"CIRCULAR FINANCING" - AI Debt Web Exposed, Opposite Day Market

 

📊 Market Sector Tracker - Gary Kaltbaum's "Investor's Edge"

Tracking leading/lagging sectors, top stocks, and market positioning

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📅 Tuesday, November 18, 2025

"CIRCULAR FINANCING" - AI Debt Web Exposed, Opposite Day Market

Market Action

• Dow: -498.5 points
• S&P: -55 points
• NASDAQ: -275 points
• NASDAQ 100: -196 points
• BUT: Breadth POSITIVE on both NYSE and NASDAQ (!)
• Russell 2000 (small caps): UP
• Mid caps: UP

"Opposite Day": Big tech crashed while broad market was green. Gary explains: "Technology has taken over the big indices in a huge way. If they have a bad day, but rest of market have a good day, market's still going down because of how big they are." His middle screen was GREEN except semis, but indices all down big.

Dow Concentration Example:

• Amazon: 65 Dow points
• Microsoft: 85 Dow points
• NVIDIA: 35 Dow points
• Home Depot: 21 Dow points
• Total: ~145 Dow points from just 4 stocks (out of 498 total drop!)

Leading Sectors 🟢

Today's Bounce (But From Weakness):

1. Food/Beverage/Tobacco - Up today
2. Insurance - Bounced
3. Financials - Bounced (but Gary notes: "go look at MasterCard and Visa stock. Gives me pause.")
4. Restaurants - Couple up (but been bludgeoned)
5. Some Lesser Tech - Up today (mixed)

Lagging Sectors 🔴

Big Tech Carnage:

1. Semiconductors - Down 154 points
2. Mega-Cap Tech - See individual stocks below
3. Home Improvement - Home Depot disaster

Leading Stocks 🚀

Nothing Notable - Defensive Bounce Day

Lagging Stocks 📉

Big Tech Destruction:

• Microsoft - -$14
• Costco - -$17
• Amazon - -$10+
• Tesla - -$7+
• Home Depot - -$21 (worsening outlook, $160B revenue company, Lowe's will follow)

Semiconductors Crushed:

• Micron - -$13
• SanDisk - -$20
• AMD - -$10
• ASML - -$16
• KLAC - -$10

Netflix Split Note:

• Up $3.80 today = $38 pre-split (just did 10-for-1 yesterday)

No-Sales Bubble Update (Still Popping):

• OKLO - 193 → 96 in under 5 weeks (down 50%)
• LAC - 10.5 → 5 (down 50%+)
• BMNR - 161 → 32 (was 65 in early Oct, down 50% from there alone)
• USA Rare Earth - 44 → 15 (still $1.2B market cap with NO sales!)
• Critical Metals - 32 → 8 (but was $1 in May - SPAC)
• Gary: "Those bubbles popped. When we say go back where it came from, the stock traded between 10 and 20 for nine months before it went to 44 bucks. It's back to 15."

Gary's Positioning 💰

• Mostly ETF bound last few weeks - "Still been a pain"
• Not touching anything trading below support
• Avoiding CoreWeave, Oracle, others with debt concerns
• Watching NVIDIA earnings tomorrow after close
• "Always optimistic but more realistic"
• "One of the trickiest markets I've seen in a very long time"
• Note: Adam doing show tomorrow (Gary hosting Boys & Girls Club Thanksgiving dinner Nov 23/24)

Crash/Correction Outlook 🎯

Gary exposes the circular financing/vendor financing web in AI: "One's buying into the other who's gonna buy into each other?" CoreWeave spending $310M on interest against only $52M operating income, borrowing money to pay interest on previous loans, while its three major customers (Microsoft, OpenAI, Meta) are all building their own facilities to compete. NVIDIA is CoreWeave's investor, customer AND vendor. Oracle mystery: announced "monstrous numbers" but stock 345→220. Data centers standing empty. NY Fed convened meeting with banks about money market strains. Gary's watching what institutions DO tomorrow on NVIDIA earnings, not what they SAY. "Do I think we've popped the whole AI thing? I think there is something... I think something's up."

Key Observations 💡

CoreWeave Debt Web Exposed:

• Stock: 185 → 75 (down 60%+)
• Bonds: Triple C's, dropped $105 → $95 (due 2030, paying 9.25%)
• Interest Expense: $310M vs only $52M operating income
• Borrowing to pay interest on previous loans (!)
• Microsoft: 67% of revenue BUT building own AI chips/data centers
• OpenAI: $22B contract BUT can terminate if not delivered
• Meta: $14B contract BUT sold $30B bonds to build own facilities
• All 3 major customers could become competitors
• NVIDIA: Is their investor ($4B in shares), customer AND vendor
• Gary: "The company is building data centers for customers who are simultaneously building their own facilities to compete with them"

Anthropic Circular Financing:

• Committed to buying $30B of Azure Microsoft compute
• Microsoft investing $5B in Anthropic
• NVIDIA investing $10B in Anthropic
• Gary: "Wait a minute here. One's buying into the other who's gonna buy into each other?"
• "We've been talking about this circular financing. Vendor financing."

Other AI Red Flags:

• Oracle Mystery: "Monstrous numbers" announced, 345 → 220 - "How could that be based on their numbers?"
• Insurance Costs Spiking: "The betting on insurance to cover issues. The insurance to buy is going higher in price."
• Data Centers Standing Empty: "It is being reported, this is a true report"
• Thinking Machines Lab: Raising funding at $50B valuation with NO product, NO customers, NO revenues
• NY Fed Meeting: "Convened meeting with banks about worries, about strains in money markets"

NVIDIA Tomorrow After Close:

• Gary: "They will not say anything untoward. They will talk a big game."
• "We know what they're going to say. They're going to talk big."
• "Very interested to see what the semiconductor equipment stocks do, not just what they say."
• Watching what big institutions DO

Market Structure Absurdity:

• Gary explains how 20 stocks in S&P could get trashed, 480 be flat/up, and still have down day
• "Goldman Sachs 1% move is 20 times more important to Dow than Verizon"
• "Something's gotta change" but companies won't split stocks (Booking Holdings $4,800, KLAC $1,100)

Gary's Read:

• "We read everything with skepticism. We trust nothing that anybody writes."
• "But when we look at these stocks on top of what's being written, we take a pause"
• On broader AI bubble: "Years from now, we may look back... I don't know. I just want to deal in real time and all I can tell you in real time, there's some holy crap moves"