Jeremy Lefebvre Makes Money · Transcript · · Updated
Market Emergency just disclosed‼️ – Transcript
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- Oracle credit default swaps have recently surged past 200 basis points, which is higher than the peak of the 2008 global financial crisis.
- OpenAI reported annualized revenue of $50 billion, which is about $20 billion less than previously reported figures due to differing sales accounting methods.
- Billionaire Ray Dalio warned that the artificial intelligence bubble is nearing the point where it may burst as technology companies borrow heavily.
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We have some very serious things going on out there. I'm talking about a stock like Oracle. Have you seen Oracle stock since June 1st? That stock has crashed 45%. Not a stock I personally own. I'm sure a lot of you guys don't own it, but it's one of the most powerful biggest companies in the world and the stock is absolutely collapsing. Now, I know a lot of people don't pay attention to credit default swaps, but right now, Oracle credit default swaps are absolutely blowing out. And I'm not talking about
you after eating Taco Bell, okay? It's no bueno. SpaceX credit default swaps blowing out right now. Okay, I want to explain what's going on there. We got some huge news regarding a major subject here today. I want to talk about how this is going to affect the entire AI trade. I don't care if you you own AMD, Nvidia, Micron, any of these other stocks like Meta and Amazon, all of them. Okay, we've got some major stuff
to talk about in today's video and where where this is all headed. Okay, after we get done going through that, I want to go ahead and react to this video. Billionaire Ray Dalio warns of AI bubble could soon burst. Looking forward to reacting that one. I want to react to this one. Jim Biano, usually a bear, at least from what I remember, a bear on bonds, has turned bullish. I want to I think that's a very important subject we got to talk about in this video here today. And then last up, I want to react to this one u from a bunch of different Wall Streeters kind of sharing their opinion, perspectives, and I want to
tell you which ones I uh believe in and which ones I don't. Okay, we got a lot to go through in today's video. Just real quick, if you haven't already done so, just please smash that like button for me. That would mean the world. And uh that's all I need from you. Make sure you're subscribed here to the channel. Listen, we got a lot of serious stuff to talk about in this one here today. But let me just share some optimism. Okay, look at this. Just today, I signed 10 10 awards that are being sent to new seven figure members. So, congratulations in
my private group. And then uh we had 18 members in the past two weeks hit $100,000 first for the first time. So, congratulations to everybody out there reaching new milestones. Whether you're in my private group or whether you're not, if you don't know, if you're in my private group, once you hit six figures and you show us uh proof of six figures, I send you a complimentary. It's like a nice little diamond award uh I send to your house. I actually have it up here in all my videos right there. And then uh once you hit a million dollars plus,
I send you a seven figure award to your house. Once again, it's complimentary. You don't have to pay anything once you you know once you're in the group, you know, I send you these awards. I also send a thousandx hat with you. Uh a thousandx Nike hat, you know, since we gota we got to help out Nike stock anyway we can. Right. So, uh I say, "Okay, we'll do a collab with Nike in regards to that one." Okay. So, uh if you want to join my private group, by the way, that will be the pinned comment down there today and click on that. See if we can get you in there. Okay. All right. Some companies just don't know
how to flip flapjacks. Okay. Listen, this is serious. Oracle stock down another 5% plus here today, right? MU stock continues to struggle despite the numbers being ex amazing, right? Um, even AMD got hit today. You know, you know how hard it is to hit AMD stock because that stock is like the golden child of the stock market right now. So, we have craziness going on in regards to Oracle credit default swaps. Okay.
Oracle CDS's credit default swaps once again have recently become a major bellweather for the entire AI infrastructure boom. The market behavior highlights a massive shift in how credit markets view big tech's AI spending.
Record high spreads. The cost to ensure Oracle's debt has recently exploded, surging past 200 basis points, levels higher than the peak of the 2008 global financial crisis. That's how serious this is getting, ladies and gentlemen.
Whenever you got something going higher, especially when it comes to basically like insurance on debt going higher than the great financial crisis, this is not a joke. This is very, very serious. At 215 basis points, it costs roughly $215,000 annually to ensure $10 million of Oracle's debt. The AI debt trap. Unlike other hyperscalers like Microsoft or Google that rely heavily on massive cash
reserves, Oracle has historically utilized heavy borrowing with over a hundred billion dollars in total debt and aggressive plans to invest heavily in data centers. Credit markets are concerned that cash flow cannot keep up with capital expenditures. That's why you don't see me buying Oracle stock.
It's it's a very interesting stock, but they just are overloaded with debt and it's not getting better. They're taking out way way way way more, right? and and the revenue profile has not even remotely caught up to that debt level.
