AI’s Bear Case is Treasury Yields’ Bull Case #shorts

For the first time in a long time, you go, "Wow, I can get a pretty darn good yield between 5 to 6% on the 10 or the 30-year." And we haven't seen those levels like you hit levels you haven't seen since 2002 in both of those metrics last week. And so, you have now a risk-free alternative, well, theoretically risk-free alternative to stocks, which are, depending on how you're looking at it, if you say market cap to GDP, which is a Warren Buffett favorite, you're at all-time record highs or near those levels. You've got some things that you can say, "Well, you know what? Bonds might be more interesting in here relative to putting money into stocks where I know we're in a bubble. Now, we're just waiting to see when the bubble breaks. I don't think it's for another year, but we'll have to wait and see. Um, but if you believe AI is the most transformational technology we've seen since the internet, then by definition, you have companies over-investing, right? Because if they're the last guys left standing, they'll be the Amazons and Googles and Netflix of the next generation. But you also know what happened in '01 and '02 when the bubble finally broke, and it can break very fast. So, those are the combination of things going on, and debt, the price of that debt is helping fund a lot of this AI build-out. So, the more interest rates go up, you go, "Wow, you know, these companies, and you've got Amazon, Google, Microsoft, the biggest companies in the world borrowing to finance this." If that keeps getting more and more expensive, you may not squeeze those guys out, but the neo clouds that don't have the balance sheets of these big guys, you may start squeezing them out, and on the margin, things start to slow down.