Daily Commentary

MarketMinder’s View: This is a reminder of the hugely transformative and positive effects of the shale gas revolution spurred by fracking just over a decade ago. It mentions a few companies, so please note that we don’t make individual security recommendations. This theme is our interest here, and the companies mentioned are incidental to that. “Cheniere Energy exported the first LNG cargo from the lower 48 states on February 24, 2016, from its Sabine Pass facility, marking a new era for the U.S. LNG industry that would eventually see it overtake heavyweights Qatar and Australia. Cargoes of LNG had previously been exported from Alaska in thin quantities. Now, the United States is processing around 18 billion cubic feet per day of natural gas into LNG, according to LSEG and EIA data, making it the top supplier.” None of this stemmed from a government policy or push. You wouldn’t have forecast it by extrapolating then-extant trends. It was about incentives and the private sector responding to them. That is how what Adam Smith called “The Invisible Hand” 250 years ago works.

MarketMinder’s View: “The Conference Board’s gauge increased to 91.2, from an upwardly revised 89 last month, data out Tuesday showed. The latest figure was above all but one estimate in a Bloomberg survey of economists. A measure of expectations for the next six months climbed by the most since July to 72, while a gauge of present conditions continued to fall.” Hooray? These gauges suggest American consumers are somewhat sunnier than a month or two ago, but they aren’t exactly lofty, as the included graphs demonstrate. But also, in tying the improvement to better jobs data, you see something more telling: To the extent the improvement here is about jobs, you have yet more evidence of why consumer confidence tells you little about future economic activity or the stock market’s direction. Stocks lead economic growth, which leads jobs data. If the last link in that chain is swaying confidence, what you have is a late, late lagging indicator—not useful in forecasting.

MarketMinder’s View: This article conjures a misperception while debunking a viral, misperceived, research “report” on AI in a sensible manner. Let’s take the sensible part first. The article centers on a research firm’s long, dystopic writeup published over the weekend that went wild on Substack by claiming AI risked a world in which white-collar unemployment spirals out of control while AI agents create hollow output that drives little to no real economic growth, collapsing the economy via a series of negative feedback loops. But as one economics professor notes herein, “‘The first part of the argument I hope my economics students would flag is the bit about “ghost GDP”,’ he told me. What does it mean for output to “show up in the national accounts but never circulate through in the real economy”? If GDP is rising — all those robots out there making stuff, faster and faster — then something on the other side of the national account identity has to be rising, too. The possibilities are consumption, investment, government spending or net exports. In the Citrini scenario, consumption is falling, fast. So is government spending rising (on the basis of taxing or borrowing from who, exactly)? Or exports — to other countries undergoing the same crisis? None of that makes loads of sense, so that leaves investment. But investment, [economist Joseph] Steinberg points out, is only sustainable on the basis of future consumption; ‘it only makes sense to invest in AI if there is income to buy these things the AI is generating.’” All in all, this correctly casts the report as a far-fetched robot doom story, which is pretty much how we see it. Now, the misperception this article generates is the presumption this fear going viral—and some select stocks selling off, perhaps influenced by it—is “… further evidence that we are in an expensive market that is looking for an excuse to fall.” For one, it wasn’t the only news potentially hitting software stocks on Monday. But even to the extent it did, volatility can come and go for any reason, ghost story or no. Said differently, the fact fears like this are circulating—and people believe them!—is evidence we likely aren’t at a typical, euphoric top. It is bullish, not bearish, that fears exist, as they lower expectations, which makes positive surprise easier to attain. This is why bull markets are often said to climb a wall of worry.