Fact Check: 3 Warning Signals Flashing on Wall Street – AI, Oil, and Fed Risks Analyzed

Well, something very strange is happening on Wall Street right now. And I think the next few days, this week is

going to tell us a lot about where this economy is heading, where the markets are heading. Because while everyone is

focused on the stock market, there are three major warning signals flashing right now in the background. And what's

particularly troubling is that these three things are happening at the exact same time. We've got an artificial

intelligence boom that may or may not be showing signs of cracking. There's going to be winners and losers in this, right?

We've got oil prices surging again, a new threat possibly for the Iran war kicking back up again and that's

threatening to send inflation right back through the roof. And then of course we've got the Fed and it's about to make

one of its most consequential interest rate decisions of the year right before the midterm election. So now

individually these stories are significant, but altogether this is one big incredible soup right

now and it is deeply troubling where we're heading. You put them all together and I think we're looking at the

possibility of a much bigger financial shock. Here's the part though that I find fascinating. The people who manage

billions of dollars on Wall Street appear to be repositioning themselves while ordinary investors are still being

told that everything is fine. Don't worry about it. So, you're seeing this movement right now. So, let's start with

something that happened this past week. On Thursday, we watched technology stocks absolutely get hammered. Of

course, they got hammered a week before that. Oops. So much so that I'm punching the microphone.

The NASDAQ fell sharply as investors suddenly began questioning the enormous amounts of money being poured into

artificial intelligence. Like is this money like being well spent? Is this all going to come back to bite

us in the behind? And according to Goldman Sachs, new data highlighted by financial analysts have now said that

hedge funds have been increasing their bets against stocks at levels that we haven't seen in 5 years. So hedge funds

are having a lot of trouble this past week if you haven't noticed. So if you think about that, retail investors have

been pouring money into Nvidia, Microsoft, Meta, all of these artificial intelligence companies, and some of Wall

Street's biggest players have been aggressively betting against the market, saying that these things are going to go

down more aggressively. Now, does that mean they know a crash is coming? Not necessarily.

But it does tell us something important about how they are preparing right now when you look at Goldman Sachs and how

they're positioning. Here's where the story becomes really interesting. For the past several years, the AI boom has

been one of the most powerful forces keeping the stock market moving higher and higher. Billions upon billions of

dollars have been spent on computer chips, data centers, electricity, infrastructure.

But I think here's the question that nobody seems to want to answer right now. Like where is all that money coming

from? Because it's not all coming from profits. A growing amount of this infrastructure is being financed through

borrowing. A crap ton of borrowing. We have new figures suggesting that AI related project financing has reached

approximately 105 billion this year. And then you have some lower rated projects have been offering interest rates as

high as 15 or 16%. So that's enormous. Think about this like buying a house. So imagine

borrowing a million dollars to build a beautiful new home, except instead of paying a normal mortgage rate, you're

paying 15% interest. You better be absolutely certain that property is going to generate enough

income to pay that loan back. That's certainly what we saw this past week with Coreweave

entering into the junk bond territory. So that's the gamble that we're all seeing in parts of the AI industry. And

as Elon Musk just tweeted this afternoon on this Sunday as I'm recording this, he said, "A lot of these neoclouds, 200

plus Neoclouds are going to be fighting for the scraps and they're going to be dying like little guppies. Meanwhile,

SpaceX is so far ahead." I think in many ways he's absolutely right about that. There's going to be a

lot of these neoclouds that a lot of people poured a lot of money into that are going to collapse or they're going

to get gobbled up by bigger bigger fish, these little guppies and companies like SpaceX. Like, can anyone really beat

SpaceX now that we know that they're not just like a rocket company? So, companies are making massive bets on

future profits that haven't necessarily materialized at all yet. It's like the promise of future profits. Now, I'm not

saying artificial intelligence is a fraud. Far from it. It's incredible. It's extraordinary.

And you cannot put that genie back in the bottle. So, any of these like boomers who think that AI is going to be

somehow restrained and we're going to cut it off and no one's going to use it, it's just smoking crack. To be honest

with you, AI is an extraordinary technology that very likely could transform the global economy. And it

might not all happen at once, but it's going to start happening in ways where people will say, "Wow, this is

remarkable." Like, I can do twice as much work now by having the ability to use AI. Whether

it's Grockbot in your Tesla on your way to work, where normally you'd be just like listening to music or a podcast,

now you can be going through your entire inbox of emails and talking to different agents while you're driving, building

out projects, and solving problems. and that 45minute commute. So the internet was also an

extraordinary technology back in 1999, right? That didn't prevent the dot crash. But a lot of people are trying to

compare what's going on with AI to the dot bubble. And I think that that's uh, you know, it's insightful, but it's

wrong in a lot of ways because great technology doesn't automatically mean every company investing in it is a great

investment. We get that. So the money flowing in AI suddenly slows down. on what happens to all these companies that

borrowed heavily to build infrastructure. What happens to the semiconductor

companies selling chips? What happens to the stock market when the very companies holding up the major indexes start

falling? That's the first warning signal. But the second one might be even more

dangerous. And that of course is what's going on with oil. So on Friday, Brent crude closed above $116 a barrel. It was

below 100. And the reason, of course, is once again the escalating instability in the Middle

