00:00Yesterday, we had a conversation, Mark, about how you were turning increasingly bearish.
00:03Well, I guess you must be feeling pretty vindicated this morning with the price action overnight.
00:10Good morning. Well, it's very short term, and this is a market where the instinct to buy the dip is
00:15extremely strong.
00:16At least in the short term, yes, it has gone in the right direction from yesterday.
00:20I think some important context here is that my narrative over the past year is that we're, you know, in
00:25an incredible AI CapEx bubble.
00:28But we're in the inflation stage of that bubble. When you find a bubble, you hop on board.
00:31Now, there's been periods where I've been tactically bearish around that.
00:34In March, I was tactically bearish because I thought the war was underpriced.
00:37I thought it was you get back in the AI bubble once we were trading the ceasefire theme.
00:41Two weeks ago, after the Trump-Xi summit, I said that was the time, I think, to turn tactically bearish
00:47again.
00:48Now, that's not worked out, that last leg.
00:50And that's one of the things that I'm finding a bit a little bit more, you know, why I'm getting
00:54increasingly more bearish about the whole AI bubble.
00:57Because in the last two weeks, we've seen a more negative narrative around the straight.
01:03We're seeing increasing economic damage every day. We're still not seeing the straight open.
01:07We're still not seeing energy flow freely.
01:09We're still seeing the more entrenched damage from the supply chain disruption.
01:14And yet the AI meme stocks continue to just go absolutely crazy.
01:18And it's because of that wider connect that I started to feel that, in fact, the AI bubble may not
01:23go on to the next earnings season, at least, which was my narrative up until yesterday.
01:27But, in fact, we may be actually kind of seeing the popping around now.
01:30So that's kind of the new narrative that I'm trying to address in this week.
01:33The short-term price action helps a little bit.
01:36But it's, you know, the instinct to buy the dip is strong.
01:41Do you think they, Mark, it's interesting, isn't it?
01:43I mean, do you think, do you think, it sounds like you're cautious, you think maybe the dip buyers do
01:47come in at this point and take advantage once again?
01:52And maybe that tactical view of yours gets derailed by that?
01:58I hope so that the dip buyers come in.
02:01I just think that they must be almost out of momentum.
02:04You look at almost any way to value anything.
02:06You look at the IPOs we've got this here from SpaceX and OpenAI.
02:09You just look at the earnings projections.
02:11Everything is priced to extreme.
02:13So, of course, the dip buyers are going to come in.
02:15The problem is I just think that real economics is going to squeeze them.
02:19And the dynamic is now is that so much of the real economy actually depends on the wealth effect from
02:24this kind of booming stock market.
02:25So the reason I'm kind of transitioning from, you know, the two weeks ago kind of tactically a little bit
02:31more negative on markets,
02:32but thinking you'd ultimately buy this dip to not be convinced you buy the dip is that I think the
02:36conditions are now ripe for a negative spiral to start
02:40because the economy is only holding up in this K-shaped economy because enough consumers have a positive wealth effect
02:48from the stock market booming.
02:49The stock market starts suffering.
02:51Then they start consuming less.
02:52The economic damage gets worse.
02:54That means we start trading that negative economic narrative a little bit more aggressively in the stock market.
02:58So I now think we're getting close to that tipping point where we can start a negative spiral.
03:04I guess I'm still on the fence of this is the, you know, this is really the top.
03:08But I'm now suddenly leaning that way as of yesterday when I wasn't before.
03:11I'm still on the fence.
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