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Tag: bubble

  • Outsiders see a circular economy. CoreWeave’s CEO sees a ‘violent change’ that’s rattling the supply chain down to the inside of the earth | Fortune

    Addressing one of the most persistent critiques of the current artificial intelligence boom, CoreWeave CEO Michael Intrator pushed back against the narrative of a “circular AI economy” in an appearance at the Fortune Brainstorm AI conference in San Francisco.

    While skeptics often point to the tangled web of investments between chipmakers, cloud providers, and AI startups as a financial bubble, he argued that deep industry collaboration is the only viable response to a historic supply chain crisis.

    Circular is “the incorrect way of looking at it,” Intrator told Fortune Editorial Director Andrew Nusca, reframing the dynamic not as financial engineering, but as logistical necessity. “It’s a lot of companies working to address an imbalance that is distorting the globe.”

    The concept of the “circular economy” in AI suggests that revenue is merely being recycled between a handful of tech giants—such as Nvidia investing in CoreWeave, which in turn uses that capital to buy Nvidia chips. However, Intrator described the market conditions as a “violent change in supply demand,” adding that the only way to navigate such volatility is “by working together.”

    The ‘physical bottleneck‘

    According to Intrator, the primary constraint facing the AI sector is not funding or policy, but “a physical bottleneck associated with getting … the most performant compute into the hands of the most cutting-edge players.” This scarcity forces companies to cooperate in ways that may look insular to outsiders but are essential for survival, he insisted.

    The CEO recounted a recent conversation with a mining company boss, whom he declined to name. Intrator said he learned just how deep the supply chain is being impacted: “two levels deeper,” down to the raw metals and copper required to build the infrastructure. Intrator noted that the executive specifically requested industry-wide cooperation to meet production needs.

    The mining CEO explained that to get out of this jam, “we need to work together as a group.” If he said the same thing about the AI space, Intrator reasoned, “I get accused of being in a circular economy … So that’s all I’ll say on the circular economy is, like, you do that by working together.”

    Critics warn that if a firm like CoreWeave cannot roll its debt or loses a key client, lenders could dump large volumes of used GPU chips into secondary markets, hitting hardware prices and rippling through the AI supply chain. But Intrator described a rapid, even violent escalation of demand.

    Managing ‘relentless’ demand

    CoreWeave, which specializes in parallelized computing solutions essential for AI, sits at the center of this storm.

    “The demand from the most knowledgeable, most sophisticated, largest tech companies in the world is relentless,” Intrator said. “That’s what the trend that matters to me.”

    This rapid expansion has come with volatility. Since its IPO, CoreWeave’s stock has seen significant fluctuation, a phenomenon that Intrator attributed to the market adjusting to a disruptive business model challenging the traditional cloud dominance of major tech players. Despite the “seesawing” stock price, Intrator noted that the company has been successful, with the stock trading around $90, compared to an IPO price of $40.

    He also addressed concerns regarding customer concentration. While he acknowledged that CoreWeave was previously reliant on Microsoft for 85% of its revenue, he said aggressive diversification efforts mean that no single customer now represents more than 30% of the company’s backlog.

    The super-cycle view

    Intrator urged investors to look past short-term execution hiccups, such as a data center opening delayed by a week, which he said caused “bedlam” among myopic observers. Instead, he views the current landscape as a “macro super-cycle,” where the fundamental shift from sequential to parallelized computing is opening up computational power at an order of magnitude previously unimagined.

    Ultimately, the collaboration that critics decry is the mechanic that is moving the industry forward, Intrator maintained. “The reasons that you have challenges in delivering that compute is because of policy… because of physical infrastructure … because of energy,” he said. “You do that by working together.”

    Nick Lichtenberg

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  • Top analyst on concerns about Nvidia fueling an AI bubble: ‘We’ve seen this movie before. It was called Enron, Tyco’ | Fortune

    A top Wall Street analyst has sounded an alarm over the U.S. equity bull market, warning that its remarkable run is built on a precariously narrow foundation: a surge in spending on, and optimistic assumptions about, infrastructure for artificial intelligence (AI). This spending has fueled a boom in the shares of most of the so-called Magnificent 7 and a few dozen related businesses, which have now come to account for roughly 75% of the S&P 500’s returns since the rally of the last few years began.

    The commentary on September 29 by Morgan Stanley Wealth Management’s chief investment officer, Lisa Shalett, frames the current market boom as a “one-note narrative” almost entirely dependent on massive capital expenditures in generative AI, raising questions about its durability as economic and competitive risks start to mount. Shalett’s critique came squarely in the middle of some people in the AI field — and many financial commentators around Wall Street —fretting at market exuberance and beginning to talk openly about a bubble.

    In an interview with Fortune, Shalett said she was “very concerned” about this theme in markets, saying her office had broadened from a belief that the market would only bid up seven or 10 stocks to roughly 40. “At the end of the day … this is not going to be pretty” if and when the generative AI capital expenditure story falters, she said.

    Shalett said she’s worried about a “Cisco moment” like when the dotcom bubble burst in 2000, referring to the company that was briefly the most valuable company in the world before an 80% stock plunge. [By “Cisco moment” did she mean a whole bunch of circular financing coming back to bite the company? If so, that would be worth adding/briefly explaining.] When asked how close we are to such a moment, Shalett said probably not in the next nine months, but very possibly in the next 24. When you look at the actual spending and the amount of capital coming into the space, “we’re a lot closer to the seventh inning than the first or second inning,” she said.

    ‘Starting to do what all ultimate bad actors do’

    Shalett’s comments centered on several recent multibillion-dollar deals to scale up data-center infrastructure. As notable substacker and former Atlantic writer Derek Thompson recently noted in a post titled “This is how the AI bubble will pop,” so much money is being spent to support AI’s energy-consumption needs that it’s the equivalent of a new Apollo space mission every 10 months. (Tech companies are spending roughly $400 billion this year alone on data-center infrastructure, while the Apollo program allocated about $300 billion in today’s dollars to get to the moon from the 1960s to the ’70s.)

    What’s more than a little concerning to Shalett is that one company alone, Nvidia—the most valuable company in the history of the world, with an over $4.5 trillion market cap—is at the center of a significant number of these deals. In September alone, Nvidia invested $100 billion in OpenAI in a massive deal, just days after pledging $5 billion to Intel (the Intel agreement was tied to chips, not data-center infrastructure, per se).

