The $3 Trillion Day: Why the AI Bubble Just Cracked (And It's Not Only Tech)

Special Thanks to Jeff and Eurodollar University: https://www.youtube.com/watch?v=_HDq7sQTUtE&t=210s The S&P 500 just lost nearly $3 trillion in a single session — the biggest one-day wipeout in history — and Tom Bilyeu sits down with Jeff Snider of Eurodollar University to explain why this is NOT just a tech story. From the Treasury market rally to energy-driven demand destruction, the data center backlash, and China's already-burst tech bubble, they break down what's really happening beneath the AI boom. What's up, guys? Today's episode is one you cannot afford to miss. We're diving deep into the chaotic world of the economy with one of the sharpest minds tracking every market move—Jeff Snider, the founder of Eurodollar University and an economist who has spent years breaking down what’s really happening behind the headlines. This dude is a straight-up wizard when it comes to understanding how global markets really work, and he pulls zero punches on where things are headed. Today, Jeff uncovers the truth behind the S&P 500's historic crash, why the tech sell-off is way bigger than just a tech story, and what the AI frenzy means for the future of your investments. Don’t miss his insights on how demand destruction is reshaping everything from energy prices to the bonds rally, and why now, more than ever, it's crucial to rethink what safety and risk even mean. By the end of this episode, you’ll walk away with a crystal-clear picture of what’s really going on in the economy, how to spot the signals everyone else is missing, and why understanding the coming shifts might be the key to not just surviving but thriving in the chaos ahead. If you love the show, please drop us a review—it helps us reach more people like you who are obsessed with unlocking their full potential. I’m Tom Bilyeu, and welcome to Impact Theory. 00:00 Intro 01:03 The AI Epicenter 02:05 Why Everyone Wants Treasuries 06:32 America Turns on Data Centers 16:26 The Fed's Shrinking Margin 19:29 Circular AI Financing 24:09 Stagflation Risk 25:50 China Already Cracked 28:36 Why Innovation Still Matters Tailor Brands: Check out Tailor Brands to launch your business starting at $0 + state fees: https://bit.ly/TailorBrandsSept Quince: Free shipping and 365-day returns at https://quince.com/impactpod Pipedrive: Get more leads and grow your business. Go to https://www.pipedrive.com/impact and get started with a 30-day free trial. Incogni: Take your personal data back with Incogni! Use code IMPACT at the link below and get 60% off an annual plan: https://incogni.com/impact HeyGen: Create your first three AI videos for free at https://heygen.com/impact. What's up, everybody? It's Tom Bilyeu here: Want my help starting a business? Join me here inside Zero To Founder https://tombilyeu.com/zero-to-founder?utm_campaign=Podcast%20Offer&utm_source=podca[%E2%80%A6]d%20end%20of%20show&utm_content=podcast%20ad%20end%20of%20show Sign up for my AI Masterclass: AI Masterclass https://tombilyeu.com/ai-masterclass?utm_campaign=Live%20Masterclass&utm_source=podcast&utm_medium=evergreen Follow Me: Instagram:https://www.instagram.com/tombilyeu/ Tik Tok:https://www.tiktok.com/@tombilyeu?lang=en Twitter:https://twitter.com/tombilyeu YouTube:https://www.youtube.com/@TomBilyeu See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Speaker 00

  Shaq here. What's it like to buy a car from Carvana 100% online and get it delivered to your door? Let me tell you. Your car is here, Mr. Shaq. Thank you, Mr. Carvana guy. Can't wait to take it for a spin. Only the best for you, Mr. Shaq. Hey, have you always been so big, tall, and handsome? Not always. I was 6'10" once. Seven days to love it or return it, Mr. Shaq. Not that I would. You never do. No, I never do. So buy your car today on Carvana. Delivery fees may apply. See our seven-day return policy at carvana.com.

• 0:31Speaker 01

  Whoever says saving money is hard doesn't know that new customers who bundle and save with Progressive save hundreds. Because switching your home and auto insurance is better than cutting down on the things you love, like those ice lattes that help you get ready to face the day. So switch your home and auto to Progressive and see if you could save and keep sipping away. Get your quote today at progressive.com. Progressive Casualty Insurance Company affiliates and other insurers. Not available in all states.

• 1:00Tom Bilyeu?

  There is something weird happening in the economy, and I want to get into it. We're going to be diving deep on exactly what is going on right now, because holy hell, the S and P 500 just lost more raw dollars in a single trading session than any time in its history, but it does not mean what most people think it means.

• 1:21Speaker 03

  The Nasdaq just plunged more than 5%, falling into correction territory. The S and P 500 dropped 4% heading for its worst day since April 2025. The Dow lost more than 1,650 points as of this recording, racing almost this entire post-election rally in a single session.

• 1:38Tom Bilyeu?

