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Ripple Effect

Credit Markets Price in AI Buildout Risk

Loading ...Addison Wiggin

December 4, 2025 • 1 minute, 11 second read

CDS
Credit Markets Price in AI Buildout Risk

During the 2008 meltdown, investors were able to point to credit default swaps (CDS) as a sign of trouble. A CDS essentially looks at the cost of insuring a debt. In 2008, CDS values soared as stocks tanked.

Today, CDS are back in focus, helping gauge the risk value debt raised in the AI buildout. Consider the CDS for database giant Oracle:

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Oracle CDS are soaring. (Source:Bloomberg)

Oracle shares managed to pop higher on their AI investment plans over the summer – but quickly gave back those gains as investors digested the total debt the company was taking on.

The AI buildout and its rising costs are raising more questions than answers right now. The CDS market is heating up as a sign of trouble ahead. Keep your eyes peeled!

~ Addison

P.S.  Today @ 2pm EST/11am PST on Grey Swan Live! we’ll be joined by Bonner Private Research’s Dan Denning to unpack the Fed formally ending its Quantitative Tightening and planning to cut rates into inflation already at 3%.

Who’s  likely to benefit from an early “Santa Rally” when the Fed cuts rates on December 10, 2025?  And how you should position your overall portfolio to benefit from the economic incentives the Trump administration will put in place ahead of the 2026 midterms.

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If you have requests for new guests you’d like to see join us for Grey Swan Live!,  or have any questions for our guests, send them here.

Inflation Episodes, Act III: When the Fire Brigade Brings Kerosene

December 4, 2025 • Addison Wiggin

Today, the top 10% of earners account for half of all U.S. consumer spending. Rate cuts that boost stock prices inflate the purchasing power of the wealthy while widening the gulf for everyone else.

How does fattening the brokerage accounts of the top decile fix affordability?

It doesn’t.

But the Fed must cut because the bottom half of America is already showing signs of breaking. If the Fed doesn’t relieve debt pressure, the consumer cracks. If it does relieve it, inflation cracks upward instead.

Inflation Episodes, Act III: When the Fire Brigade Brings Kerosene
Dan Denning: The 2026 Battle Royale

December 3, 2025 • Addison Wiggin

Altman’s claim is that not only will people get more done with less with AI, they will be happier because their work is easier and…more fun. This follows a report from Anthropic, responsible for the Claude AI, that said AI increases productivity.

I will say I’m skeptical. But we’ve been told the nature of exponential change is that it comes at you faster than you can measure or observe. And if that is true, it will have consequences in 2026 for employees and investors. Big ones.

For employees–those who are not replaced by automated processes and robots–it will mean secure employment and higher wages. A small number of winners getting richer.

Dan Denning: The 2026 Battle Royale
The Inflation Episodes — Act II, Featuring Silver, Gold and Dollar 2.0

December 3, 2025 • Addison Wiggin

American consumers don’t feel – or are at least unaware of – monetary nuance. They’re just getting the bill.

Trump declared last night that “affordability doesn’t mean anything to anybody,” dismissing the term as a “Democrat scam”— this despite recently proclaiming
himself the “Affordability President” on Truth Social.

That’s the current state of political messaging on cost-of-living: part whiplash, part vaudeville. But voters aren’t confused. Grocery prices are still 30% higher than 2020. Tariffs add daily friction. Utilities, rent, houses, tuition, healthcare continue their daily grind upward.

The Inflation Episodes — Act II, Featuring Silver, Gold and Dollar 2.0
The “New” Contrarian Case for Bonds

December 3, 2025 • Addison Wiggin

During a Fed rate cut cycle, bond yields follow, which typically means bond prices tick higher. If you buy bonds now, you’ll be getting in ahead of the crowd.

And if this tech wreck shapes up anything like 2000-01, investors will want to get out fast. Despite the debt mess in Washington, bonds will again look “safe.”

One minor bonus: if you buy now, you’ll lock in higher yields before the next Fed rate cut, which is expected to come one week from today.

The “New” Contrarian Case for Bonds