"End of the World" feeling may come soon....

 

 

 

 

AI Job Displacement and the New Era of Jobless Growth

 

 

 

 

 

 

 

 

At a breaking point again

  

 

An Armageddon Moment for Software companies

 While the stock market is a sensitive indicator for changes in the short-term, the long-term fundamental changes are often first warned by the bond market. Here is one for the software sector, which may be on the edge of a total collapse in the near future. Be ware of it if you are heave in it in your portfolio!

 

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AI threatens to undo as much as a decade of software investments...

And private lenders could be stuck collecting pennies.

One lender has already hit the brakes. Marathon Asset Management is a major private credit lender. And as of June 2025, the company stopped lending to software companies altogether.

The reason is simple... AI is moving too fast for comfort. What seems like a good, safe deal today could be worthless tomorrow.

That even applies to software companies investing in AI. There's no guarantee those businesses will have an advantage tomorrow. A five-year loan assumes the borrower's product stays relevant long enough to keep renewing contracts and paying interest.

But in the age of AI, there's no guarantee. Features that used to take quarters to build are becoming simple prompts. The "stickiness" lenders used to underwrite is getting harder to prove.

Marathon CEO Bruce Richards framed it as a "Blockbuster Video moment" for software. He said we're seeing a wave in which business models either adapt quickly or get left behind... with near-zero recovery rates for lenders.

Today's tough environment could spell disaster for many creditors...

Throughout 2025, software loans largely matched the return of the overall loan market.

But those same software loans lost 2.5% in January alone... while the rest of the market was roughly flat.

Software loans are coming under pressure because of AI disruption. And financial-services firm UBS expects things to get much worse...

In its "aggressive disruption" scenario, UBS sees U.S. high-yield defaults reaching 4%. Defaults would jump to 13% in private credit.

That's Armageddon territory.

UBS also estimates that as much as 35% of the $1.7 trillion private credit market is exposed to AI disruption risk.

In other words, this isn't a niche problem confined to a handful of bad deals.

Creditors spent years giving cheap debt to software companies... and that system could be about to implode.

 Rob Spivey

 

 

 

This time feels different

  

 

 

  

 

Volatility has returned to the markets over the past few days. Particularly in technology. This is not tech-specific market volatility. What we’re seeing is a broad derisking/deleveraging of momentum trades. Investors are selling anything that’s moved sharply higher in recent months. This includes technology, precious metals, cryptos, copper, nuclear energy, satellites, and even industrial stocks.

At the same time, the broader market has remained surprisingly resilient. One of the clearest signals of this rotation can be seen in the Consumer Staples Select Sector SPDR Fund (XLP). This ETF holds defensive stalwarts like Walmart (WMT), Procter & Gamble (PG), and Coca-Cola (KO) – businesses with stable cash flows and steadily growing dividends. Even during the recent market pullback, XLP has continued to push higher.

Expect to see more volatility in the weeks/months ahead, especially for those who are using high leverage to trade. I heard some crypto platforms allow traders to control 50 Bitcoins ($3.5 million) with only $100 dollars.  This kind of insanity will of course wipe out people's money very quickly with any slight volatility. Don't be one of them!

 

The biggest IPO: SpaceX with merged xAI

 

 

 See the note from a trading guru:

The skies are cloudy at the moment. And, it sure “feels” like a storm is brewing. All the reasons to be cautious are still in place…

The yen carry trade is starting to reverse. Long term interest rates keep pressing higher. Gold and silver are in panic mode. VIX call option prices are at a large premium to put options. Bank stocks are lagging. High yield bonds are rolling over. The Supreme Court decision on tariffs could happen any day. 

While the market is quite volatile, we at DW Family are actually doing quite well with many profitable trades closed these days. Using options to bet with some low-risk trades, it is working very well. 

 

  

 

The market is vlunerable to a sharp downside turn

  

  

 

 

 

I got a call from President Trump!

 By now you must have known what has happened to Maduro over the weekend. 

President Trump called me before that to tip me for the upcoming operation, so that I got a chance to buy in advance a stock, one of few beneficiaries from this military action. I'm talking about CVX.

 

See what happened today to the stock price, a cheerful jump rarely seen for it in one day! 

 

    

As the result, my long-term calls for CVX have nearly doubled. Not a bad "inside trading" 😀😂 

  

 

 

 

 Of course, this is a pure fiction. Don't report me to the SEC!!