AI Boom's Great Suckening: Full Breakdown & Transcript

[00:03] happening this weekend. Elon just set the standard. Holy smokes with what Elon said on Sunday. Let's go ahead and cover that. How that just completely changed the game. What Meta is doing off the back of that. We've got a Fed meeting

[00:18] this week. We got a reinvest one.com coupon expiration this week. We got coupon expiration this week. We got Hood. We got SKH Highix, Nphase, Genova. We've got Google, we've got Service Now, we got Microsoft and a Fed meeting. And

[00:35] that's not even everything because we also have these really elections. And then we have our elections next week. Oh my gosh, the next like 8 days are just

[00:47] going to be insane. So, let's break this all down. And I recommend you save this video or the time frames in it so that way you can keep track of all this madness. There's going to be a lot of content this week. Let's get started and

[01:00] try to put this all together. First things first, Elon Musk kind of changed the game a little bit when he said, "Hey guys, everybody's else's debt might

[01:12] suck." But don't worry, our debt is different. Our debt smells better, so you should invest in companies like SpaceX and maybe even Meta because Meta just filed a shelf. Yeah, we'll talk about

[01:27] what filing a shelf actually means, but listen to this. Elon Musk in response to listen to this. Elon Musk in response to good old Cham Spock as somebody uh with a portfolio of energized land assets. Here's what I'm seeing. Neoclouds are

[01:41] Here's what I'm seeing. Neoclouds are disorganized and poorly capitalized. Some are definitely better than others. Well, this is true. I mean, we've seen that Nebius, for example, has a much better balance sheet than Coreweave,

[01:54] whose balance sheet is horrible. I don't have exposure to either of these, so I'm not trying to push any Neo versus another. It doesn't matter to me. Then Chimath says, "Hey, organization between the hyperscalers is a lot cleaner, which

[02:09] makes it a lot easier to buy and sell chips from them and sell chips to them. And there are delays in the pipelines which of course hyperscalers can adjust

[02:21] to but some of those delays for basically the neoclouds can be a whole lot more oops dupsydriven. Okay to this Elon Musk says pretty much as of the past few weeks debt markets have almost entirely shut off access for any company

[02:39] that does not have substantial revenue independent of AI data centers. So, this is basically Elon Musk's sort of rewriting of what's been happening with credit default swaps, which has been all over X. I don't actually think Elon is

[02:53] some form of terminal and trying to figure out what's going on with bonds. I think he sees a whole lot of trending topics about how crappy Coreweave debt is and what's going on with those CDS's. and he's like, "The dead market seems to

[03:07] and he's like, "The dead market seems to have uh shut off access uh to any of these companies that don't have another source of revenue." But he probably has a point because a company like Cororeweave that's $8 billion short is

[03:21] entirely reliant on more fundraising. The problem is not the money that they raised. And we talked about this in my Doom Loop video. In fact, I made a Substack. I made for the first time ever. I made a Substack post on Saturday

[03:36] morning. Uh, and it was literally called the AI doom loop. And I talked about Core's debt about how they've been paying 7 12 to 10% on their debt. But

[03:48] what matters isn't that 7 12 to 10% on the debt. It's the fact that they do not have money to keep paying their bills unless they raise more money. And the new money that they have to raise has to

[04:02] compete with 15%. Because if somebody wanted to lend money to Coree, they could literally just buy the old bond on the secondary market that's sold off by the secondary market that's sold off by 20 plus%. And get a 15% yield. Why buy

[04:15] the new debt unless the new debt is somehow more attractive? So this is why Elon is saying this, okay? And then Elon justifies this with unless of course something else. you know, we have this cool thing called Starlink and uh we

[04:31] make lots of money sending stuff into space, you know, going to the moon. Like, he's right. And that's actually what makes Amazon, Microsoft, Google. I mean, Google attracted Greg Ael and Birkshire Hathaway. You know, Barren

[04:46] thinks Meta is about to attract Birkshire Hathaway with some Birkshire Hathaway with some convertibles. But all of these are so much better positioned than a new Neocloud that's trying to bootstrap

