AI Market Outlook: The podcast discusses whether the current AI boom is a bubble or a new secular trend, comparing it to the dot-com era and highlighting Nvidia's significant market impact.
Energy Consumption Concerns: AI's energy demands are projected to increase significantly, potentially causing societal backlash as data centers consume a larger share of electricity, raising energy prices near these centers.
Investment Risks: The AI sector's financial sustainability is questioned, with companies like OpenAI having high valuations but unclear profitability, relying heavily on Nvidia and TSMC for hardware.
Market Dynamics: The discussion highlights the concentration of Nvidia's revenue among a few key customers, primarily Taiwanese companies, and the potential geopolitical risks associated with this dependency.
Capex and Financing: The podcast explores the massive capital expenditures by tech giants on AI infrastructure, questioning the long-term viability of financing these through advertising and cloud services.
Social Implications: AI's impact on employment and skill requirements is debated, with concerns about AI making jobs more accessible but potentially reducing the need for higher education and specialized skills.
Regulatory Challenges: The potential for increased regulation is discussed, particularly concerning digital ID requirements for AI use, which could impact user privacy and accessibility.
Transcript
[Music] This is Macrovoices, the free weekly financial podcast targeting professional finance, high- netw worth individuals, family offices, and other sophisticated investors. Macrovoices is all about the brightest minds in the world of finance and macroeconomics telling it like it is. Bullish or bearish, no holds barred. Now, here are your hosts, Eric Townsend and Patrick Szna. Macrovoic's episode 501 was produced on October 9th, 2025. I'm Eric Townsend. Lyn Alden took first place in our top five macro guest countdown, concluded with last week's episode number 500. But guess who actually beat Lynn for the single episode download count title? That's right, it's freelancer.com founder and CEO Matt Barry, whose interviews on artificial intelligence have all been listener favorites. Matt and I will discuss all things AI in this week's feature interview. Is it a bubble about to burst or a new secular trend that's just getting started and will soon be bigger than the internet itself? And what happens when the masses start to revolt after hyperscalers consume all the new electric generation capacity that we can possibly bring online? in the next decade or two. That's all coming up in this week's feature interview. Folks, I've been traveling internationally all week and I have to confess I'm not quite as in tune with markets as usual. So, I'm going to defer to Patrick for most of this week's postgame segment. And don't worry, he's going to have plenty of charts for you. And we'll also have the new listener favorite trade of the week segment right after the feature interview with Matt Barry. and I'm Patrick Sesna with the macro scoreboard week overweek as of the close of Wednesday, October 8th, 2025. The S&P 500 index up 63 basis points trading at 6753. It continues its relentless rise. We'll take a closer look at that chart and the key technical levels to watch in the postgame segment. The US dollar index up 115 basis points trading at 98.82 82 breaking out above key levels, begging the question if the US dollar is setting up for a squeeze higher. The November WTI crude oil contract up 125 basis points, trading to 6255, bounced this week, but has a number of key technical hurdles ahead. The November arb gasoline up 106 basis points, trading at 191. The December gold contract up 444 basis points to 4,070. Gold cleared that 4,000 mark for the first time. The December copper contract up 430 basis points to 509, back above $5. And uranium down 650 basis points, trading to 7765. The US 10-year Treasury yield is up three basis points, trading at 413. And the key news to watch next week is the CPI and PPI inflation numbers as well as watching the ongoing government shutdown and its impacts on the release of key economic data. This week's feature interview guest is freelancer.com founder and CEO Matt Barry. Eric and Matt discuss the future of AI, the AI energy consumption challenges, market dynamics, and AI regulations. Eric's interview with Matt Barry is coming up as macrovoices continues right here at macrovoices.com. [Music] And now with this week's special guest, here's your host, Eric Townsend. Joining me now is freelancer.com CEO Matt Barry. Really interesting story, folks, how this one came together. We were trying to figure out who the top five macro guests were. You already know about the countdown. You know Lyn Alden was the big winner. Okay, believe it or not, those were just the macro guests. The number one all-time download champion episode of Macrovoices was actually a Matt Berry AI interview. And the thing that's really striking to me is people like Luke Groman and Lyn Alden spent half of their careers building their following and promoting themselves and so forth. Matt's not even a guy who promotes himself, yet he's done more downloads in a single episode than any of our guests that do. And it has to be this amazing topic of artificial intelligence. Matt, anytime something like this happens, you know, public internet AI, it leads instantly to the obvious debate. Okay. Is this a bubble that's about to burst or are we just getting started or you know where are we in this story and and how should we think about it? Is are we coming up on the.com bust or are we just getting started? Well, if you think back to the dot days and there are a lot of parallels between then and now. Cisco got to half a trillion dollar market cap which is about 5% of US GDP. And if you thought that is a bubble, what do you think about Nvidia at $4.5 trillion market cap and 15% of US GDP? It's become an absolute behemoth. about 7 to 8% of the S&P 500 market valuation. They talk about 6 or 7% of of revenue of the S&P 500. It is an incredibly profitable business. It does about $160 billion a year of revenue and about 100 billion of EBIT, which is insane. It is built upon a a very interesting foundation. the released in the latest financials that the top two customers of Nvidia generate around 40% of the revenue and the next four customers uh generate another 40% of revenue and it's believed to be that the top customer is Foxcon and the second top customer is Quanta and these are two Taiwanese manufacturers of boxes that put Nvidia chips in them and number three is another Taiwanese company called Wistron and below that you know so your Dells and your super micros so you've got an incredible customer concentration the top six customers, top three being from Taiwan, but the top six customers are about 80% of the revenue and top three customers are 50% of the revenue. And then you look at their the product segments that Nvidia produces, I mean 80 88% of their revenue is currently coming from data centers. So it's it's kind of interesting and and and then you know out of out of the hundred billion dollars of EBIT the biggest supplier to Nvidia is TSMC which has got just like Nvidia's got 60% concentration of the semiconductor market TSMC's got 70% capture of the of the foundry market and so you've got this incredible revenue story incredible revenue growth that's all been on the back of data centers that's all concentrated into six customers of which three are in Taiwan and really the Nvidia story which is really holding up the entire market is built upon a fault line, one island, three customers, one foundry, and a prayer that the geopolitics that uh shakes Taiwan is is less than the geo physics underneath the ground. So, it's it's a pretty interesting thing to look at. And if you look at that, so you look at that revenue number of $160 billion a year, which is about $40 billion a quarter. The entire AI compute space, so we're talking open AI, we're talking midjourney, we're talking anthropic, etc. that entire AI compute segment in its totality is less than $40 billion of revenue a year and every single one of those companies is losing money. The entire ecosystem is really built around Nvidia and a whole Taiwan story underneath it. So the more you dig into these numbers, which we'll do in a second, I'm sure, the more uh the crazier the whole thing gets and and that's in the backdrop of a pretty frothy overheated market. I mean over 10 times um that's already past the.com peak which was about 25% and and back in the.com days revenue growth was was about twice as high as about 20% year on year. That's where we are. Um and it's it's kind of it's kind of interesting with that basis of where we are today of what the projections are for tomorrow. Matt, this industry has already spent an incredible amount of capex. It seems like the interest in it is unlimited. There's probably unlimited capital that wants to chase this. Wait a minute. you're going to run out of energy at some point. We'll come back to that later in the interview. Is capex unlimited? Does it limited by energy? Is it limited by something else? When does this stop? Well, obviously there's an incredible amount of money being spent, not just on video, but in the capex to build the data centers to put the machines that have Nvidia chips in them. Einhorn came out this week from Greenlight and said this could be the biggest bonfire of of money since the the dotcom boom. Yeah, if you look at if you look at the amount of money that the big sort of hyperscalers are spending, I mean the likes of Microsoft and Google are spending at the moment around 50% of earnings on their capex and um you know the the um Metas and the the Oracles and the Amazons are projected at the moment to spend about 70% of their earnings on capex with next year potentially up to 1.3 times their earnings. So if you think about the.com boom and you think about all the telco boom and bust that happened there and the optical fiber boom and bust that happened there you know at at its peak AT&T uh when it was you know dominating the market and it had about I think it was about a 60% market share back then of of telecoms it was spending at its peak about 72% of its earnings on capex and you know Exxon was spending about 65% of its earnings on capex and the shaw boom uh and kind of the peak of of capex so we're really reaching the point of of capex to earnings that hasn't been really paralleled since, you know, the the railroads were laid across America. And those numbers are getting to pretty insane predictions. I mean, I think Alman came out just recently and and I think um Jensen's kind of backing them up on up on this that they plan on spending by 2030 7 trillion on capex. Now, if this sounds like a big number, it is. That's about onethird of the M2 money supply in the US. And how are they going to finance that? I mean a a lot of in fact possibly most of the capex is being financed by ads. So what are you going to do? You're going to finance $7 trillion of capex on banner ads. The advertising market is kind of interesting to look at. In the last 100 years, advertising as a percentage of US GDP has never really changed from about a 2% level. Uh the composition of advertising in that spend has changed. So digital advertising now is is the line share. That's about 70 75% of advertising spend. But you know in the US it's 2% of GDP. In Australia for example it's 2% of GDP. I mean worldwide it's about 1% of GDP. But in the rest of the world you don't really have a strong consumer market like you do in the US and so forth and western economies. So there's pretty limited ability for Meta and Google and so forth to increase I think their advertising. I don't think that increasing more ads in the feed or placing more banner ads on the page is going to be able to sustain a everinccreasing exponentially growing capex spend. And if it's not ads that's sning this capex spend, it's cloud. And so, you know, you've got three major players in cloud. You've got um you AWS, you've got Microsoft Azure. And I was very surprised actually to see that in the last quarter, Microsoft's actually have taken Amazon um in terms of in terms of the revenue. It's about I think $47 billion in the quarter versus um AWS is 29 billion. And then third place, you've got Google Cloud. And you know, for a long time, there were there were pretty decent margins. But now with you know the AI you know sort of capex boom those margins are eroding quite dramatically as the capex spends ramping through the roof and you've got now um fourth and fifth players coming into the market. So you've got Oracle now trying to enter the market and they're trying to do it on price. So they're saying they're going to undercut um you know the cost by about 40%. And then behind that you've got sort of corewave and the and the neo clouds coming in and and if you reflect back on the dotcom days um you AT&T had one analyst I think said you know better better profit margins and and drug dealing you know when when it was just three players in the market and they had 60% market share you know and again you know that's kind of the market share that Microsoft has in software and that's the market share that Nvidia has in AI and it's the market share that TSMC has in foundaries and now you look back at the telecoms boom when the fourth player and the fifth players came in you know all the econom omics just fell apart because of the capex. So, you know, you've got that dynamic happening now in the in the market for AI data center buildout. And the funny thing behind all of this, it's the demand isn't there, you know, they're all building this out a ahead of time. And if the if the money is not coming from banner ads and it's not coming from cloud, it's coming from VCs. So, you've got huge amounts of money slloshing to the space, the numbers are absolutely astronomical. You know, Nvidia, I I said they're doing a 160 billion a year in in in revenue and the the rest of the AI compute space is making less than 40 billion in in totality and and losing money. Well, each of these big hyperscalers, they're spending, you know, anticipated to spend next year, you know, hundred billion plus or minus 20 billion on capex alone and they're not even doing that in revenue. I mean, AWS at the moment is doing about 110 billion a year in revenue and that's going to be spent in its entirety next year on capex just just by each of the hyperscalers. So these numbers are astronomical. I mean in the back in the dotcom days at least when you had that boom the software market generated around 300 billion of revenue in its totality and employed about a million people. I mean this AI boom is generating what 20 30 billion a year in revenue. It's hard to tell because all the companies are private. Uh losing money and not employing anywhere near as that that level. And in fact if anything they're saying we're going to take everyone's jobs away uh and create unemployment. So, you know, the numbers are very fantastical and the more you dig into that, the more you dig into just how big those numbers are. I mean, I just saw literally about an hour ago, Mark Andre tweeted a um an interesting graph. it was um uh US real GDP growth contribution from tech capex and at the moment in the second quarter of 2025 the US real GDP growth is around 2% peranom and half of that is capex from big tech and they want to lift that capex from 400 million to um a 7 trillion spend by 2030 in in totality Matt as you know energy investing is my personal passion and I got to tell you this AI one is a completely different ballgame than anything else I've looked at I'm not really thinking about okay what's the demand of this and the supply of that. I'm thinking this fundamentally changes society in a way where potentially AI consumes so much energy and it needs it to grow that it exacerbates an energy price escalation that I think was coming due to inflation anyway. And all of a sudden you've got everybody feeling like AI is both stealing our jobs and consuming our energy. It has to be outlawed. It has to be shut down. And I think it potentially adds to a social divide that's already kind of out of control. So to me, there's almost nothing you could say about the scope of how much energy it's going to use or what the consequence of that could be that would surprise me. I have to admit though, I'm kind of a narrative oriented guy. I haven't done enough homework to have any data to back the things I'm saying. Am I crazy to think it's that big? And how big is it? Well, in all these things, in all these bubbles, you have blue sky and then you have reality. And energy is kind of where the reality uh practically starts to hit. You know, data centers are are drawing huge amounts of energy from the grid. In the US already, it's about 4.5% of the whole US energy demand uh and project to go to 9% by 2030. And this is at a scale now that it's causing real problems for a lot of different countries around the world. In fact, I mean, Bloomberg just came out with about a week or so ago with a an analysis of uh energy prices in the US and they found within within vicinity of data centers, I think they looked at, you know, within 70 km of a data center, um they did a survey of wholesale energy prices in the United States and they showed that within the last 5 years that those prices have gone up 267%. So, you can imagine the average person in the streets probably not very happy with their if their bills go by triple to power someone else's chatbots. Uh at the same time, you know, it takes a long time to put energy generation on the grid. It's highly political as you as you well know. I mean, you were just out here in Australia and even though we're an energy superpower in five different capabilities, you know, uranium, coal, gas, we've got some oil, etc. We're not allowed to use most of it. You know, we're shutting down coal plants, etc. So, it's very hard to get new supply on the grid. You know, the average data center now is what 300 400 megawatts going to a gigawatt. If you try and put that on a lot of city grids, you'll brand it out. So, in addition to grid cap capacity problems and energy price problems, you've just got the practical reality of building these things, right? I mean, Schneider Electric has an order book backed out till 2030. So, I don't