저자: Kevin · 외국인
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연쇄적 하락(doom loop)으로 소프트웨어·사모신용·AI 관련 자산이 붕괴 중이라는 주장. 오라클 CDS 130bp 상승, BDC 포트폴리오 55%가 AI 리스크 노출, 엔비디아-오픈AI 100억달러 딜 흔들림을 근거로 제시. 메모리·파운드리 등 후기사이클 자산 회피, 부채 축소 권고. 10년물 금리 4.27% 유지로 연준 인하 기대와 괴리 지적. 본인 부동산 플랫폼 펀드레이즈 홍보 포함.
다듬은 글
Holy smokes, we might be going through a rolling recession that has already started. Look at these numbers. And these numbers are just straight up facts. They're not an opinion. The S&P 500 software index is down 16% in just 33 days. That's not to mention other software stocks are just falling straight off any semblance of a cliff.
We'll look at those in just a moment. But look at some fintexs. Even hood so fine all-time highs to 30 to 40% crash. Silver 30% crash in a day. It was as much as 40 to even above 40% at one point. It's recovered a little bit but still down. Critical minerals over 40% crash. Crypto just looking at Bitcoin obviously there are many different forms but just looking at Bitcoin you're down 39 to more.
or now you're probably closer to 42% off of all-time highs. Data center stocks are down 30 to 50%. Oracle just yesterday announces that they're going to raise $25 billion in debt and $25 billion in equity. And we think, oh great, this is good news. It means that they'll have enough money to keep their obligations going.
Oh, but wait, stocks continue to sell off on data centers. What is going on? It's not even to mention the postcoid consumer ones which really never fully recovered. But in fairness, stocks like Target have bounced off lows recently, but they're still down 50% from all-time highs just a couple years ago.
Uh other stocks like Six Flags or Dave and Busters are having the same problem. So, it's like you're having these rolling holes in the market and it's not great. It comes across as dare I say almost a u pretty clear pattern here. a rolling stock start to a bare market. Now, you know what is causing all of this?
And well, in this video, we're going to explain my thesis for exactly what's causing all of this. And it's this, the doom loop of everything getting pulled into the void. We'll explain that in just a moment. That'll actually make a lot more sense if we go through it methodically. But first, just to stay on method here, look at just intraday.
Okay, the day after we get that announcement from Oracle, people are cheering because Oracle's credit default swaps fell to 130 uh because they're like, "Oh, good. They're not only going to dilute bond holders, they're going to issue a bunch of shares." And I'm like, man, first of all, 130 is still an all-time high since 2008 for the credit default swap level for Oracle.
But if you're going to dilute the shareholders, the stock's going to fall. We talked about that yesterday. Look, now it's down 4.5%. that's just the very next day. Uh and that then increases the risk for the entire solveny of the whole company which is subsequently also bad for shareholders. But forget just Oracle for a moment.
It's Eli Liy. Healthcare has been that healthcare and banks, they've been the defensive ones that people have been going to. Loheed Martin, you know, these are stocks that have been at all-time freaking highs because people are rushing to defensives, right? uh you know, guns and banks basically to try to stay away from the carnage.
Robin Hood's down another 5%, Trade Desk 10%, Microsoft another 3% after losing the 429 line. SoFi's down almost 20 bucks again, which is remarkable. Some of these real estate companies, Invitation Homes, American for Homes for Rent, they've been coming down. This is pretty aggressive. And then, of course, there's the NASDAQ 100 intraday down over 2%.
That's a pretty good drop within a day. So, what the hell is going on? Well, the first thing to understand is yesterday was really weird. Not just yesterday, but over the last few days, we've seen some odd stuff happen in artificial intelligence. We've seen this pullback from Jensen of this $100 billion deal, which really came across as almost a certain deal back in the day.
Just listen to how like Bloomberg, for example, pitched the deal back then. They were talking about it as if it was hundred billion in the bag already. And that's why so many people thought it was hundred billion in the bag. What was the genesis of this hundred billion investment? That's $95 billion more than they announced they were putting into Intel last week.