[04:59] well to finance. In other words, it's like, hey, let's put a startup together. Okay, we're going to bootstrap it up to the point where we need to finance, which is basically day two of our operations. Where are we going to get

[05:12] all this money from? Again, this is how somehow financing has been very easy for NeoClouds to get started. some of it a little circular with guaranteed leases from some of the big hyperscalers or even Nvidia directly and that's enabled

[05:26] them to take on some of this debt. I don't know that that's actually over yet. I think some of what we've seen in the CDS market, the credit default swaps is what I call a doom loop. You know, the stock goes down, the bonds go down,

[05:40] so the yields look higher, and then people buy more credit default swaps. Then that makes it look like the credit default swaps are in a doom loop where those keep memeing up. So then you get more traders buying the CDS's which then

[05:53] implies that the stock should be lower and the bonds should be even lower. It's kind of this crazy doom loop. Elon though he's not wrong to say this like everybody knows that a Neocloud is basically just a data center with

[06:09] nothing else. There's no advertising revenue. There's no co-pilot subscription. There's no Amazon, AWS, or consumer business that's keeping the whole company afloat. It's just chips. And so Elon argues this means that 200

[06:23] plus NeoClouds are going to see a guppy level death and consolidation. Some will make it through, but not many. Now, I'm a little torn in terms of what this sort of like it's almost a duality, but it's almost like a triality of what Elon is

[06:37] saying here because some of it's a little self-cerning uh concerning. First of all, self serving to Elon Musk. First of all, does Elon think they're going bankrupt because he's looked at the financials or is it because a if you

[06:52] stab them while they're bleeding and kind of shove that knife in a little deeper, it kind of lets somebody like Elon go potentially pick up the pieces. Amazon, Meta, any of these big hyperscalers would love to go pick up

[07:07] another 100,000 GPUs for pennies on the dollar because somebody got foreclosed dollar because somebody got foreclosed on. Little selfserving there. Uh yeah, reasons I don't invest, frankly, in the NeoClouds, but I do have exposure in

[07:21] NeoClouds, but I do have exposure in full fairness to SpaceX and Meta and others, some of these massive companies because this is kind of the same thing that happens in healthcare. It's the smaller guys who are all killing each

[07:34] other. They literally are all stabbing each other trying to get the best drugs gets a good drug to the market that looks like it's going to get approved, they end up getting bought by somebody big like an Eli Liy. I call him the S&P

[07:46] 500 of healthcare because they just keep acquiring companies. But anyway, so to acquiring companies. But anyway, so to me, I'm I'm not sure if Elon's following axe in seeing this or if he's seeing something else behind the scenes. I also

[07:59] think it's a little beneficial for him to kind of drive that knife in a little to kind of drive that knife in a little deeper. And three, this is totally an opportunity to promote SpaceX's ability to raise money, which in fairness is

[08:12] great advertising for the NASDAQ 100. See, Meta actually just announced that they have uh issued a shelf filing, going to go out and we're going to start selling stock from time to time. Uh, I

[08:27] was prepping for making this video and then all of a sudden I saw the meta candles drop drop down all the way to like 610 bucks over here and then the news came out on Weeble like 4 minutes later, but I already saw it on the uh

[08:40] the red the you know the headlines that come through the wire services. But anyway, uh then the stock actually recovers which is actually interesting and it's now positive. It was negative four and a half% now positive 2%. In my

[08:53] four and a half% now positive 2%. In my opinion, Elon's selling data center debt and going, "Guys, forget about all the little ones. This boom can keep going, baby. Just keep buying SpaceX debt and buy meta debt or whatever, a business

[09:07] that has other, you know, revenue to pay for this. Then it's all going to be fine." And the boom basically keeps going. Now, the big thing that I didn't read here is he actually said something very optimistic. SpaceX closed 40

[09:19] billion of debt for GPUs, but we're investment grade. But this right here is actually the killer line. He's basically saying, "Hey, we didn't have any problem raising money. This boom is still going." Yes, some of the guppies have

