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Drulard Family Capital Fund (DFCF, LLC)
What Bubble
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Fortnightly Macro View
JD Straight Up:
S&P 500 at 6658 – flat from 6661 two weeks ago
VIX at 19 – up 27% from 15 two weeks ago
10yr Treasury yielding 4.05% (down 3% from 4.19% two weeks ago)
Agg (US Aggregate Bond Index) at 100.46 – flat from 100.26 two weeks ago
Gold at 3976 per oz (up 3% from 3857 two weeks ago) - crossed 4,000
Crude Oil (WTI) at 59 per barrel (down 6% from 63 two weeks ago)
Bitcoin at 115k (up 1% from 114k two weeks ago)
JPM shares at 308 (down 3% from 316 two weeks ago)
Deutsche Bank shares at 35.31 (flat from 35.51 two weeks ago)
Truist shares at 42.99 (down 6% from 45.92 two weeks ago)
Blackstone shares at 157.78 (down 10% from 176.14 two weeks ago)
Magnificent 7 Index at 404 (down 1% from 408 two weeks ago)
US unemployment: at 235,000 in latest claims – up 1% from 231,000 two weeks ago
EUR at 1.16 USD (down 2% from 1.18 two weeks ago)
GBP at 1.33 USD (down 1% from 1.35 two weeks ago)
Macro Environment
US inflation rate continues at 2.9%. EU inflation rate at 2.2%. US gdp growth continues in excess of 3% and unemployment remains at the historically low 4.3%. Tariff and trade negotiations between the US and its major counterparties continue with particular emphasis on China. War continues in Ukraine while peace is reached in Gaza. Market volatility sees its first spike since August.
Macro View
Media, advisors, investors and corporate chieftains are increasingly debating publicly whether current market prices reflect a bubble environment or are justified. Arguments applying traditional earnings metrics, growth rates and fundamental analysis are making a case for a bubble in AI, technology and related infrastructure. Alternatives suggest the need for new metrics to reflect an altered environment and potential.
Relevance
Is it really different this time? It rarely if ever is. Will AI productivity gains usher in a new world that is not currently possible to imagine and thereby justify seemingly outrageous valuations? Will a few major leaders with sufficient vision, modeling capability and compute capacity own the new world? Will the models and algos need all of the energy capacity and infrastructure that is rushing to market? Will circular deals of vendor finance, partnerships, and co-investment fuel the growth and the change to the world and validate the scramble to be first? Or is it just another bubble like so many that have come before in the history of capitalism and the application of animal instincts to economic decisions? Will it burst and see a few monopolists or oligarchists succeed and leave a wreckage of also-rans? Will it require tax payer led capital injections to sort the wreckage? Or is it truly different this time?
Head Scratchers
1 - If it is a bubble, what bubble is it? The AI bubble? The Crypto bubble? The Mag 7 bubble? The cheap money bubble? The stimulus bubble? The irrational exuberance, moral hazard, massive, uncontrolled bankrupt Fed QE bubble?
The attached article is worth a read if you want to get the 'this is a bubble' perspective:
https://www.telegraph.co.uk/news/2025/10/11/big-crash-are-we-really-heading-another-1929/
I do not agree with a number of the points in the article, but it is still worth considering if you want to ponder one extreme view on the spectrum of the bubble question
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Drulard Family Charitable Fund
#27- 13Oct25