The Looming Burst: Unraveling the AI Bubble Signals Economic Storm Ahead

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In the wake of the pandemic bubble, Wall Street and Silicon Valley created the AI bubble, now teetering on the brink of collapse. An intriguing theory suggests the call/put ratio might forecast market turns, and attention is drawn to the semiconductor market’s recent turmoil, especially its peak in July.

Notably, the sharp drop in the National Association of Homebuilders (NAHB) Index indicates declining consumer confidence, a classic lag effect. While the housing market currently captivates spectators, the broader population remains largely untouched by the tumultuous events of 2022 and 2023.

Furthermore, the OECD’s tracking of the US M3 money supply reveals a concerning trend—contracting since July 2022 and now 3.3% lower than a year ago. Similar patterns in 1993 and 1995, when the M3 never turned negative, were not accompanied by inflation concerns, raising alarm bells about the current economic climate. As the AI bubble faces its final stage, signs point to an impending storm on the economic horizon.

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