"No Signs Of The A.I. Party Slowing Down" | Craig Fuller

CoreWeave

Across the shows: 53 speakers in other episodes, 12 bullish and 48 bearish calls, past 30 days

• John Lodrey · New Harbor Financial GroupBearish

  Neoclouds like CoreWeave build on financing alone, lacking demand and profitability ties.

  John says the AI build-out has the look and feel of neocloud companies such as CoreWeave. As long as financing is available, these firms keep building without a clear connection to real demand or profitability. He cites recent weakness in neoclouds as a possible early warning, and sees them as a sign of the spending risk he expects.

  “As long as you get the financing, they're just going to keep building these things without any real kind of tie back to the real demand and the real profitability.”at 53:35

AI infrastructure & data centers

• Craig Fuller · FreightWaves

  The AI capex boom is the biggest driver of US industrial activity, ahead of energy and defense.

  Craig names three drivers of US industrial activity: AI data center capex, cheap energy and defense. He says the AI capex boom is the biggest of these. Since November it has pulled the economy out of a slump, and it creates demand for electricians, HVAC workers, truckers and railroads. He says the administration will take credit for tariffs, but the capex boom is what's really driving growth.

  “And then the third is you mentioned AI CapEx boom, which is the biggest piece of it all.”at 27:00

• Craig Fuller · FreightWaves

  Freight data shows no sign of an AI capex slowdown; the AI spending boom should continue.

  Craig says freight data usually leads broader government data by about six months, and it shows no slowdown in capex spending on the horizon. He concedes that a core weave bankruptcy or a failed Anthropic IPO might happen, but says nothing in current data suggests the AI spending party will stop.

  “there is nothing that I can tell in the data and the freight data is usually six months before the broader government data that suggests that there's any slowdown in any of the capex spending that appears to be on the horizon.”at 29:14

• Craig Fuller · FreightWaves

  AI data center buildout is propping up the industrial economy alongside defense spending.

  Craig explains that industrial activity is being supported by two forces: defense spending and the AI data center buildout. He also notes that the relative price of energy benefits from the war, which helps the industrial sector. He describes this as a nuanced economy in which industrial strength offsets the consumer and trucking pressures.

  “Industrial, again, it's defense. It's AI data center build out, and it's relative price of energy, which honestly benefits from the war.”at 40:14

• John Lodrey · New Harbor Financial Group

  AI spending may mirror the telecom bubble, with a brick wall coming soon.

  John compares AI spending to the 1990s internet equipment boom, which kept rising until it suddenly collapsed. He thinks the data may not show the turn until it is too late. He points to anecdotes of GPUs piling up in inventory, difficulties siting data centers, and build-outs that continue as long as financing is available, without a tie to real demand or profitability. He cites Meta's negative cash flow from heavy equipment spending that isn't yet monetized. He sees a real chance the spending hits a brick wall quickly.

  “I think there's a real good chance that that part, which has shown no slowdown ... in the data that Craig looks at, hits a brick wall real quick”at 54:05

US stock market outlook

• Mike Preston · New Harbor Financial Group

  Market leadership rotating from tech to staples, financials and healthcare as Nasdaq breaks down.

  Mike says the market has been narrow and tech-driven. New Harbor's system has been signaling a rotation, with consumer staples (XLP) in a big base and breakout, financials (XLF) having a strong day, and healthcare (XLV) becoming a new leader after lagging for a while. Staples are up about 3% while the Nasdaq falls about 3%. He is not sure these sectors can absorb the AI selling. His firm reduced equity exposure from 50% to about 39.5% and is waiting for confirmation before adding back.

  “This is consumer staples. It's just a big base and then a big breakout. It's up like, 3% today when the Nasdaq's down 3% today.”at 1:04:08

• Mike Preston · New Harbor Financial Group

  Valuations are unsustainable and unlikely to support good index returns from these levels.

  Mike says he believes valuations are not sustainable or consistent with good positive index returns from current levels. He still expects a possible thrust higher followed by exhaustion, but he says these valuations are the core reason he is cautious. His firm has cut exposure and will not guess at a top. It waits for confirmation before adding back.

  “we do think that valuations are such that they're not sustainable or they're not congruent with good positive returns in the indices from these levels”at 1:05:57

• John Lodrey · New Harbor Financial Group

  S&P 500 is about 50% tech and communications, so passive holders carry concentrated gains at risk.