  That's the wild thing, is understanding that for a second it looked like we were going to be doing good, and then it completely flipped. But the bigger question that we're going to be getting into is where is this all going? Is this only a tech story, or is there something larger? And I'm telling you right now, this is not only a tech story, and it is very important to understand why this isn't only a tech story, why we are likely to see a reversal where the Fed thought they were going, and what this is going to mean down the road.

• 2:03Speaker 03

  Again, the epicenter seems to be artificial intelligence. Broadcom and Nvidia fell approximately 9%. Oracle dropped 8%. AMD and Micron lost around 15% each. These are just one-day totals. Semiconductor ETF fell roughly 11%, putting it on track for the worst day since the COVID outbreak in March of 2020. But this is no longer just a technology sell-off, at least today. Caterpillar fell 5%. JP Morgan dropped 4%. Boeing lost 4%. Nike declined 3%.

• 2:33Tom Bilyeu?

  These are catastrophic losses. Like, I know those numbers sound small, but when you put them in like historical moves, they are gargantuan.

• 2:40Speaker 03

  But at the same time, maybe more importantly, Treasury bonds are rallying, not just a fluctuation, we're seeing a bond market rally develop. The two-year yield has fallen to a recent low near 4.48%, down almost half a percentage point in five weeks.

• 2:56Tom Bilyeu?

  Now, the question is, what does that say?

• 2:59Speaker 03

  The 10-year is around 483, heading toward 480, roughly 50 basis points below its recent high.

• 3:05Tom Bilyeu?

  It says I'm going to need to be safe. I can feel something coming. I know bad things are going to be happening in the market. They're not going to be brief, and I need somewhere to put my money. When people want to be in US Treasuries, that means that people do not like the risk in the markets.

• 3:20Speaker 03

  September's technical effects are gone, just as I told you they would be, and the market is increasingly free to price the fundamentals, and the fundamentals are becoming more concerning. So the immediate explanation for today's stock crash is that the midterm election results may make data centers harder to build. Investors are worried about more regulation, environmental restrictions, and even proposals for a national moratorium. But that is only the proximate cause. It is one more concern, perhaps one too many concerns piled on top of anxieties that have been building for months.

• 3:52Tom Bilyeu?

  This is a big thing that I think people are missing, is that the economy has been weak for a long time. Consumer demand has been declining. AI was part of what was competing with the Treasury market. A big part of the reason that rates were going up, up, up, is the debt demand in AI was far more exciting, and it was absolutely massive. And so money was racing into that, making it hard for the government to raise the debt that it needed, which was making it look like, whoa, maybe is, are people really beginning to lose belief in the US government in terms of the stability of the dollar? That doesn't actually seem to be true, and that's very good news. But now all of this is starting to point at, there's

• 4:35Tom Bilyeu?

  actually been something else that's been going on for quite a while, as the consumer demand was held afloat for a long time by the people at the top of the K, and then by the people at the bottom of the K burning through savings and buying on credit. But now, as that's run out, we realize that the economy was a lot weaker than we thought. Remember, we've been talking about this for a while with why did the cost of oil not absolutely skyrocket, hit $200 a barrel. There was a ton of people saying that that's exactly what was going to happen, but that didn't happen. And the question is, why didn't it happen? And the hypothesis that we've been talking about that I still think is true is demand destruction. And so now you've got shaky consumer demand meeting something starting to wobble in the AI trade.

• 5:17Speaker 03

  The spending was already enormous. The financial commitments were becoming increasingly difficult to justify. Credit markets, they've been resisting the weakest AI borrowers. Too much had to go perfectly to support current stock prices and valuations. Now the path to perfection looks increasingly less likely.

• 5:35Tom Bilyeu?

  Does anybody see a path to perfection? I don't think anybody has that on their bingo card. I think people would be way surprised, and I think that the way that people are investing shows that more and more. Now, they may not want to give up on the whole only up phenomenon just yet, but I think everybody's starting to wobble, which is why people are beginning to diversify away. Remember, we're seeing a transition. It's actually a rotation. So people aren't leaving the entire market, at least as of a few days ago, more so now. But they weren't leaving the entire market. What they were doing is saying, I'm way over-indexed on tech. I need to get out into the broader market. Now, the fact that the broader market is also taking a hit is more worrisome. But at first, it was just, okay, maybe I'm over-indexed on tech specifically.

• 6:20Speaker 03

  Bonds are not merely pricing an AI bust. They're pricing energy-driven demand destruction, weak economic fundamentals, and the possibility that if the AI boom does turn into a bust, which we know it will at some point, that will remove one of the few major sources of investment, keeping the economy afloat.

• 6:39Tom Bilyeu?

  All right, that is the thing that I want to hit like a hammer blow. This is why I'm looking at the jobs data and I'm like, yeah, I'm not expecting it to hold. I am definitely expecting it to be revised down, because the thing that's making the US economy work is AI, and we are in the middle of watching that bubble wobble hard.

