저자: Jack · 외국인
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마이클 베리의 엔비디아 공매도 논리(감가상각 기간 연장, 자사주매입·주식보상, 순환 금융, 재고·매출채권 증가)를 검토. 출연자들은 베리 분석이 새롭지 않고 구체성이 부족하다고 평가. 엔비디아는 데이터센터 매출 비중이 80~90%로 단일 사업 리스크가 있으나, 단기적으로 AI 성장 여력이 남아 있다고 봄. OpenAI의 막대한 적자(HSBC 추정 2030년까지 누적 약 5000억 달러)가 AI 버블의 중심 리스크로 지목됨. 12월 연준 금리 인하 확률이 85%대로 반영되었다고 언급.
다듬은 글
Today's episode is brought to you by Fiscal AI. Fiscal is running a Black Friday special and now through December 1st, you can get 30% off any Fiscal plan. Let's get into it. Max, today we're talking about the most important topic in macro. And Max, I don't think this is the most important topic just in 2025.
I think this is the most important topic that has happened in macro event really in the past five, maybe 10 years. Jack, you have my interest piqued. What is this big macro event? Michael Burry launching his Substack. This is the much predicted event he said November 25th, 24th, whatever is going to be a day that you won't forget and we haven't forgotten it.
He's quickly rising up the charts. Max, I I think in all seriousness his analysis is something that has been contributing to the discourse. Really, I think the person to first bring it to the foray in greater detail would be Jim Chanos. Basically, that the argument that AI companies are artificially boosting their earnings by extending the weighted average lives of their depreciation schedules.
So, if they spend a hundred billion dollars on capital expenditures, they're taking a depreciation charge of 20 billion dollars a year or five years. So, 1/5 of a hundred billion being 20 billion. So, they're taking a 20 billion dollar depreciation charge. Really, they should be taking a 33 or 50 billion dollar depreciation charge because the actual weighted life is two or three years.
Now, Michael Burry has pointed out in his Substack and his research that the weighted average lives have extended from two to three years to now five and in some cases even six years. The argument being that this is this is not true. If AI is this truly revolutionary technology, these chips are going to be kind of useless in five or six years.
And even if they can be utilized, they're not going to have nearly as much value as they have right now. So, that argument, I don't know if it's original to Michael Burry. I think it is you know, I'd seen Jim Chanos honestly get in in more detail about it and I'm actually going to be interviewing Jim Chanos later in December.
So, I'm I'm going to be speaking to the kind of original source there. I, Max, what do you what do you make of this argument, Max? I think there's some truth to it, but I have some issues with it. I don't necessarily disagree with the argument so much as whether it matters to the price of the stock for right now.
As you said in our last discussion, these these tech scions think that they're building a digital god. And in many ways like the math doesn't quite work out unless you believe that. And so, whether they're depreciating these assets at three years or eight years or or whatever is not exactly relevant to to that question.
There's a lot of skeptical arguments about AI and about the return on invested capital. I think the most valid views center around Open AI, which is not publicly traded. It's a venture capital company that venture capital backed company that raised money at a valuation of of half a trillion dollars.
The FT reported that HSBC, the bank, had projections about Open AI's revenues, how the Open AI's revenues were going to skyrocket, but that the losses would be quite extreme. We'll show some numbers on that later, but I think that the kind of center of the bubble, if this is a bubble, is not Nvidia.
They're they're selling things to companies that may not get a good return on their investment, maybe. That's the left tail risk. I think the right tail risk is that these things super intelligence is achieved and no one has a job. I mean, that is maybe not a risk for the stock market, but that is a huge risk for society.
So, you know, like the Federal Reserve, it's it's all about a balance of risks and there's a left side risk, the right side risk. The right side risk good for stocks, not good for society. Obviously, you know, we would like an ideal where it's not a financial bubble that implodes. It's also not so transformational technology that, you know, no one has a job and wealth inequality skyrockets, you know, even more than it has.
