Prof G Markets - JPMorgan’s Playbook for a 10-15% Correction (or Worse) — ft. Michael Cembalest

Episode Date: November 21, 2025

Ed Elson and Scott Galloway are joined by Michael Cembalest, the Chairman of Market and Investment Strategy for J.P. Morgan Asset & Wealth Management, to discuss how J.P. Morgan is approaching the AI bubble. He weighs in on how violent the correction will likely be, shares how he’s preparing for a “profit taking spark,” and unpacks his top risks for 2026.  Check out our latest Prof G Markets newsletter Follow Prof G Markets on Instagram Follow Ed on Instagram and X Follow Scott on Instagram Learn more about your ad choices. Visit podcastchoices.com/adchoices

Support for the show comes from Blue Air Purifier. In markets and in life, the fundamentals matter, and taking care of your health is a big one. The Blue Signature Air Purifier by Blue Air is the most powerful yet compact air purifier you can get. It quietly removes pollutants that affect focus, sleep, and longevity. Blue Air is one of the most awarded air care brands in the U.S. and UK. Use promo code Prop G25 to save 25% at BlueAir.com. Support for this show comes from the Audible Original, the downloaded two, ghosts in the machine. The Earth only has a few days left.

Rosco Cudulian and the rest of the Phoenix colony have to re-upload their minds into the quantum computer, but a new threat has arisen that could destroy their stored consciousness forever. Listen to Oscar winner Brendan Fraser reprised his role as Rosco Cudulian in this follow-up to the Audible Original Blockbuster, The Downloaded, it's a thought-provoking sci-by journey where identity, memory, and morality collide. Robert J. Sawyer does it again with this much-anticipated sequel that leaves you asking, What are you willing to lose to save the ones you love? The Downloaded 2. Ghosts in the Machine. Available now, only from Audible.

From Odoo. Running a business is hard enough, so why make it harder with a dozen different apps that don't talk to each other? Introducing Odoo. It's the only business software you'll ever need. It's an all-in-one fully integrated platform that makes your work easier, CRM, accounting, inventory, e-commerce, and more. And the best part, Odu replaces multiple expensive platforms for a fraction of the cost. That's why over thousands of businesses have made the switch. So why not you? Try O-D-U for free at O-D-O-O-O-O-com. That's O-D-O-O-O-O-D-O-com. Today's number 104,000. That's how many pounds a sperm whale that washed up on an Antucket Beach this week weighed. Oh gosh, just everybody sit back and buckle up. Okay, so I've never had an unplanned pregnancy, Ed, because when my sperm finally reaches the egg, the egg swipes left.

my sperm really aren't like swimmers ed they're more like a slow jogger being chased by a lame dog um my sperm are not really swimmers they're more like uh an old man browsing at a Costco who's looking for gluten-free peanut butter who just had cataract surgery like it's well-intentioned but it's just not going to reach the goal I could do this all day I know I could by the way I made up the last one myself, Ed. Listen to me. Markets are bigger than I. What you have here is a structural change in the world distribution.

Cash is trash. Stocks look pretty attractive. Something's going to break. Forget about it. Ed, do you have a nickname for your sperm? No, I'm not quite there yet. I'm not really going to play ball with you on this one. Also, let me give you a little tip.

Just while we're barreling towards cancellation, even Claire looks horrified. it's important and it's fun that every time you orgasm you yell out the same thing it's really important you have to come up with the same thing this is the part we go what do you yell out i know i told you i'm not playing ball with you ed's got spaced in his hands this has not seen it joe kernan i'm not i'm not going to do you the service of asking the question surrender dorothy that's what i yell out from the Wizard of Oz. That's what I yell out. And my other Wizard of Oz references, I yell out, I'm melting. That's why the fans tune in. That's why they tune in. Next up, J.P. Morgan, chief economist for the last time. How are you? How are you doing? I'm doing well, Scott. How are you doing?

I'm good. I've been in L.A. the last few days, and I'm at the Beverly Hills Hotel, where they're charged me $1,800 a night so I can have a construction inside above my room. But they stopped the construction. I mean, just off mic here, you gave the front desk a call. He asked them to stop hammering, and they did it. Pretty baller. Good stuff. Yeah. No, I carry a lot of weight here. Yeah. They're very scared of me. Number one client. So what would have been the highlights from L.A. just before we get into this conversation. I had a dinner last night with like a small dinner with eight people, and I'm totally name-dropping. What the fuck? And Larry David, I'd say,

next to Larry David. Wow. How's that? He is literally the same person in real life. It's not a show. It's a camera falling around. He showed up. He's like, nice to meet you guys.

He's like, why do they serve hors d'oeuvres? He, like, goes into a bit. He's like, why would it? Like, I hate Uber. Do you hate Uber? Let me talk about Uber for, he's literally, I'm like, oh, my God, it's the show. The guy just shows up and starts doing these bits. But he's very funny.

He seems pretty nice. his wife is lovely. I don't know. I enjoyed. How did you wind up at a dinner with Larry David? I'm what you call right now, like, an intellectual support animal, and that is all these rich people think it's interesting to have me over for dinner and talk about my book. So I think there's two or three these people every year where they're like, okay, let's all get together. And also at the dinner was my role model, Sam Harris, and I enjoy seeing Sam. So when you get invited as the intellectual support animal. Do you feel a pressure to provide the intellectual support? Yeah, that's why you're there. Is that fun? That sounds stressful. Maybe that's why Larry David was doing his bit. He was the comedic

support animal. The answer is yes, and I find as I get older, they called me, and they were going to invite this fairly famous tech couple, and I said, no, I'm like, I just don't want to, I don't want to meet them, I don't want to talk about them. I don't, I find that stuff is increasingly intimidating me, want to, you know what, I'd rather just stay at home and watch Netflix and have some big Filipino man reheat my soup six or seven times and just sort of start peeing in bottles, grow my nails really long. Surrender, Dorothy. Should we get to AI in the economy, Ed? Oh, you want to move on now? Somebody gave me mushroom chocolates over the weekend. Just saying, just saying. Okay, well, that explains a lot. All right, let's get to the economy. Okay, now that we know what happened in L.A. this weekend, here is our conversation with Michael Sembless,

the chairman of Market and Investment Strategy for J.P. Morgan Asset and Wealth Management. Michael, thanks for joining us again on Profti Markets. Good to see you. Morning. So I'm going to dive right into the questions that we have, because we've only got you for so long. Just some context. So last week, we had Professor Aswath-Dermotrin on our podcast.