know how they're going to get this capex, you know, done. At the moment, they're drawing down the capacity that's come from the office market rolling off. So as the work from home and the co thing kind of get you know the office market in in uh in the US and other places around the world there is some construction capacity that's been drawn down to to build these data centers but if you can't get the you know electrical transformers and the switching equipment and you can't get the builder to to be available at any reasonable price to build the data center and then on top of that you know AI demand is moving electricity markets like OPEC used to move oil you're going to have some real problems in terms of your ability to actually deploy this and then at the end of the day the economics aren't there because no one's making any money yet other than Nvidia. you've got this whole infrastructure that is built upon a great story um a great promise and I do think in the long run it's very similar to com boom in that you know I think I said this in the last one of the last macro voices episodes right Cisco you know networks networks that's that's their motto that's their tagline the internet got deployed around the western economies people thought you know everything's going to be on the internet you know your clothing will be connected you know personal area network to your watch to your handheld device to this that the other to your computer to the to the world and Cisco makes all the routers the switches the hubs and ultimately the chips that will network the fabric of of of mankind and industry. And so they're going to be the richest company in the world. And kind of look at AI and it's a very similar issue where you kind of go think well AI is going to power everything. It's great for highly personalizing experiences and and really taking automation to the next level, you know, which is the very essence of computer science. And um but we may be getting ahead ahead of ourselves in the stories here. You've obviously got some personalities that are great, you know, showman. I mean Sam Alman's the you one of the PT Barnums of our time in terms of weaving a story and telling a story but um the numbers now are so fantastical and so large and just so incredulous that you have real constraints in the physical world building up with numbers that get you keep adding zeros to them and then at the end of the day that may be way ahead of where the current usage is in time just like you know we had the telecoms blow up and the and the dotcom boom you know the law of computing basically is that you know ultimately you will use up all the memory, all the bandwidth, all the disc space, you know, all the CPU capability available to you, but it may take time some time to get there and you may have a massive over capacity for a period of time as people get over exuberant. At the beginning of the public internet and the then the ensuing.com bubble and so forth, there was a lot of contention over completely unorthodox business models, Google giving all kinds of things away just to establish market share, which seemed crazy, but it was actually very effective. It seems to me like we're going through the same thing again. And I I got to tell you, I went from Chat GPT3, I kind of felt like it's a cool novelty, but I'm not going to spend 20 bucks a month on this thing. Now, at ChatJPT5, I've got the $200 subscription. I wouldn't go down to the 20 if you paid me to uh because I just even for that small little edge, I I really value it and I would frankly love to to be offered the $500 a month option because I've come to use it so much. Okay. If they're mostly only able to sell the $20 option, is this business staying? I mean, how do they make money doing this? It's clear that there's no sustainable business model with a foundational model at this point in time. I mean, there's zero switching costs. You know, if OpenAI, you know, deep research, you know, um 03 is better than, you know, Sonnet, whatever from Claude, I immediately switch my activity there. And I'm I'm sure you do the same as you just go to whatever the latest greatest is. There's nothing holding you back. And so it what's very obvious though as you become more of a power user and I and I do spend a lot of my day admittedly in in GPT you making all sorts of queries etc. when you kind of run out of uh usage in your $20 plan or your $200 plan or whatever the plan is, the platforms don't say, "Please put in your credit card and buy more credit." They say, "You're on a timeout in the naughty corner for 6 hours, 7 hours, six six days." And in some circumstances, I was given a several week timeout on one of the platforms. So, you can tell that they're actually the unit economics of inference is is not there. They're not making money on you actually using the product. It's it's more like a gym membership. they're making money and you not turning up and paying the subscription. And this is this is a real tangible problem that you're getting like this incredible uh buildout and data center usage for companies that that are completely unprofitable. And you may be willing to pay $500 a month for greater usage of your model. I would think that would still probably be unprofitable in your usage at that level. You know, are you prepared to pay 2,000 a month, 20,000 a month or whatever the true number is for profitability? I don't I I don't know. you know one one of the one of the big usagea use cases that coming out now which is which is burning a lot of tokens are these sort of you know AI enabled you know integrated development environments so you see like your cursors and so forth where programmers can get autocomplete on steroids effectively writing software cursor makes no money on on that token burn they've got an incredible revenue ramp rate in fact they're the one of the only um three companies in the entire AI compute space that has um $500 million a year or more of annual recurring revenue and you know note annual recurring revenue not revenue um there's a lot of funny calculations being used to kind of um project the hype but uh 100% of Kurs' revenue is sent to Anthropic who provides the underlying foundational model to basically power their product and you know they're not making money anthropic is not making any money they're losing money losing billions a year etc and you know at this point in time even companies like Perplexity is sending 165% of their revenue to the um underlying foundational model providers to run their search service. Uh and then those foundational models providers are are sending it off to the the cloud computing guys who are sending it off effectively to Nvidia who's sending it to TSMC. So what do these so what do these companies have to do? So the open AI the world they've come out now saying okay we're not we're not going to make any money on $20 a month. We're not making any money on $200 a month. We have to come out with some sort of a story to justify these skyhigh valuations. Now, I will note that OpenAI has raised about $64 billion worth of money, I think, today. And so, and and they've done it at a $300 billion valuation. They're about to sell some employee stock. I think they've they're upsizing the employee um sellown around at half a trillion dollar valuation. So, it's interesting. The Open AI guys are kind of cashing out, you know, by the time that's done, they'll cash out about 11 something billion dollars worth of stock, and they're only doing about four billion of revenue and a half, four billion of revenue and a half, and they're losing eight in the first half of this year. So to promise to provide a justification for these skyh high valuations, they've got to come up with these these fantastical stories. And the latest story I saw from Zwman about two weeks ago was that 40% of people will potentially have their jobs taken uh thanks to AI. And by the implication of that, what he's saying is that open AI will generate the income that 40% of people would in the past be paid and that's going to be the revenue stream in the future as they kind of take over all these different categories of work. Now, if that were remotely true, uh they would launch jihad on uh on SAM. They'll burn down the Open AI headquarters and they'll put an access to their data centers and governments would would regulate and ban it, right? I mean, the Great Depression uh unemployment was around 32%. And so, these numbers are extreme. And to date, I still don't know of and I know there's dislocation that's going to come in certain segments, but I still don't know someone amongst any of my friends um or even online who could put their hand up and truthfully say I've lost my job thanks to AI despite all these stories around, you know, agents and so forth and so on. Now, I do think it's going to come in in some parts. I think you know in customer support uh in some areas of sales in some areas of um administrative work where people have highly paralyzable taskbased workflows which lend themselves very highly to automation and very very good automation I will say because remember the whole art of software is around automation. So you know this is really just taking things really to you know a 10x step up and I think you can do some of those taskbased functions very very well. You know it's still it's still not there yet. I mean, nobody is making a profit doing doing this. Yes, but it is coming. Um, but it's not going to be on the scale of 40% of the world people the people in the world being unemployed. And so you've got this, if you just step back and just look at the ecosystem, right? So you got Nvidia 160 billion in in in revenue, 100 billion in earnings. they're making bank and then you got this a whole ecosystem around them basically pumping Nvidia to the moon uh in terms of their revenue and and and by by result of that their valuation. None of that around them is making any money. You've got OpenAI pitching all sorts of fantastical things. You got to remember that they still have to revenue share with Microsoft. Uh they're still a nonprofit this that the other but they're talking about trillion dollars a year of of capex 7 trillion by 2030. There's the whole Oracle deal which we should talk about in a second etc. And they don't have the money for any of this stuff and um it's almost it kind of feels much bigger than Enron in terms of the of of the look and feel of the whole story around open AI and all the all the funny things that are happening now around the financings in the space and the justifications for how the capex is going to be going to occur. Um and by example of that there was um what they're calling now on social media. I think Elon called it the infinite money glitch. You've got this announcement announcement by Oracle that have just come out. So, you know, the other day Oracle share price jumped by about 39%. Uh because they had like this big it was like 380 or so billion dollars worth of cloud compute bookings that they've got out till 20 2030 or so. Now, Oracle hasn't built their cloud yet. They're saying they're going to build one. They say they're going to do it on the price competitive approach of of, you know, roughly a 40% discount, etc. Uh but they they showed this order book and the order book was quite quite interesting actually when it came out because it was like a hockey stick you know I think it was like 2026 it was like 18 billion in in in in bookings and then the next year was 32 billion the next year was 73 billion the next year was 14 billion and 144 billion and so they showed this huge hockey stick ramp and their share price went up 39% but then like a day or so later I think it was a Wall Street Journal published that 300 billion of that is open AI Now, open Open AI is only doing was it $4 billion a quarter of revenue. They don't have $300 billion to spend. But what they've done is they've done they've done this deal with Oracle where they go they've committed to this order book and off the back of that, you know, Oracle share price has pumped and and then then in par parallel with all of that, so Jensen's come out and he's he's now offering this is the infinite money glitch. So he he's offering a hundred billion worth of GPUs to Nvidia under vendor financing. So he's effectively saying take the GPUs now, pay me later for them. And then what OpenAI has done with those with those GPUs is gone to Corewave. And Coree is a Neo cloud. We'll talk about them in a second. That's like the the new generation cloud AWS's and Azour and and so forth. And it's gone to them and said, "Okay, well, I've got these hundred billion dollars of GPUs. I'll give them to you to kind of to to use and I will book with you $22 billion worth of compute over the next couple of years and that'll be take or pay. So I'll I'll lock that in and I'll guarantee that I'll spend $22 billion with you. Coreweave is then going off and going look at look at my bookings. I've got $22 billion of the bookings. And then open eye on the flip side saying look I've got $22 billion of committed spend I'm going to make on compute. So I must have a big customer pipeline. So pump my valuation and give me you know a skyhigh you half a trillion dollar thing so I can do 11 billion stock sell down. And then Coreweave is saying well I've got 22 billion of bookings from from OpenAI. I'm going to go to the private credit markets and JP Morgan and Goldman Sachs and and so forth, and I'm going to raise money in the debt markets from private credit, the lender of last resort. And what I'm going to do with that is I'm going to take that money and I'm going to go back to Nvidia and I'm going to buy the data center, you know, gear that to build out my my um u AI GPU powered data centers and the money just goes around in a circle and at no point in time yet has a single customer spent a dollar. And so you you look at all of that and you kind of go well if you sanity check the numbers and there's actually a really interesting blog called where's your ed at which I encourage everyone to read where someone's gone looked into this in far more detail um and just gone through the numbers etc and so forth and and if you believe the Oracle story and if you believe about this $300 billion in spend then what that means is is that in five years Oracle is going to single-handedly grow the AI compute market 500%. They're going to take it from sub40 billion to 200 billion. They are going to overtake AWS, you know, by I think 2029 withund AWS does about 115 billion a year in in revenue and and and by 2029, Oracle is predicting they're going to do that from their cloud business and then overtake it to 144. So, they're going to do that and the whole thing is going to come from one customer being Open AI who doesn't have the money. And I asked you before coming in here, I just checked Oracle's balance sheet. Oracle is a big business. They've only got a billion 11 billion in cash. So these numbers of hundred billion a year of of capex for each of these companies, 400 billion up until now, 7 trillion being a third of the M3 money supply that some is going to be financed with ads or cloud or VCs. I mean, the numbers are just insane. And it all this infrastructure and all this whole environment is now is built around Nvidia who's making all the money. is the only one making any money other than TSMC. And then you got this new paradigm coming in with the um the Neoclouds, right? So the Neoclouds, that's Coreweave, it's Lambda, and it's Nebian. Matt, hang on a second. Neoclouds, I have to admit I don't know that one. Fill us in. Well, it's one of those things where, you know, from time to time, I kind of browse the internet and I kind of see these new businesses that pop up that look like they're very, very large businesses and I just kind of think think to myself, I must be really stupid or just not understand. And so you kind of you know read through the website and and and so forth and you go wow this is kind of really cool. It's like really advanced. It's really huge. This is a whole industry I didn't know about. These are next generation cloud computing providers. So these guys are aiming to provide the GPU powered version of AWS or Azure. And they're coming into the market as sort of the fifth entrance the sixth entrance and seventh entrance to compete against those those incumbents. And the interesting thing about these companies are obviously I've talked about the infinite money glitch where it seems to be like a a bit of a circle jerk going between you know Nvidia Open AAI Core and they're all kind of using the same money that's just slloshing around in a in a in a circle. these neurocclouds, they're kind of like the wei works of GPUs, right? It's basically take take in some pre-bookings, use those pre-bookings to raise some raise some money, rinse, repeat, and go in a circle. And these guys are building out infrastructure and they've got they've got huge spend. I think they're spending about $50 billion a quarter those three. They're financed by the uh by Nvidia and by the the customers are Nvidia. So for example, super micro funded lambda and they're basically just building out data centers that are GPU powered doing so in a very much a build it and they will come sort of business model because to the best of uh anyone's knowledge at the point of time not not really making any money outside of your traditional open AIS metas and of course Nvidia itself um and it' be interesting to see where Nvidia is going with this because because ultimately it feels that Jensen's heading towards a his own foundational model being being launched on Nvidia hardware, but we'll see if that if that happens or not. But the these these these um NeoCloud providers are basically trying to enter the market and uh through price pricing and through arguably a better product because it's using Nvidia GPUs rather than nutritional CPUs etc. Basically trying to enter the market and capture you know potential huge revenue streams in the future that may or may not eventuate. So, you know, I think I think uh CO has spent this year about $20 billion uh building out their infrastructure and it and um yeah, it just feels it feels like a very very strange uh business model if you kind of get to the bottom of it. Matt, I want to move on to the social implications of this. I'm as I get my head around this, I'm increasingly convinced this is