alexxmacro retweeted
The next time someone tells you that markets are rational remember that in 2026 pretty much every company simultaneously announced that they were going to borrow a quadrillion dollars to build 420 data centers in six months with chips they didn’t have powered by electricity they couldn’t get from turbines that weren’t built sent through transmission lines that didn’t exist and everybody was like “Cool, cool. Sounds good. Solid plan.”
alexxmacro retweeted
As investors get increasingly nervous about the total amount of AI capex, they're demanding a greater premium to own tech debt. Spreads on tech debt are now the highest relative to those on other investment-grade bonds going back to 2003. h/t @DRBCurtis
alexxmacro retweeted
My main worry about Europe’s public finances fits into one figure from @jburnmurdoch at @FT.
The figure shows that real output per worker has grown more slowly in the EU-27 than in the U.S. (France and Germany look particularly worrisome) and that the gap between the two trends is widening, likely because of AI adoption in the U.S.
Why is this a problem? The large capex requirements of AI point to much higher real interest rates over the next decade. If a country with a debt-to-GDP ratio of 100% must go from financing itself at 2% to 5%, its budget carries an additional burden of 3% of GDP.
Countries that adopt AI massively and enjoy fast productivity growth will, more or less, digest this shock to their budgets. But countries that do not adopt AI (or do it poorly) will not grow fast. In other words, France or Spain might end up with the worst possible combination: high real interest rates because of high worldwide AI capex and low real per capita growth because of low AI adoption due to internal barriers.
Most European countries simply do not have the fiscal space, especially as their populations age, to absorb such an increase in the interest they pay on their debt.
Governments will be tempted to rely on temporary measures (e.g., playing with the maturity structure of the debt) or to cut other spending, such as investment in infrastructure. But we saw tragically last week, with the high-speed train accident in Spain, what a decade or so of neglect of public infrastructure leads to.
The day of reckoning might not be too far in the future. Four years? Five years? Economies are complex systems, so any concrete forecast is foolish. But the fundamental problems are real, and reality always finds a way.
alexxmacro retweeted
Under pressure from Israeli prime minister Benjamin Netanyahu, the Trump administration may be within days of launching a nuclear strike on Iran. The target would be Pickax Mountain in central Iran, where Israeli intelligence claims the Iranian government has restarted its nuclear enrichment program. No conventional weapon in the American arsenal can penetrate 300 feet of solid granite to destroy the tunnels where enrichment is supposedly taking place. The only military option is a nuclear strike. Netanyahu has been pushing hard for one. “Bibi calls Trump about it every day,” says an informed observer.
Netanyahu is cornered and desperate. After last week’s election results, he can’t form a government unless Trump intervenes directly in Israeli politics and brokers a deal with other parties that gives Netanyahu 61 seats in the Knesset. Otherwise, he is out as prime minister and on his way to ignominy, investigations and possibly jail. Netanyahu must stay close to Trump. He needs this war.
To that end, he’s applied maximum pressure to his closest allies in the administration, including Secretary of Defense Pete Hegseth and CENTCOM commander Brad Cooper. Both oppose a negotiated settlement to the war they’ve so grievously mismanaged; both are pushing to restart major combat operations. Secretary of State Marco Rubio and CIA director John Ratcliffe are also following Netanyahu’s lead, as are leaders of the Democratic Party. In a recent meeting on the subject, former president Barack Obama said he opposes the current Iran peace deal being drafted in Doha.
The rest of America’s longtime allies in the Middle East are terrified by the prospect of more war. On September 27th, Netanyahu flew secretly to Abu Dhabi to enlist the UAE in his lobbying effort for a final attack on Iran. The Emiratis refused. After eight months of conflict, Gulf economies are teetering. So are global energy and fertilizer markets. They won’t recover soon. Globally, there are a total of about 850 supertankers used to transport oil from producers to the rest of the world. In October alone, 11 of them were badly damaged in Hormuz. At this pace, a global depression is imminent. A nuclear strike would radically accelerate the destruction. Fallout from a ground explosion at Pickax Mountain would contaminate the Persian Gulf, poisoning the water supply for 100 million people.
And those are just some of the immediate consequences for the region. The rest of the world is every bit as exposed. No country other than the United States has ever used a nuclear weapon in war. Some would like to. An American nuclear attack on Iran would set a new precedent. The Russians have already told at least two other governments that an American nuclear strike on Iran would free them to use nuclear weapons against Ukraine. Pakistan and India would be tempted to do the same against each other, as would North Korea against Seoul. After the first nuclear strike, World War Three is inevitable. That war would be short and final.
We’ve been sleepwalking toward this moment for months. Since February, the administration has quietly rewritten America’s nuclear doctrine to make first use of so-called “battlefield nukes” easier and therefore more likely. No one in Washington in either party seems bothered by this. Now we’re on the brink of it.
Close observers say Trump is likely to decide by next weekend whether or not to use nuclear weapons. That would be November 7, six days from now. To his credit, he’s hesitating. At the moment, Trump is listening to his vice president, JD Vance, and to his envoy and friend Steve Witkoff, both of whom argue a deal with Iran can be made.