I just think that Michael Burry's criticism of Nvidia is that's not where this uh that the purchase is being made. Nvidia are selling the things that that it may be it may be a mistake to buy. Like, why not short the things that are making the mistakes of buying them. The reality is Microsoft and Google and Amazon, they make so much money that, you know, shorting them is kind of a challenge because they're so profitable and they're financing their purchases mostly with free cash flow.
They're moving towards the debt moving towards the debt markets, but it's so early, Max. Like, you know, you can see in two in two worlds a world where uh that the hyperscalers have borrowed half a trillion dollars to finance these purchases that maybe they are ridiculous, but like we're just not there yet.
It can go it can get so much bigger, I think. I think the argument you would make for why Nvidia is the company to short is up until this point we've been talking about Nvidia and their semiconductor business as if semiconductors are not historically a cyclical sector. And right now it looks like it's an entirely secular trend, but eventually we might settle into something that looks more traditionally like a cyclical semiconductor company.
And companies that are cyclical do not command the types of multiples that companies that have steady, predictable earnings do. And if these companies, which are making these purchases, have to be more thoughtful about just dumping the money in, like the arms race ends and it's about can we get a good return on our investment.
Is Nvidia's revenue line going to look as up into the right? Is their profit going to look as up into the right as it does now? And so, I feel pretty strongly that Google's business is going to be around, that Microsoft's business is going to be around, but this is Nvidia's only business. And if that changes, then the company that is maybe the most overvalued would be Nvidia.
It's not their only business, but yeah, over 90% of the revenues are from the data center. Maybe over over 80% of the Ostensibly their only business. It's the only business that matters to the to the price of the stock. Yes, I Max, I take issue with cyclical, not that it's it's not in theory, but in practice because the implication is you can predict cycles very easily and just you want to short the aluminum companies when the price of aluminum is at its peak and you want to buy them when it's losing money over the past trailing 12 months.
Like, these things are really uh hard to predict and I I just think and Max, here is a point. I think that I see runway for continued growth over the next 12 months, just my read. Here's something I I did find valuable for Michael Burry about he he talked about how in late '99 and 2000 how all the CEOs were were saying the demand is so strong and we see so much buying, you know, the purchases are insane.
We can't meet demand enough. And so, that actually is what you're hearing now. So, I guess it is possible that this is kind of the top in in share prices and in revenues. That's just not my hunch. And also, Max, just like when I look at stocks to short, I think Palantir is is much better short idea than Nvidia to be honest.
But like there's there's you know, these fake quantum computing companies, there are these um you know, electric airplane companies that are losing billions of dollars a year. There's all of these, you know, fraudulent companies that are going public and being promoted. It's like the the best short idea you have is the most profitable company of all time?
He's the big short guy, you know, he's that's what he does, right? It's not the little short, it's not the obvious short, it's the big short. And that's that's why he's number four on finance Substack's list. He could if he wrote up a 500 million dollar market cap company that's overearning or is a fraud or whatever, we wouldn't be talking about it.
There's a reason that he he picked it and he's called his shot here. And it's because it is, as you said before, it's the most you know, facetiously we joke we were joking about Michael Burry launching his Substack as being the biggest macro event, but this is the biggest macro question. It is the biggest question in the market.
Right? So, that's that's why he's he's doing this because this is it's the only thing that matters. But in 2005 and 2006, he was he was right. That's the that's the that's the difference. All you've said so far is that you think it's wrong. Like, what are the specific parts of his analysis that you disagree with?
He criticized Nvidia's stock buybacks. He said since the beginning of 2018, Nvidia earned about 205 billion dollars of net income and free 188 billion of free cash flow assuming all capital expenditures with growth was growth capital expenditure. So, share share based compensation amounted to 20.5 billion dollars.
So, it bought 112 billion dollars worth of stock and and yet there are 47 million dollars shares more shares outstanding. I like you can just show two charts, Max, that I I made really quickly just showing why this is the case. Yes, Nvidia since 2018 has it spent more money on share repurchases than it has spent on share based compensation.
So, you would expect that the share account has gone down, but it hasn't. It has actually gone up or it's basically flat. The reason is the share repurchases were done starting, you know, in in scale starting in 2022 when the stock was way higher than it was in in 2018. So, it it issued shares in 2017 and 2018 at a valuation that was way cheaper than it is now.