much bigger almost than anybody is thinking about or talking about. And I'll use this idea of the so-called competency crisis that people have talked about. Uh, let's use Uber as an example. You know, back in the day, getting a job as a limousine driver required a fair amount of skill. You had to make sure you knew how to find addresses and so forth. Well, they dumbed that job down to the point where it's just so idiot proof with a moving map in front of your face that shows you exactly where to go that just about anybody can be an Uber driver. And my prediction is AI is going to make it so that just about any numbum skull who's got some kind of of device that they can use AI for is suddenly qualified to do all kinds of jobs that they might not even understand, but they can still get through it because they got AI to coach them. It's like they've got their own personal little coach for it. If that's where we're headed, I think it dumbs down society. Why the heck would you want to graduate high school or be bother finishing never mind going to university if a lot of the jobs that are out there you just need to learn to operate AI and you know that's it. So is that where it's headed or or or what do you think the social implications can be of this just huge explosion of AI into society? Well, and in in some regards, are we going to see a huge spike in the Dunning Krueger effect as a result of everyone becoming expert in 15 seconds from quering something on JBC without doing the hard work to learn something over a period of years? Look, what I see is, oh, I mean, generally what we are seeing, so I've got 83 million people in my marketplace who using AI on for every type of job you can imagine. Now, I mean, we're seeing a big lift in skills, right? So, you know, I think I've said this before, if you're an average copyriter, you're now an exceptional copyriter with GP Chord. If you're an average um illustrator now, you can become exceptional quite quickly with, you know, your mid journeys and the like. The same thing is going to happen in all the white collar trades, whether you're a programmer or whether you're a, you know, industrial designer or an architect or or what have you. So, it does dramatically the skills of people. I think it's like the world be when when you went to work and I I was kind of just at the cusp of this when I kind of entered the workforce where you kind of you you enter the workforce and there used to be no computer on your desk during the day and then you came to work and there was a computer on everyone's desk and all of a sudden everyone was a lot more productive and so forth and yeah you had some dislocation and a lot of jobs kind of went away then the typing pools of secretaries and large companies disappeared but they got redeployed etc ultimately to different jobs etc. I do think that skills lift. We're seeing a lot of productivity. We're seeing a lot of liquidity. So, for example, you know, our contest functionality where people can, you know, put up a prize and people compete for the prize and we do that all the way from, you know, simple things like logos right up to, you know, $6 million gene editing um invasion challenge for the NIH. We are seeing a lot of entries coming in a lot faster, a lot quicker, a lot higher quality. In fact, we had to recently rate limit that because we're getting over 700 entries per contest. So we're getting a liquidity effect, you know, and a speed effect as well as a quality effect and a bang for buck effect. So So all in all, you can probably encapsulate in the word productivity um goes through the roof. But yes, on one hand, you know, if you're at university and you used to cheat by looking up Google, the answers, you know, that cheating is now on steroids by getting GBT to do stuff for you. And and and that's certainly going to going to continue. And you know, if you get your, you know, big brother to do your homework or you get Google to do your homework or you get Wolf from Alpha to do your homework or you get GBT to do your homework. Yeah. And you're not learning the materials, you're going to really really suffer. The flip side of that is that AI is going to be probably the most powerful forces in history for education in that it will be able to personalize a lesson plan for you. And just like you know what your pace is that you want to learn at and I know your you Eric are very very good at asking the right questions to really maximize your learning rate on a new topic or a new area and so forth. And the same for me you know it does have the power particularly is from the you know the high school to tertiary education and above really empower the ability for people to learn new skills, new trades, new knowledge super quick. Now the question is just going to be and that and this is this is this is one of the questions the trillion dollar question that you kind of look at when you know a lot of these AI guys hype these models to the moon is will the AI be able to create new knowledge and do you know independent scientific research and come up with new things and new inventions and will we enter this sort of hyped up AGI super super singularity sort of event horizon or is it just a really really good autocomplete that may be better better than any autocomplete that you ever seen in your life. While it can find correlations and this that the other, it does struggle to kind of find new advances, you know, to push scientific breakthroughs. That that that's going to be the big question. And I and I I use the litma test for that. You know, will we see sort of creativity emerge from these models? And you know, for example, will there be a song trending in the top 100 soon that's going to be completely done by by AI designed, composed, produced, and executed and deployed by AI? Are we are we going to start seeing that with literature? Are we going to see start seeing that with with music? Are we going to start seeing it with entertainment? If that starts to happen um you know we might also be be there with scientific progress and technical advances or is it going to start capping out and there are real fundamental limits uh on access to data which is fundamental you know I mean all the cheap oil of data has kind of been m you know drilled out and used to train these models now you know increasingly there's there's there's tariffs rules regulations and restrictions on ability to use it and is that going to be which is required exponentially more you know with every generation of the models are coming out is going to be the fundamental limit. And in fact, yeah, we get a computer on our desk, that computer is faster, better, 10x better than you've ever seen before. Uh, and everyone's going to be super productive, but there is going to be a limit where is go from here, particularly in in the practical reality that the underlying economics of this AI at scale is not actually working. You mentioned something at the beginning of that answer I want to come back to, which is the fire hose, the excess amount of productivity. I've felt this myself, Matt, on your platform. I've been using freelancer.com for several years now. If I need logos, graphic things I'm really bad at, just hire somebody. It's amazing to me using the contest function. A few years ago, when I started using that, boy, I could put up a $100 contest and a whole bunch of well-qualified designers would submit over just a few hours. I'd have a bunch of really interesting designs. I get to pick one, the guy gets a hundred bucks. It was just a great deal. Well, recently I thought, hey, I'm going to up it to 300 bucks and uh I really want to do a good one this time. What I had no idea was coming, Matt, is if you put a $300 contest on freelancers.com, you better have a staff of people ready to help you sort through the thousands and thousands of submissions you're going to get. It's that much. And it's literally to the point where I feel like I need AI in order to filter all of the AI proposals because all of the sudden that freelancer community has so much capacity that I literally can't give each designer a fair shake or a fair chance because there's just so much coming and I mean that's a good thing kind of but it all presents a problem. Yeah. Know when you when you mention $300 in graphic design you got to be overwhelmed. So, I mean, I sabotaged myself by paying to and and think about it just a few years ago. 300 bucks if you wanted a logo done by a professional graphic designer where you're going to get one person's best attempt and they were going to put a few hours into it. That used to cost 500 bucks. I only put 300 bucks in the contest. And the result was I almost couldn't use any result because in order to I mean, not that I didn't get plenty of value back for my 300 bucks, but I didn't have time to sort through it all and pick one in time. Yeah. We we recently had to deploy something to actually rate limit uh the ability for people to to enter in contests and we could use AI to actually sort through and and and so forth and rank and and and so forth. But also as the reputation system as well we order all the entries now by um basically the quality of of past work of the particular entrance. But you are right. I mean we're definitely seeing a lift in not just the quality of work that people produce but the speed at which they can actually do it and ultimately the bang for buck bang for money. I mean what we have is an incredibly deflationary business. You know I think NASA published a white paper a while ago between 80 and 99% uh of what they traditionally pay are going to traditional labor arrangements and we are steps to make it manageable because there is an absolute explosion in productivity. Matt final question tell me about Sam Alman uh your sense of him his sincerity his intentions uh whether he's a good guy or a bad guy. I I have to admit I can't read it. I thought his interview with Tucker Carlson was incredibly revealing. I'm not sure exactly of which. And there was a tweet also which really kind of got my attention because I've seen this before. I know over you know you guys in Australia went through this with social media and oh well we we need to protect the children. We we we need to protect the children from profanity and bad things on social media. So therefore, everybody is not allowed to use it until they identify to the government with a government ID exactly who you are before you're allowed to log into your social media site. Sounds to me like Sam Alman is pushing for the same thing for AI and I don't trust his intentions. Am I being paranoid? And more broadly, what do you think of this guy? Yeah, I think you always always have to kind of take a look at the what's been said and kind of just think about it kind of carefully and think through kind of what what's really going on. There's this I'll take I'll take this the second question first and we can come back to the Tucker Carlson interview. So he said that I think in the context of the was he was saying that um they're going to allow adult content on open AI and as a result of that they need to protect the children and therefore they're going to do you know age verification. Well there's a few things going on there. Obviously, Elon has been using um sexualization of content, I guess, for one of a better word, on Grock to try and encourage a bit of a cult following of the Gro AI. But but hang on, time out. There there's just only one sane way to do that, which is to say if you want the adult content, then you can opt in at your sole personal discretion to to show your ID. That's not what he's pushing for. He's saying everybody has to show their ID in order to be able to use the thing because they're not going to It doesn't make sense. Yeah. So, so on one hand, Airlines kind of saying, "Well, we can get a Grockas uncensored." And I I think if you if you look at the sustainable competitive dev advantages between the foundational AI models, there's basically none. They all do the same thing. They all can write a story for you. They all can um give you advice. They can all generate an image, etc. The only different competitive advantage is how censored they are and how leftwing biased they are in the the training, right? and and Elon's kind of said, well, you can come to Grock and you know, you can you can talk about anything and we're not going to censor you and and that that's my that's my advantage. Now, maybe Sam is saying to himself, well, you know, the internet, I think last time someone published something, you know, 80% of the traffic on the internet is Pornhub. And so maybe on one hand, you know, Sam's saying, okay, well, how do I get usage up of my AI? And what are people potentially willing to pay for? I don't know. Maybe we'll go into kind of like the, you know, the pornographic style content and maybe that will get more people subscribing and more usage. I don't know. What I think is probably really going on is, you know, in Australia, for example, we've got a um effectively a censorship um division of government, which is run by someone who's nicknamed Ear. And in December of this year, the law comes in place uh which has already passed through government under the guise of protecting the kids. every single social media platform uh in the world that operates in Australia will need to do age verification to prove that you are not uh under 16. Now that has absolutely do nothing to do with protecting the kids and everything to do with requiring digital ID to be rolled out in Australia so that everyone on the internet can be identified um as you know the the the the source of of a comment you on on Twitter or on a YouTube video or whatever it may be. In fact, our prime minister Anthony Albanzy was some years ago, there's a there's a clip online where he was asked if he was ever going to be dictated for a day, what's the one thing he'll do? And he said, "Ban social media because he's not so thick skinned and um you know, doesn't like people talking about things on the on on the internet about him." So, this law is coming in now. The tantrums are going to be insane. Obviously, they just tried banning social media and was it Nepal and everyone rioted and set fire to parliament and so forth. But the ramifications of trying to stop people saying nasty things on the internet is more than just X and Facebook and Instagram and so forth. Um the e safety commission there is now looking at whether to ban Roblox, Legoland and GitHub because they're all places that people can leave comments etc. So that shows you how kind of insane this law is. And so by virtue of that they've also said they're going to require it for search engines. Now AI is basically a modern version of a search engine. And you know while we have not seen I think yet substantial deviation away from Google and the traditional search engines to the chat like interfaces for search that's basically what a lot of people are predicting and I I believe the reason he's rolling out the age verification is because he knows that the e- safety regulator is going to require uh them to um do age verification and you know Starmer over in the UK is now trying to push digital ID as a excuse to of what what he needs in place in order to solve the um mass immigration problem that he's been running at full speed over there as well. And it's causing all sorts of social unrest. And he's saying, "Well, these people coming across from Africa into into the UK. We can't stop them from working unless we have digital ID." Although he was pulled up this week, uh said, "Well, they've got to show a national insurance card." And if they're not doing that, they're getting work anyway uh from, you know, doing illegally working and not showing an insurance card. How's digital ID going to help? They're still going to work the same way. But um yeah, I think I you don't know what's going on there. there maybe a few thing a bit confluence of events but I kind of feels that he's just getting ahead of um that because there's quite substantial fines for the companies that allow kids to operate on them and it'll be interesting to see where where it plays out or whether they're actually going to ban GitHub and yeah I mean I come home and watch YouTube at night sometimes I watch prospecting videos and geology videos and how to repair old electronic equipment or what have you fantastic resource for kids and but yeah they're going to ban it so um I get the feeling that that they're just going to have to apply that rule to open eye as well in regards to your first question. I mean, I was pretty amazed by the Tucker Carlson interview. I mean, isn't Tucker an incredible interviewer? That interview pissed me off because we had this scheduled and I was thinking to myself, boy, we are going to rock it, Matt. We're going to do the best AI interview ever done. And Tucker blew me away cuz that guy is not technical at all. And he absolutely nailed that interview. It was like a story arc rivaling Breaking Bad. Watching that interview and just just how you set it up and and kind of it was, you know, for those who haven't watched, I highly encourage you you you watch it. It's is incredible work of art from Tucker. Yeah, it was kind of interesting. You know, obviously all these guys who run these, you know, you know, multi-billion dollar companies talk a big game. They need to talk a big game because, you know, the the whole venture space is kind of like a obeys a power law of investing. you got to kind of swing for the swing for the bleaches and you got to get one investment to return a phenomenal amount of money to make any to make a make a return in your portfolio. Um so they all talk huge gains whether it's Elon, whether it's Sam, whether whoever it is. Um but yeah it and so he kind of um he started off asking him just just things about you know have you seen higher powers of is there something spiritual happening inside the AI? Are they alive? they and so forth and kind of was kind of setting setting Sam up and then um you know and then got to kind of you know the belief system how's the belief system set up in in in these foundational models in in in chat GPT right if it reads everything on the internet uh you can see if you look at the YouTube comments that the sum total of humanity is actually quite bitter and you know argumentative and negative and how does GPT train on all the world and then kind of