00:00Mark, interesting that stocks are selling off quite as much as they are.
00:03What do you think is the primary driver there?
00:06Because if we look at the European bond market session just opened up here,
00:08we're actually pretty flat on bonds, on yields this morning.
00:11Far cry from Friday, of course.
00:13But what's your assessment of why stocks keep selling off?
00:18So I think that the primary catalyst right now is that now the summit is out of the way
00:23and the reason for the U.S. to play nice on the straight
00:27because they couldn't have that flare-up before the summit,
00:29but otherwise it would get cancelled.
00:30Now that the summit is out of the way, the straight of Hermosa is back in focus.
00:33There's no real solution there.
00:35And we saw bonds kind of price that quite aggressively last week
00:38with the help of some high inflation prints globally.
00:41So bonds have probably kind of already done the kind of panic around that.
00:45I think they may have a little bit more to go.
00:46But essentially you'll see long-term dip buyers in bond market
00:49coming to kind of lock in some of these higher yields perhaps this week.
00:51I think for stocks, you know, in the last couple of weeks,
00:53we've been very bullish into the summit.
00:55And we said that post-summit we expect the folks to turn to the straight
00:58and to be more negative because there's no easy resolution to the straight.
01:01So I think now we're in one of the larger dips that we're going to expect in stocks.
01:06I think that's going to last for the next couple of weeks.
01:08Ultimately, this doesn't derail the larger AI CapEx bubble.
01:11We'll still probably see record high in stocks later on this year.
01:13But I don't think this is a dip that people are going to want to buy quickly.
01:16They might try to buy quickly because we've got massive hurting in stock markets at the moment
01:19because everyone's getting their same advice from AI.
01:22But ultimately, I do think that stocks now have a couple of weeks in pain.
01:26And as we discussed last week, the headline numbers will be very dramatic,
01:29which will get people declaring this is the end of the bubble.
01:31But that's only in context of the extraordinary gains we've seen in recent weeks.
01:37AI is telling everybody to buy AI.
01:39Just kind of feel like the narrative at the moment.
01:42Just back to that CapEx story.
01:44Is there a – if inflation keeps going higher and yields keep going higher,
01:49this stuff is increasingly debt-fueled, the build-out of the AI data status.
01:54Is there a kind of point – is it easy to identify a point where that becomes a problem, that
01:58yield story?
02:01There is a point it's not easy to identify, but I don't think it'll matter.
02:04I think the earnings rug pull will come first.
02:06Ultimately, we're going to have to focus at some point that these companies are all competing
02:09for the same pool of earnings.
02:12And they're all projecting ridiculous earnings that are multiples of the company
02:16that they're supposedly supplying services to.
02:18So ultimately, there's got to be an earnings rug pull at some point.
02:20And a lot of this data spending will seem like a crazy thing, you know, when we look back in
02:25hindsight.
02:26But I don't think we're going to get that yet because it's not happening in this earnings season.
02:28So it's probably at least next earnings season.
02:30As for when the debt matters, I think that's probably later.
02:33And therefore, there'll be a hindsight narrative.
02:37So does that mean – where does that leave NVIDIA?
02:39That's the middle of the week, Mark.
02:40And that does seem to be a focus for some people.
02:44Yeah, so normally, NVIDIA, we see great earnings, beats the expectations,
02:48and then the stock sells off and, you know, sells off for a couple of days.
02:51And then we get back into the AI bubble.
02:53I don't see any really change this time.
02:55I think NVIDIA matters less this time.
02:57It's not going to change the underlying narrative.
02:58The long-term narrative is still good for these AI capex companies.
03:03We're seeing that from this earnings season very clearly.
03:05We don't need NVIDIA.
03:06But I don't think it's going to save the short-term negativity we're going to trade over the next couple
03:09of weeks.
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