    Fortune‘s Jeremy Kahn reported in late September on significant concerns about “circular” financing, or Nvidia’s cash essentially being recycled throughout the AI industry. Shalett sees this as a major concern and a major sign that the business cycle is headed toward some kind of endgame. “The guy at the epicenter, Nvidia, is basically starting to do what all ultimate bad actors do in the final inning, which is extending financing, they’re buying their investors.”

    Shalett expanded on her concerns by saying that companies around Nvidia “are starting to become interwoven.” She noted that OpenAI is partially owned by Microsoft, but now Nvidia has also made an investment in the startup, while Oracle and AMD each have their own purchasing agreements with OpenAI. But OpenAI also has a data-center deal with tech giant Oracle, with the “bad news,” Shalett notes, that this deal is “totally debt-financed.” OpenAI also struck a deal in October with chip-maker AMD that allows OpenAI to buy up to 10% of AMD. “Essentially, Nvidia’s main competitor is going to be partially owned by OpenAI, which is partially owned by Nvidia. So, Nvidia can ‘own’ a piece of its largest competitor. It is totally circular and increases systemic risk.”

    When reached for comment, a spokesperson for Nvidia said, “We do not require any of the companies we invest in to use Nvidia technology.”

    Nvidia CEO Jensen Huang discussed the OpenAI investment in an appearance on the Bg2 podcast with Brad Gerstner and Clark Tang on September 25, calling it an “opportunity to invest” and part of a partnership geared toward helping OpenAI build their own AI infrastructure. When asked about the allegation of circular financing in general and the Cisco precedent in particular, Huang talked about how OpenAI will fund the deal, arguing that it will have to be funded by OpenAI’s future revenues, or “offtake,” which he pointed out are “growing exponentially,” and by its future capital, whether it’s raised by a sale of equity or debt. That will depends on investors’ confidence in OpenAI, he said, and beyond that, it’s “their company, it’s not my business. And of course, we have to stay very close to them to make sure that we build in support of their continued growth.”

    Shalett said that she and her team were “starting to watch” for signs of a bubble popping, highlighting the deal announced roughly a week before OpenAI struck its $100 billion data-center deal with Nvidia, when it struck another with Oracle worth $300 billion. Analysts at KeyBanc Capital Markets estimated that Oracle will have to borrow $100 billion of that amount—$25 billion a year for the next four years.

    “Every morning the opening screen on my Bloomberg is what’s going on with CDS spreads on Oracle debt,” Shalett said, referring to credit default swaps, the financial instrument that was obscure before the Great Financial Crisis, but infamous for the role it played in a global market meltdown. CDSs essentially serve as insurance to investors in case of insolvency by a market entity. “If people start getting worried about Oracle’s ability to pay,” Shalett said, “that’s gonna be an early indication to us that people are getting nervous.” She added that all the indications to her speak of the end of a cycle and history is littered with cautionary tales from such times.

    Oracle did not respond to requests for comment.

    90% growth since the last bear market

    Since the October 2022 bear market bottom and the launch of ChatGPT, according to Shalett’s calculations, the S&P 500 has soared 90%, but most of these gains have come from a small group of stocks. The so-called “Magnificent Seven”—including high-profile names like Nvidia and Microsoft—plus another 34 AI data-center ecosystem companies, are responsible for, as cited by Shalett and separately by JP Morgan Asset Management’s Michael Cembalest, about three-quarters of overall market returns, 80% of earnings growth, and a staggering 90% of capital spending growth in the index. Comparatively, the other 493 names in the S&P 500 are up just 25%—showing just how concentrated the rally has become.

    The so-called “hyperscaler” companies alone are now spending close to $400 billion annually on capex supporting AI infrastructure, Morgan Stanley Wealth Management calculated. The economic influence of AI capex is now immense, contributing an estimated 100 basis points—fully one percentage point—to second-quarter GDP growth, according to Morgan Stanley’s research. This pace outstrips the rate of underlying consumer spending growth by tenfold, underscoring its centrality to both market performance and broader economic data.

    “People conflate AI adoption, which is in the first inning, with the capex infrastructure buildout, which has been going full-out since 2022,” Shalett told Fortune. She cited concerns about the prominence of private equity and debt capital coming into play, as that “tends to produce bubbles, because it may be unspoken-for capacity.” In other words, people have money to burn and they’re throwing it at things that may not pay off.

    Shalett waved away macro theories about the labor market or the Federal Reserve. “We think that’s missing the forest for the trees because the forest is entirely rooted in this one story” about AI infrastructure. Morgan Stanley’s bull-case mid-2026 price target for the S&P 500 is an eye-popping 7,200, but Shalett highlights that even the most optimistic outlook admits that risk premiums, credit spreads, and market volatility do not seem to fully account for the vulnerabilities lurking beneath the AI-fueled advance.

    Shalett’s analysis suggests that AI capex maturity is approaching and some possible slowdowns are already visible. For instance, hyperscalers have already seen free-cash-flow growth turn negative, a sign that investment may have outpaced underlying technology returns. Strategas, an independent research firm, estimates that hyperscaler free cash flow is set to shrink by more than 16% over the next 12 months, putting pressure on lofty valuations and forcing investors to demand more discipline in how these funds are deployed.

    Shalett was asked about data centers’ disproportionate impact on GDP throughout 2025, which media blogger Rusty Foster of Today in Tabs described as: “Our economy might just be three AI data centers in a trench coat.” The Morgan Stanley exec said “That’s what makes this cycle so fragile,” adding that at some point, “we’re not gonna be building any data centers for a while.” After that, it’s just a question of whether you crash: “Do you have a mild 1991-92-style recession or does it really become bad?”

    A more bullish case

    Bank of America Research weighed in on the semiconductors sector in a Friday note, writing that vendor financing in the space, especially Nvidia’s $100 billion commitment to OpenAI, has been “raising eyebrows.” Nevertheless, the team, led by senior analyst Vivek Arya, argued that the deal is structured by performance and competitive need, rather than pure speculative frenzy.