end up being so politically correct and and and so forth force and it got down to the point where it's like who inside OpenAI is deciding you know what the belief system is of of GPT is it you I want names give me their names and titles and then of course um yeah moved moved on to the the the copyright issue that's happening I I didn't mention before but obviously all the data in the world needs to be consumed to get these models to the next level and anthropics just lost a $ 1.5 billion class action over um copyright infringement because they scanned in half a million books without um paying the authors and $3,000 of work. Uh it's just been ruled to pay 1.5 billion. So there's a real compute cost there um that that's added on top with the training data. But yeah, there was I think it was a whistleblower inside OpenAI that was talking about um potential copyright infringement or what have you from OpenAI. I don't know the full details of that. Then um that whistleblower ended up dead and um I don't know if I probably should preempt people watching Tucker's Tucker's interview, but it was it was absolutely incredible the questioning that that kind of came out around that and asking Sam what he thought of it. And I don't know, I thought the average person in the street if you kind of asked, you know, did you kill someone? They would go no. And then I and then don't be stupid, you're an idiot. Sort of a response, but way in which that was kind of I I think I think Sam was completely thrown by the question. But um yeah, it was kind of interesting how the how the responses came out. I thought that was amazing. And as an interviewer, boy, I was just envious of Carlson because he nailed that. I guess we should explain what was going on is he was Carlson was asking Alman about a very high-profile murder of one of OpenAI's employees. And Sam Well, suicide or suicide. Oh, yes. I'm sorry. Murder or suicide? Could it be either? Sam tried to take the high road and show Tucker up and say, "Oh, Tucker, come on. We're we're talking about the dead here. Don't you think we should have a little more respect for the subject matter?" And he was trying to be the holier than thou. You know, I'm going to put you in your place, Tucker, and make you look the bad guy. And Carlson just kept his composure so perfectly. And oh gosh, Sam, you know, he would definitely be right. It would be frankly very inappropriate for me to ask that question at anything less than the behest of his mother who believes that you ordered his murder. So, let's just skip to the chase. Sam, did you did you kill him or didn't you? It was something almost that direct. And I thought, wow, I don't even fantasize about being that good at interviewing someday. On that note, let's uh let's end it there, Matt, because we are running out of time. Freelancer.com is an amazing platform. That is your day job. It is just a phenomenal to me. You you pretty much upstage our entire episode 500 countdown with something that you do as a hobby. This is not even your day job. What do you do for a living in your day job? And how can people learn more about how they can outsource a whole lot of cool stuff at freelancer.com? Well, what whatever you need done, uh we can do it for you at Freelancer, right? So, we make it real. We turn your dreams into reality. what you start want to start a business, you want to grow your business, you want to find people to build a product for you. We have 83 million people around the world with every skill you can possibly imagine. You'll get it done for you at a fraction of the costs, right? So, you can just whack down a credit card and start the next, you know, I don't know, maybe start the next OpenAI, start the next Uber for cats, pizza review site that delivers, whatever it is, you can get it done on freelancer and uh freelancer.com. Just post your project. It's free. Give it a go and you'll see the magic. and all the freelancers now AI powered and can get your job done, your product built, your service delivered uh at a fraction of the time, fraction of the cost. And I can definitely give a personal endorsement because I do use it regularly and I would say it's not really a complaint but the only uh really urgently needed repair at Freelancer is you got to filter out how much you can get at a low price because it's overwhelming to the point that you can't just can't handle it. Don't pay 300 bucks for a logo design. you will get three weeks of sorting through contest entrance be before you're done. Matt, I can't thank you enough. We're going to wrap it there and Patrick Sesna and I will be back as Macrovoices continues right here at macrovoices.com. [Music] Now back to your hosts, Eric Townsend and Patrick Szna. Eric, it was great to have Matt back on the show. Always a listener favorite. Patrick, we're getting great feedback on the new trade of the week segment. What's on deck this week? Listeners, you're going to find the download link for the postgame trade of the week in your research roundup email. If you don't have a research roundup email, that means you have not yet registered at macrovoices.com. Just go to our homepage, macrovoices.com, and click on the red button over Matt's picture saying looking for the downloads. Eric, let's go a little deeper into the AI bubble theme we just heard from Matt Barry. Now, Matt raised some serious concerns about the sustainability of this AI boom. But what I've learned in almost 30 years of trading is that bubbles always go farther and last longer than any rational person expects. Shorting the bubble before it pops is a widowmaker trade. You can be absolutely right about the endgame and still go broke along the way there. The time to press the short is after the airs already started coming out of the bubble. So the way I think about it is this. As Soros famously said, when he sees a bubble, he buys it. In the short term, the performance is chasing where the money is flowing. But because you know how it ends, you have to play it in a convex way with defined risk instead of just sitting delta 1 long and fully exposed on the left tail. That's the lesson from Stanley Denmiller, one of the smartest traders of our time, who openly tells the story of buying billions of dollars of tech stocks near the top of the dotcom bubble only to lose $3 billion in six weeks when the music stopped. So, how do you apply that lesson today? A good example is Nvidia. If you want to participate in the AI run, but with defined risk, instead of buying the stock outright, you could structure a bull call spread. For example, out to December 2026, you could buy the 200 call for around $10 and sell the $220 call for about $4.40. That's a net debit of $5.60. What does this give you? A maximum upside of $20 between the strikes less the $5.60 you paid. So about $14.40 potential reward against $560 of defined risk. In other words, almost a 3:1 upside with no tail risk. That's exactly how you chase a bubble in a smart way. Convex exposure, defined downside, and plenty of participation if the mania continues running. So, Eric, that's exactly how you chase a bubble the smart way. Convex exposure, defined downside, and plenty of participation if the media keeps running. If anyone wants to look at this deeper, the breakdown of the trade is on page two of this week's chart deck. That explanation worked for the pros and of course our retail audience can get the full briefing by attending Patrick's Monday webinar which always dissects the trade of the week in detail. Macrovoices listeners can get a free trial at bigpicturetrading.com. Patrick, let's start with equities as per normal. What are the charts telling you? So Eric, at the time of recording here, the S&P 500 is trading at 6753. The S&P futures closing exactly at 6,800. We continue to close at fresh new highs on this S&P as it relentlessly continues to climb. So, uh there is absolutely nothing bearish to say technically on the trend. Old dips keep getting bought, higher highs and higher lows. Uh everything is working in the favor of the bulls. But Eric, when we look at this from a quantitative perspective, this is not only the longest rally in duration, but also the largest in magnitude that we've had without a 5% correction this decade. That's 100 percentile. At some point, we are going to just get a correction. It's just very natural that the market does that and it's going to inevitably come. What are some of the things that are concerning from that perspective? Well, number one, uh we are continuing to see the breath of the market deteriorating. We have only 55% of stocks trading above their 50-day moving averages in this environment. That's come off of a high of near 75 80% just a few months ago. Yet, the market here continues to make new highs. It's continues to show that the market is relying more and more on a fewer and fewer number of stocks to keep this going. Another example of that is looking at the financials, the quintessential beta 1 asset. They have put in their highs back in August and we have not been able to see the XLF uh financial ETF make a higher high and hold it since then. And so we've continued to see that this market is participating pretty much on this AI boom and the breath of the market is not contributing. This in itself is showing that there is uh a weakness under the hood and inevitably something will be a catalyst that will spur on at least a solid 300 S&P point correction in the 5% variety. We'll see uh what the trigger for that ultimately will come at. Patrick, let's hit the dollar index. Plenty to talk about there. Well, Eric, let's talk about that dollar because the dollar has broken to a higher high. uh and we have now seen that trade range that was established throughout July, August, and September starting to be broken to the upside. Obviously, we had a brief little rip higher in late July that still hasn't been able to be beaten. But overall, we've seen the price action of dollar strengthening. We're now four, five days above its 50-day moving average. But it's not just the dollar index chart that's interesting. It's about the fact that the cross currencies are all breaking. we see a euro break to a little bit of a lower low. Uh now consolidating below its 50-day. The pound sterling having had a failed rally here uh last week that couldn't beat its 50-day moving average and roll over. We had those uh surprise election results in Japan that sent the yen sent lower with the US dollar ripping to now almost six month highs against the yen. We have the US dollar against the CAD breaking out to multi-month highs. And so we're seeing that under the hood, we have a lot of these currencies where the US dollar is already strengthening. To me, this is very interesting because arguably so many of the asset classes from an intermarket perspective that have worked so well this year were had the tailwind of a weak dollar. If the US dollar here begins some counter trend trade, maybe it's just a retracement, maybe it's not a new US dollar bull market, but some sort of a retracement that lasts several months and mean reverts a part of that loss. Uh the question is is that is that going to be the catalyst that spurs profit taking in so many of these assets that have worked so well because of the dollar weakness? Nonetheless, watching here whether this US dollar breakout is for real. West Texas intermediate crude oil broke down to retest its May lows last week, but our good friend Dr. Anna Alhaji has a research note out saying the bearish narrative probably isn't right. So, what comes next in the charts, Patrick? Yeah, Eric. Well, looking at crude oil, technically the price action is quite distributive. Uh lower highs, lower lows. Now, while we have bounced this week, we haven't been able to bounce back above the 50-day moving average, nor above its uh basic 50% retracement of the prior sell-off. So, you still have to assume at this moment that this price action is distributive. But overall, we have seen a fair value zone established throughout the summer in this kind uh low60s area, and we haven't seen a technical legitimate breakdown out of it. And so in theory, this consolidation could see the oil trade back to the top end of the range and just stay dominant in this new fair value zone. Uh in the end, there is no technical evidence that there's an imminent new bull breakout. That false start few weeks ago kind of ended that uh very quickly, but I'm still looking at this very much from a neutral perspective. And Patrick, needless to say, we've got to hit the gold chart this week. Yeah, Eric, we do have to talk about gold. like what a rip this thing has had. We've now cleared the 4,000 mark and are completing the measured move by just simply comparing the length of the first part of the rally that happened in the first quarter of the year to the length of this bull impulse. So now we're in a situation where gold is pretty much starting to exhaust itself. And what's interesting is that silver finishing a measured move, platinum and platium breaking out in this extraordinary way. We just have this amazing bull run in all the entire precious metals market. So, to me, this is balancing the long-term bullish perspective of precious metals because I think that this has legs to continue in the years to come, doing incredibly well, and balancing that with short-term tactical strategies in terms of whether this is the time to a accumulate more or whether you need to wait for a pullback in order uh to reposition yourself on any precious metals positioning. As from my perspective, I think at this stage this there is very little asymmetry in starting any new buying here on gold. At some stage here, like we talked about last week, there's a potential at any point for a two even $300 pullback. That would just be the new buying opportunity. I'm not in any way bearish, but I think there's lots of opportunity now to wait for pullbacks for new tactical entries. Patrick, I can't believe it, but because I've been traveling all week, I'm actually out of touch with the uranium market as well. What's going on in the charts? Well, Eric, let's talk about uranium. As as I've said in previous episodes, we had a bare market that ended back in March and April from the looking at it from the commodity price. And we've seen generally positive price action over the last six months. Higher highs, higher lows, above all its moving averages. Now this week we finally got a brea a breather a pullback and it's coming right to a 50% retracement coming right back to the levels where the highs were back in June and July. This is a very interesting moment to see whether the buy on dip traders show up right in this sweet spot because that is a typical area where you would see if it was bullish the dips starting to be bought here. Wow Patrick we were talking about whether or not copper was going to find some some legs in its rally. big breakout last Friday. Seems like the market's got the idea. What comes next? Well, Eric, on that copper chart, we definitely are seeing uh short-term bullish price action. Uh every dip is being bought, higher highs, getting above key uh high volume consolidation levels that were established earlier in the year. It's very reasonable to assume that we could be testing some of the highs that were established in 2024 and 25 up near the 5 and a/4 to 550 area just above. Patrick, before we wrap up this week's show, let's hit that 10-year Treasury note chart. Finally, I wanted to just touch on that 10-year Treasury yield. And we continue to see is that the yields continue to make lower lows and lower highs, continue to reject a basic 50-day moving average. So you still have a primary downtrend in yields and a primary bull phase in bonds. We're going to continue to see whether that trend continues, but at this stage uh it's very plausible to have downside targets near 360 to 380 on the yields. Folks, if you enjoy Patrick's chart decks, you can get them every single day of the week with a free trial of BigPictur Trading. The details are on the last pages of the slide deck or just go to bigpicturetrading.com. Patrick, tell them what they can expect to find in this week's research roundup. Well, in this week's research roundup, you're going to find the transcript for today's interview and the trade of the week chart book we just discussed here in the postgame, including a number of links to articles that we found interesting. You're going to find this link and so much more in this week's research roundup. So, that does it for this week's episode. We appreciate all the feedback and support we get from our listeners, and we're always looking for suggestions on how we can make the program even better. 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Once registered, you'll receive our free weekly research roundup email containing links to supporting documents from our featured guests and the very best free financial content our volunteer research team could find on the internet each week. You'll also gain access to our free listener discussion forums and research library. And the more registered users we have, the more we'll be able to recruit high-profile feature interview guests for future programs. So, please register your free account today at macrovoices.com if you haven't already. You can subscribe to Macrovoices on iTunes to have Macrovoices automatically delivered to your mobile device each week free of charge. You can email questions for the program to mailbag macrovoices.com and we'll answer your questions on the air from time to time in our mailbag segment. Macrovoices is presented forformational and entertainment purposes only. The information presented on macrovoices should not be construed as investment advice. Always consult a licensed investment professional before making investment decisions. The views and opinions expressed on macrovoices are those of the participants and do not necessarily reflect those of the show's hosts or sponsors. Macrovoices, its producers, sponsors, and hosts Eric Townsend and Patrick Serzna, shall not be liable for losses resulting from investment decisions based on information or viewpoints presented on Macrovoices. Macrovoices is made possible by sponsorship from bigpicturetrading.com and by funding from Fourth Turning Capital Management LLC. For more information, visit macrovoices.com. [Music]
MacroVoices #501 Matt Barrie: AI Caramba?
