Will the Stock Market CRASH Continue Next Week?
Overall Thesis
Bhakdi analyzes the recent AI/tech selloff driven by Fed rate-cut fears and AI bubble fears. He argues both are misguided: the market repriced Dec 9-10 Fed cut odds from 90% to 50% but Bhakdi thinks actual odds are 90% given unemployment weakening. AI bubble fears are 'one million percent' wrong - revenues and productivity are going through the roof. Expects clarification in next three weeks leading to a massive year-end rally.
Narratives
Bhakdi predicts a massive year-end rally once Fed clarity arrives and NVIDIA earnings crush bubble narratives. Market has mispriced Fed cut odds and misread AI as a bubble. Three weeks to resolve both concerns leading to year-end rally.
Key Arguments
- Market repriced Dec 9-10 Fed cut odds from 90% to 50%, down from 75%
- Three Fed members mentioned inflation concerns which drove the reprice
- Bhakdi estimates actual rate cut odds are 90%
- NVIDIA earnings next week will damper bubble theories
- Unemployment weakening gives Fed reason to cut
- Shelter costs down, 3% inflation unlikely to worsen
- Next 3 weeks will clarify and lead to massive year-end rally
Palantir got hit in the broad AI routing but this was not Palantir-specific. AI is not a bubble - Claude AI is already replacing financial workers at family offices, sovereign wealth funds, and banks, which is bullish for the organizational AI thesis Palantir leads.
Key Arguments
- Part of the core AI stocks that got hit in broad routing
- Claude deploying AI to replace all financial workers in family offices
- AI replacing 90% of workforce drives earnings through the roof
Tesla got hammered in the routing along with other high-growth AI stocks, but this was a Fed/AI-bubble driven broad selloff not Tesla-specific. Bhakdi urges long-term holders to survive without margin so they can benefit from the year-end rally he expects after Dec 10 Fed meeting. Tesla remains a strategic long-term asset.
Key Arguments
- Selloff was broad AI routing, not Tesla-specific
- Long-term Tesla holders win by default as long as they don't die (sell at bottom)
- Market misprices Fed rate cut odds at 50% vs actual 90%
- Year-end rally likely after Dec 10 Fed meeting
NVIDIA earnings next week will show the AI bubble thesis is wrong - they will make a complete killing. A positive catalyst that will damper bubble theories and support the year-end rally.
Key Arguments
- NVIDIA will make a complete killing in earnings next week
- We did not overvalue NVIDIA