So, even though it is doing way more buybacks than it is now, it's at a much higher valuation. So, but I mean, look, Jensen Huang was giving the people to whom Jensen Huang was giving shares in 2017 and 2018, 2019, 2020, Um, they're probably extremely talented engineers and and other professionals who have made Nvidia what it is.
So, I just think that that's a like a nonsense criticism. Interestingly, management did respond. Generally, you would expect a sort of like direct public response, but in this case, they responded via some back channels going to uh the sell-side analysts that cover Nvidia and addressing Michael Burry's points sort of one by one.
There are some people who who commented that um responding to Burry is like beneath uh a company like that. Like Microsoft wouldn't respond to claims about its business. Google wouldn't respond to this type of of claim about its business. And if it did, it would do so, you know, in a in a formal filing versus a back channel.
I mean, did you think uh that the way they have handled Burry's writing has raised any red flags? I think I would have liked to see this be public. The memo that you're referring to should have been issued publicly, but that memo memo itself was actually uh I would consider excellent. There was a tweet uh not relative to Michael Burry, but uh relative to Google's, and that I think indicates a little bit of insecurity, but I say, "Look, insecure people their insecurity often drives them to like rule the world and dominate markets.
So, I don't think there's a real signal there." Max, so I'll just you know, I I guess I take your criticism that I haven't uh swatted down the the things, but it's just like okay, the the circular financing that that's a real thing, but accounts receivable growth indicates that customers are not paying.
Like as you grow your business, your accounts receivable grow, and you have um you have accounts where you can uh book book the revenue, but you haven't received the cash yet. And uh you have uh day sales outstanding or DSO, that it's pretty standard where, you know, it's normal to give like trade credit to customers.
It's not really even credit. It's just a very normal business practice. Inventory growth I I think there I don't I don't have enough clarity uh as to whether they're playing games or not. I think that the inventory quarter-over-quarter data increased uh 32% year-over-year. And often that is found at the scene of the crime of like accounting frauds, but um I wouldn't say that I have a strong view on that on that either way.
Um cash flow conversions indicates low quality of earnings. I mean, Nvidia's free cash flow relative to its net income has always been a very high. Uh that deteriorated in the most recent quarter, but I don't think that's enough of a signal um honestly. And then okay, the circular financing is an unsustainable business practice.
This I think is a real thing. I think it's done mostly outs- outside of of in Nvidia. And I also think that Nvidia's response didn't take into account the $100 billion announced deal with OpenAI. Admittedly, because they haven't realized it in an accounting sense, and I don't think that that is super binding based on what they came out in the super call in their most recent call.
What's unsustainable about the financing is not so much that it's circular, but that it's coming from venture capitalists who are ultimately funding unprofitable activity. This This is a criticism that I think the AI startups are losing money. So, um there there are companies like um Anthropic, but mainly OpenAI that are just losing a lot of money on the compute that they're buying from the hyperscalers, um you know, Microsoft, Oracle, Google, and the like.
And they that I think is unsustainable, and it's reliant upon future injections of venture capital liquidity. Um I mean, yeah, it depends. Can Sam Altman like raise $100 billion in 2026 from the Saudi Public Investment Fund and other extremely large institutional investors? That I I don't have a view on, but if yeah, if if OpenAI is no longer able to raise capital, that is a much bigger threat than um yeah, I'd say anything Michael Burry has has written about.
And I think that we can put actually some charts up the FT, and and you know, again, I I have a lot of respect for Michael Burry as um as an analyst and as a figure in financial history in the great financial crisis. But when it comes to um like specifics and projections, there are a lot of other analysis that I uh you know, I'm I'm paying frankly more attention to.
For example, Dylan Patel, who I would say there are people more bullish on AI than Dylan Patel, but relative to a lot of financial folks and people on Wall Street, he is seen as an AI bull. I'm amazed by his detail and his command of the facts, and that is why like, you know, Mark Zuckerberg and Satya Nadella of Microsoft listen to him.