Summary
Transcript
[Music] This is Macrovoices, the free weekly financial podcast targeting professional finance, high- netw worth individuals, family offices, and other sophisticated investors. Macrovoices is all about the brightest minds in the world of finance and macroeconomics telling it like it is. Bullish or bearish, no holds barred. Now, here are your hosts, Eric Townsend and Patrick Szna. Macrovoic's episode 501 was produced on October 9th, 2025. I'm Eric Townsend. Lyn Alden took first place in our top five macro guest countdown, concluded with last week's episode number 500. But guess who actually beat Lynn for the single episode download count title? That's right, it's freelancer.com founder and CEO Matt Barry, whose interviews on artificial intelligence have all been listener favorites. Matt and I will discuss all things AI in this week's feature interview. Is it a bubble about to burst or a new secular trend that's just getting started and will soon be bigger than the internet itself? And what happens when the masses start to revolt after hyperscalers consume all the new electric generation capacity that we can possibly bring online? in the next decade or two. That's all coming up in this week's feature interview. Folks, I've been traveling internationally all week and I have to confess I'm not quite as in tune with markets as usual. So, I'm going to defer to Patrick for most of this week's postgame segment. And don't worry, he's going to have plenty of charts for you. And we'll also have the new listener favorite trade of the week segment right after the feature interview with Matt Barry. and I'm Patrick Sesna with the macro scoreboard week overweek as of the close of Wednesday, October 8th, 2025. The S&P 500 index up 63 basis points trading at 6753. It continues its relentless rise. We'll take a closer look at that chart and the key technical levels to watch in the postgame segment. The US dollar index up 115 basis points trading at 98.82 82 breaking out above key levels, begging the question if the US dollar is setting up for a squeeze higher. The November WTI crude oil contract up 125 basis points, trading to 6255, bounced this week, but has a number of key technical hurdles ahead. The November arb gasoline up 106 basis points, trading at 191. The December gold contract up 444 basis points to 4,070. Gold cleared that 4,000 mark for the first time. The December copper contract up 430 basis points to 509, back above $5. And uranium down 650 basis points, trading to 7765. The US 10-year Treasury yield is up three basis points, trading at 413. And the key news to watch next week is the CPI and PPI inflation numbers as well as watching the ongoing government shutdown and its impacts on the release of key economic data. This week's feature interview guest is freelancer.com founder and CEO Matt Barry. Eric and Matt discuss the future of AI, the AI energy consumption challenges, market dynamics, and AI regulations. Eric's interview with Matt Barry is coming up as macrovoices continues right here at macrovoices.com. [Music] And now with this week's special guest, here's your host, Eric Townsend. Joining me now is freelancer.com CEO Matt Barry. Really interesting story, folks, how this one came together. We were trying to figure out who the top five macro guests were. You already know about the countdown. You know Lyn Alden was the big winner. Okay, believe it or not, those were just the macro guests. The number one all-time download champion episode of Macrovoices was actually a Matt Berry AI interview. And the thing that's really striking to me is people like Luke Groman and Lyn Alden spent half of their careers building their following and promoting themselves and so forth. Matt's not even a guy who promotes himself, yet he's done more downloads in a single episode than any of our guests that do. And it has to be this amazing topic of artificial intelligence. Matt, anytime something like this happens, you know, public internet AI, it leads instantly to the obvious debate. Okay. Is this a bubble that's about to burst or are we just getting started or you know where are we in this story and and how should we think about it? Is are we coming up on the.com bust or are we just getting started? Well, if you think back to the dot days and there are a lot of parallels between then and now. Cisco got to half a trillion dollar market cap which is about 5% of US GDP. And if you thought that is a bubble, what do you think about Nvidia at $4.5 trillion market cap and 15% of US GDP? It's become an absolute behemoth. about 7 to 8% of the S&P 500 market valuation. They talk about 6 or 7% of of revenue of the S&P 500. It is an incredibly profitable business. It does about $160 billion a year of revenue and about 100 billion of EBIT, which is insane. It is built upon a a very interesting foundation. the released in the latest financials that the top two customers of Nvidia generate around 40% of the revenue and the next four customers uh generate another 40% of revenue and it's believed to be that the top customer is Foxcon and the second top customer is Quanta and these are two Taiwanese manufacturers of boxes that put Nvidia chips in them and number three is another Taiwanese company called Wistron and below that you know so your Dells and your super micros so you've got an incredible customer concentration the top six customers, top three being from Taiwan, but the top six customers are about 80% of the revenue and top three customers are 50% of the revenue. And then you look at their the product segments that Nvidia produces, I mean 80 88% of their revenue is currently coming from data centers. So it's it's kind of interesting and and and then you know out of out of the hundred billion dollars of EBIT the biggest supplier to Nvidia is TSMC which has got just like Nvidia's got 60% concentration of the semiconductor market TSMC's got 70% capture of the of the foundry market and so you've got this incredible revenue story incredible revenue growth that's all been on the back of data centers that's all concentrated into six customers of which three are in Taiwan and really the Nvidia story which is really holding up the entire market is built upon a fault line, one island, three customers, one foundry, and a prayer that the geopolitics that uh shakes Taiwan is is less than the geo physics underneath the ground. So, it's it's a pretty interesting thing to look at. And if you look at that, so you look at that revenue number of $160 billion a year, which is about $40 billion a quarter. The entire AI compute space, so we're talking open AI, we're talking midjourney, we're talking anthropic, etc. that entire AI compute segment in its totality is less than $40 billion of revenue a year and every single one of those companies is losing money. The entire ecosystem is really built around Nvidia and a whole Taiwan story underneath it. So the more you dig into these numbers, which we'll do in a second, I'm sure, the more uh the crazier the whole thing gets and and that's in the backdrop of a pretty frothy overheated market. I mean over 10 times um that's already past the.com peak which was about 25% and and back in the.com days revenue growth was was about twice as high as about 20% year on year. That's where we are. Um and it's it's kind of it's kind of interesting with that basis of where we are today of what the projections are for tomorrow. Matt, this industry has already spent an incredible amount of capex. It seems like the interest in it is unlimited. There's probably unlimited capital that wants to chase this. Wait a minute. you're going to run out of energy at some point. We'll come back to that later in the interview. Is capex unlimited? Does it limited by energy? Is it limited by something else? When does this stop? Well, obviously there's an incredible amount of money being spent, not just on video, but in the capex to build the data centers to put the machines that have Nvidia chips in them. Einhorn came out this week from Greenlight and said this could be the biggest bonfire of of money since the the dotcom boom. Yeah, if you look at if you look at the amount of money that the big sort of hyperscalers are spending, I mean the likes of Microsoft and Google are spending at the moment around 50% of earnings on their capex and um you know the the um Metas and the the Oracles and the Amazons are projected at the moment to spend about 70% of their earnings on capex with next year potentially up to 1.3 times their earnings. So if you think about the.com boom and you think about all the telco boom and bust that happened there and the optical fiber boom and bust that happened there you know at at its peak AT&T uh when it was you know dominating the market and it had about I think it was about a 60% market share back then of of telecoms it was spending at its peak about 72% of its earnings on capex and you know Exxon was spending about 65% of its earnings on capex and the shaw boom uh and kind of the peak of of capex so we're really reaching the point of of capex to earnings that hasn't been really paralleled since, you know, the the railroads were laid across America. And those numbers are getting to pretty insane predictions. I mean, I think Alman came out just recently and and I think um Jensen's kind of backing them up on up on this that they plan on spending by 2030 7 trillion on capex. Now, if this sounds like a big number, it is. That's about onethird of the M2 money supply in the US. And how are they going to finance that? I mean a a lot of in fact possibly most of the capex is being financed by ads. So what are you going to do? You're going to finance $7 trillion of capex on banner ads. The advertising market is kind of interesting to look at. In the last 100 years, advertising as a percentage of US GDP has never really changed from about a 2% level. Uh the composition of advertising in that spend has changed. So digital advertising now is is the line share. That's about 70 75% of advertising spend. But you know in the US it's 2% of GDP. In Australia for example it's 2% of GDP. I mean worldwide it's about 1% of GDP. But in the rest of the world you don't really have a strong consumer market like you do in the US and so forth and western economies. So there's pretty limited ability for Meta and Google and so forth to increase I think their advertising. I don't think that increasing more ads in the feed or placing more banner ads on the page is going to be able to sustain a everinccreasing exponentially growing capex spend. And if it's not ads that's sning this capex spend, it's cloud. And so, you know, you've got three major players in cloud. You've got um you AWS, you've got Microsoft Azure. And I was very surprised actually to see that in the last quarter, Microsoft's actually have taken Amazon um in terms of in terms of the revenue. It's about I think $47 billion in the quarter versus um AWS is 29 billion. And then third place, you've got Google Cloud. And you know, for a long time, there were there were pretty decent margins. But now with you know the AI you know sort of capex boom those margins are eroding quite dramatically as the capex spends ramping through the roof and you've got now um fourth and fifth players coming into the market. So you've got Oracle now trying to enter the market and they're trying to do it on price. So they're saying they're going to undercut um you know the cost by about 40%. And then behind that you've got sort of corewave and the and the neo clouds coming in and and if you reflect back on the dotcom days um you AT&T had one analyst I think said you know better better profit margins and and drug dealing you know when when it was just three players in the market and they had 60% market share you know and again you know that's kind of the market share that Microsoft has in software and that's the market share that Nvidia has in AI and it's the market share that TSMC has in foundaries and now you look back at the telecoms boom when the fourth player and the fifth players came in you know all the econom omics just fell apart because of the capex. So, you know, you've got that dynamic happening now in the in the market for AI data center buildout. And the funny thing behind all of this, it's the demand isn't there, you know, they're all building this out a ahead of time. And if the if the money is not coming from banner ads and it's not coming from cloud, it's coming from VCs. So, you've got huge amounts of money slloshing to the space, the numbers are absolutely astronomical. You know, Nvidia, I I said they're doing a 160 billion a year in in in revenue and the the rest of the AI compute space is making less than 40 billion in in totality and and losing money. Well, each of these big hyperscalers, they're spending, you know, anticipated to spend next year, you know, hundred billion plus or minus 20 billion on capex alone and they're not even doing that in revenue. I mean, AWS at the moment is doing about 110 billion a year in revenue and that's going to be spent in its entirety next year on capex just just by each of the hyperscalers. So these numbers are astronomical. I mean in the back in the dotcom days at least when you had that boom the software market generated around 300 billion of revenue in its totality and employed about a million people. I mean this AI boom is generating what 20 30 billion a year in revenue. It's hard to tell because all the companies are private. Uh losing money and not employing anywhere near as that that level. And in fact if anything they're saying we're going to take everyone's jobs away uh and create unemployment. So, you know, the numbers are very fantastical and the more you dig into that, the more you dig into just how big those numbers are. I mean, I just saw literally about an hour ago, Mark Andre tweeted a um an interesting graph. it was um uh US real GDP growth contribution from tech capex and at the moment in the second quarter of 2025 the US real GDP growth is around 2% peranom and half of that is capex from big tech and they want to lift that capex from 400 million to um a 7 trillion spend by 2030 in in totality Matt as you know energy investing is my personal passion and I got to tell you this AI one is a completely different ballgame than anything else I've looked at I'm not really thinking about okay what's the demand of this and the supply of that. I'm thinking this fundamentally changes society in a way where potentially AI consumes so much energy and it needs it to grow that it exacerbates an energy price escalation that I think was coming due to inflation anyway. And all of a sudden you've got everybody feeling like AI is both stealing our jobs and consuming our energy. It has to be outlawed. It has to be shut down. And I think it potentially adds to a social divide that's already kind of out of control. So to me, there's almost nothing you could say about the scope of how much energy it's going to use or what the consequence of that could be that would surprise me. I have to admit though, I'm kind of a narrative oriented guy. I haven't done enough homework to have any data to back the things I'm saying. Am I crazy to think it's that big? And how big is it? Well, in all these things, in all these bubbles, you have blue sky and then you have reality. And energy is kind of where the reality uh practically starts to hit. You know, data centers are are drawing huge amounts of energy from the grid. In the US already, it's about 4.5% of the whole US energy demand uh and project to go to 9% by 2030. And this is at a scale now that it's causing real problems for a lot of different countries around the world. In fact, I mean, Bloomberg just came out with about a week or so ago with a an analysis of uh energy prices in the US and they found within within vicinity of data centers, I think they looked at, you know, within 70 km of a data center, um they did a survey of wholesale energy prices in the United States and they showed that within the last 5 years that those prices have gone up 267%. So, you can imagine the average person in the streets probably not very happy with their if their bills go by triple to power someone else's chatbots. Uh at the same time, you know, it takes a long time to put energy generation on the grid. It's highly political as you as you well know. I mean, you were just out here in Australia and even though we're an energy superpower in five different capabilities, you know, uranium, coal, gas, we've got some oil, etc. We're not allowed to use most of it. You know, we're shutting down coal plants, etc. So, it's very hard to get new supply on the grid. You know, the average data center now is what 300 400 megawatts going to a gigawatt. If you try and put that on a lot of city grids, you'll brand it out. So, in addition to grid cap capacity problems and energy price problems, you've just got the practical reality of building these things, right? I mean, Schneider Electric has an order book backed out till 2030. So, I don't know how they're going to get this capex, you know, done. At the moment, they're drawing down the capacity that's come from the office market rolling off. So as the work from home and the co thing kind of get you know the office market in in uh in the US and other places around the world there is some construction capacity that's been drawn down to to build these data centers but if you can't get the you know electrical transformers and the switching equipment and you can't get the builder to to be available at any reasonable price to build the data center and then on top of that you know AI demand is moving electricity markets like OPEC