• 6:57Speaker 03

  We all know this boom will eventually break. They all do. What we don't know is when and how violent that will be when it happens. But that is always in the back of everyone's minds, especially those who are investing in in stock markets as well as the bond market. And so because it's always there, it's always something you have to keep in mind and think about, the reactions can be violent in the short run, because everybody knows how this ends. We just don't know when, which means you really got to pay attention to all of these signals. Now, again, the immediate catalyst for today's sell-off is the possibility that America's data center expansion will become politically more difficult.

• 7:32Tom Bilyeu?

  America has certainly turned against data centers. That's been happening for a while.

• 7:37Speaker 03

  Following a Democratic sweep of both chambers of Congress and victories in several important gubernatorial races, investors are now reassessing the regulatory outlook for AI infrastructure.

• 7:47Tom Bilyeu?

  It's not good.

• 7:48Speaker 03

  Senator Bernie Sanders, the crazy guy from up there in Vermont, called for a national data center moratorium, arguing that Americans don't want technology companies damaging the environment, eliminating jobs, and threatening the public's future. A national moratorium is not currently law. It may never become law. That isn't the point. Financial markets have spent the last several years assuming data centers could be constructed as quickly as financing, as quickly as equipment, and as quickly as power became available. Political resistance was treated as a manageable local inconvenience. That assumption is now being increasingly challenged.

• 8:23Speaker 04

  There is always a collection.

• 8:24Tom Bilyeu?

  That's his favorite soundbite. You're going to hear that like three more times in this video alone.

• 8:29Speaker 03

  Data centers require enormous amounts of electricity and water. They need transmission lines, backup generation, cooling systems, LAN connections.

• 8:37Tom Bilyeu?

  What's really interesting, by the way, is right now you're seeing a switch in the way, certainly that OpenAI is approaching the data center build out. They've obviously been feeling this tension building up for a while. And so now they're putting new strategies in place. They're talking about, we're going to pay for all of the power grid upgrades. We're going to be completely transparent on our water usage. There were a bunch of other things they were doing, trying to make these data centers more appealing to people, including now changing the names. They're not calling them data centers anymore. They're calling them compute campuses, which just sounds stupid. But anyway, they're doing anything they can to try to rebrand this to get people to be less antagonistic. I think they are going to have to work way harder.

• 9:19Tom Bilyeu?

  We've got to flip the mentality that people have that this is going to be bad for them. We've got to show them how this is benefiting them. And if we can't make them feel it in the economy, you're never going to convince them.

• 9:29Speaker 03

  They are already straining the power grids. These requirements are becoming increasingly visible to voters. Communities are being asked to tolerate higher electricity demand, new infrastructure, and potentially higher utility bills. The politics were always going to become more difficult. Investors simply weren't pricing that difficulty because the AI narrative assumed infrastructure would be built almost without limitation. Today, along with some of the stuff in the credit markets, the markets are beginning to price limitations. Neo cloud companies were hit particularly hard. CoreWeave, that's one that's been in the news a lot lately, fell approximately 13%. Nebius lost 16%. Iron dropped 17%.

• 10:08Tom Bilyeu?

  That's brutal.

• 10:09Speaker 03

  Now, this isn't just today. It's been coming for some time. And these companies are far more dependent on continuous AI construction than, say, Microsoft, Amazon, and Google.

• 10:17Tom Bilyeu?

  Here's where, one thing I will say, these guys aren't, it's not predicated on building out the data centers. It's that to hit their revenue targets, they would need an inflow of demand that would require the data centers. And that difference is huge because we don't know that we're going to have that continued appetite. And the problem is that when you look at, I think people were expecting to have a lot of companies competing for all of this compute. And now the reality is that if rumors can be believed, that there are people that were inquiring about buying compute that was much more expensive. And now it's coming down. And now people are coming in, offering them more hours than they were originally going

• 10:57Tom Bilyeu?

  for because it's possible that we've already overbuilt based on the rate of demand that's coming in. And so the question is, is the real wall going to be electricity? Or is the real wall going to be demand?

• 11:09Speaker 03

  Gigantic advertising, retail, and software businesses that are capable of subsidizing years of uncertain returns. So if data center projects are delayed, their revenue is delayed. If projects-

• 11:20Tom Bilyeu?

  It's not the data centers, it's the demand. Now, if the demand is there, and then the data centers aren't built, then yes, it would be the data centers. But you have to have the demand first, and there are question marks on that one.

• 11:30Speaker 03

  Projects are canceled, their expected revenue path disappears. While financing obligations they've already taken on, those remain.

• 11:38Tom Bilyeu?

  That's what I'm talking about with the mismatch in time between your debt obligations and the revenue. This is the tale as old as time.