Their topic is Nvidia's investment of hundred billion into open AI and in return open AAI is going to be buying Nvidia chip. Now, maybe that was just a misunderstanding, but Jensen did recently pull it back. And the Wall Street Journal exclusively reported that it was because they had concerns about the lack of discipline at OpenAI.
Talked in detail about this yesterday. But what happened after I posted that video was really interesting because OpenAI then like a kid in kindergarten who just got in trouble from the kid that sits next to him. He's like, "Yeah, oh yeah, you you're not going to give me my lollipop. Well, your chips suck anyway." I kid you not.
After Jensen is like, "Ah, you know, privately we question OpenAI's discipline." What happens? All of a sudden, you get a report from Reuters that OpenAI is quote unsatisfied with the speed at which Nvidia's hardware can spit out answers. And uh not only that, OpenAI has determined, quote, it needs alternatives.
Huh, interesting. So in September, you have this essentially hundred billion certain. It it feels that way, even though it was waves of 10 billion investments. Now we're pulling back on the very first of those $10 billion investments. Now OpenAI, like a kindergartener, is like, "Yeah, well your chips suck anyway." And then all of a sudden, Oracle is getting involved in the weirdest possible way.
You would think that Oracle would be like, "Okay, yeah, like it's not a big deal that they're arguing with each other, even though we know that like $300 billion of our remaining performance obligations happen to come from OpenAI. You know, some more comes from X, but we'll talk about X later." Oracle then comes out with this crazy tweet.
Oracle says, "The NVIDIA OpenAI deal, in other words, the NVIDIA OpenAI drama, has zero impact on our financial relationship with OpenAI. We remain highly confident in OpenAI's ability to raise funds and meet its commitments." Huh. This had Finn Twit freaking out yesterday. I was actively watching other people on financial Twitter freaking out going, "Um, why do you guys need to even respond to that?" Because the fact that you're responding to it makes us think that even though you're saying it's not a problem, it's actually a really big problem.
And I then got really sused out when I saw Sam Oldman tweet the following uh just a few hours after all this drama spilled over. We love working with Nvidia and they make the best chips in the world. We hope to be a gigant gigantic customer for a very long time. I don't get where all this insanity is coming from.
I feel like he's directly responding to my video. You know, it's kind of like the murderer's been caught. Oh, maybe that's an insensitive analogy to use for Sam Alman. But anyway, um you know, my analogy on top of this is is of course this. It sounds to me like Sam Alman's investors just got a call demanding to know what the f all the drama is about and to just fix it.
Hence that tweet from Sam. So there's a lot of drama. Like you've got this start of kind of this like rolling selloff in the stock market. You know, people are kind of running from one meme to the next. They don't protect themselves. So they get hosed there, then they get hosed there, then they get hosed there, then they get hosed there.
And all of a sudden, as we're seeing this liquidity drain, you're getting cycle after cycle that's just getting deleted. It's like the Grim Reaper meme where he's going like door to door. And you know, some people are going to be like, "But Kevin, you know, memory is still doing fine." Yeah, the grim reaper hasn't opened that door yet.
He's still coming. That's coming. We know that's coming. That's why I say set the trailing stops. But anyway, all of this relates to the private credit disaster, which we also talked about yesterday. But think about this for a moment. easiest thing to start with is understand what's going like what started this this shift if you will uh in artificial intelligence.
Well, a lot of it was this recent explosion in Gemini. you know, come uh August to November of last year, Gemini really exploded in usage, which then led to questions around Chat GPT's dominance and really the question of, hey, if people are actually spending more time chatting with Gemini than they are with chat GPT and GPT is like falling and then in total, we're seeing total artificial intelligence chatbot usage level out or sort of like peter out.
Well, that's a problem. remember from a few days ago and I'll pull up the chart. We looked up uh how we're seeing the rates of artificial intelligence adoption at firms. You know, not to rehash old stuff just to sort of bring this up again though, just to remind him. Uh not only do we see the rate of adoption at firms for artificial intelligence slow down a lot, but we're also seeing usage of apps like growth levels basically flatline.
