Archive link: https://archive.ph/xTfD2
The commentary on September 29 by Morgan Stanley Wealth Management’s chief investment officer, Lisa Shalett, frames the current market boom as a “one-note narrative” almost entirely dependent on massive capital expenditures in generative AI, raising questions about its durability as economic and competitive risks start to mount. Shalett’s critique came squarely in the middle of some people in the AI field — and many financial commentators around Wall Street —fretting at market exuberance and beginning to talk openly about a bubble.
In an interview with Fortune, Shalett said she was “very concerned” about this theme in markets, saying her office had broadened from a belief that the market would only bid up seven or 10 stocks to roughly 40. “At the end of the day … this is not going to be pretty” if and when the generative AI capital expenditure story falters, she said.
What’s more than a little concerning to Shalett is that one company alone, Nvidia—the most valuable company in the history of the world, with an over $4.5 trillion market cap—is at the center of a significant number of these deals. In September alone, Nvidia invested $100 billion in OpenAI in a massive deal, just days after pledging $5 billion to Intel (the Intel agreement was tied to chips, not data-center infrastructure, per se).
Fortune‘s Jeremy Kahn reported in late September on significant concerns about “circular” financing, or Nvidia’s cash essentially being recycled throughout the AI industry. Shalett sees this as a major concern and a major sign that the business cycle is headed toward some kind of endgame. “The guy at the epicenter, Nvidia, is basically starting to do what all ultimate bad actors do in the final inning, which is extending financing, they’re buying their investors.”
Now imagine a stock market crash and the government in shut down. So no stimulus for anybody.
now imagine billionaires imagining this years before you imagined it.
There is a reason they buy bunkers in New Zealand.
We’ve been down this road not long ago. The great recession lasted longer than any government shutdown.
The top 1% know they have to keep the top ~20% to ~30% placated. Otherwise they join the working class in protest. They just have to bail out the “too big to fail” companies so the upper class can make a living. The working class is fucked no matter what.
That’s reason the status quo has remained these past several years. That upper class is still comfortable enough. So far they’re only inconvenienced enough to vent on social media. No so much that they will take actionable steps toward change.