They’re right, though it won’t be simple. The Iranians are famously frustrating to negotiate with under any circumstances, and elements of that government have become more radical since Ayatollah Ali Khamenei and his family were killed in February. After decades of isolation, even relatively moderate Iranian leaders seem confused by how decisions are made in the West. (There is a widespread belief in Tehran, for example, that the United States government controls Israel.) But overall, people who have spoken to decision-makers in Iran say there is consensus there that more war is bad for everyone and a deal is worth making.
One group that hasn’t been consulted so far is the global population — the hundreds of millions of people who will be killed along with their children if Trump is pushed by Netanyahu into launching a nuclear strike next week. Now would be the time for them to speak up.
alexxmacro retweeted
Anthropic hoping to get an investment grade bond rating is simply absurd. Any rating agency that might give such a rating should be investigated/shut down immediately.
alexxmacro retweeted
A history lesson in following the "future estimates" from management teams and Wall Street analysts...
From 2010 - 2014, every shale drilling shitco had a slide in their investor presentation showing a future cash flow windfall coming in the next 12 months, and the analyst community dutifully copy/pasted it into their financial models.
There was zero incentive to question these rosy projections, because management teams were cashing in on overinflated stock grants while the sell side "analysts" were helping their investment bank masters shill worthless paper to the investment community
Of course, the cash flow windfall never came, as shalecos continued burning cash drilling more wells until supply overwhelmed demand, prices crashed, and $1 trillion in debt/equity value was wiped out
Your prize for owning the businesses that unleashed the greatest energy revolution in US history was a donut in cases of marginal players, and a decade of lost returns in the absolute best case of owning the top tier operators
alexxmacro retweeted
Every time I hear "10 sigma" event...
BREAKING: Brazil's -19.8% stock market crash on Monday was one of the rarest market events in the last two decades, according to our analysis.
Brazil's EWZ ETF plunged -19.8% on October 26th, marking an 8.4 standard deviation move.
For context, the ETF's average daily move over the last 20 years has been just +0.04%, with a standard deviation of 2.36%.
Under a normal distribution, the probability of a decline this extreme is approximately 1 in 58 quadrillion.
In other words, this event should be virtually impossible under conventional statistical models.
What just happened in Brazil was *almost* impossible.
alexxmacro retweeted
No es admisible que diez meses después de la tragedia de Adamuz no conozcamos todavía las causas, no se hayan depurado responsabilidades y no se hayan tomado medidas para evitar nuevos accidentes en unas vías cada vez más inseguras. Y en menos de un año otro accidente con víctimas mortales. Semejante grado de despreocupación y negligencia hacia los ciudadanos, repito, no es admisible.
alexxmacro retweeted
Selling chips and using the profits to buy Neo cloud, hyperscalers, and frontier model company corporate bonds and equites at bubble market valuations.
alexxmacro retweeted
Everyone who keeps sharing these short interest charts is missing the flows behind them. Most shops are not taking outright short bets. This is another effort to ease margin requirements across the street: banks providing balance sheet for more speculative bets are asking clients to post more short exposure.
The sequence on the street looks like this:
HF manager: “I want more margin.”
Bank: “Things look risky in public AI bets, and we’re already lending a lot against private AI bets. For some clients, we’ll extend more financing, but only if they add more short exposure to improve their collateral scores.”
HF manager: “Okay, I’ll short more stock against my main bet.”
That is how you end up with short exposures that look astronomically high while many end users remain heavily long tech. The additional shorts are supporting the financing of their main bets.
Which also tells the bigger story on why raw equity financing rates haven’t blown out the way they did ahead of the big SpaceX IPO in June, despite the fact that lending is slowing.
alexxmacro retweeted
If you’re a fiduciary putting a 70-year-old’s retirement into the S&P 500, more than 15% of that money now sits in two stocks. Ten years ago? It was 5%. On $1M, that’s $150,000 in Nvidia and Apple alone. The index didn’t just get riskier. Your client’s exposure did.
alexxmacro retweeted
Replying to @michaeljburry
$CAT (AI) is a classic Late Cycle stock..
They r always involved with building out the Credit Cycle’s Bubbles…In 2007 Power Gen (Solar Turbines et al) built out the Global/Chinese Property + Global Shipping Bubble …this time Power Gen building out the Data Center Bubble…
I’ve covered $CAT equity forever in a past life…
… There is no way this stock should be trading at $1,000+ at 45x…. coz of the AI Data Center Power Bubble.
It’s even worse than the China Commodities Bubble inflated CAT to crazy levels in 2007.
alexxmacro retweeted
Ken Griffin calling AI a bubble so he can liquidate Leopold for a second time
alexxmacro retweeted
Anyone who compares "inflation" today with 1970s has no idea what happened in the 70s, what inflation really is or where it comes from. People keep sharing a chart that shows the CPI back then to one today showing another big spike looming just like late 70s.
Here's the chart they never show you (because they don't have a clue):
alexxmacro retweeted
Lots of hot takes on $CRWV's bonds lately. Most of them are either wrong or focused on the wrong things.
Here are the 8 biggest misconceptions about CoreWeave’s credit:
junkbondinvestor.com/p/corew…









