  John says the S&P 500 is about 50% weighted to technology and communications, so even passive indexers hold a large concentration in tech. He notes that high-flying tech stocks have been volatile recently and that some are beginning to show weakness. He says clients are increasingly concerned about large gains in concentrated holdings, and that this is creating a dilemma over whether to sell and realize capital gains. He says hedging is one option. The argument is that index concentration makes a tech pullback a broad portfolio risk.

  “The S and P index is about 50% weighted to technology and communications.”at 1:21:33

Gold & precious metals

• Mike Preston · New Harbor Financial Group

  Precious metals pullback resembles 2008-09, likely followed by a thrust higher, not a 2011 top.

  Mike says precious metals are in an eight-to-nine-month pullback from the January high, deeper and more tiring than expected. He compares it with the 2008-09 precious metals pullback, which lasted about the same time, with gold down about 35% and silver down about 50%. Those metals later doubled or more, reaching their 2011 high. He believes the current pullback is a 2008-09-type event that will be followed by a thrust higher, rather than a 2011-type top that marks a decade-long peak. He admits this is hard to hold and says he isn't recommending the ETFs he's showing.

  “That's just a really big, [painful] pullback that's going to be followed by a thrust higher. I still believe it's a 2008, 2009 pullback versus a 2011 high”at 1:11:49

• Mike Preston · New Harbor Financial Group

  Gold is probably bottoming after an eight-week drawdown; technical support levels are holding.

  Mike reads the gold weekly chart as having broken a downtrend line and cleared a blue line that he considered important, and says the drop has moved through three waves lower. He had earlier thought July was the bottom and says it may still be. He calls the recent eight weeks of weakness an unexpected, painful consolidation, and he says critical support levels are being tested. He ties the view to the sentiment backdrop: negativity is widespread and bulls are struggling, which he reads as a sign of a bottom. He says his firm holds a metals position in its model that it can stick with, and that it sizes positions so clients aren't uncomfortable. The support is technical, with no fundamental data cited.

  “So, I personally think that we're probably bottoming here and just creating a ton of negativity but it's hard to hold.”at 1:13:35

• Mike Preston · New Harbor Financial Group

  Silver could rebound to $70-90 within three months if it reverses from current support.

  Mike says silver broke a downtrend that had been in place for many weeks, which gave some relief. Its rally toward $70-75 then rolled over, and it is now at or near its low. He does not expect a waterfall decline, though he says anything could happen. He is conditional: if silver reverses out of this area, he thinks it can reload and move back to $70-90 in 30 to 90 days. His firm holds a metals position in its model. The forecast rests on technical reversal and chart support, not on fundamentals.

  “I still think that if we can reverse out of here, we can load the energy again. I think that we could easily move back up to seventy to ninety silver even in the next thirty ninety days, three months.”at 1:15:09

Manufacturing & industrial policy

• Craig Fuller · FreightWaves

  US industrial expansion is the strongest in a decade and has rebounded since last November.

  Craig's freight data shows the industrial sector, which had been a dog for years, rebounding sharply since November, and still expanding. He says heavy industry is ripping and that it is driven by its own engines (AI capex, cheap energy, defense) rather than by consumer demand, which is weakening.

  “It's robust, I actually, I would say this is the strongest industrial economy that we have seen in in perhaps a decade.”at 4:03

• Craig Fuller · FreightWaves

  Companies are reshoring to the US for cheap energy, with tariffs a less important factor.

  Craig argues energy is about 40% of heavy manufacturing costs, far more than labor. He points to Germany decommissioning much of its energy production and hurting its industry, while the US has plentiful energy. Companies are coming to the US because of that energy advantage, and tariffs are a factor but not a major one because most people don't know what comes next or how long tariffs will last.

  “what we're seeing is that companies are coming to United States because of energy, not due to tariffs. Tariffs are a factor, but they're not really that important”at 25:34

Shipping, trucking & logistics

• Craig Fuller · FreightWaves

  Railroads are attractive AI-adjacent holdings, hauling data center materials with a non-AI business.

  Craig says the commodities and equipment needed for AI data center build-outs have to be railroaded across the country, and grid upgrades also move by rail. Railroads are among the biggest beneficiaries, and they have a real business that isn't dependent on AI, which makes them an attractive way to invest in the AI build-out.

