Gareth Soloway Reveals the BRUTAL Next Phase of This Meltdown!

Ran (0:00)

It's been a brutal 24 hours if you've been an AI investor. This is the chart of the CUSPY. The CUSPY's had circus breakers for the last two days, both days 8% down and 9% down. The NASDAQ also got really, really, really hard hit in the last couple of days, specifically because inflation is going up, and therefore, yields are going up, and because yields are going up, the AI bubble is basically starting to slow, and it's causing a lot of turbulence in the markets. The big question is whether we are in the beginning of the collapse of the AI bubble, or whether we're more towards the end. And the reason why I say that is because it's been happening for a while. It's not saying that that basically just started. In fact, if you look at these numbers over here, which I showed on my earlier show today, but just look at these numbers, how high the AI stocks have come from their all time highs. Like you've got, this is the basic list, but you can see some of them were like 90%, 85% down. As I mentioned to you, probably the best measure is the Cospi, because the Cospi is basically two stocks. It's a Samsung and SK Hynix. And if you look at where the Korean stock market is, which is a highly leveraged market of particularly AI stocks, it's about 40% down. So question is, where are we in this AI collapse? And that's why I thought I'd bring Gareth Soloway on. Gareth, how are you, my friend?

Gareth Soloway (1:15)

I'm doing great. How are you doing?

Ran (1:17)

I'm doing very well. I'm nursing my collarbone, which is getting better every single day, every single day. And at this rate, with a...

I mean, I went to the doctor the other day, and the doctor said to me, you know, your bone's not healing as quickly as I thought it would. And I said, I said, why? I wonder why? And he said, tell me what you've been doing for the last two weeks. I was like, look, doctor, I've been in Singapore, I've been on stage, I've been doing interviews, I went partying, it's like, that kind of makes sense.

Gareth Soloway (1:41)

Yup, yup, you're supposed to rest and you're not resting.

Ran (1:44)

I know, I know, I know. Okay, mom, I get it. Thanks, mom. You're my mom, I'll just say.

Gareth, I wonder if you can take me straight to the charts and you can show me whether you think we're in the beginning of the collapse of AI or like, how do you see this? And the reason why I say that is, I think maybe let's talk about the thesis first. The inflation numbers came out hotter than expected. The PPI came out hotter than expected. I guess that then the yields spiked and that may be sent a scare down the AI infrastructure spend because these guys are debt-funding a lot of the AI infrastructure spend. So if yields go up, the cost of debt goes up and that basically deflates the bubble, right?

Gareth Soloway (2:29)

That's right.

And really, that's what we're seeing is that the AI trade is so leveraged, right? I mean, it's like a Bitcoin long 300X where if rates go up too much, all of a sudden the whole thing gets liquidated, right? It all comes crashing down. And we saw this with CoreWeave just the other day where their debt, their credit default swaps, which is essentially the interest rate on their debt in the future, was at a 15% interest rate. And again, if you're borrowing $100 billion as a company and you're going to have to pay 15%, I mean, these are numbers that it just the math doesn't work. And so ultimately, there's this big scare going through. And what's fascinating is that yields after the initial CPI jump, right? So CPI came out hotter than expected, yields surged, and then they went negative on the day, and today are getting crushed. And people are confused because PPI was even hotter inflation-wise than the CPI. So why are yields falling? And the answer is that the fear is a financial catastrophe that is going to essentially send the economy into a tailspin and a recession. And then rates, we know rates tend to go down in a recession, but that's not good for the market.

Ran (3:41)

So that's the 10-year yield yesterday. As the inflation numbers came out, the 10-year spiked, and then it started to come down. And today, as you say, yields are crashing. So slowly walk me through why yields are crashing.

What is the market pricing in?