Interest rates are the key driver of household expenses, but are not captured in prevailing measures of inflation

Sometimes easy to lose sight of the incredible progress of humanity these past 200 years

The rents paid to hyperscaler data centers have taken off, as power for new cloud/AI deployments becomes a scarce commodity!

The development yields for US hyperscaler data centers have boomed this past 12 months, largely due to a shortage of available power. Any data center provider with spare capacity & available power has been able to name their price... (dev yield = NOI/build cost)

Hyperscaler data centers are receiving huge attention in light of massive build-out to serve AI. Because these are basically undifferentiated warehouses with access to power, historical return on capital has been lackluster - particularly in recent years as Google, MS, AWS negotiated lower rents.

Understanding this will take some study .. it shows an effect present in quite a number of yielding investments. LHS is a hypothetical investment - invest $100, returns $100 over 10 years. RHS is a listed company that does nothing except each year buys an additional one of these investments.

Green energy stocks have been a disaster. How could this possibly be the case given the huge energy transition underway? It's because underlying ROIC (return on invested capital) has often been far too low .. in many cases, low single digit %'s. ROIC (not growth) is what ultimately drives value.

Real assets - real estate, infrastructure, quality businesses - got a bonus 13% value increase thanks to high inflation. If those assets were leveraged with debt, as such investments typically are, then the value increase was correspondingly higher.

Echoes of the dot-com bubble? The "Magnificent-7" currently make up 30% of the S&P500. Nvidia is up 195% YTD. There is no doubt AI is the real deal. But so to was the nascent internet back in 2000-01, when the Nasdaq declined 80%! I'm too gutless to make a prediction, just noting..

Should current trends continue, by 2045 50% of US tax revenue will go to pay interest on Government debt. This will never be allowed to happen meaning current trends will not continue. What intervenes? Most likely inflation.

Fact: US trade deficit = foreign investment into US. Last year we sold and/or borrowed the dollar equivalent of 1.5% of all US listed stocks in order to consume imported goods. To put it simply - as a nation, we are mortgaging & selling the farm so that we can today live beyond our means.

This chart goes a long way to explaining why Trump has been so successful with union rank & file...(and indeed he may have a point)

the glass half full version... if Hansen is right, we already have found a way to halve the impact of global warming...

Carry on, nothing to see here...