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There might be no clear end in sight to the Iran war...
But this escalation is likely distracting you from a stunning pattern quietly heating up in the predictions market...
Corporate and Political insiders, folks with firsthand info on potential announcements, deals, policy changes coming up and more...
Have been making sneaky yet massive bets on platforms like Polymarket...
And quietly front-running the market in the process.
That's why you'd have noticed news about this pattern flying around...
Out of the blue on May 19th this year...
I tracked a large bearish bet on Bitcoin from an account with over $10 million in volume...
Days later... News came out that the SEC was delaying plans to further crypto innovations, obvious bad news for Bitcoin.
Acting on the bearish bet before the news came out with a quick trade locked in 78% in 9 days.
It doesn't end there...
These massive insider bets also tipped off a 39% winner on META overnight.
And even 60% on TSM in 6 days.
There were smaller wins and those that didn't work and I won't make reckless guarantees about the stock market...
But in the next few minutes...
I'll show you the special secret I use to track these insider bets...
Better yet...
You'll get FREE access to use this secret for yourself too... with no catch.
All you have to do is tap this link to get instant FREE access and start tracking these insider bets yourself.
To Better Trading,
Alex Reid.
The AI Trade’s Dirty Secret Is in the Bond Market
Hey there, bargain hunter. The AI trade has a funding problem hiding in plain sight, and the bond market is screaming it louder every week. Scoreboard$220 billion. That is how much Alphabet, Amazon, Meta, Microsoft, and Oracle raised in the U.S. investment-grade bond market through August 10, according to BNP Paribas data cited by Reuters. The comparable figure for the same period in 2025 was $12.5 billion. A roughly 18x increase in twelve months. S&P Global pegged the figure slightly higher, at $225 billion, and called it about a 974% year-over-year surge. Meanwhile, the 30-year Treasury sat at 5.20% on August 27, the same month it hit a 19-year high before pulling back slightly. High-yield OAS touched 281 basis points on July 27 before settling at 275 bps on August 20, deep in historically tight territory against a long-run median closer to the mid-400s bps. What Actually HappenedThe market expected AI capex to be large. It did not expect it to hit the bond market this fast, or this hard. S&P estimates hyperscaler AI infrastructure investment is accelerating rapidly, with cash flow pressure a key focus for credit. By mid-2026, incremental debt had risen from 9% of capex in fiscal 2024 to 32% on a trailing basis, per FactSet. These companies have gone from self-funded to debt-dependent in under two years. Each jumbo deal is extracting a premium. Amazon had to sweeten a $25 billion offering by 18 to 21 basis points on its longest-dated debt, with orders covering about 2.5 times the bonds on offer versus 3.2 times in March. Across the broader hyperscaler market, investors have been demanding more yield to absorb supply. JPMorgan described the spread widening as the investment-grade community "rationally pricing in an accelerating pace of issuance." What the Credit Market Is Really SayingHere is the part most equity investors skip. High-yield OAS at 275 to 281 bps means the market is charging unusually little spread premium for credit risk by historical standards. At current levels, junk-rated borrowers are borrowing at historically thin premiums over Treasuries, while the risk-free rate itself sits at a 19-year high. That is a dangerous combination: the floor is expensive and the ceiling is rising. For investment-grade AI names, tech IG spreads have moved to roughly 89 basis points over Treasuries, up from tighter levels earlier in the year. Hyperscalers' collective weighting in the Bloomberg U.S. Corporate IG Index nearly doubled over the year ending April 2026, from 2.2% to 4.1%. Passive IG holders are now involuntary AI lenders whether they signed up for it or not. Is It Cheap?From an equity standpoint, the cost of this borrowing should reshape how you value AI capex promises. When incremental debt funds 32% of capex and the risk-free rate is about 5.2%, the hurdle rate on every new data center is not a rounding error. A company needs AI revenue to clear that bar before it creates equity value.
- MSFT / AMZN / META / GOOGL: Retain AA ratings and healthy net leverage. The debt capacity argument holds. The ROIC argument is still being written.
- ORCL: The most exposed. S&P cut its rating in July 2026, and a Moody's move from Baa2 Negative would pressure bond prices and widen credit default swaps exactly as Oracle tries to raise its next funding tranche. Oracle's plan called for $45 to $50 billion in gross proceeds during calendar 2026 through debt and equity combined.
- LQD / HYG: LQD holders have absorbed more AI duration than most realize. HYG at 275 bps OAS offered about 7.2% yield around August 20: a 100 bps widening still erases roughly five months of carry if spread duration is about 3.2 years. The asymmetry is unfavorable.
Bull / Base / BearBull: AI monetization accelerates, hyperscaler free cash flow recovers, debt issuance moderates heading into 2027, and spread concessions shrink. The bond overhang becomes manageable. Base: Supply stays heavy through year-end as JPMorgan forecasts $540 billion in full-year tech, media, and telecom issuance. Spreads grind 15 to 25 bps wider on new deals before stabilizing. Equity multiples compress modestly as cost of capital rises but business fundamentals hold. Bear: AI revenue disappoints relative to the debt service burden now embedded in balance sheets. Oracle or a smaller hyperscaler-adjacent issuer faces a downgrade. IG spread volatility spills into equities. At about 5.2% on the 30-year, there is no Fed put waiting in the wings to cushion it. Action PlanDo not buy AI equity names on the premise that cheap debt funds growth forever. The debt is no longer cheap at the margin, and the refinancing wall is building. Demand visible, measurable AI revenue before paying a premium multiple. On MSFT and META, where cloud and ad revenue is already converting AI spend into cash, hold. On ORCL, wait for the Moody's decision before adding. On LQD, trim duration exposure. On HYG, the carry does not compensate for the left tail at 275 bps OAS. Cheap Investor Scorecard
- HY OAS: track weekly. Below 275 bps, credit is pricey. Above 350 bps, conditions are loosening.
- 30-year Treasury: above 5.2% tightens the hurdle on debt-funded capex.
- Hyperscaler new issuance concession: if new deals require more than 25 bps of premium over fair value, demand is cracking.
- Book cover ratios: Amazon's 2.5x in July vs. 3.2x in March is the warning trend. Watch for sub-2x.
- Oracle credit rating: Moody's Baa2 Negative is the live wire. Any cut can trigger spread widening and secondary market losses.
- Incremental debt as % of capex: 32% LTM vs. 9% in FY24. Any further acceleration is a red flag for equity holders.
- AI revenue per dollar of capex: S&P projects hyperscaler AI infrastructure investment staying extremely large through the decade. Revenue conversion must keep pace.
Bottom LineIf AI monetization delivers, the debt load is manageable for the AA-rated names and the capex cycle looks like the best infrastructure investment in a generation. If it stalls, balance sheets that looked pristine eighteen months ago will become a quarterly earnings problem. Credit risk at 275 bps HY OAS is priced for a very calm future. Demand a visible return before paying equity premiums for borrowed infrastructure. |
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