And you know, he he's a a young guy, super impressive, and he's really done the work, and he knows things and has data that other people don't have. In the same way Michael Burry in like 2006 knew things that other people didn't know, and that was such a huge advantage. I feel like in the Michael Burry piece so far, it's not so much a ton of new information.
What you're saying is in the in the GFC, Michael Burry had the smoking loan. Like he went through all of these um CMBS, and he went through and he looked at at these things on like an individual loan level and was like, "Holy crap, this is filled with complete shit." Like in this case, like all of the stuff that he's looking at it are things that you could get from public filings.
That you could get I mean, obviously that information was public before, too. Things I saw Jim Chanos tweet about 7 months ago. Like Max, for for example, so I did an interview with Bill Morland who's incredibly in the weeds on bank financials from the FDIC. And you know, I consider myself something of a bank guy, and I read the the 10-K and the quarterly presentations, and he refers to those as as merely press releases and you know, PR events.
So, he's like, "The real data comes from the FDIC call reports." And you know, so he in reference to a large bank, people can watch the interview and see what bank it was. He was like, "Oh, there was a $300 million loan uh that during the summer got reclassified from this category to this category." Like that's the level of granularity that I think if you're going to have an edge in making a huge macro call that you're going to prove everyone else wrong, you should be, you know, a a com- on that kind of granularity.
I And um I see that from Dylan Patel, who's a massive bull, and people you you know, uh particularly on Intel Silicon Valley, have a lot of respect for him. I have a lot of respect for him. Um and I'm just not seeing a ton that's new from Michael Burry, but you know, he's only posted three things. I'm sure he's got a lot in his sleeve.
So, I'm I'm excited to to see what analysis he has. And I also say, Max, you know, um I I'd love to interview Michael Burry on this program, and I'd uh very very interested in what he has to say. I mean, he is an extremely intelligent person and investor and analyst, and there's there's definitely no doubt about that.
And Max, you know, as as someone who, you know, we're at a small business, and you know, we don't have a a Bloomberg terminal, but we have a subscription to the Fiscal AI, and that has really really been helpful to analyze this stuff. So, I'm a believer in doing your own analysis, and that's why I'm really happy to say that Fiscal AI is a partner of ours, and normally uh Monetary Metals listeners can get a a discount of I believe 15%, but now because it's Black Friday, for a limited time, you can get off 30% off any paid plan.
So, right now Fiscal is offering the biggest ever Black Friday discount. That's massive savings, especially for professional investors taking advantage of the enterprise plan. With this Black Friday discount, the enterprise tier comes out to less than $1,700 per year. That's less than 1/10 the cost of a Bloomberg, which much of the same stock market data.
And Max, I'm just going to say that there's so many investors who have, you know, small to medium to even large investment partnerships who where almost all of what they invest in is stocks, and yet they're paying for a Bloomberg terminal, which has all this, you know, data on cross-currency basis swaps and bond data and currencies, but like really all they want is stocks.
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That's also why Fiscal's data is updated within minutes of corporates' earnings releases. And Max, you and I have seen that throughout this earning seasons, uh first in US, and now China is doing its earning releases. And everyone, this deal won't last long. I believe until December 1st. So, use the link in the description to get 30% off today.
Let's get back into it. So, Max, I want to talk about this HSBC report on OpenAI and just use some projections. So, the good Let's start with the good news, okay? The good news is that HSBC projects OpenAI's revenue to go from 13 billion in 2025, 12.5 billion, to to 35 billion in 2026, 67 billion in 2027, and then all the way up to 214 billion in 2030.
That sounds amazing, Max. And any venture capitalist who invest in a company that, you know, scales its revenue from zero to 1 billion to 13 billion and then 213 billion dollars, I mean, would be happy, right? Okay, here's the issue. HSBC is is projecting enormous losses. In 2025, this year, it projects that the operating loss on 12 and 1/2 billion of revenue is going to be 17.7 billion.
In 2026, operating it's going to lose 80 billion dollars a year. 2027, $104 billion a year. 2028, $108 billion a year. 2029, also $108 billion a year. And only in 2030 does do its losses begin to go down. So, in 2030, it's only losing $76 billion a year. So, I mean, Max, I know venture capitalists are used to losing money for a ridiculously long amount of time, and uh I think that public market investors would punish that losing money for such a long time.