used to move oil you're going to have some real problems in terms of your ability to actually deploy this and then at the end of the day the economics aren't there because no one's making any money yet other than Nvidia. you've got this whole infrastructure that is built upon a great story um a great promise and I do think in the long run it's very similar to com boom in that you know I think I said this in the last one of the last macro voices episodes right Cisco you know networks networks that's that's their motto that's their tagline the internet got deployed around the western economies people thought you know everything's going to be on the internet you know your clothing will be connected you know personal area network to your watch to your handheld device to this that the other to your computer to the to the world and Cisco makes all the routers the switches the hubs and ultimately the chips that will network the fabric of of of mankind and industry. And so they're going to be the richest company in the world. And kind of look at AI and it's a very similar issue where you kind of go think well AI is going to power everything. It's great for highly personalizing experiences and and really taking automation to the next level, you know, which is the very essence of computer science. And um but we may be getting ahead ahead of ourselves in the stories here. You've obviously got some personalities that are great, you know, showman. I mean Sam Alman's the you one of the PT Barnums of our time in terms of weaving a story and telling a story but um the numbers now are so fantastical and so large and just so incredulous that you have real constraints in the physical world building up with numbers that get you keep adding zeros to them and then at the end of the day that may be way ahead of where the current usage is in time just like you know we had the telecoms blow up and the and the dotcom boom you know the law of computing basically is that you know ultimately you will use up all the memory, all the bandwidth, all the disc space, you know, all the CPU capability available to you, but it may take time some time to get there and you may have a massive over capacity for a period of time as people get over exuberant. At the beginning of the public internet and the then the ensuing.com bubble and so forth, there was a lot of contention over completely unorthodox business models, Google giving all kinds of things away just to establish market share, which seemed crazy, but it was actually very effective. It seems to me like we're going through the same thing again. And I I got to tell you, I went from Chat GPT3, I kind of felt like it's a cool novelty, but I'm not going to spend 20 bucks a month on this thing. Now, at ChatJPT5, I've got the $200 subscription. I wouldn't go down to the 20 if you paid me to uh because I just even for that small little edge, I I really value it and I would frankly love to to be offered the $500 a month option because I've come to use it so much. Okay. If they're mostly only able to sell the $20 option, is this business staying? I mean, how do they make money doing this? It's clear that there's no sustainable business model with a foundational model at this point in time. I mean, there's zero switching costs. You know, if OpenAI, you know, deep research, you know, um 03 is better than, you know, Sonnet, whatever from Claude, I immediately switch my activity there. And I'm I'm sure you do the same as you just go to whatever the latest greatest is. There's nothing holding you back. And so it what's very obvious though as you become more of a power user and I and I do spend a lot of my day admittedly in in GPT you making all sorts of queries etc. when you kind of run out of uh usage in your $20 plan or your $200 plan or whatever the plan is, the platforms don't say, "Please put in your credit card and buy more credit." They say, "You're on a timeout in the naughty corner for 6 hours, 7 hours, six six days." And in some circumstances, I was given a several week timeout on one of the platforms. So, you can tell that they're actually the unit economics of inference is is not there. They're not making money on you actually using the product. It's it's more like a gym membership. they're making money and you not turning up and paying the subscription. And this is this is a real tangible problem that you're getting like this incredible uh buildout and data center usage for companies that that are completely unprofitable. And you may be willing to pay $500 a month for greater usage of your model. I would think that would still probably be unprofitable in your usage at that level. You know, are you prepared to pay 2,000 a month, 20,000 a month or whatever the true number is for profitability? I don't I I don't know. you know one one of the one of the big usagea use cases that coming out now which is which is burning a lot of tokens are these sort of you know AI enabled you know integrated development environments so you see like your cursors and so forth where programmers can get autocomplete on steroids effectively writing software cursor makes no money on on that token burn they've got an incredible revenue ramp rate in fact they're the one of the only um three companies in the entire AI compute space that has um $500 million a year or more of annual recurring revenue and you know note annual recurring revenue not revenue um there's a lot of funny calculations being used to kind of um project the hype but uh 100% of Kurs' revenue is sent to Anthropic who provides the underlying foundational model to basically power their product and you know they're not making money anthropic is not making any money they're losing money losing billions a year etc and you know at this point in time even companies like Perplexity is sending 165% of their revenue to the um underlying foundational model providers to run their search service. Uh and then those foundational models providers are are sending it off to the the cloud computing guys who are sending it off effectively to Nvidia who's sending it to TSMC. So what do these so what do these companies have to do? So the open AI the world they've come out now saying okay we're not we're not going to make any money on $20 a month. We're not making any money on $200 a month. We have to come out with some sort of a story to justify these skyhigh valuations. Now, I will note that OpenAI has raised about $64 billion worth of money, I think, today. And so, and and they've done it at a $300 billion valuation. They're about to sell some employee stock. I think they've they're upsizing the employee um sellown around at half a trillion dollar valuation. So, it's interesting. The Open AI guys are kind of cashing out, you know, by the time that's done, they'll cash out about 11 something billion dollars worth of stock, and they're only doing about four billion of revenue and a half, four billion of revenue and a half, and they're losing eight in the first half of this year. So to promise to provide a justification for these skyh high valuations, they've got to come up with these these fantastical stories. And the latest story I saw from Zwman about two weeks ago was that 40% of people will potentially have their jobs taken uh thanks to AI. And by the implication of that, what he's saying is that open AI will generate the income that 40% of people would in the past be paid and that's going to be the revenue stream in the future as they kind of take over all these different categories of work. Now, if that were remotely true, uh they would launch jihad on uh on SAM. They'll burn down the Open AI headquarters and they'll put an access to their data centers and governments would would regulate and ban it, right? I mean, the Great Depression uh unemployment was around 32%. And so, these numbers are extreme. And to date, I still don't know of and I know there's dislocation that's going to come in certain segments, but I still don't know someone amongst any of my friends um or even online who could put their hand up and truthfully say I've lost my job thanks to AI despite all these stories around, you know, agents and so forth and so on. Now, I do think it's going to come in in some parts. I think you know in customer support uh in some areas of sales in some areas of um administrative work where people have highly paralyzable taskbased workflows which lend themselves very highly to automation and very very good automation I will say because remember the whole art of software is around automation. So you know this is really just taking things really to you know a 10x step up and I think you can do some of those taskbased functions very very well. You know it's still it's still not there yet. I mean, nobody is making a profit doing doing this. Yes, but it is coming. Um, but it's not going to be on the scale of 40% of the world people the people in the world being unemployed. And so you've got this, if you just step back and just look at the ecosystem, right? So you got Nvidia 160 billion in in in revenue, 100 billion in earnings. they're making bank and then you got this a whole ecosystem around them basically pumping Nvidia to the moon uh in terms of their revenue and and and by by result of that their valuation. None of that around them is making any money. You've got OpenAI pitching all sorts of fantastical things. You got to remember that they still have to revenue share with Microsoft. Uh they're still a nonprofit this that the other but they're talking about trillion dollars a year of of capex 7 trillion by 2030. There's the whole Oracle deal which we should talk about in a second etc. And they don't have the money for any of this stuff and um it's almost it kind of feels much bigger than Enron in terms of the of of the look and feel of the whole story around open AI and all the all the funny things that are happening now around the financings in the space and the justifications for how the capex is going to be going to occur. Um and by example of that there was um what they're calling now on social media. I think Elon called it the infinite money glitch. You've got this announcement announcement by Oracle that have just come out. So, you know, the other day Oracle share price jumped by about 39%. Uh because they had like this big it was like 380 or so billion dollars worth of cloud compute bookings that they've got out till 20 2030 or so. Now, Oracle hasn't built their cloud yet. They're saying they're going to build one. They say they're going to do it on the price competitive approach of of, you know, roughly a 40% discount, etc. Uh but they they showed this order book and the order book was quite quite interesting actually when it came out because it was like a hockey stick you know I think it was like 2026 it was like 18 billion in in in in bookings and then the next year was 32 billion the next year was 73 billion the next year was 14 billion and 144 billion and so they showed this huge hockey stick ramp and their share price went up 39% but then like a day or so later I think it was a Wall Street Journal published that 300 billion of that is open AI Now, open Open AI is only doing was it $4 billion a quarter of revenue. They don't have $300 billion to spend. But what they've done is they've done they've done this deal with Oracle where they go they've committed to this order book and off the back of that, you know, Oracle share price has pumped and and then then in par parallel with all of that, so Jensen's come out and he's he's now offering this is the infinite money glitch. So he he's offering a hundred billion worth of GPUs to Nvidia under vendor financing. So he's effectively saying take the GPUs now, pay me later for them. And then what OpenAI has done with those with those GPUs is gone to Corewave. And Coree is a Neo cloud. We'll talk about them in a second. That's like the the new generation cloud AWS's and Azour and and so forth. And it's gone to them and said, "Okay, well, I've got these hundred billion dollars of GPUs. I'll give them to you to kind of to to use and I will book with you $22 billion worth of compute over the next couple of years and that'll be take or pay. So I'll I'll lock that in and I'll guarantee that I'll spend $22 billion with you. Coreweave is then going off and going look at look at my bookings. I've got $22 billion of the bookings. And then open eye on the flip side saying look I've got $22 billion of committed spend I'm going to make on compute. So I must have a big customer pipeline. So pump my valuation and give me you know a skyhigh you half a trillion dollar thing so I can do 11 billion stock sell down. And then Coreweave is saying well I've got 22 billion of bookings from from OpenAI. I'm going to go to the private credit markets and JP Morgan and Goldman Sachs and and so forth, and I'm going to raise money in the debt markets from private credit, the lender of last resort. And what I'm going to do with that is I'm going to take that money and I'm going to go back to Nvidia and I'm going to buy the data center, you know, gear that to build out my my um u AI GPU powered data centers and the money just goes around in a circle and at no point in time yet has a single customer spent a dollar. And so you you look at all of that and you kind of go well if you sanity check the numbers and there's actually a really interesting blog called where's your ed at which I encourage everyone to read where someone's gone looked into this in far more detail um and just gone through the numbers etc and so forth and and if you believe the Oracle story and if you believe about this $300 billion in spend then what that means is is that in five years Oracle is going to single-handedly grow the AI compute market 500%. They're going to take it from sub40 billion to 200 billion. They are going to overtake AWS, you know, by I think 2029 withund AWS does about 115 billion a year in in revenue and and and by 2029, Oracle is predicting they're going to do that from their cloud business and then overtake it to 144. So, they're going to do that and the whole thing is going to come from one customer being Open AI who doesn't have the money. And I asked you before coming in here, I just checked Oracle's balance sheet. Oracle is a big business. They've only got a billion 11 billion in cash. So these numbers of hundred billion a year of of capex for each of these companies, 400 billion up until now, 7 trillion being a third of the M3 money supply that some is going to be financed with ads or cloud or VCs. I mean, the numbers are just insane. And it all this infrastructure and all this whole environment is now is built around Nvidia who's making all the money. is the only one making any money other than TSMC. And then you got this new paradigm coming in with the um the Neoclouds, right? So the Neoclouds, that's Coreweave, it's Lambda, and it's Nebian. Matt, hang on a second. Neoclouds, I have to admit I don't know that one. Fill us in. Well, it's one of those things where, you know, from time to time, I kind of browse the internet and I kind of see these new businesses that pop up that look like they're very, very large businesses and I just kind of think think to myself, I must be really stupid or just not understand. And so you kind of you know read through the website and and and so forth and you go wow this is kind of really cool. It's like really advanced. It's really huge. This is a whole industry I didn't know about. These are next generation cloud computing providers. So these guys are aiming to provide the GPU powered version of AWS or Azure. And they're coming into the market as sort of the fifth entrance the sixth entrance and seventh entrance to compete against those those incumbents. And the interesting thing about these companies are obviously I've talked about the infinite money glitch where it seems to be like a a bit of a circle jerk going between you know Nvidia Open AAI Core and they're all kind of using the same money that's just slloshing around in a in a in a circle. these neurocclouds, they're kind of like the wei works of GPUs, right? It's basically take take in some pre-bookings, use those pre-bookings to raise some raise some money, rinse, repeat, and go in a circle. And these guys are building out infrastructure and they've got they've got huge spend. I think they're spending about $50 billion a quarter those three. They're financed by the uh by Nvidia and by the the customers are Nvidia. So for example, super micro funded lambda and they're basically just building out data centers that are GPU powered doing so in a very much a build it and they will come sort of business model because to the best of uh anyone's knowledge at the point of time not not really making any money outside of your traditional open AIS metas and of course Nvidia itself um and it' be interesting to see where Nvidia is going with this because because ultimately it feels that Jensen's heading towards a his own foundational model being being launched on Nvidia hardware, but we'll see if that if that happens or not. But the these these these um NeoCloud providers are basically trying to enter the market and uh through price pricing and through arguably a better product because it's using Nvidia GPUs rather than nutritional CPUs etc. Basically trying to enter the market and capture you know potential huge revenue streams in the future that may or may not eventuate. So, you know, I think I think uh CO has spent this year about $20 billion uh building out their infrastructure and it and um yeah, it just feels it feels like a very very strange uh business model if you kind of get to the bottom of it. Matt, I