Below are some of the most interesting things I came across this week.

LINK

Pointing to the record extreme in equity market valuations today, John Hussman writes, “I marvel at the rampant level of ‘imagination’ built into actual market prices, and the confidence of investors that elevated profit margins and favorable business conditions will be permanent.”

PODCAST

Of course, much of that “imagination” has been inspired by the AI boom. However, as David Cahn points out, “the market is implying some probability that all of this [AI revolution] is going to happen in such a short time horizon… unpacking the tension between AI as a long-term winning trend and a long-term generational change and a short-term market cycle that will incinerate capital… I think is really interesting.”

STAT

Already, hints of the potential for a large-scale incineration of capital will soon start to appear on Big Tech income statements. “All five of the companies’ earnings are expected to slow significantly next year — partly because the past year has been exceptionally good cyclically, and partly (for all of the companies but Apple) because of heavy AI spending,” reports Robert Armstrong.

LINK

And if those calling the AI boom a bubble are right, this could be just the beginning of an even bigger bust. Wired reports, “AI may not simply be ‘a bubble,’ or even an enormous bubble. It may be the ultimate bubble. What you might cook up in a lab if your aim was to engineer the Platonic ideal of a tech bubble. One bubble to burst them all.”

LINK

Someday, we may look back on these massive monuments being built today, both figurative ones (monstrous data centers) and literal ones (like the proposed statue of Prometheus that is taller than the Golden Gate Bridge), as clear signs of the sort of hubris that is the focus of not only so much Greek tragedy but also its more modern descendants.

More By This Author:

Searching For Meaning In Gold’s Scorching Rally - Part 2
Searching For Meaning In Gold’s Scorching Rally - Part 1
America Is Now One Big Bet On AI