It’s not sinking inflation or falling oil. So what is it?
Yield Synopsis
- 30-Year: 5.30 percent down from 5.67 percent on October 7
- 10-Year: 4.89 percent down from 5.31 percent on October 5
- 2-Year: 4.67 percent down from 4.92 percent on September 28
- 3-Month: 4.17 percent down from 4.28 percent on October 15
The Fed
- The Fed meets on October 28 with little chance of a hike
- The Fed meets next on December 9 with a 75 percent chance of one quarte-point hike and an additional 7.5 percent chance that the Fed hikes by a half point.
That’s almost no change from a week ago, so this does not seem to be the catalyst.
Not Falling Inflation
Inflation has been hot. The CPI, PCE, and PPI have all been above consensus estimates.
The Cleveland Fed inflation Nowcast is for another hot PCE report month-over-over month of 0.47 percent for September with year-over-year PCE of 3.72 percent for October.
Something Consequential
I don’t buy the recession theory yet. I do believe an AI-related credit bust is coming.
AI Bust
Corporate Credit Spreads
Nick Timiraos WSJ Columnist
Tech Jitters
Darker Side of the AI Boom
AI Default Risk
Please consider Falling Treasury yields may be hiding a darker story about the AI boom
Let’s take a step back and check on the key market drivers this week. The US-Iran conflict is still raging on and geopolitical tensions remain high. So, that is underpinning oil prices once again with WTI crude breaching $100 and Brent crude hitting $114 – its highest since May.
Now, that sounds like a familiar backdrop for the bond market, doesn’t it? Higher oil prices mean stronger inflation pressures, which should normally push up Treasury yields. Well, that has not been the case this week.
Instead, Treasury yields have fallen sharply, with 10-year yields even slipping back below the 5% threshold in overnight trading and holding thereabouts since. But wait a second, shouldn’t falling yields then buy some relief for stocks?
You would certainly think so, especially when surging Treasury yields have been such a major bane for equities over the past two months. And yet stocks have been battered this week, with AI names in particular bearing the brunt of the pain. So, what gives?
It’s one thing to suggest that investors are perhaps starting to worry about growth conditions again. But considering how long that narrative has been brushed aside and the extent of the damage we are seeing in AI stocks, I think there is perhaps a rather different problem brewing beneath the surface.
Let’s jump straight into it and start with CoreWeave, shall we?
That’s not the most familiar name in the AI space. However, CoreWeave might well have been the stone that started an avalanche of worries about debt financing in the entire sector.
Just take a look at the chart [above], which shows how the cost of insuring against defaults among major AI-related companies has surged over the past year i.e. change in CDS spreads.
CoreWeave stands out like a sore thumb, with its CDS spread widening by more than 500 basis points over the observed period.
And while CoreWeave is clearly the standout, the chart also shows that the worries aren’t confined to just one company. Oracle’s five-year CDS has climbed towards 300 bps, while Meta and Nvidia have seen theirs approach 100 bps.
In the case of Oracle, it is being traded like junk credit due to aggressive debt-fueled infrastructure loans. Meanwhile, the five-year CDS level for Meta is near its historic peak so that helps to put things into better perspective. Having said that, I wouldn’t put all these companies in the same risk category. Meta and Nvidia clearly have much stronger financial positions and liquidity than CoreWeave for example.
However, it is clear that investors are beginning to question something bigger. And that brings us back to the same question we’ve been asking all year, that is who is going to pay for the enormous AI infrastructure boom, and how long before those investments generate sufficient returns?
CoreWeave relies heavily on debt to finance data centres and computing infrastructure. Meanwhile, Oracle is also committing massive sums to AI expansion and Meta is also pouring billions into infrastructure. As for Nvidia, their fortunes are very much closely tied to that spending cycle.
The major concern here is that if financing becomes more expensive or AI investment slows, the consequences could spread across companies that depend on one another for revenues, financing and growth.
Does anyone believe profit will support the money being spent, most with circular financing?
AI Race Puts $3.5 Trillion at Write-Down Risk
Bloomberg reports AI Race Puts $3.5 Trillion at Write-Down Risk, Gartner Warns
On October 18, 2026 I noted Data Centers Need $8.5 Trillion in Revenue Through 2030 to Cover Spending
How likely is that?
