| The Midterms 2026 02:35 - Nov 4 with 10824 views | The_Romford_Blue |
Even worse for the MAGA cult than anyone could’ve predicted so far.
Republicans getting absolutely slapped. There’s states in play now that nobody even forecast were winnable. Crazy. Trumps live tweeting is going to be quite good over the coming hours.
I’d worry if I lived in Iran right now though. He’s going to do something even more batsh*t than normal isn’t he? |  |
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| The Midterms 2026 on 19:30 - Nov 6 | DJR |
| The Midterms 2026 on 15:49 - Nov 5 by DJR |
Happy to bow to your superior financial knowledge.
But I'm trying to catch up with a subscription to the digital edition of the FT, and I have been interested in recent articles about credit default swaps in connection with AI companies, including this article.
https://www.ft.com/content/67d
"AI is making CDS great again
Credit-default swaps have been making a steady comeback in recent years, as Alphaville has periodically noted with delight. But it has taken the AI frenzy to really get the market rocking again.
CDS on a lot of big technology companies didn’t even exist a few years ago, but really took off this summer, as MainFT’s Ramsay Hodgson and Euan Healy wrote a few weeks ago:
"Investors are racing to buy credit default swaps to protect their portfolios in the event the AI boom unravels, sending trading volumes surging for an instrument that shot to prominence during the global financial crisis.
The wave of borrowing to finance trillions of dollars of AI infrastructure spending is fuelling demand for these insurance-like derivatives, which pay out if the company they are tied to defaults on its debt."
What could possibly go wrong?  [Post edited 5 Nov 15:54]
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Well, well. well!
'Here’s a late take on this week’s sell-off, from Lee Robinson, CIO of Altana Downside Protector Fund and founder of Altana Wealth:
“This sell off has been a long-time coming, and it is not just caused by the midterms or an unwinding of positions in the tech giants. What we are seeing today is the result of stretched valuations and last month’s re-pricing in credit markets, specifically the rising Credit Default Swaps of the Magnificent Seven and CoreWeave.
Credit is the engine of capital markets which equities will always eventually follow. We launched the Altana Downside Protector to trade a major downturn that we could see playing out over the next 18 months.
The key questions now are who gets hurt by this selloff and what happens next. We see a lot of risk being held by life insurers who are some of the largest owners of AI-linked private credit funds and could be facing a series of de-ratings across their balance sheets.”' [Post edited 6 Nov 19:42]
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| The Midterms 2026 on 07:01 - Nov 7 | nrb1985 |
| The Midterms 2026 on 05:19 - Nov 7 by StokieBlue |
This is things working correctly though, at least with regards to default protection of not the wider AI issue.
If a company borrows too much (and Coreweave was my example) then it's right that the CDS spread increases as their ability to repay the borrowing is reduced.
The issue will be whether those who sold protection can afford to pay it (see AIG in 2008) but it has been obvious for a while that he borrowing and spending around AI was unsustainable and they a lot of it was being led by circular financing following from Nvidia who have to try and keep the AI boom going.
It could get pretty bad, doesn't seem to be any reason past speculation for life insurance companies to have large AI holdings in the same way AIG shouldn't have been issuing huge notionals of CDS in a business they didn't really understand in 2008.
Hopefully the effects on the wider economy still be limited but that seems unlikely.
SB |
And ex CoreWeave the CDS spreads may have widened but from extremely low levels given the balance sheets of the hyperscalers.
Worth noting also, for all the excitement - we are currently 6% from the all time highs on the S&P500… [Post edited 7 Nov 11:18]
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| The Midterms 2026 on 07:19 - Nov 7 | nrb1985 |
https://amp.cnbc.com/amp/2026/
And yet the economy continues to create more jobs, while the unemployment rate ticks lower. [Post edited 7 Nov 7:57]
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| The Midterms 2026 on 17:17 - Nov 7 | J2BLUE |
| The Midterms 2026 on 07:19 - Nov 7 by nrb1985 |
https://amp.cnbc.com/amp/2026/
And yet the economy continues to create more jobs, while the unemployment rate ticks lower. [Post edited 7 Nov 7:57]
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For now. I hope you're right but I strongly suspect it will look very different in a couple of years. |  | | |
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| The Midterms 2026 on 18:12 - Nov 7 | StokieBlue |
| The Midterms 2026 on 07:01 - Nov 7 by nrb1985 |
And ex CoreWeave the CDS spreads may have widened but from extremely low levels given the balance sheets of the hyperscalers.
Worth noting also, for all the excitement - we are currently 6% from the all time highs on the S&P500… [Post edited 7 Nov 11:18]
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The S&P is doing very well but it's not really based on any fundamentals. It's a momentum trade that vested interests of nearly everyone keeps going but there is a finite limit to where the can go without real fundamental change in the profitability of the underlyings.