[09:32] problems, but this boom's still going and we filled up our $40 billion. Boom. Yeah, it's the suckening. We call it the great suckening for a reason because they all need to suck. And nobody sucks better than Zuck and Elon and and some

[09:47] of these big companies. So yeah, this by Elon is a little bit kicking him while they're down while at the same time advertising his own company while at the same time also telling us that there is still plenty of freaking money

[10:03] underwriting this chip boom. This chip boom is nowhere near over. I don't know how else to simplify it. The market, yes, is nervous because of Iran and catalyst and all this kind of nonsense. That's fair. But this boom is nowhere

[10:18] near over. It is just getting started. And we we'll talk about that some more in another video. But really, the fact that Meta is going up on filing a shelf offering, which allows them to randomly start selling stock or when, you know,

[10:31] it's worded, when they feel like it, that's a good sign. That's a great sign. I mean, if this if Meta holds up, that's a sign saying, "All right, people have already priced in the suckening." Now, I actually tweeted about this a few hours

[10:46] before Elon's tweet even. And what I tweeted about was specifically this. tweeted about was specifically this. Wow. See, 21 hours ago. Wow. Meta says the quiet part out loud. Everyone is raising money, so let's try to get ahead

[11:00] because it's going to get harder to raise money. The great suckening. You follow me on at Real Meet Kevin. But like these are the kinds of insights that you know I sit there and I actually read these financial documents and these

[11:12] are the kinds of insights that we talk about in Reinvest one. If you're not that to you in just a moment. But remember, if you join before this coupon best price. You're going to lock in lifetime access and you get the alpha

[11:28] reinvest stocks terminal coming out later this year, the homes terminal coming out later this year, uh the reinvest research terminal, all nine courses, the course member live streams, the consumer agentic AI blueprint, and

[11:41] this is going to be a huge one. Agentic AI for business. Yeah, huge huge topic. It's going to be really fun. It's going to be a great great module. Uh but to be a great great module. Uh but anyway, let's focus on this piece here.

[11:56] Uh and then let's keep going on to Iran and some of the other catalysts this Special committee considered whether debt financing could be an alternative form of financing for Meta, but recognized that debt financing at this

[12:10] magnitude would have an adverse effect on the company's credit ratings and would be less desirable. Hm. Interesting. So basically they're suggesting, hey, let's just sell shares. And so that's

[12:26] raise debt. We just want to sell shares. Oh wow, how convenient. That's why we have this dual class of shares now. And what they want to do is between now and the end of the year, they literally said as early as the end of 2026, between now

[12:41] start selling stock. And so issuing their their their shelf offering or their filing for that, not a surprise. It is in alignment with exactly what they said and what we posted about 21 hours ago and we talked about this on

[12:55] earnings day. So no surprise here. The stock goes up. It's bullish big company fundraising. All right. So now catalyst look I'm going to go through these fast so buckle up. Okay. Tuesday morning SoFi UPS. All right. You got what's going on

[13:12] partly because the rates have been so high and SoFi's been, you know, driving into mortgages lately. It's like, oh man, this is going to suck for a little while. But I think they moon once rates come down. You know, this is why

[13:25] secretly, it's not that much of a secret, but just between you and me, uh, my little real estate startup is, uh, expecting, we were told by the Department of Real Estate, we are getting approved as a mortgage lender in

[13:41] November. Now, we don't actually want to do anything with it yet, but it's very interesting because if rates come down in the future, it to do some brokering. But anyway, that's the topic for for the

[13:55] future. Uh UPS, let's see how those pension fund liabilities are. Tuesday morning, we'll get the weekly a uh employment report from ADP. Tuesday afternoon, we're going to get uh Hood, SKHENX, huge Visa, Nphase, Nphase, maybe

[14:12] volt converter, otherwise there's really nothing to see there. Uh SKHX though, huge. We need to know what's going on with the loss of leadership there on that high bandwidth memory. Any comments we could get around that are going to be

[14:27] day on Tuesday, we'll know if BB is expected to win. uh if he doesn't win, some people actually think there'll be a lower likelihood of war against Iran.

