Thursday 12-11 #bubblewatch

Last night Asian and futures markets were bearish on Oracle due to their disappointing earnings report and I suggested if this continued once USA markets opened this morning the malaise could spread to other tech stocks.

And … yeah…

> Nasdaq slips to one-week low as Oracle reignites AI jitters. https://www.reuters.com/business/wall-street-futures-slide-oracles-forecast-revives-ai-bubble-fears-2025-12-11/

This isn't the #AI #bubble popping. Yet. But the smarter investors are slowly easing their money out while it's still over-inflated.

Friday 12-12 #bubblewatch

The market rallied a bit by EOD yesterday, but that evaporated when it opened this morning, followed by tech stocks hitting two-week lows. Oracle and other #AI #bubble concerns were a big reason.

> Wall St slides as inflation worries, AI bubble fears spook investors. https://www.reuters.com/business/nasdaq-sp-500-futures-slip-broadcom-outlook-reignites-ai-bubble-fears-2025-12-12/

We might be edging our way up to the tipping point!

(I might need to post an update today once the USA markets close.)

Weekend #bubblewatch update.

The Oracle and Broadcom earnings reports are certainly having an effect on tech, and most especially #AI, stocks. But, as I suggested on Thursday, it's a bit muted and not the bubble popping.

> Oracle-Broadcom one-two punch hits AI trade, but investor optimism persists. https://www.reuters.com/business/finance/oracles-stumble-hits-ai-trade-many-remain-bullish-2025-12-12/

The key here? Some investors are taking their profits and walking away, but not enough to get the short players out of bed. There remains a LOT of incentivized optimism.

More:

@ChrisMayLA6 has an interesting chart showing one significant difference between the current #AI #bubble compared to both the 2000 Tech bubble and the 1989 Japan Finance bubble.

Of course this chart only includes big players with track records, which is fair. But a bit misleading for the AI bubble because the big players this time (aside from Tesla) were priced down in a way similar to IBM in previous bubbles. While smaller players are priced stupid high.

> https://zirk.us/@ChrisMayLA6/115711494979571990

Monday 12-15 #bubblewatch

The entire market is down right now, although tech stocks are down more because they got a head start last week over Oracle and Broadcom earnings reports.

> Wall St indexes subdued as investors position for busy week of data. https://www.reuters.com/business/wall-st-futures-edge-higher-start-data-packed-week-2025-12-15/

One reason Oracle is down is their heavy use of 'Credit Default Swaps' spooked investors. But it's not just Oracle – CDCs are integral to the data center buildout of the #AI #bubble.

> https://www.investing.com/news/stock-market-news/explainerwhat-are-credit-default-swaps-and-why-are-investors-watching-oracles-4404147

Tuesday 12-16 #bubblewatch

Not much to report. Market valuations are bouncing around, but mostly down; in general and not purely tech stocks. (In fact the Nasdaq is up a little from yesterday.)

> Wall St ends mixed, healthcare and energy stocks weigh on S&P. https://www.reuters.com/business/wall-st-futures-slip-investors-brace-key-jobs-report-2025-12-16/

There are still no #economy numbers from the USA gov, but private data show muted retail sales. Not a good sign for this time of year.

Wednesday 12-17 #bubblewatch

I'm not saying the #AI #bubble is popping and I don't think it is popping quite yet. But when it does? It will start out like this…

> Wall Street falls as AI funding jitters hit tech stocks. https://www.reuters.com/business/media-telecom/wall-st-futures-inch-higher-investors-eye-more-data-geopolitics-2025-12-17/

There's been a lot of bad news lately, including more for Oracle, as a major data center project is on the rocks.

> Oracle says Michigan data center project talks on track without Blue Owl. https://www.reuters.com/technology/oracles-10-billion-michigan-data-center-limbo-after-blue-owl-funding-talks-stall-2025-12-17/

#economy

Thursday 12-18 #bubblewatch

Today tech stocks had a small rally, but didn't make up losses earlier in the week. Memory chip makers did especially well, no surprise to anyone who's been watching the effect of #AI companies on that market.

> Wall St closes higher fueled by tech rally, soft inflation data. https://www.reuters.com/sustainability/sustainable-finance-reporting/wall-st-futures-climb-run-up-inflation-data-micron-gains-2025-12-18/

The bubble isn't popping yet folks. But it does seem to have stopped expanding for the last week.

And, no, I have no idea what that means. Nor am I willing to guess.