He presented what we think is kind of the most bearish position we've ever seen from him. And this is a very level-headed, calm guy who basically told us that he thinks that everything in the stock market is overvalued. He said there's no place to hide in stocks. And I'm just going to play you a short clip that kind of summarizes what he thinks right now. To the extent that there's going to be a correction, there's no place to hide in stocks. I can't see a way because if the MAG then go down by 40%. It's not

like the industries are going to hold their value while this happens. The panic that that's going to create is going to have ripple through stocks. You're an investor, primarily investment stocks and bonds. My advice is, even though historically you might never have invested in non-financial asset categories,

this might be a time where you think about you know, kind of at least moving a portion of your portfolio. A bigger chunk than ever, into cash or something close to cash or maybe even collectibles, things that I've never owned collectibles, but for the first time in my investing history, I'm saying maybe I should hold something that is not going to be effective. Inflation goes to 10%. There's a market and economic crisis that is potentially catastrophic. So we were very struck by everything he said in that

interview. What do you think, Michael? Is he right? Are you concerned like he is? What are your reactions? It's hard to react to somebody that doesn't have a long-term track record of this is when I bought, this is when I sold, this is what I bought, this is what I sold. You know, professors are basically running fantasy baseball teams by coming out intermittently and telling you what their trades are. It's not real money. It's not real money. not real life. And so, you know, the purpose of Morningstar and Lipper and a lot of other entities out there is to kind of track the people that actually manage money. How do they do over the long run and things like that? So it's a little abstract. A better example might be the cash stockpile

that's accumulating at Berkshire Athway is probably a much better indicator of people that are having trouble putting money to work because they can't find any value. And certainly it's challenging right now. There's a ton of dry powder in the in private equity and venture that still has to be put to work. And so it's a challenging time. His premise of, yeah, I think I heard him say 10% inflation, like I'm, I'm not prepared to quite buy into a 10% inflation forecast, nor am I prepared to buy into the certainty of a 10%, sorry, a 40% correction in the Mag 10 or Mac 7. Those stocks have gone up a ton. And a passing wind could cause, profit-taking, right? Similar to what took place earlier this year with the dollar. Dollar went

down 10%. It was at its post-financial crisis high. As soon as any asset falls by 10%, Nearyl Rubini and the rest of the people come out of the woodwork and say, okay, this is it. This is the big one. Everything's going to go down from here. And then, of course, the dollar's been flat since that. The dollar's been actually flat since our podcast in May. So the last time I was on this show, you know, I think people have to have some kind of discipline to recognize that when assets are trading at 20 to 25-year highs, they can correct by 10 or 15 percent. It doesn't necessarily unfold and unravel into the big 40 percent corrections that we had in 2009, and then again, in 2001. So it sounds, I mean, we're positioning more defensively than we have, but, you know,

what he's describing there is a bridge too far. Plus, our normal balanced and conservative of portfolios already have 30 to 40% in cash, cash equivalents, gold, very diversified hedge funds, municipalities, some short duration preferred, and things like that. Just to play defense for Aswath, you know, that clip that we got was the most bearer string of sentences that he uttered. Otherwise, I think if you listen to the full podcast, it would sound less hyperbolic perhaps. But, you know, in some, he's concerned. But also, so is everyone else. And right now, this AI bubble, more and more people are talking about it, more and more people are Googling it. We're now beginning to see a little bit of a correction in in text

docs as we speak. Small. Small. The fears of this AI bubble are quite strong or stronger than they have been before. What do you make of those fears? Do you think that they are warranted and how are you at J.P. Morgan thinking about it? Something like 75% of all of the revenues, profits, and capital spending

since November 2022 have come from 40 AI-related stocks. So there's almost no justification to spend time on anything but this. And I try to be an even-keel kind of person, but the meta number through me. You know, a company announcing that they're spending 65 to 70% of their revenues on capital spending and R&D, without even knowing what the destination is that they're going to, as an investor, that doesn't fill me with a lot of good feeling about where we're going to be two years from now. And it was only two years ago that they reached the same peak of 65% of revenues investing in the Metaverse, which obviously hasn't really turned out to be anything.

So there's a lot more behind this particular generative AI boom, but the numbers, I put together something, Scott, I think you'd appreciate this, that you like this kind of historical context. The tech capital spending in 2025 is equal relative to GDP of the moon landing, the Manhattan Project, the interstate highway system, electrification of farming, the tribal, bridge, the Mintown Tunnel, the Gullnade Bridge, and the Hoover Dam. Combined. Wow. Yeah. There's all these futurists hovering around like bats telling us how all of this is going to magically make some fantastic future. And there are surely bits and pieces of evidence here and there of real productivity gains coming from this.

But this is a scarier version of the ICT revolution of the early 90s. The only silver lining that I latch on to is that whether it's 2001 or the casino buildout, airlines, fiber optics, the Calpine gas turbine era, all of those capital spending booms were financed with debt. And this one, with the exception of Oracle, is being financed with internally generated cash flow. But that simply means it can go on for longer before it gets unplugged by the debt markets. It doesn't relieve you of the ultimate need for there to be substantial profit generation to remunerate the trillion two of capital that's been spent since November 2022. I want to recognize I'm feeling defensive around my colleague. I've been following Aswath for 20 years, and he does the work around valuations, and there's few people in the alternative investment space or investors that, at least in my observation, have been more right, more often than him. And it did rattle us because he generally, I want to acknowledge your point, it's easier to sound smart when you're a catastrophist. You just sound smarter, right? And the best traders, the best historians, the best politicians have erred on the side of asking themselves what could go right, you know? And because the market's over the medium and long term are up into the right. So I want to acknowledge that. I want to put forward a thesis and have you respond to it. And that is, if you look at every single of the

company, one of the companies we're talking about. They have all had years where they're down 50 to 70 percent in that 12-month period. And the thing that's scary now is if a company like NVIDIA, which hasn't had one of those years, I don't think, or maybe it did in 2022, if that happens to a company that's now got the market cap of the GDP of whatever, Germany, that that might take the entire market down, that essentially America has become so fragile because it is now a giant bet on AI. And if Open AI, which, I mean, 60% of revenues on CapEx is one thing, as far as I can tell, Open AI is about, you know, 30 times the revenue going into CapEx.

