27) Something Wicked This Way Comes

Send us Fan MailSomething feels off when markets keep climbing while debt, inflation, and geopolitics keep flashing red. So I step back and name the black swan risks I think are building in plain sight, starting with a financial engine most people never talk about: the yen carry trade. When investors can borrow near 0% in Japan and pour that money into US Treasuries and equities, “free” liquidity doesn’t just boost returns, it can distort price discovery and push US stock market valuation into bubble territory. I walk through why that matters, where the hidden fragility sits, and what could happen if the trade unwinds fast.From there, I connect the AI boom to a more uncomfortable question: what if the biggest near term payoff from AI is payroll reduction? We look at huge AI data center spending commitments, the risk of overbuild, and the possibility of a cannibalistic loop where automation drives layoffs, layoffs shrink consumption, and shrinking demand pressures companies into even more automation. If the middle class is the consumption engine, what happens when efficiency targets the engine itself?We also zoom out to sovereign debt stress and money supply expansion, why long term bond demand matters, and why precious metals like gold and silver keep coming up as a hedge when currencies debase. Then we widen beyond finance into resource shock risks, private credit and commercial real estate “extend and pretend,” and the ultimate non financial black swan: disclosure and what it could do to trust, institutions, and belief.If this connects dots you’ve been thinking about, subscribe, share this with a friend, and leave a review. What black swan risk are you watching most closely right now? Support the showThey that seek shall find