    In an interview with Fortune, Arya explained why he wasn’t worried despite the “optics” being pretty obviously bad. “It’s very easy to say, ‘Oh, Nvidia is giving [OpenAI] money and they are buying chips with that money” and so on, but he argued the headlines are misleading about how much money is actually being spent and the $100 billion sticker price on the OpenAI deal “scared everyone.” Noting that the deal has multiple tranches that will play out over several years to come, he said it’s not like Nvidia is “just handing a $100 billion check to OpenAI [and saying] you know, go have fun.”

    “Nvidia didn’t fund all of it,” Arya said of the wider generative AI capex boom. Citing public filings, Arya argued that Nvidia’s entire investment in the AI ecosystem is in fact less than $8 billion or so over the last 12 months, not such a large figure after all. And he’s still bullish on Nvidia and OpenAI, he added, because he sees them as the winners of this particular story. “We think they are going to be among the four or five ecosystems that come up. It’s not like Nvidia is going and investing in every one of those ecosystems, right? They’re only investing in one of those five, which is, of course, the most disruptive,” that being OpenAI.

    When asked about his own fears of a bubble, Arya actually sounded a calmer but strikingly similar tune to Shalett. “I’m extremely comfortable with what will happen in the next 12 months,” Arya said, “And I have high sense of optimism about what will happen in the next five years. But can there be periods of digestion in between? Yeah.” Explaining that this is the nature of any infrastructure cycle, “it’s not always up and to the right.” In other words, after the next nine months in Shalett’s opinion and the next year in Arya’s, the data-center buildout endgame could be in play. “When these data centers are built,” Arya said, “they are not built for today’s demand. They’re built with some anticipation of demand that will develop in the next, you know, 12 to 18 months. So, are they going to be 100% utilized all the time? No.”

    Rising worries about a bubble

    Some of the biggest names in tech and Wall Street offered were hedging hard about the possibility of a bubble on Friday. Goldman Sachs CEO David Solomon and Jeff Bezos, both speaking at a tech conference in Turin, Italy, said they were seeing the same patterns as Shalett. Solomon said the massive amounts of spending weren’t fundamentally different from other booms and busts. “There will be a lot of capital that was deployed that didn’t deliver returns,” he said. That’s no different from how investment works. “We just don’t know how that will play out.”

    Bezos characterized it as “kind of an industrial bubble,” arguing that the infrastructure would pay off for many years to come.

    OpenAI CEO Sam Altman, who got markets jittery in late August when he mentioned the B-word, was asked again to comment on the subject while touring (what else?) a giant new data center in Texas. “Between the 10 years we’ve already been operating and the many decades ahead of us, there will be booms and busts,” Altman said. “People will overinvest and lose money, and underinvest and lose a lot of revenue.”

    For his part, Cisco CEO John Chambers, one of the faces of the dotcom bubble, told the Associated Press on October 3 that he sees “a lot of tremendous optimism” about AI that is similar to the “irrational exuberance on a really large scale” that marked the internet age. It indicates a bubble to him, but only “a future bubble for certain companies. Is there going to be train wreck? Yes, for those that aren’t able to translate the technology into a sustainable competitive advantage, how are you going to generate revenue after all the money you poured into it?”

    When asked whether the size of this potential bubble represents uncharted waters for the economy, especially considering the one-note nature of the long bull market, Shalett said Wall Streeters are always evaluating risk. But putting on her “American citizen hat,” she warned about the media consolidation that sees Oracle’s founder Larry Ellison also now playing a major role in TikTok (as part of a buying consortium of Trump-friendly billionaires) and Paramount in Hollywood and CBS News in New York (through his son, David Ellison, the media company’s new owner). Shalett said she’s worried about “groupthink” filtering into the functioning of markets. “That is not something that most of us have experienced in our lifetimes,” she said. “You stop factoring in risk premiums into markets, there is no bear case to anything.”

    Nick Lichtenberg

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  • It’s not only Sam Altman anymore warning about an AI bubble. Mark Zuckerberg says a ‘collapse’ is ‘definitely a possibility’ | Fortune

    Deutsche Bank called it “the summer AI turned ugly.” For weeks, with every new bit of evidence that corporations were failing at AI adoption, fears of an AI bubble have intensified, fueled by the realization of just how topheavy the S&P 500 has grown, along with warnings from top industry leaders. An August study from MIT found that 95% of AI pilot programs fail to deliver a return on investment, despite over $40 billion being poured into the space. Just prior to MIT’s report, OpenAI CEO Sam Altman rang AI bubble alarm bells, expressing concern over the overvaluation of some AI startups and the intensity of investor enthusiasm. These trends have even caught the attention of Fed Chair Jerome Powell, who noted that the U.S. was witnessing “unusually large amounts of economic activity” in building out AI capabilities. 

    Mark Zuckerberg has some similar thoughts. 

    The Meta CEO acknowledged that the rapid development of and surging investments in AI stands to form a bubble, potentially outpacing practical productivity and returns and risking a market crash. But Zuckerberg insists that the risk of over-investment is preferable to the alternative: being late to what he sees as an era-defining technological transformation.

    “There are compelling arguments for why AI could be an outlier,” Zuckerberg hedged in an appearance on the Access podcast. “And if the models keep on growing in capability year-over-year and demand keeps growing, then maybe there is no collapse.”

    Then Zuckerberg joined the Altman camp, saying that all capital expenditure bubbles like the buildout of AI infrastructure, seen largely in the form of data centers, tend to end in similar ways. “But I do think there’s definitely a possibility, at least empirically, based on past large infrastructure buildouts and how they led to bubbles, that something like that would happen here,” Zuckerberg said.

    Bubble echoes

    Zuckerberg pointed to past bubbles, namely railroads and the dot-com bubble, as key examples of infrastructure buildouts leading to a stock-market collapse. In these instances, he claimed that bubbles occurred due to businesses taking on too much debt, macroeconomic factors, or product demand waning, leading to companies going under and leaving behind valuable assets. 

    The Meta CEO’s comments echoed Altman’s, who has similarly cautioned that the AI boom is showing many signs of a bubble. 

    “When bubbles happen, smart people get overexcited about a kernel of truth,” Altman told The Verge, adding that AI is that kernel: transformative and real, but often surrounded by irrational exuberance. Altman has also warned that “the frenzy of cash chasing anything labeled ‘AI’” can lead to inflated valuations and risk for many. 

    The consequences of these bubbles are costly. During the dot-com bubble, investors poured money into tech startups with unrealistic expectations, driven by hype and a frenzy for new internet-based companies. When the results fell short, the stocks involved in the dot-com bubble lost more than $5 trillion in total market cap.

