@HedgieMarkets Again, you’re assuming there is a bubble. Define “bubble” for us before you use the term.

@Dr_Contango 🦔 Sure, in general a bubble exists when asset prices exceed fundamental value based on cash flows and economic utility. When companies spend $500 billion annually on AI infrastructure while generating $20 billion in revenue and burning cash with no path to profitability, that's

@HedgieMarkets It's not that just 500B, but it will continue at least at that rate through 2030 So that's 2 TRILLION spend. If I just expect IRR of a modest 7% it will be decades before you can expect a return not to mention interst on debt. This is "irrational exuberance' × 10000

@HedgieMarkets Most bullish MAG7 post I’ve ever seen. 30% of spend is debt financed is an amazing leverage ratio. SPV’s are not inherently bad, especially when it’s only 5% of total expenditures. Enron used them for sneaky accounting, that is not happening here. These companies are using

@HedgieMarkets Another factor here is a race against rapid depreciation with the ongoing run costs. This dynamic is unique historically. The probability of an ROI on this ever increasing capex spend is approaching zero. We are approaching three years since ChatGPT launched and the pace of

@HedgieMarkets I don’t see why financing AI data center spend is a debt bubble There are lots of super expensive no revenue stocks with retail flows in a bubble At the same time the biggest companies with the best debt coverage ($META $MSFT) are underwriting borrowing for data centers

@HedgieMarkets That is the reason of ending quantitative tightening soon. Dear Gold defend us of our enemies and specially from replicable software.

@HedgieMarkets They are taking on all this debt in the hopes that the customers will come. They claim demand can't be met with current capacity. I can't think of one vendor that has had to turn away corporate or retail customers due to capacity. Where is this demand coming from?

@HedgieMarkets no one assumed this was all being equity financed. infra almost always has significant debt financing. using siloed entities to raise debt is also common practice as lenders want their collateral isolated.

@HedgieMarkets What most don't realize is there's very little necessity for centralized AI ...individual companies and industries are interested in the technology adapted/trained to their specific domain only AI is a one-time CAPEX, not SAAS ...and that realization will be the major tech

@HedgieMarkets Now that big tech’s FCF has been exhausted, they’re using private credit and Washington has cleared the runway to park it in working stiff’s 401ks right next to the overconcenteated stocks in the same garbage.

@HedgieMarkets Thanks for this. I keep wanting to taze all the talking heads that portray .com bubble as a bunch of unprofitable companies. The leaders (Cisco, Nortel, Lucent etc) were all premier companies. And they ignore what a financial dumpster fire OpenAI is.

@HedgieMarkets Not gonna end well.

@HedgieMarkets but CAPEX is the point and everyone knows its a game pass the parcel and winner takes all and only OpenAI wants to implement AI

@HedgieMarkets Who owns the debt? Is it being accepted as collateral in repo? These seem like way more relevant questions than size of bubble.

@HedgieMarkets If you compare investments / gdp for the 3 periods, bubble ?

@HedgieMarkets AI bubble is so big that it is Worthy of the bigger exaggeration but not systemic like 2008. It will wipe tech stocks related derivatives and tertirary connections.. ask any ai for a post-bubble burst analysis and they won’t respond.. organics must work. the agi knows things.

@HedgieMarkets The Banksters are going to be repackaging these private credit loans into ABSs pretty soon. Also always someone else has to hold the bag.

@HedgieMarkets Imagine this guy trying to tell everyone electricity is just a bubble.

@HedgieMarkets Buckle up. It's gonna be a bumpy night

@HedgieMarkets Great excuse for BAILOUTS

@HedgieMarkets Per usual millions will get bagged but when the dust settles the billionaires that caused it all will have shoulder shrugged and moved on to the next grift.

@HedgieMarkets Does anyone know how to formulate a stock market trade against this bubble in order to profit?

@HedgieMarkets Poor take

@HedgieMarkets They are building the digital prison with debt.

@HedgieMarkets agreed

@HedgieMarkets The more I use AI to work on complex physics problems .. the less faith I have in its utility.

@HedgieMarkets Any good hedge strategies? @grok What was the best way to play the GFC collapse in 2008, in hindsight?

@HedgieMarkets That is really not a meaningful comparison. No matter how much of Meta’s (or Google’s or Amazon’s) AI spending is debt funded, it seems difficult to argue that a failure of AI to deliver will cause those companies to default.

@HedgieMarkets Don’t worry, you will never see it coming. The CIA recommends a window on the 11th floor or higher in case you’re thinking of jumping.

@HedgieMarkets The mad lemming rush to 'implement' 'AI is a house of cards built on a thin foundation of sand atop a field of pond lillies perched atop quicksand. The only long-term benefit to the mirage that is actually just summary-production from searching within search results will be the

@HedgieMarkets depreciation. instead of 10 years. datacenters etc. depreciate 3 times faster.

@HedgieMarkets not a problem We'll feed all that info to chatgtp, and it will tell us what to do