Show Me The Money!

Gentle reader, do you recall what I've been saying about quants, that Giant Pool of Money, and predicting the future? That, even without the various QEs, interest rates would still be falling, since there's less demand for physical capital. And that's because paybacks are getting longer, plant and equipment (especially in anything semi-conductor related) is getting more expensive, and thus monopoly/monopsony becomes the state of the world?

Well, lo and behold, we have today's bit of news, and there's a link to the original EETimes piece.

If we take things back another step, the reality of the semiconductor business is that fabs are expensive to build and maintain. Then they need to be updated every couple of years to the latest technology, or at least new fabs need to be built to stay competitive. If you can't run your fabs more or less at capacity, you start to fall behind on all fronts. If Intel can more than utilize all of their fabrication assets, it's a different story, but that era appears to be coming to a close.

A fab ain't a steel mill, which you can milk for decades. Ah, if only we had the good old days. And some label Buffett a silly old man.

Oh, and the PPI/CPI numbers out this week are benign. All that QE money still ends up with Mr. Market and ABC Corp. trading old, expensive (on a relative basis) debt for cheap debt. And some quants wonder why there's no job creation?