[14:39] Trump's waiting for to taco. Tuesday would be a great day to taco, though. Tuesday would be the most idealistic taco day because it would be taco taco day because it would be taco Tuesday. I'm 95%

[14:52] that if we have a taco, it should happen before the Israeli election is over. That would be sometime on Tuesday, maybe even Monday. We'll we'll see. Uh if it doesn't happen, then my confidence that we get a deal before the election goes

[15:07] down to 70%. I think the window starts closing. Uh and I'll tell you what happens after the election in a moment. Uh but on Wednesday, we got uh Vertive reporting, G Vernova reporting that's going to be huge for turbines. What's

[15:20] hasn't been performing as well, but another source of potential, you know, pop pop on these data centers. uh ADP people care less about their financials. Uh Wednesday we will have the Fed meeting. We are widely widely expecting

[15:37] a hold. Uh and let's go take a look October meeting. Uh we can uh I also want to see what the rates are doing for the odds of uh one rate hike this year.

[15:49] But uh you can see here 95% chance now that the Fed is going to maintain on Kelshi. And uh this is the prediction market here. And then hikes in 2026.

[16:01] I always love this one. This is This one's my favorite here where 24% chance of one. I don't know, man. I think I mean, you get a taco that I still some really good commentary out of wash.

[16:14] I could be wrong. We could get no taco and then we could get some really nasty uh, you know, hits upside the head, which I'm not looking forward to that Catalyst, but I will just mention quickly that Kelshi is a paid sponsor of

[16:29] my startup, Reinvest. Uh, when you go to kshi.com/r/mevin get $25. You could use code meet Kevin or scan You could use code meet Kevin or scan the QR code here. Okay, then. So, so Fed

[16:43] the QR code here. Okay, then. So, so Fed meeting really it matters less for anything because what's going to shape the December meeting really are going to be the next unemployment reports uh the labor reports and then the next two CPI

[16:55] reports that's really what's going to shape the Fed here. Uh so, you know, those are catalysts for the future. This Fed meeting should be a relative nothing burger. It's all going to come down to Iran because then you could really just

[17:08] look through all the other stuff. So, as if a Fed day isn't enough to cover, after the Fed, we go into Microsoft, Google, Service Now, Fortnet, Chipotle, Google, Service Now, Fortnet, Chipotle, FedEx, which obviously if Microsoft and

[17:22] Google come out and go, "Hey, boys and girls, you know, SpaceX and Meta, we kind of want to raise some money,

[17:34] we kind of want to raise some money, too." Yeah. piss some markets off again a little bit, but that's okay. You should expect that to happen because they're going to keep raising money. And the same is what Amazon is going to tell

[17:47] us on Thursday. And then we'll get at least SanDisk. So, we'll see a little bit of color on what's going on on the storage wars side. Reddit, Roblox, Coin, Micro Strategy, Starbucks pins. Some of these matter a little less, but uh then

[18:03] we'll get PCE. PCE is expected to come in at the end of this week at 0.03 core. much of a catalyst because we can kind of already calculate what PC is going to

[18:15] be based on the PPI and CPI. So, who cares? That's then where we get to about a, you know, you know, the odds of a taco dropping after the election. I think between, you know, now and Tuesday evening, 95% would be the excellent

[18:32] window for a deal. If we miss Tuesday, if we miss this Taco Tuesday, we have until really next Taco Tuesday, but my enthusiasm goes down to 70%. And if we enthusiasm goes down to 70%. And if we go past the election, uh that's that's

[18:46] where I think motivation goes to zero for either side to really make a deal. I think the greatest motivation to make a deal is actually right before the election where the Iranians can claim they gave the smallest potential

[18:58] bragging rights to Trump, but Trump can still declare a win before the election. We'll see. Now, the Iranians, interestingly, are posturing in such a way that it doesn't feel like we're actually escalating right now. Iran in