The AI Bubble Will Burst
But what inning is this? 7th, 8th, or 9th?
If you prefer to think in years, is it more like 1997 or March of 2000?
This is a theme I have been discussing for a long time.
Related Posts
April 30, 2026: AI Provided Nearly All the GDP Growth in the First Quarter
Let’s go over the AI-GDP math to see how I arrive at the numbers.
July 24, 2026: How Much Has Big Tech Overspent in AI Buildout?
Some ask whether or not big tech overspent. I ask by how much.
July 31, 2026: How Much Did AI Spending Contribute to Second-Quarter 2026 GDP?
Five charts show the AI impact for every quarter starting 2025 Q1.
“I don’t buy the recession theory yet. I do believe an AI-related credit bust is coming.”
Good point, Mish.
Google is down about 22% from its all time high, though Google is a lot better positioned than the other AI stocks.
I would not be surprised if the major techs like Google bottom at least 35% below their all time highs.
That’s similar to Dell, Ebay and Amazon surviving the tech crash back in 2000-2002.
I agree with Wolfman at Wolf Street that there is more demand for US Treasuries since there are less AI-related bonds being issued. So US Treasuries are not competing as much with corporate bonds. But US Treasuries are only going to go so low relative to annual inflation. The US Treasury trades historically between around 1.5% and 2% higher than the annual inflation rate.
Maybe the house had something to do with it. He’s gotta jiggle oil bonds equities and the Yen all at the same time though, wonder how he will fare.
The other possibility is a real October surprise: a global equity crash next week (earlier than previous models): https://theeconomicfractalist.blogspot.com/
Both scenarios look plausible.
What you have to remember is that fundamentals precede technicals.
For Treasury yields to be dropping this sharply (today excluded) somebodys are seeing something truly scary out there.
A possibility is that it is now becoming impossible to hide the insolvency of the entire Eurozone banking system any longer.
i.e. You go out into the streets to protest, riot and loot, yet continue making timely payments on your credit cards and other debts?
Yeah, last time there was this big of rise was in the March 2023 failures of Silicon Valley Bank (SVB), Signature Bank, and later First Republic.
Black Monday was about the sharpest and steepest drop in legal reserves since the GD. It was exacerbated by contemporaneous reserve accounting.
It was entirely Greenspan’s fault.
The Dot.com bust was the same problem, with Y2K concerns Greenspan first injected far too many excess reserves and then drained more than he should have.
It was entirely Greenspan’s fault.
“I know of no model that shows a transmission from bank reserves to inflation” – DONALD KOHN – former Vice Chairman of the Board of Governors of the Federal Reserve System
“Reserves don’t even factor into my model, that’s not what causes inflation and not how the Fed stimulates the economy. It’s a side effect.” – LAURENCE MEYER – a Federal Reserve System governor from June 1996 to January 2002
As Dr. Richard G. Anderson, world’s leading guru on bank reserves:
“Spencer, this is an interesting idea. Since no one in the Fed tracks reserves…”
“In an ample‑reserves (floor) regime, the system contains more reserve balances than in a scarce‑reserve (corridor) regime. But that does not mean banks have “more liquidity” in the economically relevant sense.”
Only the Fed determines total reserves. Ample reserves increase the quantity of reserves, not the economic tightness of liquidity. Liquidity is set by the interest rate price (IORB, ON RRP).
So, the FED could theoretically halt any stock decline by dropping its administered rates.
You should retract this remark.
When you posted the exact same thing on WolfStreet, Wolf completely called you out with multiple examples since March 2023 when there has been a more significant decline in yields.
You’re just as crazy. I called it a DAILY move. He extrapolated it INTO EXTRA TIME FRAMES. I was going to respond to Wolf, but Wolf is a Keynesian inspired disciple.
Wolf deletes over half my remarks because he thinks banks are intermediaries.
And Wolf deleted my call to BUY bonds after the CPI was released.
Why do you find it necessary to lie? Are you that insecure?