• 11:45Speaker 03

  If lenders conclude political risk has made future construction less predictable, the cost of financing rises before a single project is officially stopped. That is why one proposed moratorium can have a much larger financial effect than its immediate probability would suggest. It exposes just how many valuations depended on almost everything going exactly right, and how that was never a realistic possibility.

• 12:09Tom Bilyeu?

  Truth, never.

• 12:10Speaker 03

  There's a big mistake that-

• 12:11Tom Bilyeu?

  Nothing's ever perfect.

• 12:12Speaker 03

  A lot of gold investors are making right now, and it has nothing to do with the price of gold. You might have bought gold five, 10 years ago, watched the price go up and thought, I've done pretty well. But here's the question that almost nobody asks. How many more ounces of gold could you own today if your gold had been earning you more gold this entire time? Think about it. Most people buy gold, pay to store it and insure, and then just sit there waiting for the price to go higher. Your gold isn't producing anything. That's what makes monetary metals interesting. They've created a way for eligible investors to earn up to 4% annually on their gold through their gold yield marketplace. But here's the important distinction. That yield is paid in additional physical gold, not dollars. So instead of only watching the dollar price of your gold change, you have the opportunity

• 12:57Speaker 03

  to increase the amount of gold that you own. And those additional ounces can potentially appreciate alongside your original holdings if gold prices rise. Now, Monetary Metals has been doing this for nearly a decade, and they've paid out thousands of ounces of precious metals to their clients. So here's the question. If you're already holding gold for the long term, why wouldn't you at least investigate whether it could be earning you more gold? The real opportunity cost may not be the price that you paid for your gold. It could instead be all the ounces that you're not accumulating. Go to monetary-metals.com/snyder and learn how their gold yield marketplace works. If this was only a one-day re-reaction after yesterday's non-reaction reaction, we wouldn't be seeing what we're seeing in the bond market.

• 13:40Speaker 03

  The bond market, the treasury market in particular, is now rallying. It's not just a fluctuation, not just a short-run blip. This is an honest-to-goodness treasury market rally, which has much broader implications, particularly since it began long before the election results on Tuesday. As of last check, the two-year yield is now at 4.48%, down almost half a point from its recent high.

• 14:03Tom Bilyeu?

  That is wild. Remember how fast it was going up? There was so much chatter about, oh, my God, like, where is this going to stop? And now, as people are beginning to back off of pouring money into AI debt, and there's more uncertainty in the stock market, all of a sudden, the prices are coming down because more people are flooding in. They want their treasuries. Very interesting how fast that turned around.

• 14:24Speaker 03

  Here's around 480 or so, approximately 50 basis points below its peak. This matters a great deal because the earlier rise in yield had two main components to it. The first was, as I pointed out to you several times, September. Treasury markets often encounter seasonal pressure at the end of the third quarter as dealer balance sheets become constrained and intermediaries become less willing to warehouse duration. This year, those pressures amplified an already difficult sell-off. The second component, the primary component, was the Fed. Following Kevin Warsh's Jackson Hole remarks, markets began pricing the risk the Fed would respond aggressively to an energy-driven increase in headline inflation.

• 15:04Tom Bilyeu?

  Which makes no sense. You can't raise rates and open the straight. That's not how this game works. It was weird when it happened, and I said so then. I reiterate now.

• 15:14Speaker 03

  Even though expensive energy was simultaneously weakening the real economy underneath, that pushed expected short-term rates higher and farther into the future.

• 15:23Tom Bilyeu?

  Now, I will always give the devil his due. There is that one side, and we're actually seeing it play out now, which is if your goal isn't to address an energy-led inflation shock, but instead you see way too much money going into the AI industry and you're actually trying to slow that down, that would be the only thing that would make sense. Because by the AI trade getting less interesting to people, therefore the debt being less interesting, now you are seeing the rates come down on certainly the treasuries. We'll see what ends up happening with overall inflation when we get the next read on that. But yeah, spiking because you think that you, hiking because you think that you have

• 16:07Tom Bilyeu?

  an energy problem, is dumb.

• 16:09Speaker 03

  September is now over, which removes the seasonal pressure. Therefore, the September effects are now fully into, well, I guess it's not Thank God, it's October. Thank God, it's October, now November. More importantly, though, the economy is beginning to limit how much room the Fed has to overreact and triché itself. The worse the economic outlook becomes, the less credible an extended series of rate increases also becomes. The upward portion of the forward rate curve, that's termed so for futures, it has been compressing, compressing hard, because traders are pricing less room for the Fed to continue hiking before something really breaks. That process accelerated during today's stock market sell-off. The probability in options markets of a quarter-point increase in December from the

• 16:52Speaker 03

  Fed fell to approximately 70%, down from nearly 83% just yesterday. The probability the Fed does nothing in December increased to almost 30%. Markets are still pricing a meaningful risk of another triché, another rate hike out of policymakers, but the Fed's margin for doing so is shrinking. And the reason it is shrinking is because the market is becoming less confident in the economy's ability to absorb energy expenses, a worsening credit cycle, and now a potential reversal in AI investment, all at the same time.

