il10gic

1/n) When easy monetary policy is perpetualized, as a primary means to stimulate economy, there are three problems: 1) conventional policy is zero bound 2) unconventional policy is less and less effective and is not of infinite space either 3) hides/worsens structural problems

I'm sure QE can solve these problems 🤣

this chart is incredible as the ratio is unprecedentedly low. one can argue that the denomitor, i.e. market cap, is too high, or that businesses are so under-leveraged, so debt issue is so remote.

🚨 MICHAEL BURRY JUST WARNED THE ENTIRE AI BOOM MAY BE BUILT ON TEMPORARY DEMAND. He published a post today calling Nvidia "the North Star, Orion, the whole Milky Way" and explaining why that makes it the most dangerous stock in the market right now. His core argument is: Nvidia is selling into a concentrated group of buyers Microsoft, Google, Amazon, Meta who are all racing to buy chips not because they need them for real revenue generating products right now, but because they are in a training and benchmarking phase that will not last forever. Hyperscalers currently account for approximately 50% of all Nvidia data center revenue. When the training phase ends and these companies shift from building AI to deploying it, the demand profile changes completely. Burry calls this the "bullwhip effect." When the buyers at the end of a supply chain over order because they are afraid of missing out, the distortion amplifies all the way back through the chain. Nvidia sees record demand. Nvidia locks in massive custom supply commitments. Data center financing expands to accommodate the buildout. Everyone bets the demand is permanent. Nvidia just reported $81.6 billion in quarterly revenue, up 85% year over year. Data center revenue alone was $75.2 billion, up 92%. The numbers are real but the question Burry is asking is whether the demand behind those numbers is structural or temporary. He calls it the "bezzle." A term coined by economist John Kenneth Galbraith to describe the gap between what people think they own and what actually exists. In a bezzle, the money feels real, the assets feel real, and everything looks fine until the moment it does not. Historically the semiconductor industry is highly cyclical. The persistent fear among analysts is that the current build out phase of AI will eventually lead to oversupply of computing power and when that happens the whiplash into Nvidia's revenue could be severe. Burry has been wrong on timing before. He called the market a sell in 2023 and it went up 131% since then. But the 2008 mortgage crisis he predicted also looked like a timing mistake for two years before it was not. The difference this time is that he is not just making a macro call. He is pointing to a specific mechanism, concentrated buyers, a temporary demand phase, and custom supply commitments that create obligations on both sides and saying the math only works until the training phase ends. Nvidia trades at 33 times forward earnings on $81 billion in quarterly revenue. If hyperscaler capex slows even 20%, that math changes very fast.

You've got to watch this full video on the SpaceX IPO 🤣 Is this the top?

Seems like the situation will remain the same in a couple months, or several months, down the road.

Tomorrow, who knows... But one thing is more certain, there isn't a quick solution available politically and militarily.

@agnostoxxx Golden Age of Grift!

Intriguing title: "Former FTX Executive Launches a ‘No Loss’ AI Trading Platform" Wait, it gets better: "launching a product where the savviest investors can turn a profit — even while putting zero capital at stake" And the name of the platform is Chef's Kiss: "UpsideOnly" 🤣

The US issues its 3rd "temporary" waiver on Russian oil sanctions. What's the collective noun for a group of consecutive "temporary" OFAC general licenses?

@EpsilonTheory The fact that people even asked this kind of questions shows that this country is increasingly hopeless. Too many have no idea what has really been happened. Sigh!

Yes, same, yes.

Tesla robotaxi are driven by remote operators, terrific. Should I feel safer now? LOL. Is this reported/revealed in financial statements?

For global food prices, this is the most important map for the next 45 days: the onset of the South-West Asian monsoon amid an El Niño (and so far, it’s arriving to the Bay of Bengal on time, even a bit earlier than normal). Still a long way until it fully covers all India.

"While we think that AI is in a bubble, we emphasise that it is probably too soon to sell tech stocks, since this phase can last another 1-2 years." research.panmureliberum.com/view/FD91B03A-…

AI retrieved Bitcoin whose owner lost password. Sure this is bullish for AI. But shouldn't this news be bearish for Bitcoin, as AI can crack the password? tomshardware.com/tech-industry/…

@EpsilonTheory But it's all Obama's fault, right? 🤣

The Iran War is our Sicilian Expedition and the Strait of Hormuz is our Syracuse.

@AnnaEconomist "hope" is not a strategy, nor a policy.

Everytime I read Arthur Burns' "Anguish of Central Banking" I find another terrifying new parallel to today/last few years. Let's hope AI will do its deflationary thing, otherwise it's already probably too late.

@ttmygh BTW, why am I seeing this?

@ttmygh I don't believe the stat, exaggerated too much.

This blows my mind (assuming it’s legit)