Your exact post yesterday on WolfStreet at 9:46pm
“The last time rates fell so sharply was during the March 2023 failures of Silicon Valley Bank (SVB), Signature Bank, and later First Republic.”
That does not reference “DAILY”. And Wolf took you to task.
That’s exactly correct.
I’ve only made 2 bad stock market calls. One in 2010 and another in 2021. Prices went down as I prophesized inn 2010 but stocks went up. And in 2021 I had to switch time series because Powell eliminated reserve requirements.
I learn a lot from Mish’s posts and comments.
And this is the epitome of hubris!
You’ve only made two bad stock market calls EVER? And one of them was way back in 2010?
Do you think anyone will really believe such claims? You must be the richest man on Earth now with this near-perfect stock market record.
Is this really Elon I’m talking to? LOL
That’s right – ever. I was the Alpha and the Omega. I cracked the code in the summer of 1979.
— Michel de Notredame
But I can’t do it anymore.
Monetary Flows { M*Vt }
Example
Oct 14, 2026 at 8:04 am
Time to buy bonds.
10-Yr Bond
5.31
+0.09
spencer
Yeah, I know the GOSPEL
But Powell destroyed deposit classifcations
The Great Inflation was predicted in 1961.
See: “Should Commercial Banks Accept Savings Deposits?” Conference on Savings and Residential Financing 1961 Proceedings, United States Savings and loan league, Chicago, 1961, 42, 43
The GFC was predicted in 1980 in IMTRAC
Luckly, I didn’t have Joseph Granville’s problem.
As Dr. Stephen A. DeLurgio taught me in 1979, See his book:
“Forecasting Principles and Applications”, correlation sometimes depends upon distributed lag effects.
The rate-of-change in the proxy for real-gdp (monetary flows MVt) peaks in July. The rate change in the proxy for inflation (monetary flows MVt) peaks in July. Therefore it should be obvious: interest rates peak in July.
Because interest rates top in July, the exchange value of the dollar should resume it’s decline. A very good time to buy gold!
The “Holy Grail” has no disclaimer.
posted by flow5 at 7:50 AM on 06/29/07
See back then I didn’t need a disclaimer
If you note the post above was deleted by Wolf. Wolf doesn’t understand monetarism.
“the benchmark 10-year Treasury yield’s largest one-day decline since the banking crisis occurred on October 22, 2026, when it fell about 19.3 basis points to 4.952%. According to Dow Jones data cited by MarketWatch, this was the biggest daily move in the 10-year yield since March 10, 2023, during the acute phase of the regional banking crisis”
40 week and shorter cycles lows are forming.
Examine France’s high taxes and debt to GDP ratio. And the Left there wants even more social welfare spending :-/
Rising yield rally is intact.
Nothing goes straight.
Its just CORRECTION
Its healthy.
https://fred.stlouisfed.org/series/LABSHPUSA156NRUG
The Share of Labour Compensation in GDP is falling. Real gross domestic product is misleading. The companies may be flush with cash but the wage earners aren’t sharing in the spoils.
So close to getting this to work.
So close to where AI takes over the economy.
There will more than enough stuff for everyone, everybody gets income.
Besides, we need to beat the Chinese to it.
I assume that this was sarcasm.
do we all get private house robots to be our slaves to do everything around the house we need done ? including perhaps some XXX services? sign me up, daddy.
Bank Size Median NIM
Under $100M…….…3.85%
$100M–$300M……..3.93%
$300M–$1B…………3.88%
$1B–$3B……………..3.69%
$3B–$10B……………3.64%
$10B–$100B………..3.57%
Over $100B…………3.09%
With both SOFR and the IORB at 3.90% there’s not much incentive for the DFI’s to lend/invest. There is no need for the FED to hike.
Note that bond yields rolled over almost immediately after the last 30 Treasury auction. Bond traders squeezing the US to pay up for new scrip in low liquidity markets. Don’t be surprised if this same dynamic happens around the next auction, around 2 weeks away. Today was the top.
Te St. Louis Fed Economic News Index: Real GDP Nowcast (STLENI)
Observations is now showing:
Q3 2026: ………………… 3.19220
Updated: Oct 23, 2026
Oct 14, 2026 at 8:04 am
Time to buy bonds.