Due to massive AI related borrowing, S&P Global Ratings downgraded Oracle to BBB minus. This is no bueno. BBB minus that might sound like, oh, it's not that bad. It's a B something, ladies and gentlemen.
This is like you're this is like you're a D student, okay, in school. And it's like, okay, you're not quite an F student, but you're not far off, man. You got like a 62% in class. And it's like, okay, we're a D, but it's like, dude, you're like three percentage points away from an F. Okay, no. This is bad. Placing it just one notch above above junk status. A further drop would
disqualify roughly $120 billion of its bonds from investment grade indexes, driving up borrowing costs drastically.
This is bad. I mean bad bad. Okay. Now to take it one step further, SpaceX. You might think SpaceX Golden Child, right, can do no wrong. It went IPO recently.
They got a lot of money. Well, SpaceX's credit default swaps have surged to record high levels, reflecting sharp investor concern over the company's aggressive borrowing plans. A summary of the latest develop uh developments on SpaceX debt and credit derivatives is detailed below. Following reports that SpaceX is looking to raise 40 billion dollars in new debt to purchase artificial intelligence chips, or should we call it SI from Nvidia, the cost to
ensure the company's debt against default has skyrocketed. 5-year credit default swap spread hit an intraday peak between 194 and 197.6 basis points. This is up drastically from 110 basis points seen when the swaps first actively traded. institutional investors must now pay $19,400 annually to protect every $1 million of SpaceX stock. So, or SpaceX debt. So,
it's it's not as bad as Oracle where you know if we were to say 10 million cuz you know over here they said 10 million right as a number. So 215 for 10 million SpaceX is at like 19 um you know 190,000 for every 10 million. So, it's not quite as bad for SpaceX, but it's still pretty darn bad. And it's not that far off of Oracle, right? The yield spread on SpaceX's 206 bond widened to 2.36
percentage points over US treasuries. A significant increase from 1.75 points in June. Right? So, what is causing what is the new concern that has just come out in causing the issue? Let me explain this. Look at this.
Open AAI, the company that started this whole exciting phase, right, with Chat GPT and oh my gosh, it was a game changer and OpenAI started raising tons of capital, right? And then, you know, started buying Nvidia chips and that was why Nvidia was able to start going crazy and then Amazon started spending like crazy and Meta and Google and it was just it's just been insanity ever since, right? And Nvidia became the biggest company in the world. But it all started with Open AI, right? Well, this comes
out here today. Open AAI annualized revenue 20 billion dollar less than previously reported. Uhoh. OpenAI's annualized revenue is $50 billion about $20 billion less than previously reported figures. A uh a discrepancy related to how different AI companies account for overall sales. The $70 billion figure, widely reported in September by Axis uh and other media
outlets, was based on information shared with investors in an attempt to create a more direct comparison to rival Anthropic. Anthropic includes revenue from cloud partner sales in his tally. Suspicious.
A little suspicious I would say, right? Both companies are GAP compliant, generally accepted accounting principles, but they account for revenue through partner sales differently. If a customer pays $100 for an AI service through a cloud provider, Anthropic's accounting method allows for it to record the full $100 as topline revenue.
This is intriguing. This is probably also maybe why Anthropics losses look so like this is weird. Okay. A accounting professor said the cloud provider's cut is listed as an expense.
Okay. Opening eye records only its share of certain partner sales. The difference come down to how each company views its role in the transaction including who controls the customer relationship and is responsible for delivering the product. This is bad across the board.
Okay, this is not good for the AI trade. At the end of the day, OpenAI just came in $20 billion light on what investors were expecting. And you say, well, it's because this accounting situation and you know, anthropic. Here's the deal.
What do you believe anthropics revenues are really what they are? I don't know about that. It sounds like anthropics in you know basically accounting for way too much revenue the way they're accounting for this. It's it's a little suspect right and it's like there they're getting through GAP but it's like it's a little questionable in regards to this and how they're actually accounting for for revenue right and so
I look at this and it's a it's it's a little weird. It's like let's say Uber, right? Let's say Uber accounted for re their let's say the revenue was like every single ride they counted that full ride. Let's say it cost me $50 to take an Uber over to the airport, right? And let's say Uber said, "Okay, that's $50 of revenue for us." I mean, technically it could be on a gap basis, but it's a
little questionable because probably $35 or $40 of that goes to the driver. So, it makes more sense for Uber's revenue to be like what they're actually getting of that particular ride, right? Otherwise, it's going to seem like they got this insanely huge revenue number when it's like actually a very very small portion of that, right? But, you know, each company can do their own thing. But the moral of the story is here, I don't think any way you slice this is necessarily good for the AI