r/investing Apr 27, 11:17 PM
You guys are completely ignoring the Iran conflict and data center circular funding. We're literally repeating 1999. Look, I feel like everyone here has completely lost the plot. The macro environment is flashing warning signs everywhere, but retail and institutions are just blindly buying the dip like the basic rules of finance stopped existing.
Look at the massive disconnect between equities, bond yields, and oil. The Iran conflict is basically a permanent supply shock in the Strait of Hormuz right now. Oil is structurally elevated, which mathematically guarantees inflation stays sticky. In a sane market, this pushes bond yields up and crushes equity multiples. Instead, the S&P is living in a fantasy land, trading at nosebleed valuations and totally ignoring the cost of capital.
But the real joke is the so-called "earnings growth" propping this whole thing up. It’s literal accounting gymnastics. Everyone is screaming about big tech revenue beats, but if you actually read the filings, it’s driven almost entirely by circular funding in data center buildouts. Big tech funds these AI startups, who then turn around and use that exact same cash to buy cloud compute and hardware from those same big tech companies. The hyperscalers book the revenue today and depreciate the capex over the next decade. This entire post was written by AI. You people are sheep. It’s just pulling earnings forward to mask the underlying cash burn.
If you were trading in 1999, you've seen this exact movie before. Back then it was telecoms laying miles of dark fiber and booking fake revenues through reciprocal capacity swaps. The current AI buildout is doing the exact same thing. We are currently observing a paradigm of interconnected, unsustainable growth metrics. It is highly probable that when capital velocity decelerates within this circular ecosystem, the resulting multiple contraction will be severe. Optimizing long-term returns requires remaining vigilant against these macroeconomic headwinds rather than extrapolating current corporate earnings into perpetuity. Stay safe out there.
submitted by /u/weightedslanket
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