SB |  |
| Avatar - M101 - Pinwheel Galaxy |
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| The Midterms 2026 on 18:37 - Nov 7 | nrb1985 |
| The Midterms 2026 on 18:12 - Nov 7 by StokieBlue |
The S&P is doing very well but it's not really based on any fundamentals. It's a momentum trade that vested interests of nearly everyone keeps going but there is a finite limit to where the can go without real fundamental change in the profitability of the underlyings.
SB |
Eh?!
We are coming off the back of the 8th consecutive quarter of double digit earnings growth…while valuations have actually moved lower because prices haven’t kept pace with earnings.
Even the S&P equal weight has been doing extremely well, so it’s not just tech/momentum
- the median stock is also performing well.
How much more fundamental you can get than that I’m not sure. [Post edited 7 Nov 18:40]
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| The Midterms 2026 on 18:55 - Nov 7 | nrb1985 |
| The Midterms 2026 on 17:17 - Nov 7 by J2BLUE |
For now. I hope you're right but I strongly suspect it will look very different in a couple of years. |
That might be the case but the point the chap in the video made was about where we would be in 10yrs time. | | | |
| The Midterms 2026 on 06:22 - Nov 8 | StokieBlue |
| The Midterms 2026 on 18:37 - Nov 7 by nrb1985 |
Eh?!
We are coming off the back of the 8th consecutive quarter of double digit earnings growth…while valuations have actually moved lower because prices haven’t kept pace with earnings.
Even the S&P equal weight has been doing extremely well, so it’s not just tech/momentum
- the median stock is also performing well.
How much more fundamental you can get than that I’m not sure. [Post edited 7 Nov 18:40]
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Momentum was probably the wrong word to use.
The S&P is currently skewed by tech which makes up about 40% of the value at the moment. Whilst you're right that earnings have been good they are skewed by the huge tech earnings. It's not unreasonable to expect some correction at some point, especially if tech can't maintain their huge profit ratios.
Relative to GDP ratio the index is also at historic highs but once again that is skewed.
The equal weight does look reasonable but does that really mean much when a large percentage of the index is driven by the AI/tech trade which I think most would classify as a momentum trade? For instance, Nvidia makes up about 7% of the index value but in equal weightings it's only 0.2%, taking out the huge drivers probably isn't helpful at looking where the index is marked as they are going to dictate how it moves with regards to sharp corrections rather than longer term trends.
Interesting to discuss though. I guess things will become clearer when one of the tech companies goes boom or earnings are substantially lower. Still think that is likely to happen to a decent sized entity in the AI/tech trade at some point but we might be a while away from that.
SB [Post edited 8 Nov 6:23]
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| Avatar - M101 - Pinwheel Galaxy |
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| The Midterms 2026 on 11:58 - Nov 8 | nrb1985 |
| The Midterms 2026 on 06:22 - Nov 8 by StokieBlue |
Momentum was probably the wrong word to use.
The S&P is currently skewed by tech which makes up about 40% of the value at the moment. Whilst you're right that earnings have been good they are skewed by the huge tech earnings. It's not unreasonable to expect some correction at some point, especially if tech can't maintain their huge profit ratios.
Relative to GDP ratio the index is also at historic highs but once again that is skewed.
The equal weight does look reasonable but does that really mean much when a large percentage of the index is driven by the AI/tech trade which I think most would classify as a momentum trade? For instance, Nvidia makes up about 7% of the index value but in equal weightings it's only 0.2%, taking out the huge drivers probably isn't helpful at looking where the index is marked as they are going to dictate how it moves with regards to sharp corrections rather than longer term trends.
Interesting to discuss though. I guess things will become clearer when one of the tech companies goes boom or earnings are substantially lower. Still think that is likely to happen to a decent sized entity in the AI/tech trade at some point but we might be a while away from that.
SB [Post edited 8 Nov 6:23]
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Taking out the tech earnings, the median stock still grew EPS at ~14%.
Adding back in tech earnings and it's more like 35% in aggregate.
Slowing earnings from here is fairly inevitable but it'll be a slowings of earnings growth not a contraction in earnings. In that environment I would expect stocks can continue to do reasonably ok.
A neocloud might go boom but the hyperscalers, which is really what you refer to, are unlikely to go boom anytime soon - in fact quite the opposite I would think. If you slow or halt data center buildout and they are the ones that have all the cloud and infra capacity in place already, I would imagine they will be delivering some pretty good earnings - assuming demand stays broadly the same.
We shall see as you say. Enjoy the game! [Post edited 8 Nov 12:01]
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