What the hell is happening? August 2025
The AI stack is a reflexive loop. The debt is a flaming comet. And you’re still buying the dip? Thoughts on "Biden 2.0" and market scenarios for this term.
The divergence between markets and objective reality is getting wider.
Things could get interesting as we shift from a low preference of time to higher speeds — and possibly a market breakdown. Prepare for a scenario of this kind and resist being lulled by the current benign post-Trump environment.
This week, NFPs for June and May were revised down for a total of 250,000 jobs. The US economy is not as resilient as we thought. The Dollar and US treasury yields gapped down on the news.
The revised NFPs force a shift on the Fed’s stance regarding interest rates. A weakening job market with fading inflation means Jerome will probably cut in the next meeting.
The Fed Funds rate currently stands at 4.25% — by far the highest among its peers.
In the last issue of WTHIH (last issue, April ‘25) we talked about the collapse of monetary trust and the effects of this on the Dollar — and what this means for the global financial system configuration of the past century and how this affects Gold etc.
In this issue we have lots to talk about:
Trump 2.0 progress and thoughts
Biden 2.0 in terms of the Techno-Imperial Cycle
The AI-Big Tech Cycle with a discussion on Mag 7 names
Chatbot losses, hyperscalers and moving up the AI Stack
Thoughts on analogies with the 2008 crash and the economics behind both cycles
The risk/reward setup from here and thinking in terms of first principles
A discussion on geopolitics and the effects of Western isolationism
Monetary troubles and its effects on BTC. Last relevant piece here.
I will finish off with opportunities in non-overpriced, non-techy value stocks that have been shun by the marketplace
Relevant Reading
What the hell is happening?
During the months preceding Trump’s election we published numerous articles to tackle the matter from a number of angles — political, market-related etc.
Searching for Donald or Trump on Philoinvestor will get you all relevant content.
The point is, the theme was the same: We faded any idea that a Trump 2.0 could turn the debt problem around or spur a lasting bull market in the stock market.
Besides focusing on the Donald, we even wrote two pieces centred around star Treasury Secretary, Scott Bessent. We thought Bessent’s experience in markets and pupilage under Soros would give him a pragmatic and deep understanding of markets.
The reality was he drank the Kool-Aid at first — and is now probably just trying to survive as he realised he is cooked.
If you see any of this happening, please do let me know 👇
Where are we today?
Let’s put the big-picture back story to the side as we’ve covered it exhaustingly — and focus on the playing field.
What’s the risk/reward in stocks from here? What are the scenaria that could unfold?
…And can we use history to gain insights as to the future?