WTF: I was *NOT* Expecting THIS AI Problem.

hey everyone me Kevin here as we go into

earnings season it's worth knowing that

there can sometimes be leading data and

this time we're getting leading data

from artificial intelligence and well

exports that are starting to miss thanks

to the United States now this has

happened before we have volatility in

some of these numbers but the magnitude

of this Miss is something we haven't

seen since

2015 and it's somewhat odd because

really there's there's this large

narrative that right now a lot of our

GDP is propped up by well government

workers 785,000 of them if you read the

last government uh BLS report uh and

then of course artificial intelligence

which uh was likely one of the reasons

why we're quite frankly not in a

recession yet uh who knows maybe we

already are but at least not

definitionally so let's take a look at

this report out from Goldman Sachs which

actually comes from the uh Taiwanese

trade Ministry uh if you uh dive into

the numbers they're definitely a lot

more than meets the eye see if you look

at a Taiwanese news site like Focus

Taiwan you'll actually see a headline

Taiwan exports hit new high in September

driven by strong AI demand okay cool

this is a Taiwanese paper saying hey

everything's fine this is great and if

you just read the headline or FR frankly

you only read this story this wouldn't

seem like it'd be a big issue but it's

not until you actually dive a little

deeper like the this Goldman Sachs

research here that you find that the

Taiwanese export numbers were actually

way worse than expected these are

actually that that sorry that these are

actually pretty bad numbers now I'm not

looking for things to be bearish I

actually really just want to understand

what's going on in the macro environment

and I want to understand the trajectory

of artificial intelligence because quite

frankly if we get continued good jobs

data here uh you know I want to make

sure I'm positioned correctly

when I'm buying stocks and this was very

interesting to me so I wanted to look at

this with a skeptical Outlook but look

at this this is not Taiwan semi this is

Taiwan the country though obviously

taiwan's semiconductor producing 90% of

the advanced chips in the world is

basically your exporter coming out of

Taiwan right so Taiwan negative surpris

surprises in September exports led by

drop in AI related exports specifically

to the United States now that's

interesting to me because it it does

make me think of uh a few things that I

go into this with the first thing I go

into this with is I know that uh Elon is

uh done with his uh Nashville Data

Center and it's possible that in part

because of that you have less shipments

coming to Elon via you know his expanded

data centers for Tesla or otherwise or

even Axe and Gro uh and potentially

that's slowing shipments but you know if

these are in such high demand we should

continue to see more shipments so you

know maybe who know who knows maybe

there was a supply chain issue or

something but I do also go into this

knowing that Amazon reduced their orders

for uh additional h100 chips now their

argument was that they were just waiting

for Blackwell and that's sort of what's

being advertised but I always like to

say look if if the AI demand and the AI

profit is so

large you know even if the margins are

slightly less using the h100 I'd rather

fulfill the demand now if the demand

starts slow and I actually don't need

any more chips right now and you know if

I want a future proof I'll just get the

new Chips when they're out it's it is a

sign somewhat of maybe we have a little

too much AI server demand mind you I'm

also going into this with the impression

that 99% of AI companies will probably

go bankrupt I think they're really high

risk mostly because I mean I hate to say

it but I just I did capitulate uh for

those of you who want to know I did

capitulate I did end up getting the 16

one of the reasons I didn't want the 16

is because it was going to take me

forever to transfer all the stuff I have

both phones here right now and it's

taking me forever to transfer all these

apps because I do it all manually

otherwise it just sets up slowly but but

sometimes by doing that I also go

through and I see some of these other

apps that exist and I'm looking at this

right now I'm like well I have co-pilot

AI that I can use uh the acrobat AI uh

you know PDF reader is actually pretty

decent on the phone Notions now

incorporating AI though I think they use

the GPT engine then of course you've got

GPT then you've got Gro

but then beyond that uh I I know you've

got Bing as well then I found you know

this other one which is I think

anthropics which is cloud or that's not

Cloud it's claw whatever uh and uh and

to me it's like my gosh how many

different AI chat Bots could I possibly

need you you know what I mean like

there's a so I do Wonder like how many

of these companies are training chat

Bots when the market doesn't even need

that many chat Bots and when we go down

to like an olop

of of you know AI uh servers basically

uh are we cutting out the rest let me

clarify what I mean I like and then I

want to get into this data because this

