Episode summary
Collapse Of Tech? Rosenberg &. Bianco Debate AI Bubble, Soaring Bond Yields
The David Lin Report
· · 47 min · Hosts: David Lin · Guests: Jim Bianco, David Rosenberg
Summary
The discussion centered on whether the recent jump in yields and hotter CPI signal a renewed inflation problem or just another temporary shock. One guest argued that bonds still offer value around 5% yields, because the risk of further yield increases is limited unless the economy improves dramatically or oil surges. The other guest agreed bonds are more attractive than they were in 2020, but stressed that the public cares more about wages failing to keep up with prices than about any formal inflation target.
They also debated what the Federal Reserve should do in December. Both thought a 50 basis point move would be debated but that a 25 basis point hike was more likely, with the possibility of a hawkish tone and a sharper shift in dot plots. One guest argued the Fed is chasing lagging indicators and has already tightened financial conditions enough to slow growth, while the other said inflation has been driven by repeated shocks, not a permanently higher inflation regime.
The most contentious exchange was over AI and data-center spending. One guest said the AI boom is still early and may need new financing structures, but warned that the U.S. must keep building or risk ceding ground to China. The other warned the spending boom looks like the late-1990s telecom bubble, with overbuild, write-down risk, and GDP growth that could cool as fiscal support fades.
Key takeaways
- One guest said 5% Treasury yields still look like decent value because the downside from here is limited unless growth reaccelerates or oil spikes.
- Both guests expected the Fed to debate 50 basis points in December, but they leaned toward a 25 basis point hike with a hawkish message.
- One guest argued inflation is being driven by repeated supply shocks and that headline and core inflation have already fallen sharply from their peaks.
- The other guest said wages, not the published inflation rate, are the real source of public anger because pay has lagged prices since 2020.
- On AI, one guest said the U.S. must keep building data centers or risk losing the race to China, while the other warned the spending looks like a bubble with overbuild risk.
- Both guests favored a more balanced 2027-style portfolio posture, with bonds as a core holding and more caution toward expensive AI-related equities.
Notable quotes
“I am not a screaming I don't think they're cheap. I don't think that they're going to fall a lot in yield unless there's a dramatic change in the economy”
“Every technology ends in a bubble and this one will be no different than any other technology and so I agree there”
“I'm in the camp that we're still probably closer to 97 98 and we still got more to go before we eventually get to that complete overbuilt stage”
How the episode opens
We need to do this. Think we're going to run into problems that the Chinese are just going to take over. Every technology ends in a bubble. Now, the question is is how close are we to the bubble P? I'm in the camp that we're still probably closer to 9798.
Uh this is not 1997. By 1997, credit the fault swaps across the board, say for Microsoft right now, credit the default swaps in the AI space have tripled. That was not happening in 1997. This is something totally different. the stresses on cap leverage capex
Bonds now have value I saw as a lowrisk probability
Jim said bonds are not cheap bonds are cheap relative to equities yield for yield all right the 10-year yield uh is now in the US back near 5% the CPI that came out earlier this week headline rose 0.4% 4% in the month, hotter than expected. And meanwhile, uh, Fed Governor Christopher Waller says a halfpoint hike in December is warranted if the CPI is hotter than expected. What happens?
So, what's next for the bond market? What's next for equity markets? What's next for economic growth?
We'll discuss these themes today with our two esteemed guests on a wonderful panel that we've arranged for you guys. Uh, David Rosenberg, president of Rose Rosenberg Research and Jim Benkco, president and macro strategist at Biano Research. Gentlemen, welcome to the show.
Good to see you both. Thank you for being here.
Well, thanks for inviting us. — I'm aware you guys go back way back. So, uh, good to have you both on. I think first time holding a panel with both of you together. Jim, I'd like to start with you. You were both on the show last sometime around September.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- ai bubble
- bond yields
- federal reserve policy
- inflation outlook
- portfolio positioning
Watch the episode
Watch “Collapse Of Tech? Rosenberg &. Bianco Debate AI Bubble, Soaring Bond Yields” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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