Friday 12-19 #bubblewatch

And the tech stock rally continues, although two things:

1. I don't think most tech stocks made up for losses earlier in the week

2. This rally is on the back of a strong earnings forecast from Micron Technology today – and said forecast is based on continued #AI #bubble spending; expect analysts to call this out on Monday

> Wall St ends higher as tech rally continues, led by Micron. https://www.reuters.com/world/china/futures-edge-higher-tech-rebound-nike-slumps-china-pain-2025-12-19/

Monday 12-22 #bubblewatch

Looks like tech stocks are going to end the year up. I don't think we'll see the #AI #bubbble pop in 2025.

> Wall Street climbs as tech extends rebound, focus on data. https://www.reuters.com/business/us-stock-futures-rise-ahead-shortened-trading-week-2025-12-22/

That said, I think today is probably the high-water mark for the week and we'll see a drop in remaining trading days. It's been a pattern for a while now.

Tuesday 12-23 #bubblewatch

I was expecting the market to drop a bit today and tomorrow, but the 3rd quarter US gov economic data dropped last night and the market loves it. (I find the reported data rather suspect myself, but then I find everything from the government suspect these days.)

> S&P 500 nears record high as data backs Fed cut expectations. https://www.reuters.com/business/aerospace-defense/wall-st-futures-tick-higher-ahead-gdp-data-2025-12-23/

Wednesday 12-24 #bubblewatch

And the 'Santa Claus Rally' begins…

> Dow, S&P 500 close at record highs as Santa rally starts. https://www.reuters.com/business/futures-dip-shortened-christmas-eve-trading-2025-12-24/

From now until the second trading day of January, all market movements will be entirely disconnected from fundamentals and logic.

Monday 1-5 #bubblewatch is BACK!

During the holidays while bubblewatch was suspended the 'Santa Claus Rally' mostly failed to happen, due to tech stock worries.

> Wall Street ends year's final session lower but posts big annual gains for 2025. https://www.reuters.com/business/us-stock-futures-inch-down-thin-trading-wall-street-eyes-yearly-gains-2025-12-31/

It looked to be much the same once normal trading resumed last Friday, but then things took a turn unrelated to tech.

> Wall St rallies amid energy boost after Venezuela strike; Dow hits record. https://www.reuters.com/world/americas/us-stock-futures-tick-up-oil-companies-jump-venezuela-shock-2026-01-05/

Tuesday 1-6 #bubblewatch

Stolen oil fever still pushing market values high, but today there is unwarranted optimism about the upcoming jobs report as well.

> Tech, healthcare extend Wall St rally in jobs-report week; Dow at record high. https://www.reuters.com/business/wall-street-futures-muted-investors-pause-after-rally-2026-01-06/

> "… you've got a new sense of optimism in the market ... this is a week where we're going to get real economic data for the first time in months and that's going to help clear out some of the fog …"

Wednesday 1-7 #bubblewatch

The USA jobs report came out today and … not glowing. In fact indications of a downturn. Given my concerns about government data from this administration I'm wondering if they massaged those numbers from even worse ones.

In any case the market REALLY wants to stay optimistic. I can't help but feel like it's a perky gym worker trying to rally an exhausted cardio class.

> S&P 500, Nasdaq climb on tech boost, investors take labor data in stride. https://www.reuters.com/business/sp-500-nasdaq-futures-inch-lower-after-rally-labor-data-focus-2026-01-07/

Related: I just found this Paul Krugman interview with Paul Kedrosky from December 3rd and I'd call it 'must reading' if you want to understand what's happening *inside* the bubble. Plus there's some interesting macro thoughts as well.

> Talking With Paul Kedrosky. https://paulkrugman.substack.com/p/talking-with-paul-kedrosky

I'm still working my way through it. The first third is a mid-level introduction to how LLM AI actually works, so it might be skippable. Nonetheless I found it worth my time for a few things I didn't know.

OK, finished it. Some key points I picked up on:

- AI is a *resource extraction economy*! The capex for physical data centers is only a portion of the cost of the chips in those data centers, which they are burning out faster than normal lifetimes.

- The other resource is data to feed the models – and they are running out because they've already mined the entire Internet and every book they could find. Like an oil well going dry.

- Yet another resource is *electricity futures*!

[contd]

- Since power is so important to the data centers they have been buying up contracts for future electricity production; which not only drives up the cost of electricity, there's only so much new power generation you can spin up within the contract's lifetime. As a result it's getting harder and harder to find someone willing to sell electricity futures.

- But, since new powerplants are already coming online as a result? It's distorting the current market. FIFO in action.

