So, we're living in a time that might be

remembered as one of the biggest bubbles

in history. And that's because in the

next few weeks, your retirement account

and your 401k is going to be buying

shares in some of the biggest IPOs in

human history, even though you might not

want to. Okay, how's that going to

happen? It's going to happen because the

rules of the financial system were just

rewritten to make sure that your money

is going to be buying it automatically.

Now, this is actually more than just a

theory. Larry Frink from BlackRock,

which [music] is the biggest asset

management company in the world, said

that your retirement funds and pension

funds [music] will be used to build out

this AI infrastructure.

>> And so much of this money, not just the

project, is going to be coming from the

private sector, from savings accounts,

from pension accounts, from insurance

companies, and on and on and on.

>> So, let me explain how this is going to

happen. In the finance world, there's a

concept called the IPO or the initial

public offering. That's when a private

company goes public, right? It's when

investors all around the world are

finally able to buy shares and invest in

a company. And one of those companies

that's going public soon is SpaceX. And

the value of that company is going to be

$1.75 trillion. Now, to put that number

in perspective, it would make SpaceX on

day one more valuable than every

American defense contractor combined. It

would also be the biggest IPO in human

history, even bigger than Saudi Aramco,

which held that record since 2019. The

difference though is that Saudi Aramco

was the most profitable company on the

planet when it listed. But SpaceX lost

$5 billion last year. Now, the craziest

part about all of this though is that

the financial rules that are supposed to

protect us from buying these overpriced

investments at the wrong time were also

just changed right before these IPOs.

That's because on May 1st, the NASDAQ

introduced something called the fast

entry rule, which cuts the waiting

period for a company to be included in

an index from 3 months to just 15

trading days. And what it also does is

it gets rid of something called the

float requirement that would have

disqualified SpaceX, for example, from

being included. The rule change will

also force index funds to artificially

inflate how much of the company they'll

have to buy. So, what we now have is a

handful of insiders that got in really

early at low prices and now they need to

exit. And to exit, they need buyers.

They need a lot of buyers. buyers that

are going to absorb trillions of dollars

worth of stock at peak values so that

the insiders can walk away. But finding

enough of these buyers for the biggest

IPOs in history is going to be really

hard unless you change the rules.

[music] Which means now your 401k might

be the exit liquidity they need. Now the

story gets even crazier because SpaceX

is just the first company in line, but

right behind it is OpenAI and Anthropic.

They're doing their own IPOs and going

public. So, we'll have three companies

with a combined valuation of about $4

trillion.

So, SpaceX, OpenAI, and Anthropic would

leapfrog every other company in America,

basically on day one. And that's why

some people are saying that this is

going to be a bubble the likes of which

we have never seen before, and we're all

going to fund it with our own retirement

money. So, in today's video, I want to

show you how this is all going to work

and the accounting trick they're going

to use to make this AI boom look a lot

more profitable than it really is

[music] and what you might be able to do

about it. So, with that said, let's get

into it. Hi, my name is Andre Jick. Hope

you're doing well. Come for the finance

and stay for the AI bubble. So, first I

want to explain exactly how your money

is going to end up buying all of these

IPOs. This is why the financial

industrial complex is as powerful as it

is. Because they control the flow of

capital, aka the flow of where money

goes. Here's how. There's something

called the NASDAQ 100. It's basically

the gold standard index for tech

companies. It tracks the top 100 tech

stocks. There's over $600 billion worth

of investment products that track this

stuff. Meaning when a company gets added

to the NASDAQ 100, every single one of

these funds that tracks the index is

forced to automatically buy that stock.

And they don't get a choice or a vote in

this. And that automatic buying is worth

billions and billions of dollars in

demand for whichever company gets added.

So getting into the NASDAQ 100 is like

being given a money printer cuz the

moment that company is included, they

get access to hundreds of billions of

dollars in passive investment flows that

has to buy their stock whether they want

to or not. Now what's most interesting

though is that the rules around getting

into the index just changed on May 1st.

The NASDAQ introduced something called

the fast entry rule and it changed three

things. First, it changed something

called the waiting period because before

a new company had to wait until the

NASDAQ's next yearly review before it

could be added, and that could take up

to a year. The fasttrack entry rule cuts

that down to just 15 trading days. Now,

the second thing it changed was

something called the float requirement.

