Weird Market. Flat Bookings, AI and $150 Physical Oil.
Perhaps I should know better than to complain...
Did anyone notice last month (March 19th report date), that Accenture’s (ACN) Dollar bookings were only up 1% Y-o-Y despite a weaker Dollar? Accenture operates at the tip of the spear, Technology investors should be concerned.
Much of ACN’s bookings weakness was a function of a soft economy. However, some of it is AI-related - LLMs make it much easier to do the software translation work that occurs when a customer switches software vendors for a particular product. Customers often hire consultants to do this translation work. LLMs can do much of that work now, in fact they can do all of it with some supervision.
AI. Speaking of AI - software coding is the easiest use case to automate because it is 100% verifiable. Not so with most other white collar tasks, although the Corporate Finance function comes to mind. The combination of LLMs and deterministic software automations can eliminate much of the manual effort around book keeping. That said, the uptake on other white collar tasks won’t be as rapid as software development. Therefore revenue growth has to slow for Anthropic, OpenAI and Gemini beginning now.
Oil. Physical oil hit $150 over the weekend. These elevated prices will increase the cost of everything from fertilizer to food in the coming months regardless of the futures price of oil. Real world prices will move higher. The 10YR should be much higher than 4.3% because prices will move higher during 2026.
GDP. M1 grew 4.8% in February and is likely above 5.0% now. Nominal GDP was 5.4% in Q4 2025 and has to be lower now, maybe 1-2% given that prices continue to move higher as general economic activity/unit sales slow. Assume 2% Nominal GDP growth less 5% M1 growth = -3%, or recession by my math. That’s the more accurate way to calculate real GDP, not using the suppressed CPI measure.