If Open AI are some big customers, here's the thesis, and you tell me where I got this wrong. Some standard S&P companies, PepsiCo Caterpillar, P&G announced, look, AI is great, but we are out over our skis. we're not seeing the return we'd hope for. We're scaling back the investment. Open AI in the secondary market trades way down. And then Envidia goes down 60%, which would not be unusual. It wouldn't look cheap. And then we have a $3 trillion destruction in the capital markets, and we basically overnight have flat markets, GDP growth of zero. And the whole market, you know, if these companies sneeze, we're not catching a cold. We're catching pneumonia. The thing that worries me the most, and I want to get your response, is we have inadvertently turned our markets into a very fragile house of cards.

There's the S&P 490, and there's the S&P 10. And right now, everything is banking on these 10 companies living up to these extraordinary expectations. Your thoughts? I agree with most of that. One of the data points that was really disturbing is two years ago, someone talking about GDP growth would not have mentioned. in tech capital spending, it would have been a rounding error. Last quarter, it was a third of GDP growth. And U.S. GDP growth would already be 1% if it weren't for this tech AI buildout.

And, you know, how people get upset when the private sector gets bailed out by the public sector? I would argue this year, generative AI has bailed out the public sector. Like, you know, the hyperscale is bailed out the Trump administration because without them, they'd be staring a 1% GDP growth number in the face and having to explain it, which they're in really no position to do. And by the way, I don't think it's a coincidence that we track all of the country product tariff matrix combinations. The AI infrastructure, about 70 to 90% of those imports are exempt from tariffs right now. So those sectors and companies have also done a very good job navigating however one has to these days. Washington in order to get their imports, which are critical to their survival, exempt

from tariffs. So, yeah, I'm nervous about it. Again, the fact that it's being financed through cash flow means that we don't have quite the same risk of a sudden seize-up because, you know, bonds can't be placed. You know, you're not going to have a hung bridge loan that gets like the broker-dealers in trouble and have to go to the Fed's primary dealer credit facility. You're not going to have something like that. Oracle is really the only one that's financing any material amount of this through debt. My understanding, so Oracle is raising a ton of debt, and it's, you know, capital markets are concerned about this and we're seeing that reflected in the stock price. It's essentially

underwater since the deal with Open Hour was announced. My understanding, though, is that the other big hyperscale, are going out and beginning to raise debt. I mean, we just saw a big announcement from Amazon. I think we saw that from META a couple weeks ago as well. I don't know the exact numbers, but my understanding is they are going and financing this with a ton of debt.

Perhaps not debt that they necessarily have to raise. Perhaps they have the cash surplus to finance this. But they are going and raising debt, and it's record amounts of debt that they are raising. Is that wrong? Of the 40 companies I mentioned, as AI stocks, 30 are technology, what you and I would agree are technology companies, five are capital equipment companies like GE-Vernova that make the turbines, and then five are

utilities. Let's look at the 30 AI stocks. Something like 25 of them actually have negative net debt to EBITDA ratios because they have more cash and cash equivalence on their balance sheet than debt. So for the most part, the debt's not an issue. The Oracle's an exception, and is in part a reflection of the fact that Ellison's been buying back stock for 15 years and, you know, taking money out that way, at some point, Oracle's going to have to be recapitalized if it's going to be borrowing like this. The meta deal was interesting. And when I explain how I view it, you'll probably say, well, that's even scarier than if it was meta. I see it. The meta partnership with Blue Owl that borrowed $27 billion in the investment-grade bond

markets was an SPV with a strange French name, and the debt's not consolidated onto Meta's balance sheet. Initially, I was concerned that that was some kind of slight of hand. It's not. It's worse. They basically have walkaway rights every four years and a declining residual value guarantee. Blue Owl's holding the bag. So Blue Owl is at risk. If at any point, Meta basically says, you know, this, we're not getting a return on this particular day. data center complex were out and blue out and the people that have put up the money for blue owl everyone's holding the bag. So I think S&P was right to kind of withhold consolidation of that obligation. But it says it says a lot about the underwriting discipline that's taking place

in, you know, in private credit and in other places that are financing these data centers because they're the ones that are taking the risk. It's essentially releasing risk the likes of which you've seen forever in the commercial real estate markets. So it sounds like someone is on the hook. In this case, it's Blue Owl, and we're probably seeing equivalence in these other debt deals. And by the way, we're seeing this kind of reflecting the stock right now. Blue Owls publicly traded and it's been, it's declining this week. But is the conclusion then?

Because it sounds like you agree with Aswath, we are seeing some, we're seeing some form of a bubble. People are exuberant. There's a lot of hype and a lot of excitement that isn't fully tethered to react. right now when it comes to AI, but it sounds like where you disagree is the extent and scale of the damage that we're going to see if something blows up, or at least the likelihood that there will be some sort of blowout. Last year was a perfect example. My forecast for the year was the Trump people were going to break something. We'd have a 15% to 20% correction, but stocks were in the year higher than where they began. It happened within 50 days in the inauguration.

They broke everything. Markets went down. They eventually came back. I wouldn't, I wouldn't describe any of the subsequent recovery as, as the byproduct of administration policy. But I think, I think you and Scott are right, which is, it would be kind of shocking if you didn't have some kind of profit-taking correction in 2026 at some point on the order of 10 to 15%. It would be, I'd be, I'd be really surprised not to see that. The big question is, if you told me the drawdown is 12%, I don't really have to make any substantial portfolio allocation changes here. We can work through that with the way that we manage money. If it's 40, that's different.

And so that's essentially the big call that asset allocators and ERISA plans and endowments and foundations have to make. Are we looking at a 12 to 15% correction or we're looking at something that's going to end up at 40? Right now, with a little bit of fed easing and some steady momentum, I'm more inclined to think of the 12 to 15 and the 40. We'll be right back after the break, and if you're enjoying the show so far, send it to a friend, and please follow us if you haven't already. Support for the show comes from Grunes.

Even when you do your best to eat right, it's tough to get all the nutrition you need from diet alone. That's why you need to know about Grooons. Grunz isn't a multivitamin, a greens gummy, or a prebiotic. It's all of those things, and then some, at a fraction of the price. And bonus, it tastes great. All Grun's daily gummy snack packs are vegan, nut, gluten, dairy-free, but no artificial flavors or colors, and they're packed with more than 20 vitamins and minerals made with more than 60 nutrient-dense ingredients and whole food. Grun's ingredients are backed by over 35,000 research publications, and the flavor tastes just like

sweet, tart green apple candy. And for a limited time, you can try their groony Smith Apple flavor just in time for fall. It's got all the same snackable, packable, full-body benefits you've come to expect. But this time, these tastes like you're walking through an apple orchard and a cable-knit sweater, warm apple cider in hand. Grab your limited edition Gruny Smith Apple Grunz available only through October. Stock up because they will sell out. Get up to 52% off. and you go to GRUNS.gov and use the code markets. Support for the show comes from Betterment. Nobody knows what's going to happen in the markets tomorrow.

