Babies v climate change; AI v IP; bonds v world

I'm merry to be here, folks.

And I know you're gonna be shocked to hear this, guys, but I'm here to talk about corporate bonds.

Let's go. Woo, woo, woo. After the break.

It is probably almost certainly the baby's fault.

The one with more people driving more cars, consuming more plastic every year?

So I guess I'm just curious how that actually works because I'm pretty sure that children eat a lot and require a great deal of driving around and like clothing and just they're very energy intensive. So how could it be that they have only marginal climate effects?

This news is going to land like an anvil in the anarchy community. Okay, this is going to upend a lot of their assumptions. I look forward to that.

As with every week, I am thinking about bonds, specifically this week, corporate bonds, because the New York Fed just updated its measure that it tracks of corporate bond market distress and that measure has fallen, did you know, to its historical 15th percentile. That is my indicator of the week. 15th percentile, meaning this index is near the bottom of the range where it has been ever.

Okay, so you know, the bond market is where companies borrow big, huge sums of money to fund themselves to do anything from, you know, build new factories, to expand their operations or just to function depending on the health of the company. And this index that the New York Fed has, it measures things like how much new debt companies are issuing and are the prices where they're issuing high or low, are people trading those bonds, etc.

So I think it's that companies are stressed out but they are not distressed. Like if you think about Ford and GM and all of those companies that have suspended their forward guidance, they're not going to say any longer how much they expect to sell in the next quarter or whatever because they just don't know what's going to happen in the market to themselves with the tariffs. They just can't predict. So they stopped doing it. But that doesn't mean that there has been a negative impact just yet.

Yeah, right. So that's kind of the sentiment right now. For example, S and P Global on June 24 forecasts that the US economy will grow just 1.7% this year, which is pretty blah. And then the next year will also. And earlier this month, Fitch Ratings said that non financial companies in North America have a deteriorating outlook thanks to negative trends they expect to see in the economy like inflation and slowing consumer spending. And that's yet another thing that people expect to get worse. But it just hasn't really started to filter through yet.

Yeah, people were doing some spending to buy ahead of tariffs hitting, but they seem to be pulling back. We're getting data in still, so it remains to be seen what the real impact will be. We're just in wait and see mode. Perhaps you've heard that a lot lately and I've also heard analogies. Perhaps you have to to, you know, Wile E. Coyote being suspended in mid air having just gone off a cliff holding an anvil and he's just like hovering there for a second. We might be in that split second. We'll find out.

Indeed.

Yes, it's a nice view from here.

Thank you for having me.