AI Terminator Fears Grow & Rates Breach 4.9% | The Weekly Wrap

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Steve Eisman (1:00)

The Trump administration is issuing multiple and somewhat threatening statements that the Fed should not raise rates. My guess is that these threats will be ignored. The market is projecting a 60 percent chance that the Fed will raise rates at the September meeting. Oracle reported Thursday night. In some ways, it was a very good quarter. Macy's reported. GameStop reported, when it comes to the RoboTaxi business, Elon Musk has a history of overpromising and under delivery. The future of this company depends on the success of the RoboTaxi. Former anthropic researcher warned that artificial intelligence has a realistic chance of causing human extinction by the end of the decade. So I think there's some other shoe that could drop here. So let's get started.

Hi, this is Steve Eisman and welcome to The Weekly Wrap. This is for the week ending Friday, September 11th, but recorded Thursday night, September 10th.

This last Wednesday on our Premium Substack Subscription Service, we posted a great interview with Ed Zitron, creator of the newsletter Where's Your Ed At?

Ed Zitron (2:10)

The hyperscalers are starting to expect real money from AI, entirely from Anthropic and OpenAI spending money on compute. That's why they're still spending all the money on CapEx. They're doing it so they can capture revenue from two companies that they themselves have to keep inflating. This is a catastrophe.

Steve Eisman (2:25)

Ed is a prolific writer and critic of the entire AI ecosystem. Premium Chat is a lively forum. Today, I will reference two relevant comments about Ed Zitron and explain their significance in the AI debate and my opinion on this rapidly evolving and fascinating conversation. This coming Wednesday, September 16th, we will drop on Premium part one of a two-part masterclass on how to analyze banks. I'm providing you with all the tools to understand how banks work, and how to think about large cap, mid cap, and small cap banks and the investment banks as well. Part two will drop two weeks later. This is a shortened post-Labor Day week, and it was mostly a slow week with some earnings that I will comment on. On this week's wrap, we will discuss one, the war in Iran and the 10-year bond. What is Scott Bessent really after with respect to buying treasuries? The Terminator question, will AI destroy us all?

Thoughts on Tesla's RoboTaxi announcement? My thoughts on the feedback from the Ed Zitron interview? Thoughts on OpenAI cutting price?

Qualcomm and Amazon make an arrangement? Oracle reports? Bill Pulte goes after FICO again? Macy's and GameStop report? And one mailbag question about gold versus 5% treasuries? So let's get started. The war in Iran continues with Iran bombing the US and the US retaliating. As a result, oil prices rose well above $100 and the 10-year yield breached 4.8% and then the 4.9% level. 4.9% is the highest level since November 2023

The equity markets, in my view, will not be able to tolerate some level of higher long-term rates. What that level is? No one really knows. Now, I thought 4.5% was the Rubicon, and I'll admit I was wrong. We earn higher now, so the Rubicon is that much closer, but still unknowable. Regardless of the impact on the stock market, the rise in long-term rates is a negative for the real economy. This perhaps explains why last week Treasury Secretary Scott Bessent announced that the Treasury would be buying long-term Treasuries in order to drive rates down. He stated initially that he was setting aside $4 billion to effectuate such purposes. The famous hedge fund manager Stanley Druckenmiller wrote an opinion piece in the Wall Street Journal criticizing Bessent. Moreover, since the announcement, long-term rates are higher, so many are arguing that this plan is already a failure.