That's why when it comes to saving and investing, it helps to have a long-term approach and a plan you can stick to because if you don't, it's easy to make hasty decisions that could potentially impact performance. Betterman is a saving and investing platform with a suite of tools designed to prepare you for whatever is around the corner. Their automated investing feature helps keep you on track for your goals. Globally diversified portfolios can smooth out the bumps of investing and prepare you to take advantage of long-term trends.

And their tax smart tools can potentially help you save money on taxes. In short, Betterman helps you save and invest like the experts without having to be an expert yourself. And while you go about your day, Betterment's team of experts are working hard behind the scenes to make sure you have everything you need to reach your financial goals. So be invested in yourself. Be invested in your business. Be invested with Betterment. Go to betterment.com to learn more. that's B-E-T-T-E-R-M-E-N-T-com.

Investing involves risk, performance not guaranteed. Support for this show comes from O-Doo. Running a business is hard enough, so why make it harder with a dozen different apps that don't talk to each other? Introducing O-Doo. It's the only business software you'll ever need. It's an all-in-one fully integrated platform

that makes your work easier. CRM, accounting, inventory, e-commerce, and more. And the best part, O-DU replaces multiple expensive platforms for a fraction of the cost. That's why over thousands of businesses have made the switch. So why not you? Try O-D-O-4-free at O-D-O-D-O-O-com. We're back with Profty Markets. I just want to unpack something he said about the Trump administration would not have nearly the cloud cover for some of the things he was doing.

If these 10 companies were off, the S&P would be flatter down. GDP, the stuff I've said is that we'd actually be already be in a recession. So he has a vested interest in this boom continuing. Right. I wouldn't even say this bubble, but this boom continuing. Doesn't that, I feel like I'll pass lead to the same place, and that is the government will back the debt to continue to make these extraordinary capital purchases, which, in my view, weakens the strength and integrity of the U.S. debt markets or treasuries, and it's like a further move into socialism. But I predict he is going to back these companies, not the other, not the real economy, not the Main Street economy, not the 490 companies

in the S&P that got to actually compete in the capital markets. But he has such a vested interest and the music continuing here, that the government will step in and offer in some way to back the exceptional capital expenditures so they can continue to make them, and that is only inflating the bubble to very dangerous territory.

Your thoughts on that thesis? That would worry me if I saw it. They've done a couple of things so far that I would, in fairness, put in a different bucket. You know, Jamie is a very inspirational CEO, and one of the things I admire most about him is he calls it like he sees it, right? So they've done a couple of deals with MP materials and Intel.

Both of those deals fall under traditional industrial policy of trying to rescue supply chains that are rapidly diminishing in the United States with respect to domestic semiconductor production and critical minerals. I think you're being generous. When they pick one company and take a stake and they take a golden share in one steel company, I would argue that is not structural or there's not a systemic strategy there. That's the blood sugar of a man who thinks he can run these businesses better than the private sector. I'm going to disagree with you on that one.

And NP materials in particular. I mean, they have provided a price floor on neodymium and praiseodimium, which is needed by the U.S. military. It's the last man standing in that sector. If you told me that a presidential administration had to administer an industrial policy, to pick winners and losers, this might be the last administration I would want to see do that. That said, you don't get to your time and place. And as things stand right now, China has a chokehold on those critical minerals. And whatever administration is in power is responsible for making sure, particularly with China flexing its muscles on export controls, that we start

the process of trying to rebuild both mining and processing of critical minerals. If you can't do that, a wide range of both renewable energy and military applications that will soon become untenable. That has to be done. I would have preferred for Eisenhower to do it, okay, but, you know, I'm 63. So I probably would have preferred for George Burr's senior to do it, right? I'm not sure I would have wanted Obama to do it. I'm not sure I would have wanted Jennifer Granholm to do it. So, but you don't get to pick your time and place. Intel was different. There's no guarantee of demand. There's no price floors.

It's basically just a cash infusion. And based on everything I understand about Intel, their problem isn't money. So the worst thing about that one is, I don't even think whatever it is they did is going to be very impactful. But I do expect to see more intervention by the administration

in companies that represent the tail end of surviving supply chains, whether it's shipbuilding or anything else. And I'm actually, I'm actually, I'm not a, I'm not a heritage Cato guy. So I'm in support of that. You oversee and kind of set the strategy and the narrative and the theme from one of the deepest pools of capital in the world. What other than just moving to cash, and maybe that's the only thing you can do, how do you, I don't want to say become defensive, but just recognize the tradition. when stocks are this fully valued, the markets tend to have a pretty serious correction or go flat for 10 years. Like, how is your recommended asset reallocation? What has it been? What are you recommending to those deep pools of capital other than just going into cash?

So the answer to that question is I think you'll find interesting because it's less about changing the asset allocation of the different portfolios. It's more about explaining to clients that they may be better off switching from balance to conservative or from growth to balanced. When we define the risk contours of a balanced portfolio, there are certain parameters that we can go outside of, but usually tend not to want to do. And so if we're really feeling that the risk return of a growth portfolio is changing, we would rather have the student body, you know, change from being pre-med to pre-law and migrate down to the balanced portfolio risk,

rather than have to turn the balance portfolio or the growth portfolio into something it isn't. Because there's always going to be people with generational money or, quite frankly, the city of Chicago, Cook County, Illinois, New Jersey, plans that are kind of on paper in extreme distress, their inclination is to take a lot of risk. And so I don't want to change what a growth portfolio does because there are people that are going to allocate to that and have every right to expect a growth portfolio to be positioned the way of a growth portfolio looks.