• 17:26Tom Bilyeu?

  Luxury brands are not charging you more for better cashmere. You're paying for the storefront, the ad budget, the name on the tag, but Quince cuts all of that out. They work directly with ethical factories, they skip the middlemen, and sell 100% Mongolian cashmere, starting at just 60 bucks. 50 to 80% less than similar brands. Now, I gave one of these as a gift last year. It was a big hit, and gifting is really the test of a brand. You might tolerate a lot of stuff in your own closet that you would never give to somebody else. I've got their joggers and a couple of their tees as well, and I can tell you, their whole line is high-quality. Give the gift of quality this holiday season.

• 18:08Tom Bilyeu?

  Download the Quince app for app-exclusive offers or go to quince.com. Get free shipping on your order and 365-day returns. It's now also available in Canada and the UK. And when Quince asks where you heard about them, make sure you tell them that it was on Impact Theory. That's the best way to support the show. Fraud is a volume business. The bad guys work down a list, and the list is sorted by who is easiest to find. Data brokers are legitimate companies that collect your address, your phone number, your relatives' names, and then they sell it to whoever pays for it. Incogni gets you off of those lists.

• 18:49Tom Bilyeu?

  They find the brokers holding your information and handle removal requests across more than 420 broker sites. And for broader protection, the unlimited plan includes the exposure scanner, which searches the wider web for your personal data so you can choose what gets removed. It also includes customer removals as a safety net. So if you spot your details on a blog or public forum or directory, you can just submit the link and their privacy experts handle the takedown request on your behalf. They can't harm you if they can't find you. Go to incogni.com/impact and use code IMPACT for 60% off an annual plan. It's risk-free with a 30-day money-back guarantee.

• 19:30Tom Bilyeu?

  Incogni is spelled I-N-C-O-G-N-I dot com slash impact. And again, be sure to use code IMPACT. Right now, there's a promise in somebody's notebook that your company is about to break. That's where today's sponsor, Pipe Drive, comes in. It's an intelligent, AI-powered sales CRM loved by growing sales teams. I've worked with plenty of sales teams. Deals die in between calls and Pipe Drive fixes exactly that. During the call, it records and takes notes. After the call, it drafts the CRM updates for your rep to review and approve. Before the next call, it pulls that history back into one easy-to-read brief.

• 20:14Tom Bilyeu?

  Switch to a CRM built by salespeople for salespeople and join over 100,000 companies already using Pipe Drive. My link gets you an exclusive 30 days free instead of the usual 14-day trial, so be sure to use it. No credit card or payment is needed, just head to pipedrive.com/impact to get started. Again, that's pipedrive.com/impact and you can be up and running in just minutes. We gotta see what's actually happening with inflation. I think if they keep getting inflation numbers, the Fed is still gonna push, which is wild. But nonetheless, if inflation goes in the wrong direction, I think he'd hike again.

• 20:56Speaker 03

  Bite to safety, lower growth and inflation expectations, less interference from the Fed, lower bond yields, the Treasury market is now in rally mode. The data center backlash that we're now seeing emerge didn't create the AI industry's financial problems that we've been talking about for a lot longer than just this past week. In fact, it became harder and harder to ignore by the time we got to the election on Tuesday. So again, maybe one straw too many for the camel to keep going. Amazon recently spent $77 billion on property and equipment in a single quarter, contributing to a free cash flow outflow of approximately $42.4 billion.

• 21:35Tom Bilyeu?

  That is so wild, guys. That is so wild. That's so much money. For these guys to go from having more money than God to be negative cash flow is wild. There's no surprise in the fact that the market's responding to that.

• 21:48Speaker 03

  Supplier financing arrangements that could allow to borrow as much as $80 billion against the hardware purchases. Alphabet faces more than $8 trillion in reported future payments connected to data centers, computing capacity and energy, even as investors continue asking, how generative AI will be monetized without damaging Google's existing search average?

• 22:07Tom Bilyeu?

  Bro, that is the question. How are these guys gonna build the future without eliminating their revenue model now? And how do you walk that balance of everybody can see in the data that the reality is as they are bringing in or bringing online more AI and more of their searches are done via their AI mode, that there's just less traffic being moved to other sites, which means they're getting paid less money. People are getting the answer, saying thank you and doing nothing else. If my behavior were universal, I'm just in Claude all the time. I'm not doing searches almost ever. I went from doing, I can't even imagine how many searches a day, to less than one a day, for sure less than one a day. So if that is indicative of a way a lot of people are behaving,

• 22:52Tom Bilyeu?

  that revenue is going to continue to die off even if not another data center is built. So it becomes a question of how many people are actively using AI. If that number keeps going up, ooh buddy, it's gonna get weird for Google especially. We'll see.

