Transcript
0:00 throw another major concern on the table. I mean, why not? Do you Tom 40 trillion in the national debt last night? Do what is your reaction to or take on that? >> I mean, it's pretty shocking that we're in a booming economy and the deficit's growing. so >> missiles are expensive. >> Yeah. >> Yeah. >> Interest is expensive. >> Yes. >> Yeah. It seems like there's a lot of like outflows. I I agree with the folks who think that this is a structural concern, but the bond market today is signaling that it's completely okay with it. So, I think as long as it's okay with it, the stock market is fine.
0:35 >> So, that that that little blip in the 30-year, we saw those like, oh, oh, the deficit suddenly an issue that we saw last week with that that sale. You don't think that that was really a big move or that that's going to continue? Yeah, I mean it's it is a symbolic rate because as you know maybe more companies are dependent on the spread to the tenure, right? >> So that's the more important rate to watch. But again like I Tom Lee just put the biggest macro contradiction on the table. The United States is running a booming economy carrying roughly $40 trillion in national debt and still watching the deficit grow. Yet the bond market, at least in this conversation, is treating the situation as manageable.
1:15 That matters for Bitcoin because crypto doesn't trade in a vacuum. It reacts to the price of money, the direction of liquidity, and the market's confidence in government debt. If long-term yields stay contained, risk assets can keep absorbing aggressive investment in artificial intelligence, data centers, and new infrastructure. But if the bond market suddenly demands a much higher premium, the pressure can spread quickly into stocks, technology, and Bitcoin. Tom's argument is simple, but the tension is real. the system can look stable right up until the market decides the numbers deserve a different price.
1:49 Now listen closely because the conversation moves from AI spending and off-balance sheet commitments into the exact question serious investors should be asking. Where does the risk actually sit? >> and for a long time I've been saying buy chips on dips. because we think that this is this is just the infrastructure buildout of AI. And so when we look at all these large numbers, we're recognizing we're going through a transformation for our economy that's as big as a transcontinental railroad.
2:16 We're spending about two 2 and a half% of our total GDP >> on on the AI buildout, maybe a little bit more. Well, that's about what we spit on the transcontinental railroad from 1850 to >> refresh my memory. Which were the right rail railroad stocks to bend on during that time? >> Not all of them. >> Not all of them. And that's true. Not everybody is going to knock the cover off the ball, but you have this insatiable desire for being in front of what's really important. I mean, it only matters if it increases labor productivity. If AI doesn't increase labor productivity, it's just >> words. You don't care if it's 600 billion here or whatever trillion in the future. As long as they're spending on the railroad boom, you're okay owning these stocks.
2:52 >> We're we're spending on the AI boom and and we're spending we're going to in 2027, we're going to spend more on AI and the and that boom than we do on the Department of Defense. Here's the thing that Tom I wonder about the Wall Street Journal article because when I see all that off-balance sheet financing, I start to remember Enron and all the off-balance sheet financing and it's on top of that you've got these structures with the private credit funds that have a holding company that's in the JV and then there's a third company that actually is issuing the bonds. So in the end, who's holding the bag? And is that more offiscation than actual good business? and should we be worried about what seems to be a lack of transparency in terms of who's really lending the money and who's going to be stuck with it in the end?
3:37 >> it's a great question because I was a tech analyst during the dotcom and fiber boom of the '9s and the people investing capital that time were not of the same ilk and caliber of the mag seven. you know, these were companies that were digging up railroad lines and doing those IRUs, you know, which was actually >> What's an IRU? >> It was a revenue swap between fiber companies. So, you could create hundreds of billions of dollars of contractual revenue. And today we have companies with very sizable moes and some of the highest profit margins and return on capital in history. and have as the Bezos metric have delivered trillions of dollars of shareholder return that are now directing their investment on building a new mode around AI. So I have a lot more confidence that these are highlevel board wellreasoned companies investing but they're eyepopping numbers but the reality is >> why not do it on balance sheet? Well, one they could do it on balance sheet, but if they did, they would be taking up all the capital of the world and all the risk and therefore actually make it harder for any I would argue that that would make it harder for >> Tom Le's answer gives us a useful distinction. The headline number is not automatically the risk. The real question is who has made the commitment, how much cash flow supports it, and whether the expected revenue ever arrives. That distinction matters in crypto markets because investors often react to the largest possible number first. A giant funding figure can sound bullish for technology, but it can also create a second order problem if the spending depends on cheap credit, optimistic revenue forecasts, or financial structures that are difficult to read. Lee points to three numbers that deserve attention. 56% of companies now have an AI account. Only about 30% say they're seeing higher labor productivity. Just 7% say AI is fully implemented. That tells you this cycle is still early. But early doesn't mean risk-free. The market is pricing future adoption before the full productivity gain is visible in company results. For Bitcoin, the connection is through liquidity. If AI investment produces real productivity and cash flow, the broader risk cycle can stay supported.