    An AI bubble stands to have similarly significant economic impacts. In 2025 alone, the largest U.S. tech companies, including Meta, have spent more than $155 billion on AI development. And, according to Statista, the current AI market value is approximately $244.2 billion.

    But, for Zuckerberg, losing out on AI’s potential is a far greater risk than losing money in an AI bubble. The company recently committed at least $600 billion to U.S. data centers and infrastructure through 2028 to support its AI ambitions. According to Meta’s chief financial officer, this money will go towards all of the tech giant’s US data center buildouts and domestic business operations, including new hires. Meta also launched its superintelligence lab, recruiting talent aggressively with multi-million-dollar job offers, to develop AI that outperforms human intelligence.

    “If we end up misspending a couple hundred billion dollars,  that’s going to be very unfortunate obviously. But I would say the risk is higher on the other side,” Zuckerberg said. “If you build too slowly, and superintelligence is possible in three years but you built it out were assuming it would be there in five years, then you’re out of position on what I think is going to be the most important technology that enables the most new products and innovation and value creation in history.”

    While he sees the consequences of not being aggressive enough in AI investing outweighing overinvesting, Zuckerberg acknowledged that Meta’s survival isn’t dependent upon AI’s success.

    For companies like OpenAI and Anthropic, he said “there’s obviously this open question of to what extent are they going to keep on raising money, and that’s dependent both to some degree on their performance and how AI does, but also all of these macroeconomic factors that are out of their control.”

    Fortune Global Forum returns Oct. 26–27, 2025 in Riyadh. CEOs and global leaders will gather for a dynamic, invitation-only event shaping the future of business. Apply for an invitation.

    Lily Mae Lazarus

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  • Jerome Powell on signs of an AI bubble and an economy leaning too hard on the rich: ‘Unusually large amounts of economic activity’ | Fortune

    For months, Wall Street commentators have fretted that the artificial intelligence boom looks like a bubble, with capital spending – which some analysts estimate could reach $3 trillion by 2028 – fattening a few mega-cap firms, while lower-income workers suffer from a slack labor market. 

    On Wednesday, they got validation from an unlikely source: the chair of the Federal Reserve. 

    Jerome Powell said the U.S. is seeing “unusually large amounts of economic activity through the AI buildout,” a rare acknowledgement from the central bank that the surge is not only outsized, but also skewed toward the wealthy.

    That imbalance extends beyond markets. Roughly 70% of U.S. economic growth comes from consumer spending, yet most households live paycheck to paycheck. That demand picture has taken on a shape that analysts call  K-shaped: while many families cut back on essentials, wealthier households continue to spend on travel, tech, and luxury goods—and they continued to do so in August. For now, the inflation recovery depends heavily on this dynamic remaining in fragile stasis. It’s a fix that works well until it doesn’t, if it could be described as working at all.

    “[Spending] may well be skewed toward higher-earning consumers,” Powell told reporters after the Fed’s latest policy meeting. “There’s a lot of anecdotal evidence to suggest that.”

    That skew has become increasingly obvious in markets. Just seven firms — Microsoft, Nvidia, Apple, Alphabet, Meta, Amazon, and Tesla — now make up more than 30% of the S&P 500’s value. Their relentless AI capex is keeping business investment positive, even as overall job growth has slowed to a crawl. Goldman Sachs estimates AI spending accounted for nearly all of the 7% year-over-year gain in corporate capex this spring.

    The comments underscore a widening concern at the Fed: that while headline GDP growth is holding above 1.5%, the composition of that growth is uneven, unlike previous booms in housing or manufacturing. 

    Powell pointed to “kids coming out of college and younger people, minorities” as struggling to find jobs in today’s cooling labor market, even as affluent households continue to spend freely and companies funnel cash into cutting-edge technologies.

    The imbalance reflects what Powell described as “a low firing, low hiring environment,” where layoffs remain rare but job creation has slowed to a crawl. That dynamic, combined with the concentration of economic gains in AI and among the wealthy, risks deepening inequality, and complicates the Fed’s attempt to balance its inflation and employment mandates.

    That disconnect risks widening the gap between Wall Street and Main Street. While affluent households continue to spend freely and tech titans pour billions into data centers and chips, revised jobs data show the economy added just 22,000 positions in August, with unemployment edging up to 4.3%.

    “Unusually large” AI investment may sustain top-line growth, Powell suggested, but it’s doing little to lift the broad labor market.

    “The overall job finding rate is very, very low,” he said. “If layoffs begin to rise, there won’t be a lot of hiring going on.”

    Fortune Global Forum returns Oct. 26–27, 2025 in Riyadh. CEOs and global leaders will gather for a dynamic, invitation-only event shaping the future of business. Apply for an invitation.

    Eva Roytburg

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  • ‘Mr. & Mrs. Smith’ and the Death of the Black Prestige TV Bubble

    ‘Mr. & Mrs. Smith’ and the Death of the Black Prestige TV Bubble


    Perhaps the most telling—if cynical—part of Amazon’s new Mr. & Mrs. Smith series occurs in the opening minutes of the second episode. Over bagels and lox, Maya Erskine’s Jane asks Donald Glover’s John what inspired him to go down the path of high-risk espionage and 40-hour-a-week drudgery. In his winking and meta way, Glover simply responds “money,” as the couple laugh, knowing there’s rarely another answer.

    For almost two decades, this hyper self-awareness has been Glover’s signature. Mr. & Mrs. Smith revels in a mischievous and playful hubris. Glover knows that you know about his lucrative, eight-figure deal with the Bezos behemoth. Just like he understands that Donald and Maya aren’t Brangelina, and that a show originally meant to star Phoebe Waller-Bridge before Erskine joined is the type of discourse machine few creators can stoke.

    Mr. & Mrs. Smith, and by extension Glover, feels caught between two eras of TV struggling to coexist. On paper, Glover’s and co-creator/showrunner Francesca Sloane’s show nestles nicely into Amazon’s growing portfolio of four-quadrant, IP-spy thrillers. It’s a remake of a beloved 2005 movie, starring two darlings of the prestige TV era with a cast of supporting players—Paul Dano, Michaela Coel, Alexander Skarsgard, Sarah Paulson, Ron Perlman—that’d put most comparable programming to shame. Its ballooned budget is so tastefully deployed across its wardrobe and locales that it feels like a sentient Instagram feed of those vacation girls Drake is always complaining about.