• 23:11Speaker 03

  Microsoft offered voluntary buyouts to approximately 60,000 employees as it seeks additional flexibility while continuing its own enormous AI infrastructure program. These companies, these specific ones I just went over, are not speculative startups. They are among the most profitable corporations in history. Yet even they are being forced to conserve cash, find new financing structures and prioritize AI investments over all other kinds of expenses. And below them, much weaker layer of NeoCloud's data center operators and AI laboratories without profitable independent businesses.

• 23:47Tom Bilyeu?

  Yeah, those guys, ooh NeoClouds, would not want to be one right about now.

• 23:51Speaker 03

  Need financing before revenue even exists. Lenders are being asked to fund GPUs, the networking equipment, the land purchases, and all the power associated with everything based on projections of what customers may eventually pay after the infrastructure is completed. That was becoming a difficult proposition long before we got to the election. Banks nearly backed away from a reported $63 billion financing package for Broadcom chips and networking equipment that was intended for Anthropic. Lenders demanded higher interest rates and stronger protection against those losses. Broadcom reportedly had to provide residual value support because the banks weren't comfortable relying entirely on the financed chips as collateral.

• 24:34Speaker 03

  And it told us something very important before we got to the election this week.

• 24:38Speaker 04

  There is always a collection.

• 24:40Speaker 03

  The same chips described as the most valuable and strategically important assets in the world apparently aren't sufficient collateral on their own without additional guarantees from Broadcom, the supplier.

• 24:50Tom Bilyeu?

  Yep, let that sink in, man. Like, the money is being spent on all these chips and now people are more and more going, nah, maybe those will be valuable, maybe they won't. The fact that people are starting to have questions about the chips, I mean, the chips have been viewed as like manna from heaven, buy them at any price. This is the very thing that is like pissing the average person off. It's like, bro, anything that requires memory is inflating to high heaven. You guys are storing these in warehouses? This is crazy. And now people are saying, yeah, I don't know if we're gonna give you as much credit for those as we used to. Now it's not looking so good to have a warehouse full of chips.

• 25:26Speaker 03

  Why? Because uncertainty is enormous and getting bigger. Add political and construction risk to that equation and financing becomes even more difficult. The election didn't create the wall. It may have pushed the industry into a wall that was already directly in front of it.

• 25:43Tom Bilyeu?

  That's what I was saying earlier, man. You got that wall and now is what's happening? Basically, the, um, the blue tsunami, is it just taking the back of like the economy's head and ramming it into the wall? That is, it didn't create the wall, as he said, but boy, oh boy, did it give some acceleration on the rate at which our face planted into that wall. Remember, $3 trillion almost lost in a single day of trading.

• 26:12Speaker 03

  You gotta keep in mind too, that this AI possible bust, we aren't there yet, but the possibility of an AI bust adds to an already difficult situation. That's what the bond market has been pricing, even though everybody was hyper-focused on the September sell-off. And Kevin Warsh and the Federal Reserve's role in that sell-off. The Fed has been hiking rates for CPI pressures that it sees and therefore imagines down the road, while the bond market continues to price all the negatives in the real economy that exist and have evidence for. And AI would just be one more of those.

• 26:45Tom Bilyeu?

  Demand destruction, demand destruction. That, that is why oil did not reach $200 a barrel. And it isn't just here, it's in China as well. There's demand destruction, man. Nobody wants to face that. And this is a bad time to have a crisis in AI as well, because now no part of the economy is working well. But, uh, yeah, demand destruction. It's coming, it's already here and it's only gonna accelerate. It will be very interesting to see what the numbers are for the Christmas holiday, for the holiday season. Yikeses.

• 27:15Speaker 03

  Much broader than just strictly technology. The energy shock has been described primarily as an inflation problem. That interpretation ignores what expensive energy does when incomes and credit aren't growing nearly fast enough to absorb it. Households can't create money because gasoline, electricity, and now their utility bills are gonna cost a lot more. If consumers have to spend an initial $100 on fuel, that's $100 they can't spend at restaurants, retailers, or other discretionary expenses. One category's higher price becomes another category's lost revenue. That's what the bond market especially tips have been explicitly pricing this entire time. Businesses face the same constraint, and so that's in bond yields too, really bond spreads.

• 27:57Speaker 03

  Higher transportation, electricity, production costs, they reduce margins unless they can pass those costs on to their customers. But customers already face higher household expenses, therefore they can't accept another round of price increases. That's what we keep hearing all across the economy. Without rapid wage growth, which let's face it, is not happening, expanding credit or some other broad increase in income, the energy shock can't generate an endless inflationary spiral. It destroys volume.

• 28:26Tom Bilyeu?

  This is so important. All right, so if you've got a system where the prices are going up and up and up and up, wages aren't keeping up with that, then

• 28:37Tom Bilyeu?

