents/shelter have been some of the slowest moving inflation metrics. Shelter represents around 40% of the official inflation statistics (CPI), so any movement…
LK99 and Quick Bites
LK99 is the new buzzword I hesitate to write about this because it’s an unproven technology and, therefore, will not impact markets if it does not live up to its promise. However, I’ve found in conversations over the last week that while it’s an extremely popular topic in some circles, it’s still not quite made it out in the mainstream,…
Direct Lending & AI
Direct lending and private credit Historically, banks dominated corporate lending, providing the majority of debt financing to both large and smaller businesses. However, the great financial crisis severely impacted banking lending capacity. This was due to tighter regulatory restrictions, capital constraints, and a shift towards more conservative balance sheet management. This void in lending capability paved the way for non-bank…
QQQ Rebalance & AI Model Collapse
QQQ – Nasdaq Rebalance The Nasdaq 100 index is in the middle of a special rebalance due to the overweight of the largest positions. Microsoft, Apple, NVidia, Google, Amazon and Tesla collectively make up over 50% of the index. In order to maintain balance, Nasdaq will redistribute the weights by selling those positions down slightly and increasing the other 94…
Uneven Recovery, GPT Example, Quick Bites
Uneven Recovery Yesterday’s latest inflation (CPI) number continues the downward trend, which is exactly what people want to see. The unattractive part of the report was the 7.8% shelter inflation, which is a core issue. More on that below. While the S&P and the Nasdaq are recovering just fine, many asset classes are still down badly. The long-duration Treasury market…
