Grok now has native, built-in access to search, read, and monitor live posts directly on X. It’s direct real-time access to monitor anything on the platform. I put it to work to give me a sense of current market.
Is Crash Talk Up?
Yes, crash talk on X picked up this week, but it reads as worry in words rather than real fear. Posts about a market crash more than doubled from Monday to Thursday’s chip selloff, and “AI bubble” posts rose about 75%. Both have eased since. Buy-the-dip and all-time-high posts rose just as fast, so bullish talk still outweighs crash talk about 2.5 to 1.
The positioning numbers people cited back that up, though I haven’t checked them against their direct sources. The equity put/call ratio, which compares puts traded with calls, sat at 0.80–0.86 all week, which isn’t that high. CNN’s Fear & Greed index was at 43–45, on the fear side but not extreme at all. The AAII retail survey shows 48% bearish, while trading shows heavy call buying. As one macro account put it, “Stated fear, traded appetite.”
So we have people talking about a crash but still looking to buy.
This is going to be a nice fee add to my macro watch.
Other Early Signals
I’m learning to follow and use more macro data. Broadly speaking my main worry is coming from the 10-year yield at about 5.3%, the highest since 2002, and from how narrow the rally is: 89% of Russell 3000 stocks are more than 10% below their highs. Thanks to Hedgeye, I was able to turn those concerns in decent trades with PFIX and by exiting IWM.
About a week ago, Hedgeye Risk Management put out an elegant overview of the AI buildout and bubble. Go subscribe for the full take but I’ll share that it has me watching credit and the flow of money. Last week gave us some AI financing concerns:
Coreweave credit. AI credit is moving from yellow to red in my mind. CoreWeave’s 9.625% bonds due 2032 were quoted around 85 cents on the dollar on Oct 7, a yield of about 13.5% (via BondTerminal). Junk-bond pricing for one of the biggest AI cloud builders.
Oracle AI project credit. Red. Oracle’s five-year credit default swaps also hit a record of about 257 basis points on Oct 8 (via IFR).
OpenAI revenue. Getting close to a red light. On Oct. 8th, the FT reported OpenAI’s annualized revenue is closer to $50B than the $70B reported earlier, which is just not a good signal.
The demand side still looks strong: TSMC’s September revenue was up about 55% from a year ago. But the companies borrowing to build AI capacity are paying more for money.
Add these early AI financing worries to oil around $100 and bank stocks in a correction mode and you get ripe environment for Michael Burry to be calling for a downturn (of course with no date).
My take: None of these are reasons to completely panic out of AI immediately, but it is a reason to stop adding to the most leveraged AI names and favor the cash-rich ones. Take profits (or in some cases take your losses), stay nimble. Pay attention to rates and inflation.
Hedgeye’s Keith McCullough isn’t calling a crash, yet; on Oct 9 he signaled a buy on one of the largest tech stocks and stressed hedging. BUT: The bond market usually notices strain before stocks do, and it’s worth reading his post, “The Last Time Yields Did This, I Called the 2008 Crash”