    Like Atlanta before it, Mr. & Mrs. Smith lives and dies by the audacity of its swings. If Brad and Angelina’s original was pitching the rebirth of domestic bliss as aspirationally sexy, the reboot’s vision is more earnestly sober. Amazon’s Mr. & Mrs. Smith asks the type of questions—Can love survive the gig economy? How much of ourselves do we lose in an interracial relationship? How many times is it socially acceptable to call your mom on a given day?—that can make couples therapy feel like a lobotomy. In other words, it’s a Donald Glover show.

    Eight years ago, the novel proposition of Atlanta was that it was in constant conversation with the hyper-online and underrepresented Black spaces it mined for inspiration. In the deflating final days of the Obama era, a convergence of multiple factors—Trump, the Black Lives Matter movement, streaming wars—meant white America had a lot of time and money to spend on Black art that was deemed “important” and also made them feel good.

    Careers were minted. Creatives turned mogul. A generation of Black showrunners became recognizable by one half of their name: Glover, Issa, Rhimes, Waithe, Carmichael. We were inundated with a bounty of great art (and just as much schlock) with no sign of an end.

    Then the pandemic struck, and soon the entire era of “peak TV” came under scrutiny. The white guilt and easy PR born from 2020 protests and social movements could only last so long in Hollywood, a place where the illusion of change is usually mistaken for the real thing. “Prestige” shows began to fade. Shows like Lovecraft Country, Them, and Love Life came and went without securing the same type of rabid fan bases that Atlanta and Insecure could boast (and even those shows were never ratings juggernauts).

    The 2023 Hollywood strikes didn’t help matters. In November, returning Disney CEO Bob Iger said the quiet part out loud when he declared, “We have to entertain first. It’s not about messages.” The not-so-subtle jab at diversity as the main culprit for Disney+’s stagnation arrived right on schedule. A couple months later, Issa Rae acknowledged what this prevailing new Hollywood order meant for the darkest people in the room. “You’re seeing so many Black shows get canceled, you’re seeing so many executives—especially on the DEI [diversity, equity, and inclusion] side—get canned,” Rae told Net-A-Porter. In January, Rap Sh!t, Rae’s follow-up to Insecure, was canceled at Max after two seasons. “You’re seeing very clearly now that our stories are less of a priority. I am pessimistic, because there’s no one holding anybody accountable.”

    Mr. & Mrs. Smith isn’t a Black show in the way we’ve been taught to view any mass media originated by a powerful Black person. Sloane hails from El Salvador, and the show’s creative duties are split up between a host of creatives from Hiro Murai to Carla Ching. While the series’ best moments can’t help but interrogate ideas on race and power, it’s always through the prism of matrimony and the ways it can drive the people stuck within it mad.

    The pilot episode doesn’t begin with our new John and Jane but instead with two conventionally attractive stand-ins for Pitt and Jolie played by Alexander Skarsgard and Eiza González. Naturally, in the show’s winking manner, Skarsgard’s neck is blown off within minutes, metaphorically signaling that our traditional spies need to die for Glover and Erskine to provide something a tad more esoteric. Perhaps the show’s most loaded (and hilarious) moment arrives when our new half-Japanese, half-white Jane murders three Black targets when she gets jealous that John is connecting with these men over Asian jokes. The racial complications of the situation volley back and forth until they’re too absurd to take seriously. John thinks his Japanese wife is jealous of his Black male bonding, which she’s chastised for by their wealthy white marriage counselor.

    Like its protagonists, Mr. & Mrs. Smith is at war with itself, sweating profusely with ideas and ambitions. It’s a self-conscious examination of whether greatness in romance, career aspirations, and art can flourish within the confines of domesticity. The show is enamored of its own sense of subversion, but it most often succeeds when it’s more conventional.

    Similar to the institution it seeks to mock and venerate, the pace and emotional fallout of the series is brutal, closer to Marriage Story than Mission: Impossible. It has all the ugly and tortured contours of witnessing a good friend’s marriage disintegrate before your eyes.

    Glover’s and Erskine’s portrayals of John and Jane are awkward and cringe-inducing, and the camera often lingers on their most intimate moments with a voyeuristic quality. The duo’s chemistry is slippery. True to life, there’s less of a spark and more of a sloppy runaway freight train of existential and boredom-fueled horniness. You believe their love in the same way you would the word of your hopelessly romantic friend. Time, life, and rapidly decreasing hormonal levels will always tell them what you cannot.

    But the sincerity baked into the elevated rom-com premise gives the show its electricity. Glover still has an uncanny ability to disarm the audience, his laugh and innocent charm as infectious as it was behind the Greendale table. While Glover and Erskine’s chemistry waxes and wanes from episode to episode, the show’s comedic moments—Jane warming John’s dangerously frostbitten penis, Jane going to great lengths to hide her farts, John lying about smelling said farts—are its most refreshing.

    The conundrum of Mr. & Mrs. Smith is that marriage—like love, vulnerability, and moguldom—is inherently corny because growing older is corny. At 40, Glover is no longer “Trojan horsing” his concepts through the Hollywood system. He’s been part of the industry for almost 20 years, dating back to his time working on 30 Rock. Like James Harden before him, Donald has become a system, and Mr. & Mrs. Smith is the first of his shows to interrogate life from that perspective. Glover’s John is distrusted by the faceless spy corporation in a way Jane is not. Rarely does John follow rules, plans, or conventional thinking even when it becomes clear his life hangs in the balance. Ever since Donald made the leap from network sitcom star to auteur status, he’s chafed against rewriting the history of his ascent.

    Part of the myth of Atlanta is how much John Landgraf—the FX executive who coined the phrase “peak TV”—didn’t want the show they ended up getting. “Steve always reminds me, ‘FX didn’t want to do this show—you had to beg them. Fuck them,’” Glover told The New Yorker in a 2018 profile, paraphrasing his brother and Atlanta co-creator. “I like Landgraf, I’ve learned a lot from him, but FX is a business. It’s not there to make some kid from Stone Mountain, Georgia’s dreams come true.” (Landgraf, for his part, didn’t dispute Glover’s narrative. “I don’t have a problem with the Trojan-horse narrative if it’s important to Donald,” Landgraf responded. “We’re in the business of making pieces of commercial television that mask deeper artistic narratives.”)