And then that leads to the question, hey, well, if we're flatlining, do we really need all this extra investment, which then leads to private credit burnout? Okay, AI adoption rates starting to flatten out across all firm sizes. So, the new adoption rate is flattening out. AI adoption rates started to flatten out across all firm sizes, right?
This is the end of the S-curve. This is that late cycle I always talk about. Uh and then of course you haven't seen substantial increases in usage over the last year for people who actually are using generative AI or some gen AI or whatever. It's like people who are using it great but you're just not seeing that base grow.
All of that is somewhat problematic especially since private credit really relies on well basically more of the spending. And this is where we get to this or investment. This is where we get to this sort of doom loop. And then I'd also like to briefly talk about SpaceX. See, hedge funds right now are convinced that software is screwed, that semiconductors and equipment, that's where they want to be positioned.
So, this is hedge fund positioning according to Goldman Sachs skyrocketing on the right side at the same time as software positioning is plummeting. Okay, not great. That's for hedge funds going through January of 2026. But here's possibly a bigger issue to focus on. Look at this. The red and orange portion of this pie right here has to do with total business development corporation exposure to sectors with AI risk.
It's more than half. 55% of the total BDC portfolio comp is exposed to artificial intelligence. Now, why is that problematic? Well, it's problematic because these very businesses uh make up uh the vast majority of the private credit market. And if you want to look at sort of a daily look at, you know, how are people feeling about private credit, there's some tickers that I encourage you to watch.
I'll pull them up here. Uh let's see here. So, I would encourage you look for the following. Look at these. Aries Capital down 2.25%. It's done decently, but we're certainly topped out. Topped out over here mid last year, and we're starting to come down a little bit, breaking that 100 day moving average.
This is the best of all of these private credit ones. Here's Prospect Capital. Okay, this sucker topped out in 2021, and it's really fallen off a cliff in the last year. Here's KKR. It double peaked right over here, the second double peak in July. We've been straight down since then. Black Rockck peaked out in 2023 and it's at essentially its lowest level since coming out of CO over here.
This particular Black Rockck TCPC fund Blue Owl Technology has never been this low in the history of this uh entity. Right now it has a price to book of.7 which means it's selling for.7 cents on the dollar 30% discount. Capital here this is the company itself. So, not an underlying feeder fund, but you could see it also peaked out in January of 2025 and it's been plummeting.
So, you've got a lot of pain in private credit. But that's where we get to the doom loop. And of course, like what do we do in this? And I'm going to be very transparent about what we do in this uh in just a moment. But look at the doom loop. Okay. So, in the doom loop, everything gets pulled into the void, right?
The doom loop void is collapse. All right. And and so what pulls into the void? Bank lending to data centers is slowing. That was per Bloomberg. Titans credit. Oracle CDS's have already rocketed up. They're still at the highest level since 2008, even though they came back a little bit recently. That Titans credit.
Oracle finances get crappier. Lower solvency. They might go insolvent. Uh Nvidia tightens their belt. Tightens credit for the whole AI industry. Open AAI needs more money. can't get it. Lower liquidity. Private credit slowing down. Titans credit obviously. Uh the UAE deal is still on ice. Frozen Titans investment.
Titans credit. What about over here? AI growth fears tank AI software. This just lowers liquidity for the whole industry. What do we have over here? AI software has large exposure exposure inside of private credit. 55% of BDC's. Again, doom loop of lower liquidity. Then you get the contagion that spreads to private markets.
Private credit worsens even more as NAV gets crushed. Falling liquidity accelerates the rush for the exits in private credit. Private credit slows due to the collapse of accounting standards and fraud. Uh that was actually potentially the first thing that started all of this. But anyway, it's a big circle.
It doesn't matter now. Like the more this cycle happens, the more you just end up restarting the cycle and more there'll be even more private credit failures and bank failures and all that. So, it's scary. So, you know, what do you do? Uh, and and you know, in fairness, like I look at us and I'm like, well, you know, we're a company as well that operates a real estate software, uh, you know, app that we just launched.
And so, I'm thinking to myself like, okay, you know, how how does this kind of stuff affect us? Well, the I'm just going to I'm using this not as a pitch. I'm using this as just sort of a a way to think about it. Uh, I I really think that, you know, if this doom loop continues, whatever this weirdness is that's going on, really, unfortunately, debt is going to suck.
