Can you determine if it was an a Tricolor deal or the entity itself and which agency awarded the AAA?
Bell (a large Canadian cell service provider) has dropped the streaming package that they were offering with their cell plans and replaced it with an AI subscription. I don’t know why anyone would want that where my phone manufacturer is providing an AI and I can access various other ones or get it through Google search.
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Goes into a bit more detail here in the link.
Looks like they issued a whole bunch of ABS and got that AAA rating.
Wait. Isn’t that equating production with consumption (which is standard), and then concluding if one source of consumption is removed the spending wouldn’t have gone elsewhere – instead production itself would somehow decline? Seems a bit like saying “If I hadn’t spent $70k on that new truck my salary would have been $70k lower”.
Capital expenditures are part of GDP.
But that’s my point – expenditures are not actually part of GDP. It is common to calculate GDP by assuming all production is consumed (via expenditures). But that doesn’t mean it makes sense to zero out an expenditure and conclude the production would be lower. That expenditure would go elsewhere (except for the production specifically generated by that expenditure).
Hence my statement about my salary. You can calculate my income (production) by looking at my total expenses and new investments/savings over a year (expenditures). But you can’t cross out one of my expenses and conclude my income would go down. My income would just get spent elsewhere.
You can say “but the items purchased via an expenditure were produced by someone”. Yes, that production is part of some nation’s GDP – it just might not be the US (and in this case likely isn’t, since we don’t actually make much tech hardware domestically).
Suppose country X produced $100bn of crops annually (GDP = $100bn) and uses the proceeds to buy $100bn of farm equipment (expenditures = $100bn). It doesn’t make sense to say “If everyone stopped buying farm equipment then country X would be in a recession!”. If they stop buying farm equipment it could just be that they don’t need any more; country X will continue producing $100bn of crops and just spend the money elsewhere. Sucks for country Y though, where the farm equipment is actually built – their GDP will be in the toilet.
Gold hit $3,800
I am riding this train till early 2026 as inflation going higher in the US (alongside weakening USD FX) will drive gold prices further upwards.
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I foolishly bought a 2x silver ETF back in 2020 and had been solidly underwater on it for sometime. I’m now minimally positive on it. It’s sounding like I should maybe keep it for a bit longer?
Yes. Investors will usually flock to all precious metals as inflation goes up (silver, gold, platinum etc)
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On Sep 29th 2025, The Polymath confidently predicted the future price of silver lol.
Not so much the price, but the likely trend between now and early 2026.
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Sure the expenditure will go elsewhere, but not necessarily to something that directly increases GDP. Since the original reference was to Capx for tech, let’s say they decided they weren’t getting the right return on the massive AI spend and decided to do stock buybacks with their excess capital.
Yep.
After that I have no idea because after May 2026 it will be very chaotic (Trump would then have a majority on the Fed Board with Hassett as likely chair (who will do what Trump tells him to do which is to lower rates)).
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Current period GDP wouldn’t drop due to that, though (buybacks are still an expenditure, just presumably one with less opportuning for future GDP growth). My whole point is that the original quote was silly to say that we could have had a recession if tech capex hadn’t been so high – GDP would have been largely identical with or without that spend. It’s needlessly alarmist about the wrong things, which is a lot of what’s wrong with what passes for “journalism” these days.
The correct conclusion is that a lot of current production is being used to fund tech capex, and if AI is just a bubble then that’s going to be a lot of squandered investment and expected future GDP growth will suffer (though maybe not to the level of a recession). That is very concerning, it just doesn’t have the misleading, panic-inducing sizzle of “we could have had a recession!”.
I don’t think corporate stock purchases are included in the typical GDP calculation, but am interested to learn if I am wrong in this assumption
Stock purchases are not directly reflected in the expenditure calculation, no. They appear indirectly, in as much as the people the stocks are purchased from spend their proceeds somewhere (which is counted in the expenditure-based GDP calc – if not from them directly, then from someone who purchased something from someone who purchased something… from the person the stock was purchased from).
It always comes back to the fact that GDP is a production measure. If you produce $100m of product and sell it, that’s $100m of GDP. Whether you use the proceeds for capex or stock buybacks doesn’t change the contribution to GDP – it just affects where that money manifests under the expenditures approach.
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Sure, a little trickles through in spending but most of it gets reinvested in stock, cash, bonds,… So 100% of CapX hits GDP, where only a fraction of money spent on stock buybacks or debt retirement hits GDP.
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Again, the same production happened regardless of whether a company spends on capex or buybacks. The GDP doesn’t change. How you attribute it under an expenditure approach does.
- When a company does a buyback, that doesn’t get counted as an expenditure.
- That money goes to someone else who has to do something with it.
- If they spend it on a qualifying expenditure, then it gets counted for GDP in the appropriate expenditure bucket and you’re done
- If not and instead they buy stock or retire debt or etc., then go to 2.
The expenditure approach to calculating GDP relies on the fact that that loop eventually ends. If it doesn’t, then the expenditure approach does not produce the correct GDP.
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