    By Episode 4 of Mr. & Mrs. Smith, this fraught subtext is made plain when Glover and Erskine meet fellow Agents Smith (played by Wagner Moura and Parker Posey) years into their spycraft and relationship. The humor and tragedy of the generational divide between the young and old Smiths is illustrated when the older John is unable to distinguish between a Clipse and Eminem song, in very much the same way most don’t care to interrogate the rise of FX’s Dave in the wake of Atlanta.

    “It’s hard to be old and famous and stay punk,” Moura waxes poetically.

    “I don’t think it’s possible. I don’t think you’re supposed to be punk,” Donald responds.

    Glover returns to the idea of who and what isn’t “punk” a lot. He reportedly told the Atlanta writing staff, “We’re the punk show—what’s the most punk thing to do?” during its conception, and after the disappointing critical reception to Atlanta’s third season, his wife’s response was “You do punk things, you get punk results.” By the time Atlanta returned for the following season, it was competing in a crowded landscape it had paved the way for, as shows like Reservation Dogs, Barry, Ramy, and Dave followed their own lanes of subversion to acclaim of their own.

    One of the unspoken tragedies about the end of whatever you want to call the last 20 years of television is that it presented a convenient truth. For a moment, there was a belief—as nurturing as it was naive—that by virtue of TV finally becoming artistically “important” it could also inspire change. Maybe if we watched and related to the depths of Tony Soprano, Walter White, or Don Draper enough we’d come to find out something about ourselves. Naturally, that extended to Earn and Issa and Dre. But that rarely if ever happens. TV is mass media entertainment, and all it’s ever known is the mean. Transcendent television always existed in opposition to that.

    In that same New Yorker article, Glover spoke about Atlanta’s capacity to teach something important. Critical consensus was still on the show’s side and we were yet to see the other side of the streaming boom. “I don’t even want them laughing if they’re laughing at the caged animal in the zoo. I want them to really experience racism, to really feel what it’s like to be black in America,” Glover said. “It’s scary to be at the bottom, yelling up out of the hole, and all they shout down is ‘Keep digging! We’ll reach God soon!’”

    We’re back to digging. And maybe that’s the joy of Mr. & Mrs. Smith. A series this messy being made by a team that still seems to care when the market says they don’t have to is still an entertaining proposition.

    Every frame isn’t perfect. Often the show’s world seems to adhere around the joke or punch line, leaving characters to seem far more stupid or downright illogical than they probably should be. But then Ron Perlman delivers a terrible Holocaust joke or Glover punctuates a scene by cocking his hat to the side like a 2007 Derrick Comedy skit and it all comes back into focus.

    Mr. & Mrs. Smith found a reason to exist and managed to get there in the most peculiar way possible. It didn’t need to save or change the world, because no amount of peak TV—even the shows by Black creators—could. Like marriage, eras can only last so long until a new pair of Smiths comes around.



    Charles Holmes

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  • Hang Seng leads selloff for Asia stocks, with 4% slump after China data

    Hang Seng leads selloff for Asia stocks, with 4% slump after China data

    TOKYO (AP) — Asian shares slid Wednesday after a decline overnight on Wall Street and disappointing China growth data, while Tokyo’s main benchmark momentarily hit another 30-year high.

    Japan’s benchmark Nikkei 225
    NIY00,
    -0.95%
    reached a session high of 36,239.22, but reverted lower, last down 0.3% to 35,477. The Nikkei has been hitting new 34-year highs, or the best since February 1990 during the so-called financial bubble. Buying focused on semiconductor-related shares, and a cheap yen helped boost exporter issues.

    Don’t miss: Wall Street firms catch up to Buffett enthusiasm on Japan as Nikkei keeps hitting records

    Hong Kong’s Hang Seng
    HK:HSCI
    tumbled 4% to 15,220.72, with losses building after data showed China hitting its economic growth target of 5.2% for 2023, surpassing government expectations, but short of the 5.3% some analysts expected. The Shanghai Composite
    CN:SHCOMP
    shed 2% to 2,833.62.

    Read on: China hit its economic-growth target without ‘massive stimulus,’ boasts Premier Li Qiang

    Australia’s S&P/ASX 200
    AU:ASX10000
    slipped 0.2% to 7,401.30. South Korea’s Kospi
    KR:180721
    dropped 2.4% to 2,435.90.

    Investors were keeping their eyes on upcoming earnings reports, as well as potential moves by the world’s central banks, to gauge their next moves.
    Wall Street slipped in a lackluster return to trading following a three-day holiday weekend.

    See: What’s next for stocks as ‘tired’ market stalls in 2024 ahead of closely watched retail sales

    The S&P 500
    SPX
    fell 17.85 points, or 0.4%, to 4,765.98. The Dow Jones Industrial Average
    DJIA
    dropped 231.86, or 0.6%, to 37,361.12, and the Nasdaq
    COMP
    sank 28.41, or 0.2%, to 14,944.35.

    Spirit Airlines
    SAVE,
    -47.09%
    lost 47.1% after a U.S. judge blocked its takeover by JetBlue Airways
    JBLU,
    +4.91%
    on concerns it would mean higher airfares for flyers. JetBlue rose 4.9%.

    Stocks of banks were mixed, meanwhile, as earnings reporting season ramps up for the final three months of 2023. Morgan Stanley
    MS,
    -4.16%
    sank 4.2% after it said a legal matter and a special assessment knocked $535 million off its pretax earnings, while Goldman Sachs
    GS,
    +0.71%
    edged 0.7% higher after reporting results that topped Wall Street’s forecasts.

    Companies across the S&P 500 are likely to report meager growth in profits for the fourth quarter from a year earlier, if any, if Wall Street analysts’ forecasts are to be believed. Earnings have been under pressure for more than a year because of rising costs amid high inflation.

    But optimism is higher for 2024, where analysts are forecasting a strong 11.8% growth in earnings per share for S&P 500 companies, according to FactSet. That, plus expectations for several cuts to interest rates by the Federal Reserve this year, have helped the S&P 500 rally to 10 winning weeks in the last 11. The index remains within 0.6% of its all-time high set two years ago.