AI drop is pretty intense but but

consider the data for a moment here if

uh or or another example of an oligopoly

like what what would a good example of

an olop I can't even say the word

oligopoly be uh I think personally cell

towers you know right now if you want

different cell service youve basically

got Verizon in T-Mobile and AT&T and

then you might say no that's not true I

use mmobile or whatever but then you

realize they just use the T-Mobile bands

or you know whatever uh I think the

Google five ones I think they use

Verizon I'm not sure but anyway you

really just have three providers here

and so what happens is if you're like oh

I want to get into you know making cell

towers it'd be crazy for you to spend

the capex to get into cell towers like

you're better off just doing a Ryan

Reynolds and you know making a

mintmobile creating your own branding to

attract customers and then licensing

T-Mobile bands uh and so T-Mobile gets

more business and you're picking up

people who aren't willing to pay

T-Mobile fees I think at T-Mobile you

pay maybe 35 40 bucks a month you almost

get the same thing at mint for 25 or 15

a month this sounds like an ad for mint

I use mint I also use T-Mobile I use

both I think they're great I use Verizon

I use AT&T I use all of them I hate

Verizon Verizon sucks although they have

better service than AT&T in my area

anyway my point is of course you're

going to have an oligopoly in in AI as

well so I just wonder like is some of

this data that we're getting here uh

indicative of this beginning to happen I

I I don't know you like I'm not short

any AI you know I'm not trying to like

pump a book here or whatever I think by

now many of many of you hopefully my my

my biggest fans or subscribers I

appreciate you so much not necessarily

the loudest people complaining at me in

the comments but I just want to thank

you and appreciate you know that like I

want you to always know that I'm just

going to give you these these facts and

the data that I see even if it's unpop

talking down AI right now is extremely

unpopular and I'm going to get a lot of

hate for it I just always like to bring

a realistic Outlook I do the same thing

in real estate and my other businesses

you know house haack's kicking butt uh

we'll have uh I think we've got a big

house Haack update coming next Wednesday

so stay tuned mark your calendar for

that it's going to be huge but anyway uh

Taiwan exports fell 5.1% month over

Monon seasonally adjusted pulling back

from a sharp rebound of 88.2% in the

prior month so you had a really big

August so it's possible this is some

normalization but the outcome was even

worse uh than uh was weaker than our

below consensus forecast so in other

words Goldman had a forecast which was

below consensus and the outcome was even

worse than what Goldman Sachs was

predicting exports fell sharply across

most major products especially AI

related products this is a big red flag

here this is not good AI related

products fell 18.6

% out of Taiwan uh so now this is

important to to note because when they

show you the charts they don't just

specifically show you air related so AI

related products down 18.6%

month-over-month seasonally adjusted I'm

just going to write that down as sort of

one of the little takeaways here by

destination uh us uh fell 23.8% month

over month seasonally adjusted largest

drop since

2015 so those are two really important

data point takeaways right there so far

so the US getting really hit in

reflection of the sharp declines in AI

related exports the losses were

partially out offset by gains in Japan

Emerging Markets South Korea was

mentioned in here but look at these

numbers here uh the Bloomberg consensus

for September exports was 10.9% Goldman

was at 99.9% and the previous

year-over-year was 16.8 well you

actually got a read of just

4.5% so the numberers still positive and

when you go over to the Tyran you know

news source over here you you'll see

they still accurately mention the

positive news here on uh on on you know

growth it's true it's another month of

growth but the problem is not that

there's growth or

contraction the problem is actually that

that growth rate has just collapsed well

further than the collapse that was

already expected you know Bloomberg was

expecting roughly 11% right here down

from the 16.8% last year growth rate

well now it's just down to

42% this is a shockingly small number

here this is not great keep in mind that

as part of the exports in information

communication AV products AI is lumped

into that so sometimes you'll see charts

on exports of it Comm and and Audi

visual equipment stuff AI is only at one

like one4 of that so it's it's really

difficult to sort of look at charts on

this kind of stuff but basically it's

bad and uh it reverses about uh 3 months

of modest gains in the uh AI exports and

sequential momentum which is quarter to

quarter was also weak for other exports

after gains in the previous months with

machinery and commodity related exports

declining 7.8 and 7.1% respectively by

destination exports to the US plunged

23.8% sharpest drop since 2015 in a

reflection of the sharp declines in AI

related exports exports to Europe also

