AI's World-Changing Breakthroughs, Bond Market Mayhem & US-China Power Moves | The Tom Bilyeu Show

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Tom Bilyeu (0:30)

Let's talk about the moment your side hustle becomes a real business. Now I see way too many founders stay stuck running their business like it's a hobby. And then they wonder why nothing ever feels real. It doesn't feel real because it's not. I've helped thousands of entrepreneurs build real businesses through Impact Theory University. And the first step in the path to building a legit business is registering it. And Tailor Brands will help you do just that in a few clicks. An LLC, a Limited Liability Company, is an official business structure. It's inexpensive to form and very simple to maintain. It's how you open a business bank account. It's how customers know they're dealing with a real company. And Tailor Brands doesn't stop at the filing. Their dashboard tracks what comes next based on what your business actually needs. So EIN number, registered agent, licenses and permits, bookkeeping, business banking. I tell every founder the same thing. Just make it official. Click the link in the show notes to check out Tailor Brands and get started on your business today. This is a paid advertisement. Good morning, everybody. Welcome to another episode of the Tom Bilyeu Show Live. It's Friday and the world is not waiting around for anybody. If you guys are paying attention to the markets, boy, oh boy, they've been quite the roller coaster ride. The bond situation is getting completely unhinged. The 10 year is basically a straight line up, hitting numbers that we haven't seen in nearly two decades. In some cases, more than two decades. If you were hoping for protection from Skynet, it ain't coming despite whistleblower concerns. The US and China, literally Trump and Xi, I just imagine them holding hands saying, we're not changing anything about AI. We're gonna keep developing it at breakneck speed.

Now the race to AI supremacy itself is just getting truly bizarre. Sam and Dario pled with the UN to protect the world from, get ready for it, Sam and Dario. Nvidia's Jensen Huang is not having any of that and he did a press tour slapping the do-mers around, calling them irresponsible. And speaking of irresponsible, Oracle's stock price plummeted on news that their latest Debt Monster AI Center got delayed due to an inability to get gas, reminding all of us exactly how precarious all of the AI debt based build out really is and your whole economy is teetering on it. But the debt really is buying something absolutely extraordinary. This is where I feel schizophrenic when I talk about AI, but AI has made yet another potentially game changing medical discovery. We're going to be talking about that. It is very exciting. It's all promised right now. We don't know exactly what it's going to become, but when you hear about it, you're going to realize this is a very thrilling moment.

Now, what isn't thrilling is that since the war started, the bond situation really has gotten completely unhinged. The 10-year yield is going parabolic. It's hitting numbers that we have not seen in nearly two decades. The 10-year closed at 5.22% yesterday. I don't know if you can pull up the graph. When you see the graph and you see that it literally is just a straight line up if you clock it since when the war started, it's pretty unnerving. Now, the last time that we were at 5.22% on the 10-year, my wife was literally sleeping on the pavement to get a brand new device called the iPhone. And of course, a little catastrophe called the Great Financial Crisis was looming on the horizon. Could the two be related? Not the iPhone, but the 5.22% rates.

That is what we were about to find out. Now, the 10-year unfortunately for all of us is not the only problem. The 30-year hit 5.5%. Now, you would expect there to be an additional premium, but the fact that it's rising is what all eyes should be on. And that 5.5% for the 30-year is also a level that we haven't seen in a very long time. And this is a big part of the reason. When you look at what that does to mortgage rates now being over 7%, this is exactly how you end up with the frozen housing market, which is essentially what we have right now. And given how important the housing market is to the general economy, you begin to understand how if AI doesn't pay off, man, you don't have a lot of other bets going on right now. And so the last time that we saw a 30 year this high, we have to go all the way back to 2004 So we are literally talking about more than two decades ago. Now this past Wednesday was the biggest single day jump in the 10 years since the tariff madness of April of 25 So it's not unprecedented, but it takes some pretty big things to see a jump that big. So it certainly is something to pay attention to. But the real question, if you're looking at the graph and you're seeing it go vertical, you're seeing these big jumps, the real question is why? What is driving this? Now, obviously the war in Iran and Ukraine's increasing ability to strike Russia's oil infrastructure, do not discount that. Those are contributing massively. Oil is back above $103. Diesel has just set a record. Man, diesel is really the one to start paying attention to here in the near term, given all of the knock-on effects that that's going to have with manufacturing, with food. There are going to be a lot of things that are downstream to that, and that one is really racing away. Now, global disruptions are also contributing to inflation. Now, we don't have any updated inflation numbers, but August inflation came in at 3.4 percent, and Wednesday's survey of corporate purchasing managers, this is something that the industry basically uses to say, okay, we don't have the official inflation numbers, but what are we expecting them to be? Because basically, a purchasing managers are telling you that everything is getting more expensive, then the likelihood that that is going to some percentage be passed on to the consumer is effectively 100 percent. There are no guarantees, but businesses are not going to be able to absorb all of this, and what their business activity is showing is a five-year high. So, with the prices the companies are paying for stuff rising at the fastest pace in four years, it's another brick in the wall of, uh-oh, we've got a fundamental problem here that is beginning to shake literally the foundations that everything rests on. That 10-year number, and if you guys are anything like me, for a huge swath of your life, you probably didn't even pay attention to the rates of the bond market. You may not have understood how important all other pricing is basically coming off of that 10-year, and so anything that is adding bricks to that wall of that continuing to climb higher, that's undermining the overall stability of that, then you realize that as that number starts hitting records, it starts being something that we haven't seen in decades, then you're in for the kind of pain and suffering that we haven't seen in a while. And unfortunately, when you look back at what was going on in the Silicon Valley Bank when that imploded, that was basically a very similar set up to what we're seeing right now.