Corporate America be like: “Congratulations on celebrating 4 years with *company name* Click below to visit our Firmwide Employee Recognition Portal and claim your complimentary company-branded merchandise gift.” *Clicks below* “Our records indicate that you have failed a recent company-administered phishing simulation. In accordance with the Company’s Information Security Policy, you are required to complete the mandatory Phishing Awareness and Remediation Training by Friday, October 30th.”

Lately, the 10Y is *seemingly* being driven by AI CapEx expectations. SOXX is the proxy. 87% correlation over training 9-weeks. P-value = 0.003. The deepest and most liquid market in the World is *seemingly* confirming what the equities are screaming. CapEx will fall short of prior expectations. Correlation ≠ Causation

Don’t overthink it. Hyperscaler and AI CapEx stocks are dumping because the assumption that there will be unlimited cheap debt to fund the AI buildout is proving false. Only two ways around it: 1) Cut the CapEx 2) Fund it with equity And both result in lower EPS. Welcome to your first commodity cycle, Muse bros.

I’ll stay short as long as this card keeps getting pulled

The question is… will hyperscalers fill the neocloud CapEx void? Current hyperscaler CapEx expectations are $1.1T for 2027, $400B of which is to be funded with debt. Debt investors are already balking at that prospect, evidenced by wider hyperscaler spreads despite no issuance since Aug 7. What do you think spreads will do when issuance resumes in earnest in 2027 and if the bogey climbs to $470B+? Debt investors understand hyperscaler leverage is way higher than what’s stated when you contemplate OBS commitments. Couple that with dubious ROIs on incremental capacity and spreads will go much wider with issuance. Maybe hyperscalers will borrow regardless, after all it’s a religion to these folks and they view the buildout as existential, but they would likely sacrifice their stock price in the process. The jig is up.