A float is the percentage of company

shares that are available for the public

to buy and sell. So for example, if I

was a company and I had 100 shares in

total, but only 10 were available for

people to invest in, my float would be

10%. Okay, but in the old rule, the

NASDAQ wanted a minimum 10% public float

to even qualify for an inclusion into

the index. But SpaceX is planning to

list with a float of around 4 to 5%. So

under the old rules, that would be an

automatic disqualification. Now the

third change is a hidden multiplier

right and what that means is for any

company listing with a float less than

20%. The NASDAQ now artificially

inflates how the stock is weighed in the

index. So a 4% float gets treated as if

it were 12%. A 5% float is treated like

15%. So this multiplier is now 3x, which

means index funds are now legally

required to buy more stock than the

actual available supply would normally

justify. Now, what's important to

understand here is that the NASDAQ

didn't just write these rules for SpaceX

specifically. [snorts] They wrote them

for a whole class of companies and

SpaceX just happens to be the first in

line for these IPOs, but right behind

them is OpenAI and Anthropic, and

they're planning to do their own public

listings. So, just three companies that

are going public are going to be

potentially funneling as much as $4

trillion worth of newly issued stock

into passive retirement accounts within

a couple months of each other. And the

NASDAQ, by the way, is not alone. The

FTSE, Russell, another index is doing

the same thing. They are allowing the

index inclusion after just 5 days,

right? S&P is doing the same thing. So,

what we have is every major index

provider is racing to update their rules

at the same time. Now, you could look at

this and say, okay, well, maybe the

rules needed updating. Maybe the system

just needed a firmware upgrade. Maybe.

Some people say though that the timing

of all of this is just very suspicious

because every single one of these rule

changes was announced just weeks and

months before the biggest IPOs in human

history. Right? All of these companies

are being listed within just months of

each other. So that is the mechanism of

how your retirement account will end up

owning SpaceX, OpenAI and Anthropic

whether you want to or not because the

rules are changing to accommodate them.

So now the question is well why are they

trying to force everyone to buy these

companies and why right now? Now

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for sponsoring this segment. And now,

let's get back to it. Okay, so why are

they trying to get everyone to buy these

IPOs? And the basic answer is that these

companies need to sell trillions of

dollars worth of stock. And the only

buyer that's big enough to absorb that

much supply is the passive investment

complex. the trillions of dollars that's

sitting in our 401ks and index funds

across the whole country because

remember passive investors don't choose

what they buy. They just buy whatever

makes up the index. So if you want a

guaranteed demand for your IPO, you

don't go to the investors and try to

pitch to them. You just try to get into

the index. But if the rules say, well,

you don't qualify for the index, you

change the rules, right? That is the

name of the game. But for this game to

work though, they need something else.