So part of our job is to explain to whoever wants to listen that the risk return is skewing because of where the valuations are. So you might want to kind of move down the portfolio chain. What does a balanced or more defensive portfolio look like for those, I mean, just in a very high, high level, general level. Like, what does that portfolio look like, bonds versus stocks? You're talking about 30 to 40% of the portfolio being in some combination of cash,

short-term A1P1 commercial paper, municipalities for taxable clients, super diversified hedge funds, like 30 to 40 of them, where, like, the VAL turns out, be something like 5 or 6 percent and some preferred stock, things like that. So you're kind of taking a lot of the directional beta risk out of it. You would, you know, you're obviously positioning much more defensively. Healthcare is trading at like the cheapest valuation on record relative to itself

and relative to the market. So if you're going to take a position someplace, go someplace where you can be paid for the risk a little bit better, you know, so stuff like that. How is tech valued at large right now in terms of paying you for the risk? The first thing people tend to do is say, I'm going to look at the P.E. of tech, and then I'm going to look at the P.E. of something else, whether it's industrial, or basic materials, consumer discretionary or staples. But for a hundred years, people have been adjusting PE ratios for growth, like for earnings growth, an ROE, an ROA, and capital efficiency. So if, and one of the things we do, and we share this and all are probably,

is we plot both stocks and sectors and industries with return on equity on the X axis and either PE or price to book on the Y axis. And so there's a lot more consistency to the way the market's valued once you adjust for earnings growth. Now, you may think the slope of the curve is too steep, and I wouldn't disagree with you. But to just kind of look at PE differentials is really missing the point that even before this generative AI boom, and we roll back the clock to 2019, the tech sector had double the margins of the rest of the market. They had become the things that the tech investors of 2000 would eventually dream they would be, which is highly capital efficient, low employment businesses with huge operating margins. So that's what they

were even before this whole AI boom started. Yeah, something that I was thinking about after we spoke with Asworth. I mean, his core valuation tool is the equity risk premium, which basically, you know, he's taking the rate of return on stocks minus the risk-free rate, and he sort of plots that out. Yeah. And you know, you're not a fan. It doesn't have any nuance to it. It doesn't look at earnings growth. And it doesn't differentiate between sectors and, you know, and it's, I understand why people want to look at it. Over the really long run, it can be obviously a helpful tool.

Yeah. Well, I think it's helpful when you're trying to take a bird's eye view and understand where we are in terms of sentiment. And the thing that kind of surprised me, is, you know, we're at around 3.7% by that measure. And, you know, to be fair to him, he says, you know, anything below 4% is a little bit dangerous. But we're also nowhere near where we were in 99 when it was around 2%. And, you know, you're someone, I mean,

you were a managing director during the dot-com boom and bust. You were the chief investment officer of JPMorgan during the 2008 financial crisis. So you've seen these cycles before. And I think what we're describing here is, like, how do we put this in the context of not just tech versus industrials versus consumer, but how do we put it in the context of all of history? And what does this look like compared to previous crises and previous cycles? I couldn't sleep in March of 2008.

Like, I couldn't sleep. The things that we were seeing on a daily basis were so bad. And we knew that it was infecting the entire network of the financial system. And we went underweight, both stocks and high yield. The only mistake we made is we didn't do more of it. Just to show you how hidden those risks were, J.P. Morgan, which is an exceptionally run bank, bought a couple of billion dollars worth of Fannie and Freddie preferred that summer. For its own balance sheet, three months before they went to conservatorship.

Right. So that's how hidden the depth of the problems were. 2001 was easier because the companies weren't making any money. And so as long as you had some degree of discipline and support from your investment committee to go through a period of temporary underperformance as the market was rocking, you did fine. And so that, in a way, that was the easiest one. I remember we had this annual MD meeting and the chairman at the time

invited a company to come speak to us in 1999. He invited a CEO to come on stage and address all the MDs and he was the CEO of a company called the globe.com. So I pulled up the globe.com on Bloomberg and I hit D.E.S. And it said, this company has no business model at the time.

So we're sitting there. Like the chairman has invited, a guy who runs a company with no business model to address us, I think we'll go underweight now, right? I mean, so that was pretty easy. This is a harder one because, you know, in many ways, Google's one of the most successful companies in the history of the markets.

I personally think their AI-related language model products are better than everybody else, and I think they're the long-term winners in this race. And so I have a lot of respect for what that company's accomplished you know i i have similar feelings about what amazon and and microsoft are doing um but like Microsoft signed a deal recently with constellation energy to turn back on a nuclear power plant in three mile island they've agreed to pay something in the neighborhood of 130 a megawatt hour now most of your listeners don't know what that means that's double wholesale power prices

for an average 20-year, you know, PPA agreement. The other risk that we need to acknowledge is we're getting closer to a power wall that will prevent OpenAI from getting anywhere near. Like, they've announced partnerships with Broadcom, Oracle, AMD, and Invidia that would require 30 gigawatts of power, which is the equivalent of 16 Hoover-D like, that's just not going to happen. So what we're trying to figure out is how much of what's in the price of this whole AI boom

is the expectation that these announcements are actually going to come to fruition under some three to five-year time frame? Because it's impossible. Yeah, it seems kind of obvious to almost everyone. I mean, if you look at the numbers, when you see the amount of power that it's going to take to build out AI the way opening I would like,

it's like oh yeah that's that's not possible and you know one of the things that we've been talking a lot about recently is that crazy interaction between sam altman and brad gusner i don't know if you saw this where brad gusner says you know you're going to spend you're making 13 billion dollars in revenue you plan to spend one and a half trillion dollars over the next few years how are you going to pay for it to which some up and responds if you want to sell your stock you can be my guest there are plenty of other buyers out there who would love to buy open a i stock It sounds like what happens. When there's a syndicated loan distribution now on Wall Street, there's so much demand

that if you press the button that says on the syndicate call, I have a question about the documents. You get disconnected. Like, if you have a question on the docs, you don't need to be part of the syndicate. So I would agree with you. Those are the signs that are kind of telling me that we've entered into a period where the risk-taking isn't there, the underwriting has gotten sloppy. When we look at, like, in the innards of the private credit markets, private credit five years ago was substantially different than leverage loans in really boring ways having to do with

maintenance covenants, IP blockers, and all sorts of stuff. And over that five-year period, it's converging rapidly towards the leverage loan market, which basically doesn't apply much of an underwriting wall. at all. You know, so we're kind of preparing for a profit-taking spark that comes from things we might not be able to anticipate, a violent, you know, correction in overbid assets, and then some period of kind of recovery and calm that follows. In a previous life, Michael, I used to take boards and management teams outside and do scenario planning as an exercise for how they allocate their capital. And if I were going to do this for a bank or anyone else, there's a couple

scenarios I want to outline and you tell me if they're realistic, if you think they might happen and if so, how to respond. The first scenario is, all right, built into these, baked into these valuations of these AI companies is what I've read, the assumption that they're going to be able to find or inspire across their clients, three to five trillion dollars in incremental revenues or efficiencies. Now, I don't see a lot of AI moistureizer out there. What I do see is companies saying, okay, we're cutting our legal expenses. We're cutting compliance. There's real savings and efficiencies, which is sort of Latin for layoffs. And if you think that 160 million people in the nation work, if half of them

