Greece(Fellow of Athenaeum)

🔴The AI bubble is now larger than almost every market bubble in history: The 'AI Big 10', comprising the Magnificent 7 plus Broadcom, AMD, and Micron, now accounts for a record 40% of total US stock market capitalization. This matches the peak concentration of the Nifty Fifty bubble of the 1970s and the 2000 Dot-Com Bubble. Including the upcoming mega IPOs of OpenAI, Anthropic, and SpaceX, AI-related market concentration would surge to ~48%, surpassing every major bubble on record. The only bubble in history with greater concentration was the Railroad bubble of the 1880s, which peaked at 63%. Is the AI bubble near its end, or is there further room to run?

Shocking stat of the day: Annual interest expense on US public debt could rise to as much as 30% of government revenue by 2036, an all-time high. This would occur if the 10Y Treasury yield averages 4.70% over the next decade, or ~55 basis points above the current projection of the Congressional Budget Office. This means nearly 1 out of every 3 dollars of government revenue would go toward servicing debt, TRIPLE the level seen in 2022. Under this same scenario, net interest costs as a % of GDP would rise to a record 5.3% by 2036, DOUBLE the levels seen in 2023. Meanwhile, the 10Y Treasury yield briefly touched 4.68% on Tuesday before easing to 4.56% on Friday. The US government needs lower rates more than anyone.

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