  You end up going in the exact opposite direction. You get demand destruction, then people start lowering their prices because they're trying to capture what money there is out there. But unfortunately, now that's crisis-led deflation and you're in bad news territory. It isn't like, oh, you know, inflation is bad and oh, what a tough break. It's like you start getting into stagflation and now prices are going up, people can afford less, and it literally just breaks the economy.

• 29:01Speaker 03

  It's why gasoline demand and other measures of discretionary activity are such a big part of it. If fuel consumption weakens, for example, while energy remains expensive, the economy is revealing that demand is being rationed. Treasuries are really recognizing the higher likelihood and maybe even a sooner arrival of that destruction. Falling yields don't mean the energy shock has disappeared. They mean the market increasingly believes the economy can't tolerate the shock without, at the very least, slowing down more than it has. And that also explains why today's broad stock decline is a big part of it, too. Caterpillar, JP Morgan, Boeing, Nike, they aren't direct AI infrastructure trades at all. Their declines demonstrate that investors are moving beyond a narrow reassessment of

• 29:45Speaker 03

  semiconductor valuations. Caterpillar reflects investment in construction. JP Morgan, credit in the wider financial system, the credit cycle. Boeing, industrial demand and financing conditions. Nike, consumers, but a lot more trouble there at Nike. With all of them falling alongside technology, the market is no longer only asking whether Nvidia's valuation, for example, is too high. It's asking whether the economic foundation beneath the entire marketplace is weaker than previously.

• 30:12Tom Bilyeu?

  If you're not looking at your screen, the US industrial production revised, 2025 revised numbers down, yikes, yikes.

• 30:23Speaker 03

  Weaker than previously told, or really, really, really weaker than previously hoped. And believe it or not, the United States is not the only market to suffer these types of questions. In fact, the Chinese marketplace, the Chinese tech marketplace, the Chinese position in the AI bubble has already been far more advanced than what we're seeing here in the US. In fact, China's technology bubble may have already burst.

• 30:47Tom Bilyeu?

  I'm so curious to know what's actually going on in the Chinese economy, man. It is possible that those guys are in worse shape than we are, which will actually end up buying time. If they're in dire economic straits and needing to rebuild there, it's possible that their window to go after Taiwan in '27 may have already closed. That would be good news.

• 31:09Speaker 03

  Index of major Chinese technology and semiconductor companies has fallen roughly 40% from its mid-year peak, destroying approximately half a trillion US dollar equivalent in market value. China's broader CSI 300 dropped around eight and a half percent in October, its worst monthly decline in more than a decade. Technology and AI shares have become an enormous portion of the market capitalization and trading activity. And once those stocks reversed, very few investors escaped the damage. Beijing has, of course, attempted to stabilize the market. Authorities announced another round of central bank swap operations with securities firms and fund managers applying for more than $100 billion yuan, or approximately $15 billion US dollar equivalent of liquidity support.

• 31:51Speaker 03

  Financing costs for share buybacks were reduced, and major technology companies were encouraged to repurchase their stocks. So far, the measures haven't created a durable recovery in the marketplace, and that is a warning American investors and global investors overall should heed. Now, liquidity from any source can slow a decline, share buybacks can create temporary demand, and government support can prevent disorderly selling, but none of those measures are going to be able to manufacture a profitable end demand state for AI services. Now, China's sell-off was also intensified by its weak domestic economic situation, its prolonged property downturn, but also, maybe this is a point we should all pay most

• 32:32Speaker 03

  attention to, disappointing technological progress and concerns about restrictions on Chinese equipment. The exact catalyst was less important than the accumulated imbalance. Valuations required sustained technological progress, rapid demand growth forever into the future extrapolating, and continued support from all parts of the Chinese system.

• 32:54Tom Bilyeu?

  This is why you got to focus on innovation, man. All of our hopes and dreams in terms of an economy always going up are predicated on innovation. Now, China has not exactly made a name for themselves of innovating. They've made a name for themselves off of copying innovations from the US and others. And the problem is, the US is now moving away from being innovators themselves, which is a big part of our problem. This is one of the things that I'm worried about with the blue wave that represents energy in culture. Culture is moving away from embracing innovation. People are terrified of AI. We're doing a horrible job of explaining to them why this is going to be useful, why the thing that should not be occupying their thoughts is, oh, my God, I might lose my job.

• 33:38Tom Bilyeu?

