$6.1T

Money funds are raking in record amounts of cash

4/9/24 2:11PM

The stock market might be desperate for rate cuts, but for those with cash to stash away, high rates are just fine.

High short-term interest rates — closely tied to the short-term rates the Fed uses to implement monetary policy — have greatly increased the incentives for keeping cash on hand over the last couple years.

In early January 2022, you basically received no interest if you put your money in safe money market mutual funds. Now you get more than 5%.

You don’t have to be an economic theorist to see why that’s resulted in money rushing into money market mutual funds. Those dollars chasing higher yields have added to money market fund coffers that were already swollen after the Covid-related stock market sell-off and the string of bank runs set off by the collapse of Silicon Valley Bank in 2023.

According to the latest figures from the Investment Company Institute — a trade and lobbying group for mutual funds — some $6.11 trillion now sits in these funds, up from roughly $4.50 trillion in early 2022.

To be clear, the parallel sagas of the stock investors and money market savers, are two sides of the same coin.

Part of the reason that rate cuts are thought to boost stocks is because those cuts lower the incentives for socking money away in vehicles like super-safe money market mutual funds that invest in things like short-term US government Treasury bills.

Such securities are the closest thing you can get to a risk-free investment. Cutting rates lowers the return on no-risk bets and forces some cash back into the much riskier stock market — or at least that’s the theory.

Luke Kawa2m

How the character of the AI trade has changed — for the worse — in 2026

A smattering of observations on how the character of the AI trade has changed this year — with, obviously, some of these trends not having waited for a full turn of the Earth around the sun to start to establishing themselves:

All the bullish oxygen is being sucked out of the room and squarely into the memory chip shortage, which is offering bumper profits for a handful of firms. On a related note, semicap equipment stocks have been an upstream beneficiary of this dynamic. The underlying message is that near-term scarcity is being rewarded by the market.
That the big capex spenders will generate a high return on investment from their outlays is not something traders are willing to take for granted. Big budgets are not necessarily getting applauded; even companies that seemingly earn the benefit of the doubt by posting accelerating revenue growth, à la Meta, aren’t able to maintain those gains for long.
The big “consumers” of memory chips are getting squeezed. This includes the hyperscalers, obviously, but even more so the likes of Qualcomm, which has to wait behind these giants in line for supplies, which played a role in the company’s underwhelming outlook.
For public markets, the theme is more of a net negative than a positive. Firms seen as the most likely to be disrupted by AI (basically, the entire software industry) are getting indiscriminately clobbered, regardless of how good their quarterly results and guidance are.
The facilitators of disruption, in many cases, have not yet arrived on public markets but plan to do so this year. That’s SpaceX/xAI, OpenAI, and Anthropic. So if the AI theme has seemed a little “negative sum” in this year, that might be about the room that investment firms know they’re going to need in their portfolios to add these stocks once they’re able to (or, in some cases, ahead of time).
And this isn’t really a 2026 dynamic, strictly speaking, but the two biggest chip companies have been dead money for months. Since the end of Q3, Nvidia and Broadcom are both negative, with the S&P 500 up about 2% over this span.

Matt Phillips3h

Memory chip makers bounce back after report of customers turning to China for supplies

High-flying memory chip stocks like Sandisk and Micron bounced back early Thursday after dropping in pre-market trading following a Nikkei report that some PC makers are considering turning to Chinese companies — such as ChangXin Memory Technologies — for supplies amid a historic chip price spike sent them down in the premarket session.

HP, Dell, Acer and Asus mull using Chinese memory chips amid supply crunch, Nikkei Asia reports

Sherwood Staff

We have the futures market — and Ray Dalio — to thank for the Chicken McNugget

Bridgewater founder Ray Dalio reimagined the chicken as an entity that consumes corn and soybeans on its way to being consumed by you.

Dozens Gather To Watch McDonald's Fan Eat Chicken Nuggets

Max Knoblauch3h

Nio projects its first quarterly profit, sending shares surging

Chinese EV maker Nio on Thursday said it expects to achieve its first-ever quarterly profit in its fourth quarter. Its US-traded ADRs rose more than 6% in premarket trading.

Based on a preliminary assessment, Nio projects Q4 adjusted profit from operations of between $100 million and $172 million. Wall Street analysts polled by FactSet estimated a Q4 adjusted operating loss of $19 million.

Nio attributed the preliminary results to sustained sales volume growth, vehicle margin optimization, and cost reductions. Nio delivered 124,807 vehicles in its fourth quarter, which ended in December, up 72% year over year.

Hims to offer copies of Wegovy pill at $49 a month for starting dose, Novo threatens legal action

Novo said in a statement "will take legal and regulatory action to protect patients, our intellectual property and the integrity of the US gold-standard drug approval framework."

J. Edward Moreno4h