    Treasury yields
    BX:TMUBMUSD10Y
    have already sunk on expectations for upcoming cuts to interest rates, which traders believe could begin as early as March. It’s a sharp turnaround from the past couple years, when the Federal Reserve was hiking rates drastically in hopes of getting high inflation under control.

    The Tell: No rate cuts in 2024? Why investors should think about the ‘unthinkable.’

    Easier rates and yields relax the pressure on the economy and financial system, while also boosting prices for investments. And for the past six months, interest rates have been the main force moving the stock market, according to Michael Wilson, strategist at Morgan Stanley.

    He sees that dynamic continuing in the near term, with the “bond market still in charge.”

    For now, traders are penciling in many more cuts to rates through 2024 than the Fed itself has indicated. That raises the potential for big market swings around each speech by a Fed official or economic report.

    Yields rose in the bond market after Fed governor Christopher Waller said in a speech that “policy is set properly” on interest rates. Following the speech, traders pushed some bets for the Fed’s first cut to rates to happen in May instead of March.

    On Wall Street, Boeing fell to one of the market’s sharper losses as worries continue about troubles for its 737 Max 9 aircraft following the recent in-flight blowout of an Alaska Air
    ALK,
    -2.13%
    jet. Boeing
    BA,
    -7.89%
    lost 7.9%.

    In energy trading, benchmark U.S. crude
    CL00,
    -1.55%
    lost 90 cents to $71.75 a barrel. Brent crude
    BRN00,
    -1.37%    ,
    the international standard, fell 78 cents to $77.68 a barrel.

    In currency trading, the U.S. dollar
    USDJPY,
    +0.44%
    rose to 147.90 Japanese yen from 147.09 yen. The euro
    EURUSD,
    -0.10%
    cost $1.0868, down from $1.0880.

    MarketWatch contributed to this report

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  • Global Risk Of Housing Bubbles Deflates Sharply [Infographic]

    Global Risk Of Housing Bubbles Deflates Sharply [Infographic]

    The global risk of housing bubbles has decreased sharply in 2023. A report released Wednesday by Swiss bank UBS concludes that out of 25 cities surveyed, only two were at risk of a housing bubble this year, down from nine each in the previous two reports. The data shows that even places known for their chronically high prices of housing exited bubble territory and were now merely classified as overpriced, including Tel Aviv, Hong Kong, Frankfurt and Toronto.

    UBS identified rising interest rates causing the end of cheap financing in the real estate sector for the change. Inflation-adjusted international home prices experienced the sharpest decrease since the 2008 global financial crisis as a result of these changes. The report states that especially the most unaffordable markets couldn’t take the added pressure from increased interest and slumped.

    Two cities most notorious for unaffordable home prices retained their bubble risk—Zurich and Tokyo. The leader of the list, Zurich, saw a slight decrease in its score, while Tokyo saw a slight increase. The Swiss market in general has not fully adapted to the changed market conditions yet, according to UBS. This also becomes visible in the virtually unchanged score of Geneva, which caused it to rise in rank opposite other cities where bubble risk decreased substantially. For Tokyo, the report cites the market’s defensive qualities which remain attractive to foreign investors.

    One way bubble risk can end as a result of interest rates giving prices another push is overwhelmed buyers pivoting back to the rental market, dampening demand and house prices in the process. This is especially likely in markets where renting is somewhat cheaper than buying. Another way a correction can take place is when cities have a lot of buy-to-let activity, which lost profitability in the course of rising interest rates. This can free up capacity in the housing market and also lower prices.

    Decline all around

    In some cities, the decline of housing bubble risk started earlier than 2023. Hong Kong, long listed among the top cities for housing bubble risk, decline to rank 5 in 2022 and rank 6 this year—exiting bubble territory faster than other cities. This is due to a compounded crisis of downward pressures not restricted to high interest, in this case demand gaps due to isolating Covid-19 restrictions, economic turmoil in Mainland China as well as an aging society.

    Miami remained the highest-ranked U.S. city in 2023—at a score of 1.38 rated just 0.13 index points below bubble risk territory. The city also saw only very slight changes from 2022—unlike other cities which are now found much lower down the ranking. Housing prices in Miami have continued an increase that is above the U.S. average. The relative strength of the city’s housing market can be explained by its comparably low income-to-house-price levels and population influx to the U.S. sun belt. New York and San Francisco are now found in the fair-valued category after experiencing Covid-19 and quality-of-life related deflators on top of pressure from interest. Los Angeles is the only housing market in the U.S. other than Miami that UBS views as overvalued, but it has also become more affordable since last year.

    —

    Charted by Statista

    Katharina Buchholz, Contributor

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  • With house prices this high, boomers may want to become renters

    With house prices this high, boomers may want to become renters

    If you’re a retiree and you’re trying to square the circle of rising costs, longer lifespans, more expensive medical care and turbulent markets, don’t be afraid to run the numbers on your biggest investment.

    That would be your home — if you own it.

    U.S. house prices are now so high that it is almost impossible for seniors not to ask themselves the obvious question: “Should we cash in, invest the money, and rent?”

    Right now the average U.S. house price is nearly $360,000. That’s about a third higher than just a few years ago, before the COVID-19 pandemic. The lockdowns, the panic, the stimulus checks and 2.5% mortgage rates have all passed into history. But the sky-high prices remain — for now.

    After several years of double-digit percentage increases, apartment-rent growth is falling for only the second time since the 2008 financial crisis. WSJ’s Will Parker joins host J.R. Whalen to discuss.

    At these levels, analysts at Realtor.com — which, like MarketWatch, is owned by News Corp.
    NWSA,
    +1.13%
    — say that in 45 out of 50 major U.S. metropolitan areas it is cheaper to rent than it is to buy a starter home. The Atlanta Federal Reserve Bank says national housing affordability is abysmal — about where it was in 2006 and 2007, during the big housing bubble.

    There is a similar story for seniors. Federal data show that the average U.S. house price is now nearly 17 times the average annual Social Security benefit — an even higher ratio than it was in August 2008, just before Lehman Brothers collapsed. At that juncture, the average house price was 15 times higher.

    U.S. National Home Price Index vs. average rent of primary residence in U.S. city, according to the U.S. Bureau of Labor Statistics. Indexed: January 1987=100.