are in industries and mean to AI, chiropractors, you know, welders, 80 million are quote unquote vulnerable, if you were to not inspire, which I have not seen, a ton of incremental revenue growth from AI products, but all efficiencies, say a trillion a year, $100,000 average load per job, you're talking about a destruction in the labor market of 10 million jobs a year across the 80 million jobs that are vulnerable or a 12.5% labor destruction per year in certain industries, which may not sound like a lot, but that's chaos. Or these companies' valuations get cut in half. I see this a pretty definitive fork in the road, either pretty much chaos in the labor markets for the next three years or these companies adjust down their expectations and valuations. What are your

thoughts on that scenario? Those are some important questions. That says it all. The first kind of thought piece that OpenAI published after GPT was released was a piece that kind of jumped out and said, genera of AI is going to be complementary to workers and not to destructive. And I remember thinking, uh-oh, it's going to be bad because they, they were ready to go out of the gate with a paper to defend the labor market of this stuff, like right away to try to get out in front of it, which, which demonstrates that they kind of knew what this would be able to do to certain industries. You know, the other thing that happened, and I wrote about this, a couple months ago, there was a couple of papers that came out. There was this chart showing

that the unemployment rate for reaching college graduates for the first time in about 60 years is higher now than the overall unemployment rate rather than lower. So the first two pieces that come out, say, it has only to do with generative AI. So, you know, you go to the back and, like, who wrote this piece? And as you unravel the threads, they're Silicon Valley think tanks. And so then I kind of went to David O'Tour and Darren Osamoglu at Harvard at MIT and John Projolveson at Stanford, you get a different answer, which is, yes, it's kind of looking like generative AI

is beginning to affect those young college graduates. So we're starting to see that. We made this pyramid of things about AI. And the bottom of the period is the most ubiquitous thing you can find, which is like futurist forecasts and all sorts of stuff. And then as you go a little narrower, it's lab studies of AI doing non-business-related things. They're great, right? It plays chess.

It plays go. It can do all sorts of non-business-related things extremely well. It can play your wordel for you, right? Then now let's see. How does it do in actual business-related tasks? Pyramids getting narrower, but there are some studies out there showing this in a lab setting. then you want like surveys of adoption but then you get those kind of bland you know cream of chicken soup pieces from McKinsey where all they do is call companies and say hey are you using it right and you don't really learn anything from that and then you keep going up the pyramid to hardcore stuff where what are the revenue and profit and productivity consequences of doing this stuff there's only a handful of those And what you can't find at all is the top of the pyramid, which are pathways, explicit pathways to profitability for generative AI adoption for the hyperscalers.

We'll be right back. And for even more markets content, sign up for our newsletter at profgmarkets.com slash subscribe. Support for this show comes from Odu. Running a business is hard enough, so why make it harder with a dozen different apps that don't talk to each other? Introducing Odu, it's the only business software you'll ever need. It's an all-in-one fully integrated platform that makes your work easier, CRM, accounting, inventory, e-commerce, and more.

And the best part, Odu replaces multiple expensive platforms for a fraction of the cost. That's why over thousands of businesses, have made the switch. So why not you? Try O-D-U for free at O-D-O-O-O-O-com. That's O-D-O-O-O-O-O-com. Support for this show comes from the Audible Original, the downloaded two, ghosts in the machine.

The Earth only has a few days left. Roscoe Cadulian and the rest of the Phoenix Colony have to re-upload their minds into the quantum computer, but a new threat has arisen that could destroy their stored consciousness forever. Listen to Oscar winner Brendan Fraser reprised his role as Rosco Cudulian in this follow-up to the audible original blockbuster. The Downloaded, it's a thought-provoking sci-fi journey

where identity, memory, and morality collide. Robert J. Sawyer does it again with this much-anticipated sequel that leaves you asking, What are you willing to lose to save the ones you love? the downloaded two ghosts in the machine available now only from Audible This week on Net Worth and Chill I'm breaking down the psychology of Black Friday and how to shop smart without going broke

with Americans dropping $9.8 billion online during Black Friday alone the pressure to spend is real and retailers are banking on it I'm sharing my biggest Black Friday wins and fails from scoring amazing travel deals travel deals to getting burned by final sale luxury items I'll never wear. I'm giving you the exact strategies I use to navigate the sales without falling into the trap of buying things I don't actually

need. Learn about values-based spending, the tools that help you spot fake discounts, and why I use Black Friday for gift shopping instead of treating myself. Get ready to win the Black Friday game on your own terms. Listen to wherever you get your podcasts or watch on YouTube.com slash you're rich BFF. We're back with Profti Markets. I think China's pissed off. I think they're sick of trying to figure out the U.S.-China relationship, plan their economy. And they're diversifying away from us.

24% of their exports use to come to the U.S. not 17. But they really feel as if they have, I believe they feel, we have declared economic war on them and that they are going to punch back. And one way they might punch back, or what I would do if I were she, we run companies for profit. they sort of run companies for control and geopolitical advantage. And if I were them, I would begin a government-sponsored drive of capital and strategy to essentially engage in what in the 80s they did with steel, but with AI, and engage in massive AI dumping.

And that has create a ton of LLMs that have near parity technically to U.S. LLMs and then dump them into the market, you know, kind of these open weight, open source, LLMs, that basically do what China does, and that is offer 95, 97 percent of the premium high-end U.S. product for 5 percent of the price. And then essentially cut, go for the jugular, just flood the market with open weight LLMs and AI products for near free. It takes down, massively erodes the margin power of these companies, takes them down, and thereby takes the U.S. economy down. Your thoughts?

So the outlook for this year has four major risks. Number one is the power constraint wall. Number two is the thing you just said, which is that China basically scales the moat on its own. As recently as three years ago, that scenario you just described would have been impossible. China is the world leader in a lot of things. You know, fission, they've made more fusion advances.

They're ahead in genetic testing of certain new drugs. they have there's a really cool thing that looks at the complexity of exports um it's i think it's one of the harvard labs that does it they've converged now with the united states so the complexity in the industrial complexity and sophistication of their exports has matched that of the united states but as recently as five years ago they couldn't figure out the semiconductor thing and through a combination of ingenuity and theft, they have now acquired a lot of things. There's a long list of people that used to work for, you know, either TSM or ASML that are now working for Huawei. And Huawei has announced that next year, they expect to sell, to your points, got a chip cluster that matches or exceeds the performance of what you can get.

from NVIDIA. Now, it's got more, it matches the power. The chip, on a per chip basis, it's only, let's say a third is powerful, but they say, fine, we'll just use three times as many chips. And so that's, they're trying to use a combination of brain and brawn to do that. I, that kind of still feels two years away, but China's on a really long-term journey, and I would agree that that is very much explicitly their goal. I want to talk more about your 2026 outlook.