East, attacks affecting Saudi Arabia, renewed fears of supply disruptions, Israel calling for the United States to

once again intervene and launch a massive war against Iran. So why should you care about oil if you

don't own energy stocks? Because oil affects everything. the food arriving at your grocery store, the products shipped

across the country, airline tickets, manufacturing, all of it, transportation. So, when energy costs

rise, they work their way through the entire economy. And that's the nightmare right now for the Federal Reserve

because the Fed has spent years trying to bring inflation under control. But if energy prices keep rising, inflation

could become way harder to contain. So that brings us to signal number three right now that we're seeing and that of

course is the bond market. Now this is the one I really want you to understand because honestly like I'm not an

economist but I watch this very closely. I've been a longtime investor but the bond market can be a little wonky you

know and a little like out there for people because the bond market is where financial trouble shows up before

ordinary people start to notice it. So, the yield, like the percentage gains on the 10-year, the US Treasury bonds was

sitting around 5% on Friday. And that matters because Treasury yields help determine borrowing costs throughout the

economy. Mortgages, business loans, corporate financing, even government borrowing. And when these yields stay

elevated, the cost of carrying debt then becomes more expensive. And remember, the United States is already carrying an

enormous federal debt burden. Now, think about the situation facing the Fed. I don't envy them, but I also

don't care because the Fed is a uh large criminal organization that shouldn't even exist in the first place, but I,

you know, they they're still driving our monetary policy, so we have to deal with them. So, if the Fed, this giant

criminal cabal, uh, raises interest rates to fight inflation, that could make borrowing more expensive and put

additional pressure on the economy. Now, if it cuts rates as well and it cuts rates too aggressively, then it could

risk reigniting inflation, especially with oil prices already elevated. And if it does nothing, then those financial

pressures don't necessarily disappear. This is why the Fed meeting on October 27th and 28th is so darn important.

Markets are going to be listening closely to every word coming out of that meeting, especially ahead of the midterm

elections. Remember, Trump put Walsh, Kevin Walsh, in this job to lower interest rates, to debase the US dollar.

He wants a weaker US dollar. He said it multiple times. He wants Kevin Walsh to lower interest

rates. Lowering interest rates debases the dollar. Makes the dollar actually weaker, right? But there's something

else happening this week. So, what's going to happen? We're going to see all of these earnings. We have major

earnings reports coming from some of the biggest companies in AI, right? The investors are going to be looking for

one thing, proof. proof that all of this AI spending, like Amazon for instance, all of this capex spending, like I've

talked to an Amazon engineer who's been building out these data centers, and he told me they're sold out for

years to come, years. They can't build them fast enough. Okay. Well, all of that capex spending, like, is there

proof that this AI spend is actually going to generate enough money to justify the incredible valuations that

Wall Street has been placing on these companies? You have new targets for Amazon saying it's 40% below its value,

40%. But then why did the stock surge after the last earnings and then plummet back

down to where it was before the last earnings? So, like, what's going on here? There's a lot of uncertainty

floating through these markets right now. So if those earnings disappoint at the same moment oil is rising

and the borrowing costs remain elevated, we could see a sharp repricing of all of this risk. And that's kind of the real

danger here that not not that one company misses its earnings estimates, but that investors begin questioning the

assumptions holding up the entire market right now, all sort of built around this AI promise.

Now, to be clear, this doesn't guarantee a stock market crash. In fact, there's plenty of companies and sectors

performing relatively well right now, actually. Investors have been moving money into areas like energy, utilities,

consumer staples. So, you know, you're seeing McDonald's doing pretty well. Walmart's kind of up. You know, you're

seeing people rotate. Costco money's rotating, right? Rather than maybe a complete collapse coming here. So the

question is whether that rotation remains orderly as it does in certain downsides because when investors start

selling crowded positions at the same time, markets can move very quickly. And as we learned back in 2008, the

financial system can look remarkably stable right up until confidence starts disappearing.

So I'm watching these things very closely and when people talk about the AI bubble is just like the dot crash,

maybe we won't know. And but you what what people need to remember is the dot crash was like basically

um let me put it this way the dot boom was coming. The like the internet was a real thing. So what the

dot what the you know what the dot collapse created was really just a delay in the inevitable like a three to

fouryear delay. So all of these all this money was flowing into things like pets.com and all this craziness

and then what happened? We had this reset but the internet exploded afterwards. So we had like a 3 to four

year delay. So are we about to see the same thing here? Like an overbuilding and then you're going to have a few big

companies really emerging from this AI world and you're going to have a lot of little guppies as Elon talked about sort

of fighting for scraps and they kind of die off and get consolidated. Maybe maybe we will have like a three-year

kind of pullback and then an explosion. So AI earnings watching very closely. Oil prices I'm watching very closely

this week. And what the Fed says about interest rates and inflation. This is a huge week. If those three warning

signals begin flashing red together and simultaneously, boy, the next big market move could

catch millions of investors totally offguard. Here's the question I want to leave you with, though. If the AI boom

has been one of the biggest engines driving Wall Street higher, what happens then when that engine starts to run out

of fuel? Like, where does that money go? Does it go into crypto? Because now crypto is really tied to AI. So, is it

going to go back into crypto? Probably not. Is it going to go into the biioharmaceutical industry once again?

We're seeing some biioharmaceutical stocks kind of doing pretty well over the past few weeks. Is it going to

rotate into safe harbors? You know, like Apple, McDonald's, Walmart. Like, what's going to happen here? So, let me know

down below your thoughts on this. Are we witnessing a healthy market correction? Because I think we actually need it, or

are we watching something much bigger? Let me know down below. Thank you so much for subscribing. Let's keep our

eyes on what happens this week, folks.