They need an epic story, right? They

need a dream because investors love to

buy the dream. And SpaceX has one of the

best dreams ever told. Because if you

ask anyone on the street what SpaceX

does, most people will probably tell you

something about rockets, right? maybe

going to Mars, maybe Elon doing

something crazy. Most people's

perception is that they're trying to

make humanity become a space exploring

civilization, and that is worth a lot of

money. But behind this dream, SpaceX is

actually made up of three completely

different businesses. There's the rocket

business that's made up of things like

government contracts, NASA missions,

reusable rockets, and last year they did

around $4 billion in revenue. That's a

lot of money until you realize that's

only about a quarter of the company's

total business. The second business is

Starlink, which is that satellite

internet provider. They have 10 million

subscribers across 150 countries and

they made 11.4 billion in revenue with

63% profit margins. It's all really

impressive. So Starlink is actually

genuinely doing really good. And if all

SpaceX was Starlink and these reusable

rockets, then maybe this is a completely

different story. But there's a third

business and that business is losing a

lot of money. It's called XAI, Elon's

artificial intelligence company. But

that company burns over a billion a

month. So when you look at SpaceX and

the three separate companies that it is,

the overall picture is that SpaceX

actually lost $5 billion last year. So

Starlink makes money, right? Rockets

make money and then XAI kind of like

lights it on fire. So what you're

actually being asked to buy right now at

1.75 trillion is all of that bundled

together at the biggest IPO values in

human history. And the only reason that

might not sound crazy to some people is

because they believe in the dream,

right? Which is this AI boom and the

artificial intelligence is going to

change everything and make everything

grow forever and ever, right? Maybe,

right? But some people say the problem

with that dream is that if you look at

the math, it just doesn't make any sense

right now. Now, so far I've explained

the mechanism of how your money will get

funneled into these IPOs automatically

and maybe how they might not be worth

that much, but what I haven't explained

is why are these companies trying to go

public specifically right now? So, one

of the best theories I've been able to

find about why they're all trying to go

public right now is because this whole

debt based AI boom, right? The trillions

of dollars in valuations and the record

profits that are in the headlines about

tech companies printing money, a big

part of this is sort of an illusion.

It's a paper illusion that is built on

an accounting trick where money is

passed from one company to the next to

the next and back to that same company.

Right? which artificially increases how

much money it looks like they're making.

Now, that strategy works for only as

long as the markets stay strong. But

remember, there's also a geopolitical

context to consider and what's happening

in the Middle East because the longer

they wait, the more likely that the

financial markets could break by the

reality of the supply chains. So, they

need to move fast. They need to pump up

the value as high as possible and get as

many people to buy it. So, let me just

give you an easy example of how they're

pumping this. And then we'll get into

the specifics. But imagine I lend you

$100, right? And then you use that $100

to buy a Pokémon card. That card goes up

in value $1,000. I then get to write

down on my tax return that I made $900

in profit, even though I never sold

anything. Even though that $900 exists

only on paper. And then I use that paper

profit to justify lending you another

$5,000 to buy even more cards, right?

That is roughly a simple way of

explaining what's happening between all

these tech companies. So, let me show

you. A group of analysts at the

Financial Times looked at something

called the capex, which is capital

expenditure. a fancy way of saying how

much money Microsoft, Google, Amazon,

Meta, and Oracle are planning to spend

on building out AI infrastructure

between now and 2030. And then they

looked at how much revenue those same

companies are expected to make from

those investments over the same time

period. And so they asked, okay, are

these companies going to make more money

than they spent? And the answer for

almost every single one of them was no.

Under the most generous assumptions

possible, assuming zero costs, no

salaries, no electricity, no overhead,

nothing, Microsoft's implied return on

its AI investment was 9.2%. Google was

negative 15.7%. Meta's negative 28.8%.

Oracle's negative 35.6%.

The only company that clears it into

positive is Amazon at just 7.2%.

These aren't worst case scenario

numbers. Remember, these are the best

case numbers, assuming it costs these

companies literally nothing to build and

run their AI infrastructure. They all

still lose money. Now, let's look at how

they're funding all of this. Where do

they get the money to do this? This year

alone, those very same companies have

issued over $150 billion in what are

called corporate bonds to fund this AI

spending. Now, to put that in

perspective, that is more than double

what they were doing just 2 years ago.

And look what's happening to what's

called their free cash flow. As a

result, Microsoft, Meta, Google have all

seen their free cash flow margins, which

is the actual money left over after

spending, collapse towards zero when you

account for their AI capital

expenditure. JP Morgan's analysts are

projecting that by 2027,

several of these companies will have

negative free cash flow, meaning they

will be spending more than what they'll

be bringing in. from companies that were

just a few years ago the most profitable

businesses in human history. But it gets

crazier. On the other side of that

spending, look at who they're spending

it with. It is all with each other. Open

AAI has committed 280 billion to

Microsoft and 138 billion to Amazon.

Anthropic committed 30 billion to

Microsoft and 100 billion to Amazon. In

total, OpenAI and anthropic spending

commitments represent roughly half of

Microsoft's entire revenue backlog. 54%

of Oracles, 51% of Amazon's. So, what

you actually have is a system where big

tech invests into AI startups. The AI

startups then use that money to rent

computing power back from big tech. Big

tech books the investment gains as

profit and then uses that profit to

justify spending even more. The money is

mostly going in a circle. Michael Bur's

company recently did a deep dive on this

exact thing. And the circle only keeps

spinning as long as everyone sort of

agrees about the valuations which sort

of brings us back to the IPO. The second

these companies go public, the

valuations stop being whatever just a

couple investors decided they were in a

private funding round, right? They

become whatever the open market decides

they're worth. And if those numbers come

in lower than what Google and Amazon

have been booking as profit, then those

profits have to get revised, right? The

earnings that justified the stock prices

get revised downward and then the whole

loop goes in reverse, right? So this

theory says that is why the timing of

all of this is so important to them.