6:08 If the spending runs ahead of the earnings, the bond market may become the pressure point, and crypto usually feels that pressure quickly. Subscribe if you want the macro signal separated from the headline noise. Now, let's return to the part that matters most. What happens when a $40 trillion debt load meets higher long-term rates? well I think maybe a good place to start is I think that the revelations from the journal article are actually helpful but they're giving people an incomplete picture of how financial systems work because if you do you know the gross obligations of the financial system it's multiple times the underlying assets >> always or just today >> always in fact that's why Warren Buffett used to call credit derivatives you know the weapons of mass destruction >> are these credit derivatives that we're about though or these are just future spend commitments.
6:58 >> It's the same arguably it's not that different because if you did like gross exposure of swaps or options like look at in any day options contracts are multiples of cash underlying. So if someone says oh there's a hidden offbalance sheet risk that retail investors have 20 times the size of the stock market in bets. We'd be like well there's the offset. So I I would say when we look at these numbers it's giving a distorted view of the actual risk.
7:30 >> Let me just press this analogy one more. In other words, do you think that the spending is representing multiple possibilities of spend that's only going to manifest in one way? >> I think to me none of these contracts like are going to lead to criminal liability. Like in other words, like a company can decide to cut spending in the future and the contracts should be. So like the 3 trillion isn't like you know people have to like write sign over their kidneys to to meet.
7:55 >> And Den, how should investors think about this? I mean should they be worried or should they be encouraged that wow it's not just $600 billion is going it's actually an additional you know 1.4 or up to three trillion. And so therefore that's a good sign about the future of AI. How should investors interpret all this? I >> I think it's a good sign because companies are making a lot of money. free cash flow. And what were they doing before? They were buying back their own stock. They were they didn't have anywhere to go with the money that they were making. And so I like it when someone said, "No, I'm not going to buy back my stock because I'm going to actually put it into the thing that I do best, which is grow and do these things." So I like that the capital is being redeployed into what these companies do because that's their core business. They're not hedge funds. They need to be out there putting their money to work in what they do. So, as a a growth investor, I like it. I like CFOs and I like CEOs and I like boards going like this is our fast ball. We're Microsoft.
8:50 >> And you talked about the productivity litmus test. A lot of this, particularly the bonds are based on revenue expectations in two to three years that are ginormous compared to what they are today. Do you think we get there based on >> I mean 56% of the companies today have an AI account but only about 30% of them are I mean 30% of them say hey I'm seeing increased labor productivity and only 7% say we fully implemented so you have all of these companies that have yet to play you have all these companies that are just now scratching the surface we're moving from we're moving from infrastructure to implementation we're moving from proof of concept to rapid adoption and this is an area time where we think you know margins are good >> Tom Lee's position ition is constructive, but it isn't a blank check. He believes large technology companies can fund a major AI buildout because they have strong businesses, high margins, and real cash flow. He also believes the bond market is currently accepting the fiscal picture.
9:48 The risk is that both assumptions can change. Watch the 10-year Treasury yield. Watch the spread between expected growth and actual productivity. and watch whether AI spending starts producing measurable cash flow instead of just larger commitments. For Bitcoin investors, this is the framework. A stable bond market can give risk assets room to run. A disorderly rise in long-term yields can remove that room very quickly. There was no Bitcoin price target in this interview, so don't manufacture one. The real takeaway is more useful. BTC's next major move may depend less on one technology headline and more on whether the financial system can absorb the debt, the investment, and the promised growth. If you want more serious crypto market analysis without invented predictions, subscribe and leave your view below. Is the bond market calmly absorbing the next investment cycle or is it waiting for one number to