want to move on to the social implications of this. I'm as I get my head around this, I'm increasingly convinced this is much bigger almost than anybody is thinking about or talking about. And I'll use this idea of the so-called competency crisis that people have talked about. Uh, let's use Uber as an example. You know, back in the day, getting a job as a limousine driver required a fair amount of skill. You had to make sure you knew how to find addresses and so forth. Well, they dumbed that job down to the point where it's just so idiot proof with a moving map in front of your face that shows you exactly where to go that just about anybody can be an Uber driver. And my prediction is AI is going to make it so that just about any numbum skull who's got some kind of of device that they can use AI for is suddenly qualified to do all kinds of jobs that they might not even understand, but they can still get through it because they got AI to coach them. It's like they've got their own personal little coach for it. If that's where we're headed, I think it dumbs down society. Why the heck would you want to graduate high school or be bother finishing never mind going to university if a lot of the jobs that are out there you just need to learn to operate AI and you know that's it. So is that where it's headed or or or what do you think the social implications can be of this just huge explosion of AI into society? Well, and in in some regards, are we going to see a huge spike in the Dunning Krueger effect as a result of everyone becoming expert in 15 seconds from quering something on JBC without doing the hard work to learn something over a period of years? Look, what I see is, oh, I mean, generally what we are seeing, so I've got 83 million people in my marketplace who using AI on for every type of job you can imagine. Now, I mean, we're seeing a big lift in skills, right? So, you know, I think I've said this before, if you're an average copyriter, you're now an exceptional copyriter with GP Chord. If you're an average um illustrator now, you can become exceptional quite quickly with, you know, your mid journeys and the like. The same thing is going to happen in all the white collar trades, whether you're a programmer or whether you're a, you know, industrial designer or an architect or or what have you. So, it does dramatically the skills of people. I think it's like the world be when when you went to work and I I was kind of just at the cusp of this when I kind of entered the workforce where you kind of you you enter the workforce and there used to be no computer on your desk during the day and then you came to work and there was a computer on everyone's desk and all of a sudden everyone was a lot more productive and so forth and yeah you had some dislocation and a lot of jobs kind of went away then the typing pools of secretaries and large companies disappeared but they got redeployed etc ultimately to different jobs etc. I do think that skills lift. We're seeing a lot of productivity. We're seeing a lot of liquidity. So, for example, you know, our contest functionality where people can, you know, put up a prize and people compete for the prize and we do that all the way from, you know, simple things like logos right up to, you know, $6 million gene editing um invasion challenge for the NIH. We are seeing a lot of entries coming in a lot faster, a lot quicker, a lot higher quality. In fact, we had to recently rate limit that because we're getting over 700 entries per contest. So we're getting a liquidity effect, you know, and a speed effect as well as a quality effect and a bang for buck effect. So So all in all, you can probably encapsulate in the word productivity um goes through the roof. But yes, on one hand, you know, if you're at university and you used to cheat by looking up Google, the answers, you know, that cheating is now on steroids by getting GBT to do stuff for you. And and and that's certainly going to going to continue. And you know, if you get your, you know, big brother to do your homework or you get Google to do your homework or you get Wolf from Alpha to do your homework or you get GBT to do your homework. Yeah. And you're not learning the materials, you're going to really really suffer. The flip side of that is that AI is going to be probably the most powerful forces in history for education in that it will be able to personalize a lesson plan for you. And just like you know what your pace is that you want to learn at and I know your you Eric are very very good at asking the right questions to really maximize your learning rate on a new topic or a new area and so forth. And the same for me you know it does have the power particularly is from the you know the high school to tertiary education and above really empower the ability for people to learn new skills, new trades, new knowledge super quick. Now the question is just going to be and that and this is this is this is one of the questions the trillion dollar question that you kind of look at when you know a lot of these AI guys hype these models to the moon is will the AI be able to create new knowledge and do you know independent scientific research and come up with new things and new inventions and will we enter this sort of hyped up AGI super super singularity sort of event horizon or is it just a really really good autocomplete that may be better better than any autocomplete that you ever seen in your life. While it can find correlations and this that the other, it does struggle to kind of find new advances, you know, to push scientific breakthroughs. That that that's going to be the big question. And I and I I use the litma test for that. You know, will we see sort of creativity emerge from these models? And you know, for example, will there be a song trending in the top 100 soon that's going to be completely done by by AI designed, composed, produced, and executed and deployed by AI? Are we are we going to start seeing that with literature? Are we going to see start seeing that with with music? Are we going to start seeing it with entertainment? If that starts to happen um you know we might also be be there with scientific progress and technical advances or is it going to start capping out and there are real fundamental limits uh on access to data which is fundamental you know I mean all the cheap oil of data has kind of been m you know drilled out and used to train these models now you know increasingly there's there's there's tariffs rules regulations and restrictions on ability to use it and is that going to be which is required exponentially more you know with every generation of the models are coming out is going to be the fundamental limit. And in fact, yeah, we get a computer on our desk, that computer is faster, better, 10x better than you've ever seen before. Uh, and everyone's going to be super productive, but there is going to be a limit where is go from here, particularly in in the practical reality that the underlying economics of this AI at scale is not actually working. You mentioned something at the beginning of that answer I want to come back to, which is the fire hose, the excess amount of productivity. I've felt this myself, Matt, on your platform. I've been using freelancer.com for several years now. If I need logos, graphic things I'm really bad at, just hire somebody. It's amazing to me using the contest function. A few years ago, when I started using that, boy, I could put up a $100 contest and a whole bunch of well-qualified designers would submit over just a few hours. I'd have a bunch of really interesting designs. I get to pick one, the guy gets a hundred bucks. It was just a great deal. Well, recently I thought, hey, I'm going to up it to 300 bucks and uh I really want to do a good one this time. What I had no idea was coming, Matt, is if you put a $300 contest on freelancers.com, you better have a staff of people ready to help you sort through the thousands and thousands of submissions you're going to get. It's that much. And it's literally to the point where I feel like I need AI in order to filter all of the AI proposals because all of the sudden that freelancer community has so much capacity that I literally can't give each designer a fair shake or a fair chance because there's just so much coming and I mean that's a good thing kind of but it all presents a problem. Yeah. Know when you when you mention $300 in graphic design you got to be overwhelmed. So, I mean, I sabotaged myself by paying to and and think about it just a few years ago. 300 bucks if you wanted a logo done by a professional graphic designer where you're going to get one person's best attempt and they were going to put a few hours into it. That used to cost 500 bucks. I only put 300 bucks in the contest. And the result was I almost couldn't use any result because in order to I mean, not that I didn't get plenty of value back for my 300 bucks, but I didn't have time to sort through it all and pick one in time. Yeah. We we recently had to deploy something to actually rate limit uh the ability for people to to enter in contests and we could use AI to actually sort through and and and so forth and rank and and and so forth. But also as the reputation system as well we order all the entries now by um basically the quality of of past work of the particular entrance. But you are right. I mean we're definitely seeing a lift in not just the quality of work that people produce but the speed at which they can actually do it and ultimately the bang for buck bang for money. I mean what we have is an incredibly deflationary business. You know I think NASA published a white paper a while ago between 80 and 99% uh of what they traditionally pay are going to traditional labor arrangements and we are steps to make it manageable because there is an absolute explosion in productivity. Matt final question tell me about Sam Alman uh your sense of him his sincerity his intentions uh whether he's a good guy or a bad guy. I I have to admit I can't read it. I thought his interview with Tucker Carlson was incredibly revealing. I'm not sure exactly of which. And there was a tweet also which really kind of got my attention because I've seen this before. I know over you know you guys in Australia went through this with social media and oh well we we need to protect the children. We we we need to protect the children from profanity and bad things on social media. So therefore, everybody is not allowed to use it until they identify to the government with a government ID exactly who you are before you're allowed to log into your social media site. Sounds to me like Sam Alman is pushing for the same thing for AI and I don't trust his intentions. Am I being paranoid? And more broadly, what do you think of this guy? Yeah, I think you always always have to kind of take a look at the what's been said and kind of just think about it kind of carefully and think through kind of what what's really going on. There's this I'll take I'll take this the second question first and we can come back to the Tucker Carlson interview. So he said that I think in the context of the was he was saying that um they're going to allow adult content on open AI and as a result of that they need to protect the children and therefore they're going to do you know age verification. Well there's a few things going on there. Obviously, Elon has been using um sexualization of content, I guess, for one of a better word, on Grock to try and encourage a bit of a cult following of the Gro AI. But but hang on, time out. There there's just only one sane way to do that, which is to say if you want the adult content, then you can opt in at your sole personal discretion to to show your ID. That's not what he's pushing for. He's saying everybody has to show their ID in order to be able to use the thing because they're not going to It doesn't make sense. Yeah. So, so on one hand, Airlines kind of saying, "Well, we can get a Grockas uncensored." And I I think if you if you look at the sustainable competitive dev advantages between the foundational AI models, there's basically none. They all do the same thing. They all can write a story for you. They all can um give you advice. They can all generate an image, etc. The only different competitive advantage is how censored they are and how leftwing biased they are in the the training, right? and and Elon's kind of said, well, you can come to Grock and you know, you can you can talk about anything and we're not going to censor you and and that that's my that's my advantage. Now, maybe Sam is saying to himself, well, you know, the internet, I think last time someone published something, you know, 80% of the traffic on the internet is Pornhub. And so maybe on one hand, you know, Sam's saying, okay, well, how do I get usage up of my AI? And what are people potentially willing to pay for? I don't know. Maybe we'll go into kind of like the, you know, the pornographic style content and maybe that will get more people subscribing and more usage. I don't know. What I think is probably really going on is, you know, in Australia, for example, we've got a um effectively a censorship um division of government, which is run by someone who's nicknamed Ear. And in December of this year, the law comes in place uh which has already passed through government under the guise of protecting the kids. every single social media platform uh in the world that operates in Australia will need to do age verification to prove that you are not uh under 16. Now that has absolutely do nothing to do with protecting the kids and everything to do with requiring digital ID to be rolled out in Australia so that everyone on the internet can be identified um as you know the the the the source of of a comment you on on Twitter or on a YouTube video or whatever it may be. In fact, our prime minister Anthony Albanzy was some years ago, there's a there's a clip online where he was asked if he was ever going to be dictated for a day, what's the one thing he'll do? And he said, "Ban social media because he's not so thick skinned and um you know, doesn't like people talking about things on the on on the internet about him." So, this law is coming in now. The tantrums are going to be insane. Obviously, they just tried banning social media and was it Nepal and everyone rioted and set fire to parliament and so forth. But the ramifications of trying to stop people saying nasty things on the internet is more than just X and Facebook and Instagram and so forth. Um the e safety commission there is now looking at whether to ban Roblox, Legoland and GitHub because they're all places that people can leave comments etc. So that shows you how kind of insane this law is. And so by virtue of that they've also said they're going to require it for search engines. Now AI is basically a modern version of a search engine. And you know while we have not seen I think yet substantial deviation away from Google and the traditional search engines to the chat like interfaces for search that's basically what a lot of people are predicting and I I believe the reason he's rolling out the age verification is because he knows that the e- safety regulator is going to require uh them to um do age verification and you know Starmer over in the UK is now trying to push digital ID as a excuse to of what what he needs in place in order to solve the um mass immigration problem that he's been running at full speed over there as well. And it's causing all sorts of social unrest. And he's saying, "Well, these people coming across from Africa into into the UK. We can't stop them from working unless we have digital ID." Although he was pulled up this week, uh said, "Well, they've got to show a national insurance card." And if they're not doing that, they're getting work anyway uh from, you know, doing illegally working and not showing an insurance card. How's digital ID going to help? They're still going to work the same way. But um yeah, I think I you don't know what's going on there. there maybe a few thing a bit confluence of events but I kind of feels that he's just getting ahead of um that because there's quite substantial fines for the companies that allow kids to operate on them and it'll be interesting to see where where it plays out or whether they're actually going to ban GitHub and yeah I mean I come home and watch YouTube at night sometimes I watch prospecting videos and geology videos and how to repair old electronic equipment or what have you fantastic resource for kids and but yeah they're going to ban it so um I get the feeling that that they're just going to have to apply that rule to open eye as well in regards to your first question. I mean, I was pretty amazed by the Tucker Carlson interview. I mean, isn't Tucker an incredible interviewer? That interview pissed me off because we had this scheduled and I was thinking to myself, boy, we are going to rock it, Matt. We're going to do the best AI interview ever done. And Tucker blew me away cuz that guy is not technical at all. And he absolutely nailed that interview. It was like a story arc rivaling Breaking Bad. Watching that interview and just just how you set it up and and kind of it was, you know, for those who haven't watched, I highly encourage you you you watch it. It's is incredible work of art from Tucker. Yeah, it was kind of interesting. You know, obviously all these guys who run these, you know, you know, multi-billion dollar companies talk a big game. They need to talk a big game because, you know, the the whole venture space is kind of like a obeys a power law of investing. you got to kind of swing for the swing for the