That's why they changed the rules. That

is why there's such an urgency to get

these IPOs to go public as fast as

possible. They need these IPOs to

validate the paper before the paper runs

out or gets exposed by some conflict in

the Middle East. So now the question is,

well, has this happened before in

history? And what happened to the stock

market? Turns out it has happened

before. Now there's a famous saying in

the investment world that says history

doesn't repeat itself, but it rhymes. So

it might not happen the same way again,

but this has happened before and it did

not lead to good things. There's a chart

from the Financial Times that I think is

really interesting. It shows the

biggest, most hyped, most culturally

significant IPOs in American history

against the S&P 500, aka the stock

market. It shows companies like Xerox

went public when investors were

desperate to own it and then the market

peaked right after. Ford went public

when investors were desperate to own it.

Right? The market peaked right after.

McDonald's, Apple, Goldman Sachs,

Blackstone, every single one of these

companies went public at the same moment

when public excitement about owning them

was at the highest point. And in almost

every single case, the market peaked

right after. That's because the IPO is

rarely about the company needing money,

right? It's almost always about the

seller needing a buyer. And the best

time to find a buyer is when everyone

wants what you're selling. And that

brings us to right now. By the time

SpaceX, OpenAI, and Anthropic complete

their IPOs, they will have raised as

much money as all the 300.com IPOs from

the year 2000 combined. and that's

adjusted for inflation. That is

unbelievable. Now, a lot of people have

said that the AI boom is nothing like

the.com bubble. And they do have a point

cuz one of the classic signs of a bubble

is when values get completely

disconnected from reality. That's when

something called the PE ratios, the

price to earnings ratio goes up really

fast, right? And companies start trading

at hundreds of times what they make

without any profit. And by that measure,

the AI boom looks different. The PE

ratios of most of these companies are

not that insane. The valuations look

kind of reasonable. But that's what

makes maybe this bubble more dangerous

than any other one. Because according to

BCA research, for example, the AI bubble

is not a valuation bubble. It might be

what's called an earnings bubble.

Earnings bubbles are much harder to see

coming. What's the difference? In a

normal bubble, the stock price goes up

while the earnings of the company stays

flat. So, the price to earnings ratio

goes up really fast with no correlation

to its earnings. But an earnings bubble

like this one might be. It's that the

earnings themselves that are inflated,

right? The price to earnings ratio can

still stay low and look reasonable. And

that's because it's that E, right? the

earnings number. That's what's being

artificially propped up, which is

exactly what could be happening with

that accounting trick we talked about,

right? The paper gains from anthropic

investments are inflating the earnings

of Google and Amazon, and it's making

their PE ratios look healthier than they

might actually be. And history has a

very clear track record with earnings

bubbles. It happened with homebuilders

before 2008. Their PE ratios looked

reasonable right up until the moment

they didn't. It happened with banks

before the financial crisis. Perfectly

healthy earnings numbers right until the

earnings themselves were shown to be

built on assets that were worth a

fraction of what they were being carried

at on the books. And the theory is that

it's happening right now with

semiconductors. Look at this chart.

Global semiconductor sales have gone

completely parabolic. A straight

vertical line up, right? And every time

in history that semiconductor sales have

looked like this, what followed was a

very brutal earnings collapse. In almost

every historical case, the stock price

peaked before the earnings did. Which

means by the time the earnings started

going down, the stock had already been

dropping for months and nobody had

connected the dots yet. Look at Nvidia

for example. In December 2001, Nvidia

peaked and then went down 83% before

earnings caught up. In November 2021, it

peaked and went down 53% before earnings

caught up. There's Micron, Intel, the

S&P 500 tech sector. The same pattern

repeats across every single

semiconductor cycle in modern history.