[19:14] its capital is having a mecca meeting for sort of a security agreement between for sort of a security agreement between the uh officials from Turkey, Pakistan, Saudi Arabia, others uh are expected to be involved as well. I'll just zero as

[19:29] it comes right after Donald Trump is like there'll be no strike maybe tomorrow but there'll be no strikes. Anyway, now Alazer is also posting images of before and afters of a tanker that's leaking oil everywhere in the

[19:44] street of Hermus. It's it's a mess. But then on Tuesday also the president of Iran goes to Moscow. So there's a lot happening with this meeting in Iran and the president of Iran going to Moscow. They're looking

[19:59] guys going to stick up for us if the Americans violated us? Violate us? This Americans violated us? Violate us? This to me is not the sound of a war getting started. And I know there are some similarities, you know, uh you could do

[20:13] the war risk, the February versus now. Straight of Hormuz was open then. Now it's disrupted though. We're looking for alternatives. We have a blockade now and uh we didn't really have a blockade then. We have an economic blockade now

[20:29] and we didn't really have an economic blockade then at all. No, these are all new sort of inventions. Uh oil risk premium was at like six bucks. Uh now premium was at like six bucks. Uh now it's closer to $60. So which is leading

[20:44] oil to to trade for over $100. Uh the Saudis versus the Houthies, that wasn't a problem in February. It is now. The uh Iranian oil sales, well, they were flowing before the war and now they're next to zero. Iran's currency was

[20:59] collapsing then. It's still collapsing and getting worse. uh Iran's labor, you know, market was kind of went from not an issue to high unemployment. Now, they've got a negative 7 to 12% GDP depending on how

[21:15] you measure it. Uh so, you know, there are definitely some extra weights on the Iranian economy, but you could argue that some of those exist on the US economy as well. But hey, if Elon and Suck Zuck can suck and the economy keeps

[21:30] going up or, you know, economic growth via GDP keeps going up and the stock Trump's not going to have a lot of pressure. You know, he had more pressure to make a deal because of the pain that we saw for 6 weeks in March and the

[21:43] beginning of April. Uh, now we've got Hormuz's workarounds. We seem to be talking about the length of the Iranian nuclear deal that's coming, the uh enrichment process. In other words, what level of enriched uranium are we willing

[21:57] level of enriched uranium are we willing to accept? Uh this right here does indicate that we are seeing more supply issues. This is a chart that basically says hey of the price of oil, how much is being caused by supply issues. Uh and

[22:10] the answer is more more more over the last few months here. Uh this is really every bar charts about one week here. So over the past I guess you could call it five weeks more supply issues. This is probably when the tanker fortanker

[22:25] strategy started. It seems to align with that. And then demand has shrunk a But people think that demand is going to come back from China. Whatever. Who knows? Here's the US blockade when the blockade stepped in again. So obviously

[22:38] Iran's oil exports are next to nothing compared to what they were. Uh you know maybe 10% of what they were if if that. And then of course Iran's currency is crumbling. And this is an inverse chart because really it's a chart showing you

[22:52] because really it's a chart showing you how many dollars it takes um or sorry how many real it takes to buy $1. And the answer is more uh like 2.5 million

[23:04] 2.6 million real right now compared to like 2 years ago you were down at 500,000. So you know your money has lost its purchasing power 5x over. Kind of scary. So, you know, put all this together. This is a lot. And so, I just

[23:22] There's going to be a lot of content on this with the exception of this morning. Uh, sorry about that. I got little twins with their birthday this morning. And, but remember, you could always go to reinvest one.com

[23:37] and join us in the membership. You pay once, you get lifetime access. Can't luck this week. If you like that video, check this one out. I think you're going >> Why not advertise these things that you told us here? I feel like nobody else

[23:51] see how it goes. >> Congratulations, man. You have done so you. >> Kevin Pra there, financial analyst and YouTuber. Meet Kevin. Always great to get your take.