Is There an AI Bubble in Valuations?

Macro trends blogger and economist David Woo @DavidWooUnbound, CEO of David Woo Unbound, a global forum devoted to the promotion of fact-based debates about markets, politics, and economics, joins Julia La Roche on episode 296 to discuss the trade war, AI, and markets.

Sponsors:

Monetary Metals. https://monetary-metals.com/julia

In this episode, Woo warns that the US economy is heading toward stagflation as tariff impacts finally materialize, with holiday shopping expected to be weak due to consumers having front-loaded purchases in anticipation of price increases. He argues the US is now in a weaker position versus China in the tech war, as China has survived Trump's tariffs through factory automation and AI integration while US manufacturing continues shedding jobs even in protected sectors. Woo is short NASDAQ heading into November 1st, when China's rare earth export restrictions take effect, believing the market has mispriced both the AI bubble (with companies like OpenAI spending unsustainably while hitting technology plateaus) and the intensifying US-China showdown over AI supremacy—calling this "the macro trade of our generation."

Woo, the former head of Global Interest Rates, Foreign Exchange, Emerging Markets Fixed Income Strategy & Economics Research at Bank of America, is known for some of his bold and contrarian calls, including Trump winning the presidential race in 2016 (https://www.cnbc.com/2016/12/08/bofaml-analyst-got-ovation-from-co-workers-the-morning-after-election.html), and that the 2020 US presidential election would be much closer than expected and the results contested (https://www.afr.com/policy/economy/the-dangerous-groupthink-stalking-wall-street-20210909-p58q48).

Links:  

Youtube: https://www.youtube.com/@DavidWooUnbound

Website: https://www.davidwoounbound.com/

Twitter/X: https://twitter.com/Davidwoounbound

Timestamps:

0:00 Welcome David Woo back to the show

0:54 Big picture macro view and difficult 2025

3:08 Why tariffs haven't impacted economy yet

6:09 Consumer spending as preemptive buying

9:16 Holiday shopping weakness ahead

10:05 Gen Z consumer struggles

12:05 Stagflation thesis explained

14:28 Manufacturing job losses in protected sectors

16:43 Who's benefiting from tariffs?

18:05 US-China trade war positioning

21:52 China's factory automation advantage

23:54 US vs China AI strategies

26:44 The race for AI dominance

29:31 The macro trade of our generation

32:01 Jensen Huang: China "nanosecond behind"

34:22 September 29th export sanctions expansion

35:51 November 1st deadline explained

36:27 What would you tell Trump administration?

38:37 Shorting NASDAQ and AI bubble thesis

40:01 OpenAI's revenue vs spending problem

43:44 Technology plateau concerns

46:09 AI bubble meets US-China tensions

47:06 Risk management for short positions

49:15 Key catalysts: November 1st & earnings guidance

52:31 What keeps David up at night

53:13 Tomahawk missiles to Ukraine concern

55:03 Final thoughts and where to find David