The stock sort of always knows before

the earnings do. And right now,

something very weird is happening in the

broader market. That suggests that the

stock market might already be starting

to know. The S&P 500 has just hit four

consecutive record highs on what's

called negative market breadth. Meaning

the index keeps going up, but more

stocks are actually going down than

going up, right? The gains are being

driven by just a handful of the very

biggest companies while everything else

is just deteriorating. And according to

the data, this has literally never

happened before in market history. Four

consecutive record highs with negative

breadth. This just basically means the

S&P 500 as an all-time high and it's

kind of hiding what's actually

happening. And what's happening is a

market that is concentrating. It's

becoming more and more dependent on a

smaller and smaller group of companies

to hold the whole thing up. And here's

exactly what that looks like. By the

way, right now AI related stocks make up

almost 49% of the whole S&P 500's market

cap. 41 stocks out of 500, about half

the entire index. Which means if

anything goes wrong with AI, it won't

just hurt tech stocks. It will hurt

retirement accounts. And that's because

almost 50% of our retirement accounts is

essentially a bet on AI right now if

you're in these indexes. Right? These

are the same companies, by the way, that

are about to be joined by the three

biggest IPOs in history. So, let me tie

all of this together and give you the

big picture of what's happening. So far,

the US personal savings rate just hit

2.6%. And that's the lowest that it's

been in 4 years, which means the average

American almost has nothing left in

reserve. And also, the real wages are

going down. The bottom half of the

consumer economy is already in distress.

In fact, what's mind-blowing is that the

top 10% of earners right now are the

only reason the economy is not in a

recession. The top 10% of spenders are

holding up half of the economy. Now,

here's another chart that shows exactly

why it's happening and why it's probably

going to get worse. Corporate earnings

are going up, which is good, but workers

incomes are not. They're flat and that's

not good, right? The gap between those

two lines is AI. Remember when companies

were laying people off and telling us

it's because of AI? That's why that gap

is there. Companies are automating their

way to higher profits while the people

who work for them are starting to make

less and less. One researcher said, "At

the limit, firms automate their way to

boundless productivity and zero demand."

Right? Think about this passive

investment money that SpaceX and OpenAI

and Anthropic are counting on to buy

their stock. That only exists as long as

American workers have paychecks to

invest that money every 2 weeks. Right?

The moment that AI displaces those

paychecks, the very thing that these

companies are exploiting, well, that

starts to get smaller. there's less

money for them because they got rid of

their own workers, which is another

reason why this window might be closing

and why these companies want to go

public right now. But remember, there's

also the straight of her rem. It's been

closed for 3 months due to the Iran war.

Exon Mobile's senior vice president went

on stage at a conference in New York and

said that oil inventories are going to

hit critically low levels within the

next 2 to 3 weeks. And when that

happens, the price of oil goes up. His

estimate was $150 to $160 a barrel. If

that happens, that would mean every

country that imports oil, which is most

of them, they'll suddenly need a lot

more dollars to pay for this oil. And

when countries need their dollars fast,

where do they go to get them? They sell

whatever dollar denominated assets they

own. And the biggest dollar denominated

assets most countries hold are US

Treasury bonds. So they sell US

treasuries. And when you sell

treasuries, interest rates go up because

the US needs more buyers. And the way to

get more buyers is to tempt them with

higher interest rates, right? But when

rates go up, borrowing gets more

expensive for everyone, for governments,

for companies, for consumers. Here's a

chart from FFTT. Since the beginning of

the Iran war, wherever oil goes,

Treasury yields follow almost perfectly,

which means if Exxon Mobile's right

about $150 oil coming in the next few

weeks, Treasury yields are likely going

to levels that start breaking things.

And we're kind of starting to see the

early signs of that. Emerging market

countries sold US treasuries in March at

the fastest rate since at least 2023.

27 countries have approached the World

Bank looking for emergency crisis

funding. Global bond yields are breaking

out of multi-year consolidations across

the US, UK, Germany, Japan, and Canada.