So you mentioned that the number one risks, or the number one risk is power constraints. We don't have enough power to build all the things that we want to build, particularly AI. You said number two is China. What else should we know in terms of risks? Well, the two other ones is the more that China is able to rely on its own chip, system. That means that number three risk has to be Taiwan because, you know, Taiwan essentially was always protected by the fact that China relied 90% for its advanced chips on Taiwanese output. You know, the day we wake up and that number is below 50%.

I think you have to start to reevaluate some of the geopolitical contingencies around this whole thing. There's great work. CSIS is the best think tank in the world on this kind of stuff. And they showed us some data. Something like 85% of Chinese military assets are in the Taiwanese strait. They have been partnering with Russia to do drills on how to drop heavy equipment out of specially designed parachutes from helicopters. You know, this is moving in another direction, in another clear direction here. And you don't know when and you don't know how and you don't know why, and maybe it's a quarantine, maybe it's a blockade, maybe it's not a full-out invasion, but there are going to be some challenging times for the West within the next five

years as it relates to its almost exclusive reliance on this, you know, Nvidia, ASML, TSMC partnership. And then the fourth one is the stuff we've been talking about, which is this kind of collective metaverse moment where investors in aggregate say, like, a, you know, okay, it's not a waste of money, but we can't see the ROI. We're going to take profits until we have a clearer vision of where this is going. I'm still digging through it. There was a – for every good paper, there's a negative paper, right? So for every good paper on AI adoption, there was one that you should read it.

It came from this group called MIT Nanda, NANDA. Yeah, the 95% one, yeah. Yeah. Like, you know, I read through the details on that one. that those are a lot of companies that that kind of tried it, played around with it, and said, you know what, we're just going to keep doing things the way we're doing it. The other thing that the outlook mentions, there are three forces that will define next year's market. They are, according to your report, AI, we've discussed that, I think everyone understands that,

global fragmentation and inflation. Describe global fragmentation and inflation for us. Let me just summarize by saying, like the Fed is facing a peculiar, fork in the road here. It's not a violent differential, but there's a meaningful differential right now between – we look at the PMI surveys, right, the ISM and PMI surveys of prices paid. Those are going up. The PMI survey is on labor. They're going down, right? So what's a federal reserve to do when you have a dual mandate that are going in opposite directions? Historically, the Fed has almost never cut rates when prices paid surveys are going up. Why would day, right? I mean, you'd be easing into an inflationary environment. It looks like they're

going to do that. And it's a huge gamble. The gamble is that the inflationary increase is tariff-related, and once it makes its way through the system, it will not ignite some kind of wage price spiral, and inflation will be coming down by the spring, and the Fed will be vindicated. But that's a big bet, and that's the bet that's, you know, that we're looking at as we're heading into, you know, the end of the year and early next year. And the markets are pricing in a couple of cuts here because of that. I'm, I'm less worried about tariffs than immigration policy as it relates to this stuff we're talking about. I think the president is less committed to some of these things than he appears to be. They're already adding massive numbers of products

to the exemption list of tariffs. So I think the tariff stuff will turn out to be less damaging. But the latest data from the Fed is that 50,000 payroll growth is inflationary. Like the Nehru of inflation for wages is 50,000. So they, yeah, they shut the border. We all understand what political forces they were reacting to. But the United States needs people to grow. And if you get wage inflation at 50,000 payroll growth, you have a labor supply problem. And so they're going to have they're going to have to make a change soon on that one or else they're going to have bigger problems. Yeah, the report also says it says tariffs are here to stay no matter what the Supreme Court rules. What are you thinking about in terms of the Supreme Court ruling on tariffs right

now? You know, Gorsuch has been kind of tilting is showing you, I don't know the poker analogy because I don't play, I don't gamble. But is it the thing where you hold your cards and people can see what you have or something. I mean, he's been showing his cards a little during the hearing. And I think he and Barrett will side with the liberals. And that would reduce the effective tariff rate from like 15 to 7. And then they would try to replace two or three percent of them with some other clauses. But a bunch of them get defanged and are not so easy to replace. Do you think there might be a ruling where they have to pay back? the tariffs to the companies the tariffs were imposed on?

I do. Over some period of time. And, you know, they would make that as difficult as possible. And, you know, it would be extremely messy. You know, it would be, you know, think about the messiness of the PPP loans as people started to kind of clean up after them. I mean, it's a messy thing to do. And, of course, the Doge people cut a lot of the staffing as it relates to the enforcement

and tracking of this stuff. So one of the reasons that tariffs haven't been quite as much of an impact on the economy is a lot of companies are recategorizing goods so that they fall under different tariff buckets that they may not necessarily supposed to apply to. But if you've gutted the enforcement of the people that look at that, then that's what companies are going to do. So, you know, earlier in the year, a lot of people were trying to convince me that there was this holistic vision. that they had about what they were trying to accomplish. And I've struggled with that because I see too many policies that conflict with each other. Like if you're really trying to attract foreign direct investment, why would you expel all of those South Korean factory workers? There's just too many policies that don't seem to be aligned with what the administration says its goals are,

So, which has given me less confidence that there's a kind of a playlist here that is all adding up to some big, coherent grand vision. You've got to work over time to justify how it all makes sense and how it all plays into a specific strategy. And then, which leads you to believe, okay, that's not what's happening. This is policy by tweets. If you have time on the weekend and you really want to, you know, read something interesting, the Washington Post had an editorial recently from every single living prior surgeon general about what they thought about the leadership at HHS.

And I'm not going to go into any more detail. We'll check it out on our own time. Just final question for me, Scott May I have one as well. We've talked about some kind of concerning stuff on this podcast, And you said that you thought it was, and correct me if I'm wrong, you thought it would be unlikely to see some sort of profit-taking event to the tune of 10 to 12 to 15% next year. No, that's the one I thought was likely. I misspoke. That's what I meant. That is a likely scenario. That's almost your base case

for next year. And perhaps there is a more shocking event, like 40%. But you're thinking, you know, you're going to see 10, 12, 15% correction. For someone, who has kind of a regular portfolio, a regular investor who is, you know, dollar cost averaging into the market, into the S&P, they've been doing that for a few years. Maybe they haven't looked at bonds too closely in the past. What is your general advice for those people going into 2026? How should they think about that portfolio and how should they invest right now? Well, you know, based on what we've just discussed, it would make sense to start accumulating some dry powder to take advantage of whatever opportunities may exist.