    S&P/Case-Shiller

    Our simple chart, above, compares average U.S. home prices with average U.S. rents, going back to 1987. (The chart simply shows the ratio, indexed to 100.) The bottom line? House prices are very high at the moment compared with rents — again, prices are about where they were in 2006-07.

    And the two must run in tandem over the long term, because the economic value of owning a house is not having to pay rent to live there.

    If there are times when, in general, it makes more financial sense for seniors to rent than to own, this has to be one of those.

    Seniors who own their own homes may think high interest rates on new mortgages don’t affect them. They most likely either already have a mortgage at a lower, older rate or they’ve paid off their home loan. But if you want to sell, you’ll almost certainly be selling to someone who needs a mortgage.

    If borrowing costs drive down real-estate prices, seniors who hold off on selling may miss out on gains they may never see again. After the last housing peak, in 2006, it took a full decade for prices to recover fully. Those who sold when the going was good had the chance to buy lifetime annuities at excellent rates or to invest in stocks and bonds that overall rose about 80% over the same period.

    As I mentioned recently, there is a broad basket of real-estate trusts on the stock market that are publicly traded landlords. You can sell your home and invest in thousands at a click of a mouse.

    But should you?

    Incidentally, there is also an exchange-traded fund that invests in residential REITs, Armada’s Residential REIT ETF
    HAUS,
    -0.53%    ,
    though in addition to single-family homes and apartment-complex operators, about 25% of the fund is invested in companies involved in manufactured-home parks and senior-living facilities.

    For each person, the math will be different, and there are a number of questions you need to ask. Where do you want to live? How much would you get if you sold your house? How much would you pay in taxes? How much would it cost to rent the right place? Do you want to leave a property to your heirs? And what would be the costs of moving — both financial and emotional?

    The conventional wisdom is that you should own your home in retirement.

    “I would advise any and all retirees against renting if at all possible,” says Malcolm Ethridge, a financial planner at CIC Wealth in Rockville, Md. “You need your costs to be as fixed as possible during retirement, to match your income being fixed as well. If you choose to rent, you’re leaving it up to your landlord to determine whether and by how much your No. 1 expense will increase each year. And that makes it very tough to determine how much you are able to allocate toward everything else in your budget for the month.”

    A key point here, from federal data, is that nationwide rents have risen year after year, almost without a break, at least since the early 1980s. They even rose during the global financial crisis, with just one 12-month period where they fell — and then by only 0.1%.

    “My general advice for clients is that owning a home with no mortgage in retirement is the best scenario, as housing is typically the highest cost we pay monthly,” says Adam Wojtkowski, an adviser at Copper Beech Wealth Management in Mansfield, Mass. “It’s not always the case that it works out this way, but if you can enter retirement with no mortgage, it makes it a lot easier for everything to fall into place, so to speak, when it comes to retirement-income planning.”

    “Renting comes with a lot of risk,” says Brian Schmehil, a planner with the Mather Group in Chicago. “If you rent, you are subject to the whims of your landlord, and a high inflationary environment could put pressure on your finances as you get older.”

    But it’s not always that simple.

    “With housing costs as high as they are now though, renting may be a viable solution, at least for the moment,” says Wojtkowski. “We don’t know what the housing-market trends will be going forward, but if someone is waiting for a housing-market crash before they move, they could very likely be waiting for a long time. We just don’t know.”

    “Any decision comes with pros and cons,” says Schmehil. “Selling when your home values are historically high and renting allows you to capture the equity in your home, which is usually a retiree’s largest or second-largest financial asset. These extra funds allow you to spend more money on yourself in retirement without having to worry about doing a reverse mortgage or selling later in retirement, when it may be harder for you to do so.”

    Renting also allows you to be more flexible about where you live, for example nearer your children or grandchildren, he adds.

    And as any experienced property owner knows, renting also brings another benefit: You no longer have to do as much work around the house.

    “Renting is great in that you don’t need to maintain a residence,” says Ann Covington Alsina, a financial planner running her own firm in Annapolis, Md. “If the dishwasher breaks or the roof leaks, the landlord is responsible.”

    Wojtkowski agrees, noting that many people no longer want to spend time mowing the lawn or shoveling snow in retirement. “Ultimately, one of the things that I’ve seen most retirees most concerned with is eliminating the general upkeep [and] maintenance of homeownership in retirement,” he says.

    Several planners — including Covington Alsina and Wojtkowski — note that one alternative to selling and renting is simply downsizing. This can free up capital, especially when home prices are high, like now, without leaving you exposed to rising rents.

    Many baby boomers have been doing exactly that. 

    Meanwhile, I am reminded of my late friend Vincent Nobile, who — after a long and fruitful life owning homes and raising a family — found himself widowed and alone in his 80s. He rented a small cottage on a New England sound and said how glad he was that he never had to worry about maintaining the roof or the appliances, or fixing the plumbing or the heating, or any one of a thousand other irritations. Or paying property taxes — which go down even more rarely than rents.

    When the regular drives to Boston got too onerous, he moved into the city and rented there. And he was glad to do it. The money he had made was all in investments — a lot less hassle both for him and his heirs.

    I once asked him if he would prefer to own his own home. He shook his head and laughed.

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  • The Everything Bubble: Markets At A Crossroads

    The Everything Bubble: Markets At A Crossroads

    The below is an excerpt from a recent edition of Bitcoin Magazine Pro, Bitcoin Magazine’s premium markets newsletter. To be among the first to receive these insights and other on-chain bitcoin market analysis straight to your inbox, subscribe now.

    Powell’s Speech And Contracting ISM PMI

    We want to zoom out and revisit the broader macroeconomic picture and analyze some of the latest data that came out this week, which will heavily influence the market direction over the next few months.

    After Jerome Powell’s Brooking Institution speech, it’s clear that markets are chomping at the bit to move higher with any possible Federal Reserve narrative and pivot scenario. There’s over hedging, short squeezes, options market dynamics and forced buying. This is beyond our expertise to say exactly why markets are exploding with volatility on any given data point or new Powell speech. However, these types of events and market movements have nearly always been a sign of unhealthy and heightened volatile swings in bear markets. Despite more talk from Powell with nothing new really said, markets perceived the speech as more “dovish” with his commentary around the concern of overdoing rate hikes. Yet, if this is another bear market rally taking shape for the major indices, we seem to be close to that rally turning over yet again.

    Dylan LeClair And Sam Rule

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