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Federal Reserve Chair Powell Says the Global Economy Is Entering a Period of Investment Surge; Growth Potential May Be Underestimated

At the G20 finance leaders meeting, Federal Reserve Chair Powell said the world is seeing a wave of investment that will boost economic growth and reverse the situation in which excess savings flowed into low-yield instruments due to a lack of investment opportunities in the past.

He said at the G20 opening plenary session that he hopes to learn more about the growth outlook of member economies.

Powell said he is considering whether the growth rates of the United States and other G20 economies could exceed forecasts from traditional institutions such as the U.S. Congressional Budget Office—namely, that annual growth of about 1.8% is possible even when productivity growth is “sluggish.” * U.S. President Trump told reporters in the Oval Office that he greatly respects Federal Reserve Chair Powell and believes the latter “will do what he has to do” on the issue of interest rates.
$TSLA.US

“The AI investment wave is far from over—will supply and demand only reach balance by 2028?

The staggering capital expenditure figures reported by major tech companies such as Alphabet, Meta, and Amazon are far from the end of the story, because the industry is racing to build artificial intelligence (AI) infrastructure.

The expected supply-demand balance for AI won’t be achieved until the first half of 2028. As a result, the imbalance is likely to persist for a long time. This means more capital spending and revenue growth are needed, but the supply chain is still constrained in many ways.

With the supply chain so tight, memory prices are rising. Chip prices are also higher than they were six months ago—even higher than they were twelve months ago. As a result, all input costs are increasing. In addition, data centers also face demand for acquiring land and building facilities— even for data center capacity that is currently vacant—because companies are trying to seize the lead so that when components are ready in two or three years, or even four years, they can be put into use immediately.

SpaceX is expected to invest $200 billion per year in the AI sector over the next two years.

And the most critical question now is whether the large-scale investments by big tech companies in AI have already been reflected in their stock prices. Many companies—such as Tesla—saw their share prices plunge in the last earnings season due to worries about spending.

I believe that large high-tech companies are shifting from focusing on the size of capital expenditures (regardless of whether they’re good or bad) to focusing on the visibility of capital expenditure returns. As this theme continues to dominate discussions among investors, attention to both absolute amounts and the visibility of returns will increase. This will lead to further expansion of the price-to-earnings ratio.

I continue to invest $SOL
$SPCX.US

Once Waller’s hawkish remarks hit the market, are forecasts now saying the Fed will hike once in September and once in December?

It is expected that the Federal Reserve will raise rates by 25 basis points in both September and December.

Waller’s speech was “clearly hawkish.” Although he still refused to provide explicit forward guidance, he effectively signaled further tightening of policy.

Market pricing has shifted accordingly. The CME FedWatch data shows that the probability of a September rate hike has risen to 60.4%, a clear increase from before Waller’s remarks. Interest-rate futures indicate that investors are re-pricing the Fed’s in-year hikes, and the policy meeting on September 16 will become the next key milestone.

During his first major speech in his current term at Jackson Hole last Friday, Waller did not directly lay out a September policy path, but his comments on inflation were clearly hawkish.

Even if monthly inflation data over the coming months may soften noticeably, longer-term inflation indicators could still be affected by adverse base effects, meaning the process of inflation cooling by year-end may not be smooth.

The issue is that Waller’s hawkish stance primarily addresses short-end interest rates and inflation expectations, but may not resolve the core pressure facing long-term U.S. Treasury yields.

U.S. government debt has already surpassed $40 trillion. Meanwhile, tech giants have been issuing large amounts of long-term corporate bonds for AI data center construction, also competing for capital that would otherwise flow into the Treasury market, further increasing long-term funding pressures.

Whether the market’s repricing after Waller’s speech can persist ultimately depends on economic data.

If subsequent economic data does not continue to move in a “hawkish” direction, the market action triggered by this speech could fade quickly. Especially if the next jobs report again shows weakness in the labor market, expectations for a September hike could cool down again.

The U.S. quarterly options expiration dates are the third Friday of March, June, September, and December. Similar to triple expiration is double expiration, where two of the three contracts expire simultaneously on the same date.