Is there another bubble? Warren Buffett's favourite gauge, market value against the economy, reads 219 per cent. The dot-com peak was 140.
Price tells you what, but never when. For when, watch music. Alan Krueger chaired the US Council of Economic Advisers, then spent his last years backstage writing Rockonomics. Music meets each new technology early, and unlike other industries it writes everything down. Cheap money had Hipgnosis bidding for song catalogues at 29 times earnings. Rates rose, the fund collapsed, Blackstone bought the wreck. That was 2023. Now more than half of everything uploaded to Deezer is AI generated, and almost half the catalogue gets under ten streams a year.
Five companies will spend roughly 739 billion dollars on AI capacity this year, betting the demand keeps growing. The demand for more music didn't. Meta, Oracle, xAI and Nvidia are getting creative with the accounting. Data centres on fifteen-year leases, chips that depreciate in four, customers who don't exist yet, all financed with debt nobody's balance sheet claims. If music is anything to go by, supply doesn't meet demand. How long can we keep that up?
🎵 Johnny Cash — Sixteen Tons A song about labour and demand, and the debt in between.
— Nicc