A lot of times when you get sell-offs like that, a bunch of things sell-off. All of a sudden, you start seeing industrial and utility preferred stock sell-off two to three points, which can be the equivalent of 50, 60, 80 basis points. So, you know, having some spare cash and credit to be able to draw on when these things happen and can be helpful, a lot of these things tend to be very V-shaped, right? If you look back at almost every single one of these corrections, including the one that happened last year, there's this rapid, violent unwinding of risk. I think a lot of the hedge fund, the big risk parity funds are kind of partially responsible for that. But then it tends to snap back where it comes back

roughly at the same speed at which it declined. In that regard, individual investors have an advantage over some of the large institutional investors. I mean, the average endowment or foundation meets quarterly. They're not even set up to respond to some of these things. Yeah, so I think it's, you know, retail investors have at least the flexibility to try to act when these things happen. Make the bull case for 2026. You start seeing more concrete evidence of, of AI adoption that companies are willing to pay for.

and you start seeing productivity benefits that are based equally on revenues and not entirely on the backs of lower rates of hiring. China starts to cut back on its excess production policy. They announced this Involution campaign a few months ago that's designed to make Chinese companies more profitable by telling them to stop overproducing. I'll believe it when I see it. You get fiscal stimulus in Europe, in part because Trump is basically forcing them to defend themselves. Another policy that I think is long overdue, Europe agreed in 2006 to spend 2% of GDP on defense, and it took them until 2021 to finally get there. And so you're starting to see more defense spending in Europe, which is stimulative.

And then in the U.S., the Fed is vindicated. where inflation starts to roll over, aided and abetted by an enormous amount of multifamily and single family real estate supply, pushing down housing-related inflation. And the administration figures out through some combination of relaxation in certain regulations and things like that to ramp up U.S. oil and gas production. so energy prices come down. So that's kind of your bold case. Michael Samblis is the chairman of market and investment strategy for J.P. Morgan Asset and Wealth Management,

a global leader in investment management in private banking with $6 trillion of client assets under management worldwide. He's responsible for the development of market and investment insights across the firm's institutional funds and private banking businesses. Michael joined J.P. Morgan in 1987. He's previously served as chief investment officer

of the firm's global private bank and head strategies for emerging markets fixed income. And you can discover more of his insights by reading eye on the market or listening to his podcast by the same name. Michael are always really insightful. I really appreciate your time. Thank you. Good to see you, Michael. Thank you very much. Good to see you, Scott. He knows everything, which is so, it's so helpful. I mean, he's kind of overseeing one of the largest portfolios in terms of AUM in the world. So, I mean, he's got so much data. I think I agree with him on pretty much everything he said.

I mean, our reactions to Aswell's interview, I thought it was really striking, but I didn't feel quite as bearish as Professor Demodrom was when we interviewed him. I feel like Michael's sentiment is more where I'm at right now in terms of valuations, where I'm kind of expecting some sort of correction, but not something that is kind of going to cause a major, major crisis. So, yeah, I thought that was informative, made me feel maybe a little better. I think he's very measured because he, the last thing he wants to do is spook, you know, the two trillion dollars in value or in assets they oversee, but he sounded, he sounded measured

and a little bit, I don't want to say nervous, but, and I might be, it might be just confirmation bias, but whether it's Sam Alman or Alex Karp getting defensive or demotoran saying, Aswath is the least panic person I've ever met. And, and then Michael sort of, Michael seems really measured, not to a fault, but really measured, like, okay, I don't want to spook all the capital I oversee, but I'm having a tough time defending this market. And I think part of the reason he's in the position he is, is this guy is just, he's very measured. He just doesn't scare easily, right? But I don't know. And again, I can't figure, I can't suss out. Like, when I hate everyone around me, I know it's my depression. Like when I literally hate everybody, I know

it's my depression speaking, and I'm pretty convinced now we're in for a serious, pretty rocky road in the next 12 months. And I can't suss out my old man boomer anger from the actual data, but the data, I just think, looks, I think if the market goes down 40%, if the NASDA goes down 40% in the next 90 days or 100, we're going to be like, well, of course it fucking did. I think it's going to be like the most obvious thing in the rearview mirror that it happened. So, but anyways, back to Michael. I like him because he's measured and just, I like that he pauses and thinks about questions. He wants to answer them, answer them correctly. I appreciate that too. Yeah, and, you know, what he said, foots with what you're saying. I think he, he is anxious and kind of expressed that.

I mean, he said that his base case is a 10 to 12 to 15% correction, which is kind of a bit deal in and of itself. I mean, the question is, do you think it's going to be like that, or do you think it's going to be 40%, which again, he didn't rule out? He said that it was unlikely. He doesn't think it's going to happen, but he didn't fully rule it out. I think the part that he's gotten right is that there is crazy amounts of leverage and debt that's being accumulated, but only in certain contained spaces. So he mentioned Oracle. I've talked about how open AI, they haven't gotten there yet, but they're going to have to raise huge amounts of debt in order to support the amount of AI that they want to build and spend on

over the next few years. He mentioned Blue Owl and the idea that Meta is raising debt, but using these SPVs to sort of protect themselves. So I think where he's probably right is that the debt and the leverage that we're seeing isn't quite as systemic as we've seen in previous crises, which is probably going to be a good thing. It means that whatever correction we see is going to be at least more contained than it has been in previous crises. I think that's quite a sound analysis. The question then becomes, well, how much more debt are we going to see in the pipeline? I mean, is it just Oracle? Or are we going to start seeing crazy amounts of debt from Amazon and Microsoft and meta? Are they going to ramp it up? That sort of

of the next question. But in terms of his views on, like, what the implosion will look like, I think he's pretty spot on. This episode was produced by Claire Miller and Alison Weiss and engineered by Benjamin Spencer. Our research team is Dan Shalon, Isabella Kinsel, Chris and O'Donoghue, and Mia Silverio. Drew Burroughs is our technical director, and Catherine Dillon is our executive producer. Thank you for listening to Prof G Markets from Profi Media. If you liked what you heard, give us a follow and join us for a fresh take on markets on Monday. and the dark flies in love, love, love.