[contd]

- Separately, the snake oil sales pitch to 'replace human labor' doesn't take into account the side-effects on the economy of replacing human labor at scale.

- Given all the things said above (and others)? Future revenue predictions for AI are not just inflated, they are pure fiction. And that's assuming the LLMs actually *can* replace human labor at scale.

- There does seem to be a future in more limited models (the Chinese method).

- This might be the biggest bubble *ever*.

[fin]

Thursday 1-8 #bubblewatch

When the market reflects political/social world realities in the darkest way possible. But it does make one wonder if the only thing holding back the #AI #bubble from bursting was a lack, until now, of somewhere else equally terrible for that money to go.

> Wall Street mixed as tech dips and defense stocks rally. https://www.reuters.com/business/us-stock-futures-dip-defense-firms-climb-up-trump-budget-plans-2026-01-08/

Friday 1-9 #bubblewatch

And (some) tech stocks come roaring back.

> S&P 500 hits record high as chipmakers lead broad gains. https://www.reuters.com/business/us-stock-futures-subdued-ahead-crucial-jobs-report-tariff-ruling-2026-01-09/

This back and forth, up and down, is so headspinning. It's probably best to think of it as an example of a confused market searching for stability, but instead lurching back and forth between different industries and market segments. This is *not* a stable market.

Monday 1-12 #bubblewatch

The market is up a bit today, going against the common wisdom that investigating Fed Chair Powell should be of concern. I've seen some people suggesting this is because Big Tech, like Real Estate, loves lower interest rates because they depend so heavily on debt for operations.

You will note the Financial sector isn't doing as well – they know the Fed needs to be independent of the Administration.

> Wall Street indexes gain with tech, Walmart. https://www.reuters.com/business/finance/wall-st-futures-slip-worries-over-fed-independence-financial-stocks-slide-2026-01-12/

The worst part about this whole thing between the Administration and Fed Chair Powell: we probably can't trust either side.

What do I mean by that?

Well, I really doubt Powell is an angel. Like almost anyone else who arrives at a high post in government it's highly likely he is a sociopathic asshole and has done skeevy things. Normally these are overlooked by the powers that be, because they are all the same. (Rocks. Glass Houses.)

But this Administration deserves no trust at all.

Tuesday 1-13 #bubblewatch

The market is down across the board today. Weirdly, the given reason is the Administration threatening to cap credit card rates. It's not clear to me how this would affect tech and industrial stocks, although the throughline to the finance sector is pretty clear.

> Wall Street falls with JPMorgan, credit card companies. https://www.reuters.com/business/wall-street-futures-dip-ahead-jpmorgan-earnings-inflation-data-2026-01-13/

NOTE: It's also not clear to me it is possible to cap lending rates without Congressional action. Maybe it is?

Grrr. Fixing the thread again!

Wednesday 1-14 #bubblewatch

Most market sectors recovered from yesterday's declines, with the exception of Financial and Tech. The Financial losses have a clear reason (see up-thread), but Tech stock valuations wouldn't be affected by that. For now I'm assuming it's more early #AI #bubble investors moving their profits to safer investments, like arms manufacturers.

> Wall St skids after mixed results from big banks; tech stocks retreat. https://www.reuters.com/business/wall-street-futures-decline-ahead-big-bank-earnings-2026-01-14/

NOTE: I accidently broke this thread in late November, losing a few posts. Here is the original start of the #bubblewatch thread from early November:

> https://rustedneuron.com/deck/@jackwilliambell/115495970020295124

(Including this for anyone wanting to be a completist enough to read the whole thing, but assuming it's really only for my records.)

Thursday 1-15 #bubblewatch

And today Finance and Tech sectors are recovering as well. In the case of Tech, this is mostly because chipmakers are predicting record profits this year because of #AI. So it's really just more #bubble talk and some segment of the market is still believing it.

> Wall Street rebounds as banks gain following results; chips rally with TSMC. https://www.reuters.com/business/wall-st-futures-rise-tsmc-sparks-semiconductor-rally-financial-earnings-deck-2026-01-15/

Friday 1-16 #bubblewatch

Mixed trading today. Tech values still buoyed by chipmaker profit predictions … and chipmaker profit predictions still based on assuming the #AI #bubble keeps expanding.

Anyone who thinks the market is always rational has a hole in their head.

> Chip stocks lift S&P 500 in volatile trading ahead of long weekend. https://www.reuters.com/business/wall-st-futures-rise-chipmakers-advance-end-choppy-week-2026-01-16/

Related: Interesting article pointing out the #AI #bubble carries political risks as well.