And frankly, I'm I'm more of the public market side. Like I think if Uber was publicly traded in 2014, the the public the the the all the all the all the people who would own Uber would have a tough time, and and it would not have subsidized the losses as lavishly as the venture capitalists did. However, look, the VCs were kind of right eventually.
I mean, I think Jim Chanos' argument about Uber losing money, he was right on the fundamentals for like 7 years. What more do you want? It's just that the VCs had a very long time horizon and they were able to unload that on public markets at 2019. And for a very long time, Uber was trading below its IPO price.
I Now I believe it is trading above its IPO price. So, hey, look, the VCs I guess eventually, you know, they do get some stuff right. But Max, are the VCs this willing to subsidize losses? Are they basically willing to lose half a trillion dollars or invest in a company that is going to lose in cumulative terms close to half a trillion dollars up until 2030?
And I mean, Max, the HSBC, I don't think they had a forecast for 2032, but what if they're still losing money in 2032? What about 2033? So, this is where I think, you know, the wheels could really come off this train. And if AI is is a bubble, I think that the eye of the storm of the of the bubble hurricane is OpenAI, not Nvidia.
I mean, Nvidia will be affected. Everyone will be affected. You know, in in a when a bubble pops, no one no one anyone associated with it, you know, no one is really spared. But I have much more concerns about OpenAI than I do Nvidia. And particularly like Oracle, I think this is why Oracle is going down.
They have a huge 100 billion hundreds of billion dollar deal RPO or made performance obligations outstanding. And then it was real I I said this on the last show that like they're really the one by by far the biggest client for that is OpenAI. And like how can OpenAI spend hundreds of billions of dollars if it's losing 50 billion dollars in a year or projected to lose?
So, look, I mean, HSBC could be totally wrong and Sam Altman could be totally right. I will say Max, I don't want to, you know, attribute too much to like the podcast world, but I think probably the top in sort of AI AI stock market pricing was on or around the day when CEO of OpenAI, Sam Altman, went on the Brad Gerstner podcast alongside Satya Nadella and said like, "What do you mean?
Of of course we can spend money. If you want to sell your shares, you can sell your shares. I wish OpenAI was publicly traded so that these shorts could lose money." And he was kind of sounding like those CEOs who trash short sellers. And generally I think that if a CEO trashes short sellers, the stock and the business tends to not do very well.
Two counterexamples, Palantir and Tesla. So so Elon Musk and Alex Karp, I would say those are the exceptions that prove the rule. Like I I I don't know if there I there are I don't think there are that many other examples other other than that. Um uh you know, like Shorts short sellers don't like to short companies that are high-quality companies.
They short them because they have severe issues. Um which is why I, you know, I am I'm questioning and challenging Michael Burry's short of Nvidia. A lot of the AI bulls have pointed to is the dropping costs of inference, right? So, that can make up, you know, a huge percentage of the cost of operating for these AI companies, OpenAI, all the other startups you mentioned that are losing money.
And those costs are going down. So, the question I would have for those HSBC projections is what sort of inference costs are they projecting out there? Because if the trends continue, inference costs are going to continue to go down a lot. So, if the models are getting better and the cost of running those models is going down, I don't know if they're they're going to lose as much money.
I mean, I'm kind of playing the foil here no matter which which side you are on. But that would be the big question I would have about those HSBC projections. Right Max, and these are projections about operating losses, which I I think include depreciation and amortization. Uh The question is can OpenAI be profitable from a cash from operations perspective?
And then from a operating income or net income perspective, they still will lose money because of the depreciation, but could they still, you know, be be a cash generating company? That I don't think is is revealed yet in the FT article about the HSBC forecast. I mean, look, HSBC forecast like it's not bearish about the TAM.
They literally forecast that there will be 3 billion ChatGPT users by 2030. So, it's not like they're saying this isn't going to grow but but but but they're saying even if the rosy forecast happen, they're still going to be losing a lot of money. So, Max, I I don't really have clarity and you know, I don't think a lot of people know the answer to to that question.