bleaches and you got to get one investment to return a phenomenal amount of money to make any to make a make a return in your portfolio. Um so they all talk huge gains whether it's Elon, whether it's Sam, whether whoever it is. Um but yeah it and so he kind of um he started off asking him just just things about you know have you seen higher powers of is there something spiritual happening inside the AI? Are they alive? they and so forth and kind of was kind of setting setting Sam up and then um you know and then got to kind of you know the belief system how's the belief system set up in in in these foundational models in in in chat GPT right if it reads everything on the internet uh you can see if you look at the YouTube comments that the sum total of humanity is actually quite bitter and you know argumentative and negative and how does GPT train on all the world and then kind of end up being so politically correct and and and so forth force and it got down to the point where it's like who inside OpenAI is deciding you know what the belief system is of of GPT is it you I want names give me their names and titles and then of course um yeah moved moved on to the the the copyright issue that's happening I I didn't mention before but obviously all the data in the world needs to be consumed to get these models to the next level and anthropics just lost a $ 1.5 billion class action over um copyright infringement because they scanned in half a million books without um paying the authors and $3,000 of work. Uh it's just been ruled to pay 1.5 billion. So there's a real compute cost there um that that's added on top with the training data. But yeah, there was I think it was a whistleblower inside OpenAI that was talking about um potential copyright infringement or what have you from OpenAI. I don't know the full details of that. Then um that whistleblower ended up dead and um I don't know if I probably should preempt people watching Tucker's Tucker's interview, but it was it was absolutely incredible the questioning that that kind of came out around that and asking Sam what he thought of it. And I don't know, I thought the average person in the street if you kind of asked, you know, did you kill someone? They would go no. And then I and then don't be stupid, you're an idiot. Sort of a response, but way in which that was kind of I I think I think Sam was completely thrown by the question. But um yeah, it was kind of interesting how the how the responses came out. I thought that was amazing. And as an interviewer, boy, I was just envious of Carlson because he nailed that. I guess we should explain what was going on is he was Carlson was asking Alman about a very high-profile murder of one of OpenAI's employees. And Sam Well, suicide or suicide. Oh, yes. I'm sorry. Murder or suicide? Could it be either? Sam tried to take the high road and show Tucker up and say, "Oh, Tucker, come on. We're we're talking about the dead here. Don't you think we should have a little more respect for the subject matter?" And he was trying to be the holier than thou. You know, I'm going to put you in your place, Tucker, and make you look the bad guy. And Carlson just kept his composure so perfectly. And oh gosh, Sam, you know, he would definitely be right. It would be frankly very inappropriate for me to ask that question at anything less than the behest of his mother who believes that you ordered his murder. So, let's just skip to the chase. Sam, did you did you kill him or didn't you? It was something almost that direct. And I thought, wow, I don't even fantasize about being that good at interviewing someday. On that note, let's uh let's end it there, Matt, because we are running out of time. Freelancer.com is an amazing platform. That is your day job. It is just a phenomenal to me. You you pretty much upstage our entire episode 500 countdown with something that you do as a hobby. This is not even your day job. What do you do for a living in your day job? And how can people learn more about how they can outsource a whole lot of cool stuff at freelancer.com? Well, what whatever you need done, uh we can do it for you at Freelancer, right? So, we make it real. We turn your dreams into reality. what you start want to start a business, you want to grow your business, you want to find people to build a product for you. We have 83 million people around the world with every skill you can possibly imagine. You'll get it done for you at a fraction of the costs, right? So, you can just whack down a credit card and start the next, you know, I don't know, maybe start the next OpenAI, start the next Uber for cats, pizza review site that delivers, whatever it is, you can get it done on freelancer and uh freelancer.com. Just post your project. It's free. Give it a go and you'll see the magic. and all the freelancers now AI powered and can get your job done, your product built, your service delivered uh at a fraction of the time, fraction of the cost. And I can definitely give a personal endorsement because I do use it regularly and I would say it's not really a complaint but the only uh really urgently needed repair at Freelancer is you got to filter out how much you can get at a low price because it's overwhelming to the point that you can't just can't handle it. Don't pay 300 bucks for a logo design. you will get three weeks of sorting through contest entrance be before you're done. Matt, I can't thank you enough. We're going to wrap it there and Patrick Sesna and I will be back as Macrovoices continues right here at macrovoices.com. [Music] Now back to your hosts, Eric Townsend and Patrick Szna. Eric, it was great to have Matt back on the show. Always a listener favorite. Patrick, we're getting great feedback on the new trade of the week segment. What's on deck this week? Listeners, you're going to find the download link for the postgame trade of the week in your research roundup email. If you don't have a research roundup email, that means you have not yet registered at macrovoices.com. Just go to our homepage, macrovoices.com, and click on the red button over Matt's picture saying looking for the downloads. Eric, let's go a little deeper into the AI bubble theme we just heard from Matt Barry. Now, Matt raised some serious concerns about the sustainability of this AI boom. But what I've learned in almost 30 years of trading is that bubbles always go farther and last longer than any rational person expects. Shorting the bubble before it pops is a widowmaker trade. You can be absolutely right about the endgame and still go broke along the way there. The time to press the short is after the airs already started coming out of the bubble. So the way I think about it is this. As Soros famously said, when he sees a bubble, he buys it. In the short term, the performance is chasing where the money is flowing. But because you know how it ends, you have to play it in a convex way with defined risk instead of just sitting delta 1 long and fully exposed on the left tail. That's the lesson from Stanley Denmiller, one of the smartest traders of our time, who openly tells the story of buying billions of dollars of tech stocks near the top of the dotcom bubble only to lose $3 billion in six weeks when the music stopped. So, how do you apply that lesson today? A good example is Nvidia. If you want to participate in the AI run, but with defined risk, instead of buying the stock outright, you could structure a bull call spread. For example, out to December 2026, you could buy the 200 call for around $10 and sell the $220 call for about $4.40. That's a net debit of $5.60. What does this give you? A maximum upside of $20 between the strikes less the $5.60 you paid. So about $14.40 potential reward against $560 of defined risk. In other words, almost a 3:1 upside with no tail risk. That's exactly how you chase a bubble in a smart way. Convex exposure, defined downside, and plenty of participation if the mania continues running. So, Eric, that's exactly how you chase a bubble the smart way. Convex exposure, defined downside, and plenty of participation if the media keeps running. If anyone wants to look at this deeper, the breakdown of the trade is on page two of this week's chart deck. That explanation worked for the pros and of course our retail audience can get the full briefing by attending Patrick's Monday webinar which always dissects the trade of the week in detail. Macrovoices listeners can get a free trial at bigpicturetrading.com. Patrick, let's start with equities as per normal. What are the charts telling you? So Eric, at the time of recording here, the S&P 500 is trading at 6753. The S&P futures closing exactly at 6,800. We continue to close at fresh new highs on this S&P as it relentlessly continues to climb. So, uh there is absolutely nothing bearish to say technically on the trend. Old dips keep getting bought, higher highs and higher lows. Uh everything is working in the favor of the bulls. But Eric, when we look at this from a quantitative perspective, this is not only the longest rally in duration, but also the largest in magnitude that we've had without a 5% correction this decade. That's 100 percentile. At some point, we are going to just get a correction. It's just very natural that the market does that and it's going to inevitably come. What are some of the things that are concerning from that perspective? Well, number one, uh we are continuing to see the breath of the market deteriorating. We have only 55% of stocks trading above their 50-day moving averages in this environment. That's come off of a high of near 75 80% just a few months ago. Yet, the market here continues to make new highs. It's continues to show that the market is relying more and more on a fewer and fewer number of stocks to keep this going. Another example of that is looking at the financials, the quintessential beta 1 asset. They have put in their highs back in August and we have not been able to see the XLF uh financial ETF make a higher high and hold it since then. And so we've continued to see that this market is participating pretty much on this AI boom and the breath of the market is not contributing. This in itself is showing that there is uh a weakness under the hood and inevitably something will be a catalyst that will spur on at least a solid 300 S&P point correction in the 5% variety. We'll see uh what the trigger for that ultimately will come at. Patrick, let's hit the dollar index. Plenty to talk about there. Well, Eric, let's talk about that dollar because the dollar has broken to a higher high. uh and we have now seen that trade range that was established throughout July, August, and September starting to be broken to the upside. Obviously, we had a brief little rip higher in late July that still hasn't been able to be beaten. But overall, we've seen the price action of dollar strengthening. We're now four, five days above its 50-day moving average. But it's not just the dollar index chart that's interesting. It's about the fact that the cross currencies are all breaking. we see a euro break to a little bit of a lower low. Uh now consolidating below its 50-day. The pound sterling having had a failed rally here uh last week that couldn't beat its 50-day moving average and roll over. We had those uh surprise election results in Japan that sent the yen sent lower with the US dollar ripping to now almost six month highs against the yen. We have the US dollar against the CAD breaking out to multi-month highs. And so we're seeing that under the hood, we have a lot of these currencies where the US dollar is already strengthening. To me, this is very interesting because arguably so many of the asset classes from an intermarket perspective that have worked so well this year were had the tailwind of a weak dollar. If the US dollar here begins some counter trend trade, maybe it's just a retracement, maybe it's not a new US dollar bull market, but some sort of a retracement that lasts several months and mean reverts a part of that loss. Uh the question is is that is that going to be the catalyst that spurs profit taking in so many of these assets that have worked so well because of the dollar weakness? Nonetheless, watching here whether this US dollar breakout is for real. West Texas intermediate crude oil broke down to retest its May lows last week, but our good friend Dr. Anna Alhaji has a research note out saying the bearish narrative probably isn't right. So, what comes next in the charts, Patrick? Yeah, Eric. Well, looking at crude oil, technically the price action is quite distributive. Uh lower highs, lower lows. Now, while we have bounced this week, we haven't been able to bounce back above the 50-day moving average, nor above its uh basic 50% retracement of the prior sell-off. So, you still have to assume at this moment that this price action is distributive. But overall, we have seen a fair value zone established throughout the summer in this kind uh low60s area, and we haven't seen a technical legitimate breakdown out of it. And so in theory, this consolidation could see the oil trade back to the top end of the range and just stay dominant in this new fair value zone. Uh in the end, there is no technical evidence that there's an imminent new bull breakout. That false start few weeks ago kind of ended that uh very quickly, but I'm still looking at this very much from a neutral perspective. And Patrick, needless to say, we've got to hit the gold chart this week. Yeah, Eric, we do have to talk about gold. like what a rip this thing has had. We've now cleared the 4,000 mark and are completing the measured move by just simply comparing the length of the first part of the rally that happened in the first quarter of the year to the length of this bull impulse. So now we're in a situation where gold is pretty much starting to exhaust itself. And what's interesting is that silver finishing a measured move, platinum and platium breaking out in this extraordinary way. We just have this amazing bull run in all the entire precious metals market. So, to me, this is balancing the long-term bullish perspective of precious metals because I think that this has legs to continue in the years to come, doing incredibly well, and balancing that with short-term tactical strategies in terms of whether this is the time to a accumulate more or whether you need to wait for a pullback in order uh to reposition yourself on any precious metals positioning. As from my perspective, I think at this stage this there is very little asymmetry in starting any new buying here on gold. At some stage here, like we talked about last week, there's a potential at any point for a two even $300 pullback. That would just be the new buying opportunity. I'm not in any way bearish, but I think there's lots of opportunity now to wait for pullbacks for new tactical entries. Patrick, I can't believe it, but because I've been traveling all week, I'm actually out of touch with the uranium market as well. What's going on in the charts? Well, Eric, let's talk about uranium. As as I've said in previous episodes, we had a bare market that ended back in March and April from the looking at it from the commodity price. And we've seen generally positive price action over the last six months. Higher highs, higher lows, above all its moving averages. Now this week we finally got a brea a breather a pullback and it's coming right to a 50% retracement coming right back to the levels where the highs were back in June and July. This is a very interesting moment to see whether the buy on dip traders show up right in this sweet spot because that is a typical area where you would see if it was bullish the dips starting to be bought here. Wow Patrick we were talking about whether or not copper was going to find some some legs in its rally. big breakout last Friday. Seems like the market's got the idea. What comes next? Well, Eric, on that copper chart, we definitely are seeing uh short-term bullish price action. Uh every dip is being bought, higher highs, getting above key uh high volume consolidation levels that were established earlier in the year. It's very reasonable to assume that we could be testing some of the highs that were established in 2024 and 25 up near the 5 and a/4 to 550 area just above. Patrick, before we wrap up this week's show, let's hit that 10-year Treasury note chart. Finally, I wanted to just touch on that 10-year Treasury yield. And we continue to see is that the yields continue to make lower lows and lower highs, continue to reject a basic 50-day moving average. So you still have a primary downtrend in yields and a primary bull phase in bonds. We're going to continue to see whether that trend continues, but at this stage uh it's very plausible to have downside targets near 360 to 380 on the yields. Folks, if you enjoy Patrick's chart decks, you can get them every single day of the week with a free trial of BigPictur Trading. The details are on the last pages of the slide deck or just go to bigpicturetrading.com. Patrick, tell them what they can expect to find in this week's research roundup. Well, in this week's research roundup, you're going to find the transcript for today's interview and the trade of the week chart book we just discussed here in the postgame, including a number of links to articles that we found interesting. You're going to find this link and so much more in this week's research roundup. So, that does it for this week's episode. We appreciate all the feedback and support we get from our listeners, and we're always looking for suggestions on how we can make the program even better. 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