> ‘Show me the money’ time for AI as political risks loom. If investors start to lose faith in AI, it could dent economic growth and put more pressure on the GOP in the midterms. https://www.politico.com/news/2026/01/16/ai-money-political-risk-00733145

Thing is? Even if the bubble doesn't pop, it's unlikely the #genai sector is going to be profitable this year; if ever. Has anyone done a serious cost analysis of AI usage per prompt?

Monday 1-19 #bubblewatch

I wasn't going to do a bubblewatch today because the market is closed for a USA holiday. But that doesn't mean markets are not operating elsewhere and recent #uspol events have shaken things up.

> Dollar at week low as geopolitics revive 'Sell America' trade. https://www.reuters.com/world/asia-pacific/dollar-week-low-geopolitics-revive-sell-america-trade-2026-01-20/

I've usually avoided making predictions on this thread and the few times I tried I either missed the mark entirely or was only partially right.

But I'm gonna try again.

[contd]

So, first two things: The dollar is taking a bath and USA stock futures (to be settled tomorrow morning) are tanking.

This doesn't bode well for the market tomorrow, but could lead to bargain hunting driving prices back up. HOWEVER…

However, USA Treasury bonds have been doing badly lately, with rising yields and not enough takers. And now we have European countries threatening to pull their money out of the USA bond market.

This is bad. This is really bad.

[contd]

Why? Because all European countries together hold more USA Treasury bonds than even China. If they pull out it could devastate the USA bond market and not just for Treasury bonds.

But it gets worse. If bond values tank from this we could see all foreign AND DOMESTIC bond holders trying to get out before values completely flatline. Think bank run, but on the entire country.

(This is bad for my own investments!)

And I'm not done yet…

[contd]

When the market as a whole looks bad money tends to flee to blue-chip Industrial and Energy stocks. Right now the biggest single sector of the market is the #AI #bubble. And major holders of AI stocks include European retirement and sovereign funds. So if the market looks hinky to them they now have two good reasons to sell and sell quickly.

Meaning, even if it's only those stockholders selling, the AI sector tumbles.

So, will the bubble pop this week? I don't know.

[contd]

What I'm saying is, I don't know if the European national and retirement funds are actually going to do those things. Right now the market is indicating there are fears it will happen, but it could also even out tomorrow. Who knows?

But I do feel fairly confident in predicting the AI bubble will pop if European funds start divesting from USA bonds and stocks in a big way. Only if it does? It's now 99% more likely it will take the rest of the economy with it.

Black Tuesday? We'll see.

[fin]

MORE:

Here is a helpful explainer from 2024 on how USA Treasury bonds work and how things can go wrong if bond buyers decide the USA is *not a good investment*.

> How to tell if the US Treasury is having trouble borrowing in the bond market. https://www.brookings.edu/articles/how-to-tell-if-the-us-treasury-is-having-trouble-borrowing-in-the-bond-market/

What this article doesn't cover in-depth is what happens if that day comes. The answer is simple: the dollar crashes and the USA economy goes off a cliff. Most likely dragging the rest of the world along with it.

Holding off on today's #bubblewatch until the market closes. But, if you want to see how it's going so far?

I'll keep watching.

All that said? It's important to note CNN's 'Fear and Greed Index' is currently neutral. Which is a sign the market could recover some value by end of day.

> https://www.cnn.com/markets/fear-and-greed

Tuesday 1-20 #bubblewatch

Well, in the end today's trading was neither a complete collapse of the market nor a recovery due to bargain hunters. Tech stocks ended down the most, but all market segments were down significantly. I was talking about potential issues with USA bonds above, but today the Japan sovereign bonds were in play. Still, the 'Sell America' talk continues. (Mentioned in the article.)

> Global bond markets shaken by Japan selloff, Greenland worries. https://www.reuters.com/world/asia-pacific/japanese-selloff-greenland-fears-ripple-through-debt-ridden-global-bond-markets-2026-01-20/

It begins…

> Danish pension fund to divest its U.S. Treasuries. https://www.reuters.com/business/danish-pension-fund-divest-its-us-treasuries-2026-01-20/

Still, $100 million is a drop in the bucket. But if there are a hundred such drops? Then we have a storm.

ETA: I should point out I'm not cheerleading this! If the USA bond market collapses it will take a big chunk of my investments with it. This is money I'm counting on to get me into a care home where they change your diaper regularly when I get to where I need that.