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:
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.
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.