declined 12.4% after a strong Rebound in

the prior month again maybe this is you

know a way of saying hey you know things

are normalizing we can't always uh go to

the Moon uh and you know in alluded to

that as well they had a report on this

and they mentioned here that hey you

know perhaps this is just a

normalization after this really big beat

in August and that's entirely possible

but they say that you know they we're

expecting some of the acceleration of

demand in August to translate to

September and so far it didn't look like

it had so I find this interesting and to

me it it it is somewhat you know it's

something I want to pay attention to

like I don't want to go as far as

calling this concerning yet but I do

think that a lot of our economy is

propped up on artificial intelligence

capex spend and one of the downsides of

that is when you have a jobs report that

tells you your household job increased

by 785,000 jobs and it was all

government workers uh and absent the

government workers the unemployment rate

would have

skyrocketed uh by 4% which could have

potentially triggered us going into

recession you know on a definitional

basis since it's possible we already are

well you know then all of a sudden I get

a little nervous uh because it you know

I start I I do I really want to be

bullish I I want everybody to know that

I really I think it it should be crystal

clear I want to be that person that

every single day is just like by the dip

let's go I love this but In fairness to

those of you who watch my channel and

those of you who you know come to me for

information maybe you're not hearing

from anywhere else I I just I have to I

have to have to have to keep being as uh

transparent as possible with my feelings

and and I just don't feel good about

where valuations are right now now don't

get me wrong Nvidia is decent right now

unless obviously grow collapses Nvidia

is only sitting at a 1.9 Peg it's way

cheaper than like a Tesla or paler which

I've definitely been running uh but

really if you have not looked at it yet

please please please take the time look

at table alpha 8 on the last BLS labor

report and I really want you to pay

attention to this seasonally adjusted

number of government workers here all of

a sudden we're up supposedly 785,000

government workers on a seasonally

adjusted household number which is what

the unemployment rate is based on this

seems cooky dooky to me uh that uh that

this this could be true private payrolls

uh increased by what do we increased by

on private payrolls we did have an

increase in seasonally adjusted

household private payrolls which is good

it was about

133,000 which sounds more

appropriate uh but you did also then

have a decline of over

200,000 in the self-employed workers so

if you're counting as employed as

self-employed and let's say maybe you

did get a job so you count it over here

you actually had a loss of private

payrolls there uh so really the way you

could see that is you go non a right

here and you could go okay we're at uh

159

635 minus out the 785 government workers

you're at 158 850 jobs compare that to

the prior month of

159 108 you actually lost

258,000

jobs in the uh you know in the combined

self-employed and private sector you're

minus

258,000 if it wasn't for that big

$785,000 or 500 785,000 boost that we

got from government workers just

seasonally adjusted it already accounts

for the you know like removing teachers

that are just going back to work wasn't

for that be nasty

you know add to that the increase we're

seeing in the number of people uh you

know working multiple jobs or the number

of unemployed 27 weeks or over which is

a number that generally only Rises and

rose again in the last payrolls report

uh the September report was up again I

mean you were uh almost 100,000 97,000

more people unemployed 27 weeks or more

which means now theyve fallen off the

ability to apply for unemployment

insurance and they're just not

considered like unemployed anymore which

is crazy as that number goes up you're

often usually in recession right so all

these things coming together I don't

think they necessarily say everything is

going to collapse tomorrow but without a

doubt they're a warning sign and they're

a sign that I want to pay attention to

anyway uh big video coming next

Wednesday I hope you mark your calendar

for it uh it's it's going to be a huge

uh investment video uh that I'm making

so a huge investment uh coming uh next

Wednesday as well well as uh updates on

other aspects of uh of businesses house

act like a lot of basically news I've

got posting on uh next Wednesday so I'm

excited to talk about that anyway um

thank you so much for watching if you

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thanks so much for being here and we'll

see you soon goodbye and good luck why

not advertise these things that you told

us here I feel like nobody else knows

about this we we'll try a little

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congratulations man you have done so

much people love you people look up to

you Kevin P there financial analyst and

YouTuber meet Kevin always great to get

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