Debt is going to become an anchor. Kevin Walsh is an anchor for debt because he's a deflation guy. He's a no stimulus guy. That's going to leave us in the hole longer. That means that debt is even more burdensome. So, you know, that's why and I I just like I feel like I've been saying it for like 9 months now.
It's been about 9 months that I personally have been debtree and my real estate startup uh doesn't have any bank debt. And we look at the last 9 months and we're like, this is great. Why would we take out bank debt right now? That's really, really risky. Like, of course, if we're going to go to the moon, it's like, yeah, leverage up debt, but you don't want to leverage up to the downside.
That's terrible. So, I mean, but that's that's obvious. But like, okay, cool. So, yeah, you you try to pay off some debt. You lower the outstanding principle on your credit cards or your cars or your margin or your home or whatever. But where's the safety play? Well, that's the question. A lot of people are saying, okay, well, the safety play right now is in SanDisk or memory stocks, which I get it.
Like, this has been a remarkable skyrocketing chart. You know, we did an analysis on SanDisk back when it was $250 and uh over there in our uh stocks and sight group or our alpha membership, which you could join at mke.com. This is what I wrote. I wrote the following on SanDisk right here that they've got $438 million of free cash flow.
They've got a good balance sheet, plenty of cash, and accounts receivables to pay for all of their debt. Their free cash flow is solid. uh they are um growing their EPS massively at uh $210. They're pretty close to fair value, but they've got these insane that's based on Wall Street projections. But then we say they have these insane margins that are exploding.
And so it makes sense people are running into into you know memory stocks. But the problem with memory stocks is they're late cycle. That's the big issue that we also talk about is that a late cycle stock benefits when everybody's kind of looking for safety. But what happens if the whole artificial intelligence sort of boom slows down?
Well, that light cycle stock of memory starts to tank, doesn't do well. So now all of a sudden people are trying to run into a stock like pterodine for safety. Now, Pterodine is an interesting one because Pterodine is a stock that we projected had upside uh when it was about $150. And I could show you this so you could see it in writing so that way we know it's factual.
But I just want you to see where the market's heading. Okay, this isn't a pitch. It's just to show you where things are heading. So, right over here, we did a fundamental analysis last on Pterodigine. And if you jump into my Pterodine analysis, also in the alpha membership, you can see that I wrote this suggests this stock could be a $283 stock with Wall Street growth estimates at 31% average growth over the next four years.
If we take Kevin's estimates at a higher average growth, given that robotics revenue was flat, and I expect that to jump, uh, and robots only take 8% of sales right now, then you can actually justify a $317 valuation for this stock. definitely has some serious upside. Obviously, in the near term, the technicals were overbought, but that's always the case when you have upward momentum.
So, valuation was good then. Balance sheet was good. Their margins suggest decent pricing power, low robotics exposure that I think is actually going to boom. And so, that's where people are running into. But the reality is none of these are going to be safe in in, you know, a recessionary environment.
I think that's where all of this stuff ends up tanking and it just sucks. So then the question is, okay, but what about the bond war that's going on? And bonds create an issue. See, one of the reasons we're seeing this rising 210 spread is because the short end of the curve is going, "Oh, Kevin Walsh is going to cut interest rates.
Yay." But then the long end of the curve, the 10-year side of the curve is like, "Uh, yeah, good luck with that. Did you read the S&P and PMI reports uh for manufacturing? how we're still seeing massive inflation impetuses coming from Donald Trump's tariffs. Look at that. Might be why you got at least somewhat of a rebound in gold and silver, though I don't think that'll last.
Probably keep going for a while. But anyway, look at this. The tenure is still sitting at 4.27. This is higher than where Donald Trump announced he wanted to see mortgage rates lower by manipulating the mortgage bond market. You know, MBS's by basically printing $200 billion more of debt. The issue is bond investors, or you could call them at this point, bond vigilantes, are pissed off.
You know, they look at the market and they say, "We've got serious underlying issues, a potential doom loop of issues." Look at this. Tesla's going right back to its 414. We've got this potential doom loop of issues. And really, there are few places to hide. So, I will say I feel really exceptionally frustrated.
