What does AI tell us about credit market weakness?On this episode of the Odd Lots podcast, Dan Wertman, co-founder and CEO of Noetica, joins @thestalwart and @tracyalloway to talk about his startup that uses AI to scan deal documents and measure linguistic and term trends over time https://t.co/qoGXjc1GMM ...

Whenever I go to McDonald's, I always order the 10 piece Chicken McNugget. There's exactly three things that happen when you order a 10 piece. You open the box, you have nine pieces.>> Yeah. >> You open the box, you have exactly 10 pieces. Or you open the box and you have 11 pieces.Now, if you have nine pieces, you go to the counter, you say, "Hey, I'm missing a piece." They give you a piece. You get the benefit of your bargain. If you get 10, you you enjoy your McNuggets. If you get 11, what do you do.>> Y ...

What does AI tell us about credit market weakness?On this episode of the Odd Lots podcast, Dan Wertman, co-founder and CEO of Noetica, joins @thestalwart and @tracyalloway to talk about his startup that uses AI to scan deal documents and measure linguistic and term trends over time https://t.co/qoGXjc1GMM ...

LendingClub CEO Scott Sanborn discusses the company's customer base, the state of with US credit market and current credit card rates on Bloomberg Television. ...

Credit Market Outlook - Concerns that massive debt issuance from tech giants like Meta and Alphabet will create oversupply in the credit market are premature [1] Company Actions - Tech giants such as Meta and Alphabet are issuing massive amounts of debt [1]

Core Viewpoint - The rapid increase in debt issuance by major tech firms to fund artificial intelligence and data center expansions could lead to market oversupply and widen credit spreads, raising concerns among investors about potential risks in the sector [1][9]. Group 1: Debt Issuance and Market Impact - Tech firms are projected to seek up to $1.5 trillion in debt by 2028 for expansion in AI and data centers, which may lead to wider spreads across the credit market [1][9]. - JPMorgan Chase's strategist Matthew Bailey expressed concerns that excessive data center financing could result in supply indigestion, particularly in dollar markets [2][9]. - The total tech debt supply is expected to exceed $900 billion next year, indicating a significant increase in borrowing needs [6][10]. Group 2: Major Players and Capital Expenditure - Major tech companies, including Alphabet, Meta, Amazon, Microsoft, and Oracle, have capital expenditure needs estimated at around $570 billion for 2026, a substantial increase from $125 billion in 2021 [6][10]. - Alphabet raised $17.5 billion in the US and ₹6.5 billion ($7.5 billion) in Europe, while Meta sold $30 billion, marking significant corporate deals in the region [5][10]. Group 3: Investor Sentiment and Market Dynamics - Despite the large-scale debt issuance, there are no broad signs of panic in the credit market, as many sales have come from top-tier companies [2][9]. - Investors are questioning the potential returns on massive AI investments, with concerns about a glut of lower-quality names in the AI space [5][10]. - The strategic importance of these projects has made tech issuers less price-sensitive, which could lead to broader market repricing [7][10]. Group 4: Credit Market Trends - Investment-grade credit spreads are expected to widen to a range of 100-110 basis points in 2026, up from 75-85 basis points this year, driven by increased bond issuance [10]. - The corporate bond market has remained stable this year, supported by significant cash inflows chasing higher yields compared to previous years [7][10]. - For European investors, the rise in issuance from Big Tech presents an opportunity for exposure that is currently underrepresented [8][10].

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And joining us now, Julian Emanuel, chief equity uh derivatives and quantitative strategist uh at Evercore. Good to have you on, uh Julian, given uh what we've seen in in not just the stock market, but on everyone's lips and talking about stocks, even people like you talk about Bitcoin, which is weird. That's that's different than a couple of years ago where it wasn't really it wasn't ready for prime time crypto.Not quite. Now uh people look at it as as an actual asset class and try to glean things from uh ...

Group 1 - The Federal Reserve is facing a tricky scenario with the upcoming unemployment rate data being crucial for their decision-making process [3][12] - Market expectations for a Fed rate cut in December have fluctuated significantly, with odds dropping to 30% and then rising to 63% [4][12] - The labor market is showing signs of cooling, with the unemployment rate increasing to 4.4%, which may solidify the case for a rate cut [9][21] Group 2 - Major tech companies, including Amazon and Alphabet, have raised significant amounts of debt recently, indicating strong demand in the credit market [26][27] - Oracle's credit default swaps have become a key indicator of AI-related risks, reflecting market concerns about the sustainability of AI growth [32] - The overall credit market is showing improvement, with high-quality companies dominating recent debt issuances, suggesting a positive outlook despite potential late-cycle behaviors [28][30] Group 3 - The earnings season has seen a majority of companies in the S&P 500 beating estimates, with 85% reporting positive results, indicating strong corporate performance [24] - There is a notable divergence in performance among high-yield companies, with some showing operational deterioration, which could lead to increased default activity [38] - The demand for high-quality bonds remains strong, presenting a value opportunity as the market navigates through economic uncertainties [21][36]

Federal Reserve Policy & Economic Outlook - The debate heats up as doves sound off on potential rate cuts, with policymakers awaiting the October CPR (Consumer Price Report) and jobs report [1] - Market pricing for a December Fed rate cut initially fell to 30%, then spiked to almost 66%, settling at 63%, indicating high volatility and uncertainty [4][11] - There's a stark division among Fed officials regarding the need for further easing versus holding rates steady to assess the impact of current policy [7][10][15] - The unemployment rate is a key data point that could settle the debate on rate cuts, but the Fed will not have it when they vote [3] - The market is pricing in potential rate cuts, but the timing and extent of these cuts remain uncertain due to mixed economic signals and geopolitical shocks [11][12][13] Bond Market & Investment Strategies - The two-year Treasury yield is at its lowest level since October 28, reflecting market expectations of potential rate cuts [4] - High-quality bonds are seen as a great value opportunity and a hedge against equity risk, with manageable inflation upside risk [21] - The state of the labor market is front and center for bond investors, with the unemployment rate influencing duration and interest rate risk [21] - Investors are keying off the labor market as a catalyst for the bond market, with the unemployment rate being a key indicator [19][21] Credit Market Dynamics - Hyperscalers have raised a combined $108 billion in debt this year, three times the average over the previous nine years, signaling a significant increase in debt issuance [29] - Oracle's credit default swaps have become a barometer for AI risk, with price and volume jumping in recent weeks, potentially indicating defensive positioning or bets against the AI boom [32] - While overall credit stats are improving, there are signs of operational deterioration in some high-yield companies, potentially leading to higher default activity [27][37][38][39]