  It's how do I use AI to have more freedom, more sovereignty, more ability to be the last person standing at my job, if that's the direction that we're headed, or being able to start something on my own, being able to control my own destiny? We're not telling people that story. We're letting their brains turn to mush because we're putting them in a relationship with AI that's just like, go do it for me, rather than help me learn and understand what this thing is so that I can go do something. We're allowing people to wallow in fear. I cannot stress enough, young people must be taught to be optimistic. They must be taught to be aggressive and constantly trying to improve and do better. And if we're giving them this never-ending buffet of fear, then they're never going to

• 34:23Tom Bilyeu?

  get anywhere useful. And so all of that takes a concentrated effort on our part. And instead, what we're seeing now is people saying basically anti-innovation messages, that we should be doing a moratorium, we should not be building these data centers, AI is bad, we should not be doing this. It is potentially deeply problematic. And this is the kind of thing that we've really got to look at this from first principles. Where does AI go from here? Why does AI matter? Why is it such an important technology? Why has it already had such a big impact? And why are we going to struggle to shift the old revenue stream into the new revenue stream? Because that in and of itself is going to cause a shakeup. So we're going to have to be very smart about how we proceed.

• 35:08Tom Bilyeu?

  Otherwise, we're going to do one of two things. We were on the path to just over-leveraging ourselves and crashing due to the bubble popping, very historically the thing that people tend to do. And now we've got a new trajectory of, we're just going to tap out, go be more like Europe, find ourselves in 10 years with the streets on fire because we're just drowning in so much debt. Remember, France is a debt crisis happening in real time to Europe writ large. So, yeah, that is not the direction that we want to go. We want to get back to being the innovators. It's driving not only us, but has massive impacts on the second biggest economy in the world, China.

• 35:49Speaker 03

  When investors became less certain about all three, prices fell much faster than the underlying story, which had changed. And this is where bonds and technology stocks finally converge. The AI capital expenditure boom has been one of the few, one of the few legitimate economic tailwinds for the United States and really around the rest of the world. Just look at global trade and how much that has been, this year in particular, really boosted by the technology sector. So today's stock crash is being blamed on the political fallout from the election and the possibility that building data centers will become politically more difficult. And that is technically correct, but is also an incomplete explanation for everything that we're seeing here. Political resistance is only the latest concern.

• 36:32Speaker 03

  The industry was already consuming extraordinary amounts of cash. Financing structures were becoming increasingly circular. Lenders were demanding stronger guarantees. Credit protection costs were already rising. Chinese AI stocks had already collapsed. Too many assumptions had to remain true simultaneously. Data centers had to be approved, power had to become available, chips had to retain their value, financing had to remain cheap, AI demand had to expand exponentially and continuously, customers had to accept proper prices, and the broader economy had to remain resilient enough in truth to support all of it. Markets are now seeing a narrower path to that perfect outcome. Stocks are pricing, stocks are pricing the direct threat to earnings and valuations, at least the narrative about the future.

• 37:17Speaker 03

  Bonds are pricing the broader economic consequences. Energy-driven demand destruction, the energy shock hasn't gone anywhere, weak real economy potential, tighter credit from the credit cycle downturn, the downturn's even more, and the possibility that an AI reversal removes one of the economy's largest remaining investment engines. The bubble hasn't burst yet, not fully, not in the United States at least, but the warning signs, the warning signals in more places, they are beginning to pile up. And when both stocks and bonds begin sending the same message, it's much harder to dismiss this as a post-election hangover for a single daily crash. The market is beginning to ask, what are these AI stocks actually worth?

• 37:58Speaker 03

  The wider marketplace is beginning to wonder, what happens to the broader economy if that worth never gets realized?

• 38:05Tom Bilyeu?

  Preach, brother, preach. My man, Jeff Snider, over at Eurodollar University, he's incredible, is somebody who really, I think, has a very good understanding of the much larger international influence that all of the different markets have on each other, hence the name. I think his read on all of this has really been great. So definitely give Jeff Snider a follow for more of this kind of stuff. He's absolutely fantastic. Let's talk about a pattern that is guaranteed to be killing your progress. You know what you need to do. You need consistent nutrition. We all do. You need vitamins, probiotics, greens. We all know that we should be doing more of it. When your morning gets chaotic, you skip it. When you travel, you skip it.

• 38:51Tom Bilyeu?

  When your routine breaks, everything tends to break, and that inconsistency compounds against you every single day. AG1 is designed to solve the execution problem. One scoop, eight ounces of water, and you're done. You're getting 75-plus ingredients, vitamins and minerals, pre and probiotics, nutrient-dense superfoods, everything that used to require six, seven different supplements, and perfect planning now happens in one drink that takes about 30 seconds to make. Right now, AG1 is giving you $87 worth of free gifts with your first subscription. You get a welcome kit, travel packs, vitamin D3 plus K2, and flavor samples.

• 39:30Tom Bilyeu?

  Click the link in the show notes or visit drinkag1.com/impact to claim this offer.

• 39:38Speaker 05

  Everyone talks about how challenging it is to raise kids, but what about protecting them? Outlet covers, kitchen cabinet locks, baby gates, where do you even start? Well, protecting your home and auto is a great place to start. Progressive offers customized coverage options so you can be sure you have the right coverage. They're basically the baby gates of insurance. Get a quote at progressive.com. Progressive Casualty Insurance Company, affiliates and other insurers. Not available in all states.