I feel like the people who are booming up this economy are booming up this economy on the premise or on the backs of hope and hype. And that's where, you know, it's worth talking a little bit about what's going on with this SpaceX deal. Let me pull up my SpaceX notes because these I think are interesting because Elon is kind of the definition of of hype boy.
We know that. I like Elon, but you know, we know he's a little hypy. The problem I find with this SpaceX XAI merger is that you know SpaceX has about 16 billion in revenue maybe 8 billion in IBIDA which you know if you include stockbased comp and and all the other things that they've adjusted out of uh this is is probably a lot lower.
They do indicate cash flow about1 to2 billion a year in free cash flow, but we kind of need that to keep funding rocket launches and technology, especially if you really do want data centers in space. You're going to need more R&D research to actually pull that off. How are you going to cool in space?
How are you going to deliver in space? How are you going to conduct maintenance in space? How are you going to get servers that are properly shielded in space when these servers are designed to be used on Earth? And we're already worried that we've built too many of these servers on Earth. I mean, SpaceX basically just bought, you know, multiple hundreds of thousands of H100s, and we probably don't even need that many H100s at Grock.
I mean, it's literally the fourth or fifth best AI, which is bad. And you go back to the Financial Times chart, and it's like GPT and Gemini are up here in terms of app downloads. Grock isn't even labeled. So, the fact that this company has essentially 1/4 of the valuation of SpaceX is kind of insane to me.
Uh, you know, this, you know, Elon struck a really good negotiation with with Elon, but the fact that SpaceX, you know, is a company that's been around for 25 years and is cash flow positive and is supposedly worth a trillion dollars. and XAI which has been around for 20 what two months or whatever which loses money and has maybe 1% of the revenue that OpenAI has that company is all of a sudden supposed to be worth 25% or 1/4 of what SpaceX is worth combining the companies to be worth 1.25 25.
To me, all of this is telling me that the doom loop is real. It's basically becoming impossible to raise money to fund these AI models, which Elon Musk is dead set on funding. And so, he basically has to go rob SpaceX investors to pull off the funding. And the way you sell it is with this vision of space data centers.
But XAI is now bringing over its debt baggage. Uh, and now all of a sudden SpaceX kills its neutrality in shipping uh uh, you know, server equipment to space for Gemini or Amazon. Like really, if we're going to have a space data center race, wouldn't you want to be the neutral delivery vehicle, you know, and just have like that side contract with XAI and, you know, you do it for a little bit of a friendto friend discount or something?
It's weird to me. So, all of it relates to this. I call it the doom loop. Uh, and I don't know the exact answer of where this means we're going. But what I do know is that we have a fund raise ending on Friday. And and I get it. You know, people are going to be like, "Hey, you know that Kevin, that's great.
You guys don't have debt. Well, how much of your business is is valued in software?" And the good news is if you're worried about software valuations going down, our software valuation for our company is basically zero. Because when we created this fund raise, we used our August of 2024 valuation, a buck 40 a share, and they didn't even know we had software.
You know, they didn't, as far as I'm aware, they didn't include any kind of intention of of selling AI. I mean, I was looking at the broker letter and I'm like, I they didn't we weren't even planning on selling AI until like four or five months uh you know, into last year. Uh so it was like last May and we're like wow we should make an app and sell our sell our software.
So it's kind of interesting but I personally think if you are looking for uh something that's real estate that's diversified away from this insanity in the stock market and you're basically in my opinion paying $0 for valuation wise for software. So in my opinion there's only upside in that. You know obviously n check this out.
You earn a 5% yield. You get all the upside in the stock. It's real estate backed. We've got no bank debt. You can invest with credit card, AC, or wire. No fees. The investment round closes February 6th at 11:59 p.m. That's this Friday. We did extend it for a couple weeks and I personally invested an extra $1 million in because, you know, I'm looking at the stock market.
I'm like, do I really want to throw a lot of money to work on the stock market right now? No. you know, not not with some of these, especially you know, you page around on our website if you want. Again, . Really appreciate you being here, folks. And uh .
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