10-Yr Bond
5.31
+0.09
spencer
I think there’s good insight in your comment. I just need to google some of those acronyms to unravel it. At least I know what SOFR means.
“SOFR stands for secured overnight financing rate, which serves as a reference interest rate that helps financial experts price loans and other dollar-based financial products. It also serves as a benchmark replacement for the London Interbank Offered Rate (LIBOR), another standard rate.”
Some are selling EU bonds and buying US treasuries.
Considering the evolving situation in the EU, it makes sense.
So for stocks trading sideways for a while now, are we testing highs or lows???
meanwhile: “Israel’s economy is growing so fast, it will leapfrog the Netherlands and Australia within the next 18 months, in time for it’s 80th birthday—not by 2030, as predicted—to rank second only to the USA in GDP per capita of all nations with populations over 10 million.”
https://x.com/saul_sadka/status/2113310558464143570
Killin’ fellow semites is their business, and business is good.
Will that hold if Dimona is breached?
Qualitatively, US Debt was grossly oversold and ‘the smartest’ money has been buying US debt over the last 12-13 days with the trend line established from TNX peak interest rates (about 5.36% on 7 Oct 2026). Quantitatively, within the counterbalancing cyclical asset-debt macroeconomic system, US interest rates reached their time-based fractal peak. The US hegemonic asset-debt macroeconomic system reached a SPX equity peak valuation on 6 October 2026 at 7844.52 and is undergoing an initial crash decay which will nadir 8 December 2026 and which will undergo a further decay to the 1300-1430 level in 2027. The 82-84 % collapse in the SPX peak to nadir will drive interest rates on US sovereign debt much lower. Oil valuations will peak during the SPX 8 December 2026 nadiring, but will moderate thereafter, through demand destruction (and likely eventual US military departure from theater.) (Hit me with those thumbs down.)
I’ll downvote you for your continued hubris.
Yesterday, you posted here at 3:30pm on MishTalk that “Tomorrow SPX will be down a minimum of 4% and oil (very transiently) also down a bit.”
Today’s results:
Brent oil +3.1%
WTI oil +3.8%
SPX -0.5%
You are either a bot or a rube that believes you can connect two data points in the past to make definitive oil/stock price changes for a specific day in the future – even though you are wrong every time you do so.
If nothing else, maybe AI will be used to delete such hubristic BS from blog posts in the future. I’d be willing to take a sizeable market downturn for that to come about.
Oh, wait, I have the ‘Hide’ button. AI not needed for me, anyway. Thanks, Mish
Fair comment. I look at the actual outcome data, and make adjustments to the long terminal fractal model …
LMAO at “off the book” investment in AI, another huge bailout coming
Ive conditioned myself to drink cheap beer. Been drinking Genesee. It’s pretty good, actually. I work as a shift Mgr for a place that gets all its business currently from data center buildouts. They stopped repairing machines and making upgrades and our CEO quit. Makes me wonder. The work is still coming in currently.
loved genesse cream ale when in college upstate NY in late 70s
In Western New York we refer to it as Gene-sewer.
I find it amusing people are throwing themselves at RSP and retail stocks as a solution to the collapsing AI bubble. Any stability in those stocks/ETFs comes from the contribution of the AI build out to growth. Trump’s supposed ( he’s backed off many times before) attack on Iran should drive the final nail into the coffin of AI. Volumes still light as many in the market think Santa Claus will save the day.
Oil price shocks always tank the economy.
Walmart gets more business as people get poorer.
To a point…
I keep watching the “end” getting closer and closer in France. It will show us how, but not when, the “end” will take place here. Today’s post by Mish is just one more warning sign that will be ignored by almost everyone.
The easy way out is the way the French did it in 1960. Simply say that beginning Jan 1, new dollars will be issued, and that each new dollar is worth 100 old dollars
BINGO. I HAVE SAID THE SAME. we will be getting new USD before trump is done by jan 20, 2029. this is economics and FX trading history 101.