And sitting right in the middle of all

of this is the new Federal Reserve

chairman Kevin Worsh, who remember was

hired by President Trump to lower

interest rates. except the market right

now is predicting that interest rates

will go up. For the first time in four

years, the two-year Treasury yield is

above the federal fund rate, which is

basically the market's way of telling

the Fed it should be increasing interest

rates, not lowering them. But if Kevin

Walsh lowers interest rates into an

inflation spike when oil is going up,

right, then the dollar falls, inflation

gets worse, and bond yields go up even

higher as more countries and investors

lose confidence and sell more of their

US bonds. But if he increases interest

rates, the stock market drops because

corporate borrowing costs go up. And

this whole AI spending boom that's been

holding up 93% of US GDP growth now has

a much higher cost of capital. Right?

Either way, it looks like yields are

going to go up and higher yields are the

one thing that could pop everything

we've talked about like all the paper

profits and the circular spending and

the $150 billion in corporate bonds that

all these companies issue to fund their

AI spending, right? All of it gets more

expensive and it comes under pressure

right at the three biggest IPOs in

history. So that is the macro big

picture reason for why they might be

changing these rules right now because

the window might be closing and maybe

the people on the inside kind of know

that. Okay. So how do you make money or

at the very least not lose money in that

case? because I don't want you to walk

away from this video thinking that

investing is bad or that SpaceX or AI is

a fraud or a scam or that technology

doesn't work. Right? It does work and I

think Starlink is genuinely one of the

most amazing things that's been built in

the last decade and AI is real and it is

going to change the world in the next

century. But I also think there's a big

difference between a technology winning

and investors winning. Right? Those are

two completely separate things and we

have a lot of historical examples of

this. Like in the late 1800s, for

example, the railroad boom changed

America forever. Railroads connected the

whole country and they expanded commerce

at a scale that was impossible before.

They transformed things like agriculture

and manufacturing, supply chains,

everything. The technology was real and

the railroads are still here today. But

almost every single investor who funded

the railroad boom got wiped out. Those

companies went bankrupt and their stocks

collapsed. Right? The people who built

the railroads lost everything. But then

a new group of investors came in. They

bought the same railroads out of

bankruptcy at pennies on the dollar and

they made fortunes. The same thing

happened with the fiber optic cable boom

of the 1990s. Hundreds of billions of

dollars were spent laying cable across

the whole country and under the ocean.

Right? The companies that laid it though

went bankrupt in the dotcom crash. And

then a decade later, that same fiber

optic infrastructure became the backbone

of the internet. That's how you're able

to watch this video right now.

Technology won, but the initial

investors lost. And it was the people

who bought those assets afterward that

built the world we live in today. That

has always been the pattern. And that

pattern is what I think will most likely

happen with AI. I think it's the initial

investors, the people buying at $1.75

trillion valuations, the passive funds

that are forced in by these rule

changes. They're going to absorb any

potential losses. the technology itself

will keep on evolving and a new group of

investors will pick it up at much lower

prices and they'll build the next era on

top of it. Okay, then so what do you

actually do with this information? And I

think the first thing is just understand

what your index funds actually own

because then the next few weeks they're

going to own SpaceX and after that open

AI and anthropic at values that history

suggests is extremely unfavorable entry

points for passive investors. Now I'm

not saying you should sell everything,

but you should know what you own and

why. The second thing you might be able

to do is actually know where your money

should be invested right now to protect

yourself against all the possible

outcomes because maybe none of this

matters. Maybe it's not a bubble, right?

Maybe the IPOs will go great and Kevin

Worsh might thread the needle at the

next Fed meeting. Hermuse might reopen

next week. The AI boom might generate

returns that justify all the money

that's been spent. History might not

rhyme this time. Maybe. For me

personally, I just like to think that

the job of investing is not for me to be

right about a specific thing. The job of

investing is to put my money into

multiple outcomes cuz no one knows

what's going to happen based on their

probabilities of happening. Now, if

you're interested in seeing how I'm

preparing and how I'd like to invest,

those videos live in the premium member

section where you'll also get access to

my main videos earlier. And if that's

valuable to you, the link is down below.

It allows me to make more videos like

this one and take on fewer sponsors.

Thank you so much for watching this

extremely long video and being a member.

I hope you have a wonderful rest of your

day. Smash the like button. Subscribe if

you haven't already. I'll see you next

week. Bye-bye.