Why The Nasdaq Just Hit Correction Territory
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Welcome to Profty Markets. I'm Ed Elson. It is July 29. Let's check-in on yesterday's market vitals. The S and P five hundred and the Dow rose. Meanwhile, the Nasdaq declined as chip stocks got crushed. More on that in a moment. Brent crude declined to about $84 per barrel. The yield on ten year treasuries fell ahead of the Federal Reserve's interest rate decision due later today. And finally, SpaceX shares fell to a new low of $107 per share, down 52% from their all time high. Okay. What else is happening? The most important sector in the stock market is starting to fall apart. The tech heavy
The challenge at the moment is that the hyperscalers and those who are building the infrastructure, they are changing their financing, which used to be mainly from the equity side of the balance sheet to now being on the debt side of the balance sheet. And the amount of debt that has come to the market from the hyperscalers, meaning the companies that are building out the infrastructure, has just been enormous. So, as a result, we've seen very, very significant increase in supply of investment grade credit that is in the hyperscaler space. And the consequence of that is that we have started to
Yeah. Just looking at the price of those credit default swaps that you mentioned there, some companies whose credit default swap prices have hit record highs in recent weeks. Oracle, SpaceX, Google, Amazon recently, Nvidia. I mean, from your perspective, how dangerous is the debt situation in AI right now? How likely is it that some of these enormous names that have become so structural and so important to the market could actually go under in the next five years?
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