Agree. Old story. Dr. Merklein forecast the repudiation of the $ in 1978. We are a little past his time frame. And Dr. Franz Pick of “PICK’S WORLD CURRENCY REPORT” fame said it best: “the dollar will be wiped out”; and called gov’t bonds: “certificates of guaranteed confiscation”.
At what point of this not happening will you stop pretending like you know what you’re talking about?
If the country splits, as you have predicted, that would be a great excuse to issue new currency.
There will be no county split or new US dollar. The idea is beyond ridiculous.
Well, we just got rid of the penny. I’ve heard talk about the nickel next. If you just creep up you can eventually replace a dollar with a penny.
what the hell does that have to do with a new currency?
In 1960 dollars were physical items (bills/coins).
Today they are essentially digits.
So how could you tell old from new?
Just move the decimal point in your account and place or two.
The French use the Euro. The French Franc is long gone. They can’t devalue the Euro; they’re trapped by the EU.
Isn’t one of the biggest problems within the EU is that all countries use a common currency, the Euro, but issue their own government bonds to finance their activities? I think this manifested itself with the Greek financial crisis over a decade ago. ‘Austerity’ anyone??
That’s why there’s an intrinsic impulse to break apart. To combat that, they need to maintain a common external enemy. So, they gin up false flags like a “Russian drone” ending up at a German airport and cancel Romanian election results on account of purported Russian social media meddling.
Currency redenomination, almost always following hyperinflation. Historically, governments have repeatedly replaced a collapsed currency by issuing a new dollar (or mark, peso, etc.) at ratios like 1:100, 1:1,000, or even 1:1,000,000,000,000. These conversions are not market exchange rates; they are administrative resets after the old currency becomes worthless.
No need.
MBZ and MBS has put all their hundred and hundred of billions in crime family investment funds.
They thought they invested.
Its true on paper. “IOU”. Similar to 40 trillion US debt. Never be paid back.
They don’t know they’re finished.
So stupid.
This is not crime family fault.
Without learning history they trusted too much.
Brent at $116 and climbing. Paging MAGA, paging MAGA, when are gas prices going down? Lol.
It’s Trump turtles all the way down and inflation all the way up!
Criticism is easy. What’s the answer?
Trump will tell you.
https://www.youtube.com/watch?v=rRndMiVIB-w
End the war against Iran.
after that happens, trump will be the QB in the superbowl.
Have to end both wars.
walk. bicycle. not really complicated. this ain’t trading bonds. which i know you understand.
Go back in time and don’t attack Iran.
Send Trump and his family to Iran in shackles.
That would be glorious.
Un-attack Iran. Also, bring those 165 schoolgirls back to life. Not everything has a solution, but in this case the best course would be to walk away from Iran and let them charge their passage fees.
ha ha ha. the answer is walking. we share one auto for the past decade with 6 drivers in our family. the suburban and rural life is one big scam.
I have grocery, pharmacy, and car fix 2 blocks from home. Aging mom 5 miles away. Huge medical complex 1 mile away. In temperate weather zone. Can walk in the woods without touching a car. Not an accident: multi-decade planning and discipline. I am a recession baby, and just expect the worst to happen any day, forever.
Coreweave == Bear Stearns?
the leading edge?
“After the avalanche begins it is too late for the pebbles to vote.”
i was at a bear stearns conference in 2007 summer. i was a trader clearing my trades with them. after 2 days of the managing directors of not answering questions about their offshore mortgage funds melting…….i took elevator at lunch and sold all my bear stearns stock at over 100 USD per share and a structured note bear stearns i owned had underwritten. by spring of 2008 bear went up in flames. i was so glad JPM bought them for pennies. i also had the funny experience of working for lehman bros as a young broker/trader a few decades previously. those were the dumbest traders ever. they refused a bailout by the koreans. if memory serves. those cocky fucks all believed their CEO was a wonderful trader. many of those fellas i grew up with and admitted to me over drinks etc……..over the unfolding years………hubris and stupidity and cockiness is the amerikan modern ego. from farmers to traders to clerks……..crumbling evil empire 101. has happened in past centuries.
That’s back when I said I didn’t need a disclaimer.