Um but yeah, the these numbers do not look good. I will also say Max, I spoke so highly of Dylan Patel and to his credit, you know, Michael Burry spoke very highly of Dwarkesh Patel who wrote he has a great podcast mostly focusing on tech and AI. Um Dwarkesh had an interview with Dylan Patel and Satya Nadella, CEO of Microsoft, where they they used one of Dylan's charts from SemiAnalysis showing the revenues or the ARR for coding agents at the beginning of this year, Microsoft Copilot was 5 600 billion ARR and that was the vast majority of the market.
Now it's doubled its ARRs to over a billion dollars, but Claude Code is now also at a billion dollars. Cursor is 800 900 million dollars. OpenAI Codex has grown as well to 600 million dollars. And that growth has happened since the summer. So, these things are growing really quickly. And you know, Max, we've got a really intelligent audience and I'm I'm pleased that we have that we have that audience.
One thing the YouTube people have have commented is like, Jack, where are the revenues? Where are the revenues? Okay, yes, of course Nvidia has giant revenues and profits. Microsoft, Google, they have the hyperscalers, they have these revenues and and and profits from these things, although maybe not free cash flows.
But but where are the actual revenues from the actual thing? From OpenAI, from Claude, from all these VC-backed companies. And I think that's a a totally fair criticism and I I I agree with it. I would have agreed it with it slightly more, however, um before I saw this chart. I mean, this chart chart shows that the revenue growth is is quite extreme.
Now Max, the question is is even this growth not profitable even on a gross margin basis? Like even are you spending 3 billion dollars to get 1 billion dollars in revenue? Like okay, losing billions of dollars is fine if if the reason you're losing billions of dollars is because of your fixed costs, you know, your HR, your general administrative and and stuff like that.
But is if if you're not profitable and basically the more you sell, the more you lose, then you start to have some issues. I mean, that that may be the case. So, again, I'm not some like hyper AI bull. I just have a hard time seeing how like the VC investors do well and the public market investors do well.
Like I Max, I feel like there's two worlds and we're kind of in between this There's the worlds of the the extremely optimistic OpenAI you know, AI evangelists who say uh super intelligence is going to be here in 3 years. So, and if you're an investor in OpenAI, you're going to become the world's next trillionaire or you know, and then there are the people for more from the traditional Wall Street saying saying this is a bubble etc.
etc. It's like obviously both of those can't happen at the same time, but I can't see the right tail scenario happening without Nvidia doing extremely well. And I if the left tail scenario happens, like I feel like the first losses are going to be these money-losing VC-backed companies, um not Nvidia.
It's all predicated off of the right tail. All the spending, the arms race is predicated off of the right tail. So, if and that's baked into the valuation, like it 100%. So, I just I don't know, Jack. I I don't see how it escapes unscathed. We're definitely pricing in the right tail scenario into Nvidia.
And there's a long time that we have until we determine whether that whether that is the actual outcome. But the idea that Nvidia is not going is going to escape unscathed if OpenAI that? When did I say that? What? When did I say it was going to escape unscathed? I mean, I don't know about you, but 50% drawdown, 80% drawdown like Sure.
But that it could be an 80% be an 80% drawdown from a double and then the peak is in uh you know, February 2027. And then all these AI bears who've been so wrong for 3 years now will continue to be wrong for 16 months. So, they'll basically have been wrong for close to half a decade. And then when the bubble finally pops, they'll declare victory.
And then no one will find intellectual fault with them even though they should. It's like it's a matter of timing, Max. Yeah, it is it is a matter of timing. Yeah, I'm just I'm just saying that I Obviously, there's a difference between your own trading and portfolio, whether it's for your own money or for other people's money, you know, shout out to your podcast, Max, and making public calls.
Obviously, that is always going to be two different things and different return streams and and the like. But I think like when Michael Burry has his puts on on Palantir and Nvidia and every day Nvidia and Palantir go up or at least don't go down, he's losing money on that. I think if you're out there making these public calls, like your reputation should should suffer the same reputational drawdown.
