3 ms·
What is your theory of how the dominoes fall and why? My understanding of this situation (ahem) is that SI was highly leveraged and where tech (ai and adjacent
by next_xibalba 2mo ago
What is your theory of how the dominoes fall and why?
My understanding of this situation (ahem) is that SI was highly leveraged and where tech (ai and adjacent) stock prices fell, they got margin called ABs were forced to liquidate. Why would this lead to cascading events beyond SI? It appears to have been a very orderly liquidation. No counterparties are reported to have been blown up. Nothing systemic.
- mapping365 2mo agoMy theory is simple, margin debt is pushing up stock prices on the back of growth, the high stock prices allow datacenter companies to fund their debt that fuels the growth. Two types of debt are cycling and reinforcing each other. If datacenter company stock prices fall then it will be harder for them to borrow, which will slow down growth, which will cause the stock to fall more. Situational Awareness was one of the largest buyers of these stocks using margin. One leg of the cycle is demonstrably failing.