We knew the precise “Minskey Moment” of the GFC:
AS I POSTED: Dec 13 2007 06:55 PM |
The Commerce Department said retail sales in Oct 2007 increased by 1.2% over Oct 2006, & up a huge 6.3% from Nov 2006.
10/1/2007,,,,,,,-0.47 * temporary bottom
11/1/2007,,,,,,, 0.14
12/1/2007,,,,,,, 0.44
01/1/2008,,,,,,, 0.59
02/1/2008,,,,,,, 0.45
03/1/2008,,,,,,, 0.06
04/1/2008,,,,,,, 0.04
05/1/2008,,,,,,, 0.09
06/1/2008,,,,,,, 0.20
07/1/2008,,,,,,, 0.32 peak
08/1/2008,,,,,,, 0.15
09/1/2008,,,,,,, 0.00
10/1/2008,,,,,, -0.20 * possible recession
11/1/2008,,,,,, -0.10 * possible recession
12/1/2008,,,,,,, 0.10 * possible recession
RoC trajectory as predicted.
if history is a guide, it’s seems more like the smoot hawley tariffs and the coming great depression…….after the roaring 20s. if we go back further to the 1873 RR panic…..which brought on the worst depression this empire has experienced. of course the civil war was much worse in blood and also economic misery for much of the young nation at the time. my old home town for a decade, charleston SC was in a depression from 1860s to the 1980s…….
I’ve been pointing out the past several weeks about the expected lows for the 40 week and shorter cycles. These cycles have their peaks far to the right, so they are “right translated”. This means longer cycles are strongly to the up side. The next larger cycle is 18 months, which is half complete. The interest rate rally out of the cycle lows will indicate how right translated the 18 month cycle is.
The distributed lag effect of money flows, the volume and velocity of means-of-payment money supply, the proxy for R-gDp, is a little late in falling.
That’s why I said buy bonds after the CPI release. Intraday spreads went to 5.35 and I opted in at 5.31.
But there’s also been a risk-off attitude building.
When retail MMMFs stop growing, this is a signal of peak policy rates.
see the history of tops: https://fred.stlouisfed.org/series/WRMFNS
They are about liquidity preference, t-bills vs. bank cds. Bank CDs and deposits are private‑sector liabilities with credit risk, duration risk, and slower repricing.
When rates are rising, t-bill yields rise faster than bank cds. Thus the public migrates into MMMFs. When rates flatten, MMMFs stop growing.
A guest in a Napolitano podcast said why the restrictions happened:
The rising bond yields were causing the AI companies to freak out about the interest rates their bonds would have to pay.
So they asked Musk/Trump to (pretend to) stop at least one of the wars.
Then Musk put the restrictions on Ukraine. And sure enough, once that happened, the 30 yr yield came down from 5.73 to 5.30 and 10 yr yield came down from 5.35 to 4.95
And now there is no need to pretend that any of the wars is ending anymore.
The risk of an AI collapse is tremendous as revenues are not materializing to cover the investments and committed build out.
Is anyone remotely surprised that computing costs are falling chips improving and huge percentages of the buildout are redundant?
Bubbles burst…
It’s that simple!
The history of the stock market going back at least 50 years has been a series of bubbles.
the only bubble as big or bigger than this current bubble was the 1870s RR bubble, which busted in 1873 and brought about the worst depression that the US has ever seen. hope i’m wrong but i see some real big pain ahead for the world. don’t think one can escape by flying off somewhere.
Unlike RRs in 1873, hyperscalers can simply run screaming for a bailout.
Yes, they will get it, with suitable kickbacks in the form of campaign contributions.
THAT’S so very naive. you don’t think the RR had government bailouts from the beginning of laying down the tracks. do you know how much LAND on either side of the tracks they were gifted by the usg ? ole honest abe even made a bundle with his inside info on where the tracks were going……………imagine Trump and company just giving free land and warehouses to the tech bros today.
Very interesting bond dynamics. I took the opp to sell deep otm calls on TLT to bank profits on the rally. I expect rates to go back up at some point, buy back the calls cheap and live happily ever after. In the meantime, collect qualified dividends at 15% tax rate.
Excellent Post here! Spot on, no politics just good info. Reminds me of old times. Have a great day!
