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*                       FIEND'S SUPERBEAR MARKET REPORT                     *

*                                December 4, 2025                           *

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*                       e-mail: fiendbear@fiendbear.com                     *

*                    web address: http://www.fiendbear.com                  *

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Fiend Commentary

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When the Boom Goes Quiet

Why great tech manias often end in falling prices—and what that would mean now.

Bubbles don’t just pop—they reverse the cash flows they created. The spending that drove prices up becomes the very thing that drags them down: capacity is built, debt is piled on, and expectations harden. When the funding tide recedes, projects pause, orders vanish, and the glut that follows pushes prices lower. That’s the deflation risk after the party.

 

We’ve seen this movie before

  • Canal & Railway manias: Britain’s late-18th-century Canal Mania and the Railway Mania of the 1840s both married real breakthrough technology to financial excess. The rails did change the world—but the financing frenzy collapsed first, starving projects of capital, crushing share prices, and spilling into a broader credit squeeze (commercial crisis of 1847). The longer shadow was a multi-decade period of falling prices across much of the industrial world, the backdrop to what we now call the Long Depression.
  • Telecom & fiber (1999–2002): The internet was real; the vendor-financed build-out was the problem. Carriers borrowed and pre-sold capacity into a demand curve that never kept up; when funding dried, equipment orders collapsed and bandwidth prices deflated into a glut. Investors learned that reality arrives with a lag, but cash interest is on time.

What rhymes today

  • AI’s capex sprint is tangible—but debt-heavy. Hyperscalers and “neoclouds” have been issuing large bond deals and forming JVs to fund GPU-centric data centers, even as the sector’s power needs climb sharply; global data-center electricity use is projected to roughly double by 2030. U.S. grid-demand forecasts keep getting revised up, and several tech names are already under scrutiny for balance-sheet strain tied to AI investment. Those are classic “late-cycle” tells.
  • History’s caution: Even transformative build-outs can overrun economics in the short run. Railway spending once consumed a startling share of national income before the crash; Breakingviews draws a direct parallel to AI’s capital hunger now. The risk isn’t that AI “isn’t real”—it’s that financing and timing are. When the cycle turns, capex pauses fast; prices for capacity, chips, and leases fall; and the deflationary drag shows up in margins and jobs.

What a post-bubble deflation path would look like

1.     Capex cliff: Announcements keep coming, but starts and orders slow first. Backlogs shrink; equipment discounts appear.

2.     Debt overhang: Cash flow misses collide with rising real servicing costs; credit spreads widen; restructurings start at the edges.

3.     Price cuts as survival: GPU rentals, inference pricing, and DC lease rates cut to fill; the revenue line disinflates even before demand does.

4.     Policy reaction: Easier money arrives late—supporting asset prices—but the real-economy drag persists as firms delever. That’s classic debt-deflation dynamics.

How to use this now (next 30–90 days)

  • Watch capex language (shift from “accelerate” to “sequence”). That’s your first tell.
  • Follow power & permitting—if supply bottlenecks ease, price pressure on capacity intensifies.
  • Credit > equity: Widening spreads in AI-exposed issuers are an early warning; upgrades/halts in bond calendars matter more than the next headline.
  • Inventory & used markets: Secondary GPU pricing and sublease activity will reveal demand realism before the P&L does.
  • Metals’ message: A calm hold near recent highs signals “policy credibility tax.” A sharp air pocket alongside wider spreads is your deflation scare.

My plain-English view: AI will change a lot; that is not the question. The question is whether the financing of AI has overshot the cash flows that can service it near-term. If it has, the first act after the peak isn’t inflation—it’s discounts. And discounts, across a leveraged build-out, are another word for deflation.

 

 

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