Most of the news will say that AI spending and credit worries resurfaced – which is true. Oracle – the latest VIP member of OpenAI’s mega-deal circle – has now become the bellwether of AI credit risk, partly because it's spending billions financed by debt, and partly because it has weaker credit grades compared with Microsoft or Google.

And Oracle saw its 5-year CDS spike past 110 bps – the highest in three years. CDS stands for credit default swaps, an instrument investors buy to hedge against the risk of default by a company or government.

The higher the perceived risk of default, the higher the demand from investors, and the higher the price. I don’t want to bring this back, but Credit Suisse’s fall began in the CDS market.

Coming back to why market sentiment turned from euphoria to drama: a few reports and analyst comments on Nvidia’s own books started circulating yesterday, suggesting unease around two pressure points: swelling inventories and unusual patterns in deferred revenue.

People started pointing out that Nvidia has built up large stockpiles of chips – partly because demand is shifting toward its next-generation Blackwell platform, and partly because US export controls have left billions’ worth of H20 chips potentially unsellable, forcing a multi-billion-dollar write-down.

At the same time, it’s been flagged that Nvidia has been taking in hefty pre-payments from customers and then recognising those payments as revenue too quickly, before chips are delivered.

This is not illegal. It is a practice that can flatter near-term results but could leave a gap if future orders slow. And Nvidia may have done it to smooth out the avalanche of revenue it expects from Blackwell chip sales this year and next – Huang was talking about roughly $500bn in sales over that period.

But together, the inventory overhang and the fast-cycling deferred revenue fuelled concerns that some of Nvidia’s blockbuster growth may be front-loaded, with future quarters more exposed than the headlines suggest.

When you dig deep enough, you’re sure to find dirt. And people only start digging when they begin to feel uncomfortable — and that level of discomfort is rising. Market opinion is becoming increasingly polarised between those who scream that this is a bubble and those who are willing to keep running. I believe this dynamic will lead to heightened volatility and big moves. It will be fun.

Also, the delayed data out of the US looks mixed and confusing. The September jobs data – released yesterday – was not only old and dusty, but also somewhat mixed. The report suggested that the US economy added nearly 120k new jobs in September, far above the 53k expected by analysts.

The separate weekly report showed jobless claims falling to 220,000 – unexpectedly strong. That was the glass-half-full part. But the uptick in the unemployment rate to 4.4% and slowing wages were the glass-half-empty part – half-empty depending on whom, of course, since soft data fuels the Federal Reserve (Fed) doves and is often supportive for risk appetite.

But it didn’t yesterday. The data helped the Fed doves gain field, but the AI worries and Nvidia rumours kept the upper hand. The sharp decline in US 2-year yields and the improved chance of a December cut couldn’t talk the bulls in.

The good news is that Japanese yields are down from peak levels this morning – maybe inflation climbing to a 3-month high cooled the Bank of Japan (BoJ) doves. But it was hard to crack a smile out of SoftBank this morning: the shares tanked more than 10% and are down almost 40% since the October peak.

The crash in cryptocurrencies may be forcing investors to liquidate other positions – likely their tech bets. Bitcoin is testing the $86k level at the time of writing, and to be fair, there’s nothing to stop the fall given that we have no idea what a coin is worth – other than the value we collectively give it.

So the week will end in a worse dilemma than where it started. Nvidia couldn’t save the market. The Fed is still expected not to cut rates in December. Japanese yields kept pushing higher this week, and the 10-year JGB surpassed a critical level thought to trigger Japanese repatriation back home.

That’s roughly $3.4 trillion in overseas assets held by Japanese investors – from US Treasuries to tech and EM – that could, in theory, be pulled back home if domestic yields climb further. So the bubble talk is bubbling everywhere. The valuations are high, the problem diggers are out digging.

No one can tell if or when the balloon will burst or who will take the hit. And there is no guarantee that history will repeat itself. Yet comparing today’s prices to past cycles is always interesting.

Nasdaq, gold and Japanese assets show similar trends compared with the dot-com bubble, the gold boom of 1976–1982, and the Japanese bubble between 1986 and 1992. But today’s prices are not even halfway to the past peaks. Again, I can’t – and no one can – tell you whether this is going to be dot-com bubble 2.0 or Japanese asset bubble 2.0, but if history is any guide, bubbles tend to inflate well beyond what reason would suggest.

Remember: a financial bubble is not a bubble until it bursts.

On this note – I will leave it here and wish you a lovely weekend.