Agree!! TDS gets tiring even if Trump is deranged.
I think Mish has a filter for finance vs politics … have to start using it.
Given current levels of debt (on the books, plus future obligations), I feel it’s obligatory to double quote words like “safe” and “quality”.
Big panic a few weeks ago when we hit the $40T debt level now we are at $40.4T as the pigs in power continue to feed at the trough. We will be bumping up against the debt ceiling likely before next summer. The knives will be out this go round. Trump might get defunded and his precious ballroom leased out for a McDonalds.
Democrats will be solidly in control of both houses by then.
It will be easy to get Trump to increase the ceiling by giving him the money for the ballroom (money for military adventures is already guaranteed since both parties are happy to spend on that since the MIC employs plenty of people in both parties districts).
“the MIC employs plenty of people in both parties districts”
–not by accident, but by design.
Ai made the mistake of suggesting it can be used everywhere by everyone. It can’t. People don’t trust it anymore.
The Sony PlayStation has been reversed engineered so that you can play any game from the PS5 archive on a computer for free thanks to AI reverse engineering the entire library.
Banks are now reporting AI conducting business on their own. Don’t know for what ends, it’s vague.
The infrastructure is quite unsustainable. People are figuring that out. City councils who push data centers through are finding they now have to flee.
Maybe it’s isolated but I don’t think it is any more than housing was isolated in 2008. We just don’t know by how much.
And the best part, no matter how badly AI collapses the orange Jesus will do everything to bail it out at the expense of the country. Inflation will be here for another decade at least.
Why can’t we just say “the Government will do evertyhing to bail out”….Silicon Valley Bank was mentioned in the article, happened in 2023. The Great Financial Crisis was alluded to in the article, happened in 2009. 2000/1 was mentioned in the article. Democrat, Democrat, Republican. Right when I see “Orange Jesus” I just shake my head. I comment all the time I’m okay with a bustup but I’m confident most here would be looking for, in your terms, Orange Jesus to do whatever to hold up their assets and prevent contagion–because as you indicated, it’s NOT isolated. Just as we saw in the Biden Administration, Obama Administration, Bush Administration, Clinton Administration. The assault on the US Taxpayer and the outright theft of the US Treasury has been ongoing. Sadly it looks like end of Empire type stuff. Fiat does that like middle school popcorn seed poker games. Creates such massive dislocation and misallocation of “capital”, where capital was put in double quotes for ya.
I was just happy to see an economic post as I was wondering what may have caused the huge collapse in yields. The dramatic rise in yields followed by the rapid fall are great topics for an economic blog as that was a large and timely round-trip in a short time. Now, which direction will it go next?
Our township, for the first time ever, was forced to take on debt to finish an expensive emergent infrastructure issue. I consider it a sign of the last domino to fall.
The rapid rise and fall in yields is all about fear.
The fear when they rose rapidly was fear of inflation eating away the value of the Gov’t bonds when rates were low. Hence there were not enough buyers of the debt at low yields so higher yields were offered and buyers eventually bought when their fears about inflation eating the bond values were allayed.
The fear when they fell was the fear of corporate debt defaulting (Coreweave and the like mentioned in the article, especially Oracle). The buyers of corporate debt instead shifted to buying Gov’t debt. Once you have more buyers than you need to absorb the Gov’t debt the price begins to fall as some buyers will accept lower yields in order to buy *something* and then the next guy accepts less and so on.
Vast numbers of dominos have been falling for years. Telling the truth insures you can never get elected again.
As if Trump is the only thing that is wrong with this country! Far from it.
Let me tell you, if the donorCRAT Party wins the House and/or the Senate this time, one of the first things they will do is to assure the AI scamsters that the donorCRATs will not do anything to rock the boat because economy, because China, because jobs, because whatever.
Trump is the festering boil on the arse of a country that’s sat on the couch so long it’s got bed sores.
Yes. But I wouldn’t let the donorCRAT bastards get off the hook. They, along with their Republican buddies, created the conditions that gave rise to Trump.
Spiking oil prices, energy sector outperformance coupled with dropping yields is signalling peak economic/biz cycle.