And look, obviously, all these huge AI bulls, their reputations are going to be destroyed if if this if this bubble pops. I think you Max, you and I are kind of in in the middle. I I see the case both sides. I I actually do think that Max that like I mean, some some of these scenarios that are so rosy that are not priced into markets.
Like some some people are describing scenarios of OpenAI where basically within 5 years all knowledge work gets automated. I think that if that scenario happens, like Nvidia's revenue is is to be double what is currently priced in at terms of earning you know, estimates. I'm not saying that's going to happen, but I I do think there is more of a right tail that can be priced in.
Fair enough. Well, there's one thing I am definitely bullish on, and that is Michael Burry's place on the Substack finance leaderboard. I mean, he launched that thing what I think he he he originally said November 25th. I think it was faster than that. He got it out by like the beginning of this week, the 22nd, 23rd, uh something, and he's already up to number four on the leaderboard.
So, for all of those people who are concerned about the puts that have gone to put heaven for Michael Burry, I I wouldn't be too concerned uh because he he's making it all back and then some. Um So, I guess my question for you, Jack, having gone through what Michael Burry has written, is he going to be getting $39 a month from you?
Well, I did pay I uh to read it this this morning. I think it it depends. If like everything he writes is just going to be a repeat of the past three pieces, um I think there could be a I think there could be a little bit of cancellation, but, you know, I think there are definitely people who could find value in the work.
Max, I just, you know, this is a macro show. I'll just point out to to the macro like AI is just becoming so important to the macro. Like totally reasonable to see in 2020 uh six that X AI spending, the like the economy would be in a recession, but that GDP figure is going to be 3% real and 4% nominal or 5% nominal because of all this AI spending.
And also, you know, I'm not a specialist in GDP accounting and when things are realized, but there's so much money that is scheduled to be spent, like so much data center construction that is scheduled to actually happen, that is, you know, has people has been paid for and stuff, but it's not actually uh you know, shovels in the ground yet that um yeah, I think we we got to get used to this world where a lot of people uh view the economy as sucking, but the GDP figure is actually pretty good because of because of all this uh AI stuff.
All right, Jack, I know you wanted to keep it uh singularly focused on AI today. Is there anything else on your mind before we go? Yeah, the December uh Fed meeting, what's being priced in the markets is a much higher chance of cut than when we last spoke. It had gone as low as, you know, 25, 30% last week of a of a rate cut, but now it's as high as 85%, and 85% is quite close to 90%, and I've never seen something being priced at a 90% probability, you know, a few weeks out and it not actually happening.
So, looking like Fed rate cut is going to happen. Perhaps that is accompanied the the the renewed bull market we have in in stocks as we sit here today. Um I was feeling a little bit unlucky or foolish maybe when I did the interview with Fed Governor Stephen Myron, and he he made this huge dove case, and then almost immediately after that like the the rate cut got priced out.
So, interesting to see the rate cut being priced priced back in. I I I think it I think it's reasonable for for them to cut. So, um just paying attention to that. And of course, the shutdown is over, so we're we should be getting um you know, the labor markets for November in in the in the December months.
The labor market data that had been released so far actually was good. So, it it is kind of counterintuitive. I had to, you know, learn, "Okay, why is this cut being priced back in if the nonfarm payroll number was so good?" I guess it was because the unemployment rate budged up, and um you know, you had John Williams from the New York Fed say something uh pretty dovish as I believe we we covered last week.
So, um you know, a little hard to read the Fed tea leaves, but looking like it's going to be a cut. Max, we'll leave it there. People should follow your show Other People's Money and my show Monetary Matters. We've got a ton of great content. I'm speaking to Ahon and Prometheus, the quant's quant for quantitative macro, and then we're doing a China update on Michael Pettis, who has a lot to say on imbalances between, you know, saving and investment around the world between China and the US and and and and everywhere.
Uh so, people should leave it there. And then also, please check out today's sponsor Fiscal AI, where you can take advantage of Fiscal AI's Black Friday special at the link in the description. Now through December 1st, you can get 30% off any fiscal plan, including their enterprise tier specifically designed for professional investors. Thank you again, everyone, for watching. Until next time.
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