  “if you wanna invest in an AI stock and benefit from the AI data center build out, the railroads are fantastic positions to own because first of all, there's a real business there that isn't dependent upon AI.”at 30:17

• Craig Fuller · FreightWaves

  Immigration crackdown is cutting trucking driver supply, the biggest factor in his industry's capacity.

  Craig says the main driver of higher transport prices is truck capacity, which depends on drivers rather than diesel. Past waves of recruiting, including legal and then undocumented immigrant workers, filled driving roles for a decade. Government crackdowns, tighter hiring restrictions, and insurer and court actions are now removing that labor pool, and no new drivers are entering the industry. He calls this the biggest change in his industry in decades and expects it to persist regardless of who holds office, because large trucking companies want tighter restrictions.

  “That is a major factor. It is probably the most important factor in my industry”at 43:14

Oil & fuels

• Craig Fuller · FreightWaves

  Diesel squeeze is driven by refined products and Ukraine refinery strikes, not just Hormuz crude.

  Craig argues the energy problem is in refined products, especially diesel, not crude. Ukraine refinery attacks matter as much as the Hormuz disruption. US diesel exports are creating a domestic problem that hurts farmers and truckers, and he calls the diesel crisis a real problem for the administration. He says the public doesn't understand how nuanced the energy supply chain is. He assumes the status quo: the Iran and Russia-Ukraine conflicts are not wrapping up quickly, so he sees no near-term relief in sight.

  “It's not crude. That's the problem. It's the refined energies. It's the refined products that actually are the issue diesel specifically.”at 36:58

• Mike Preston · New Harbor Financial Group

  Oil stubbornly high; if it eases, it could catalyze a broader market bullish run.

  Mike points to refiners in XLE, which hold Exxon and Chevron, hitting new highs while oil stays stubbornly high even as other commodities sell off. If oil comes off, that could become a catalyst. His firm is building energy exposure for a potential bullish run, though he notes such energy buildups can either launch a rally or accelerate a collapse.

  “So if oil can come off, it could come down. That could be a catalyst ... we are building energy here for a potential bullish run.”at 1:07:35

US Treasuries & yields

• Craig Fuller · FreightWaves

  Ten-year yield rising since the Iran war is tightening policy and slowing housing.

  Craig says housing is really an interest rate problem more than an affordability one. He says there is good data showing the 10-year yield has risen since the US went to war with Iran. That rise pushes the Fed to be more restrictive, which in turn has slowed housing. He presents this as the likely argument, not a certainty.

  “the ten year has increased ever since we went to war on Iran. And therefore, that is causing the Fed to be more restrictive, and therefore, housing has slowed down.”at 39:52

• Mike Preston · New Harbor Financial Group

  Bond rally may be bottoming after TLT jumped from 76 to 82; interest rates are falling hard.

  Mike cites TLT, a long-term Treasury ETF, rising from 76 to 82 in just a few weeks. He says the daily chart has cleared the previous swing high and left the earlier downtrend behind. He says interest rates are coming down hard, though he is unsure whether the move is a bottom and says the jury is still out. He notes that metals have fallen whether rates rose or fell, so falling rates have not supported them. The view is tentative and rests on chart breakout, with no fundamental argument given.

  “You know, TLT went from 76 to 82 in just a couple of weeks.”at 1:15:56

US consumer

• Craig Fuller · FreightWaves

  US consumer goods volumes are slowing even as industrial freight expands.

  Craig uses freight data, which he says reflects real demand rather than dollar-inflated spending, to show consumer goods volumes slowing while industrial categories expand. He argues the consumer is now a concern after being the main driver of the post-COVID rebound. Volume of goods, not dollars, is what he measures, since inflation inflates spending without moving more product.

  “Consumption and consumer activities and consumer categories is slowing. And we know that because freight data doesn't lie.”at 2:22

Consumer & retail

• Craig Fuller · FreightWaves

  Food and beverage volumes are seeing a sharp slowdown, a major laggard in freight.

  Craig says food and beverage is a big laggard, with volumes slowing sharply. He cites several causes: population growth slowing as immigration into the US has cut off, SNAP no longer covering unhealthy products, shrinkflation reducing package weight, and GLP-1 drugs reducing appetite. Volume rather than dollars is the measure, since a $40 steak and a $5 steak both count as one unit.

  “Food and beverage is actually a pretty big laggard right now. ... the food and beverage sector is seeing a pretty sharp slowdown in consumption.”at 7:22

GLP-1s & obesity drugs

• Craig Fuller · FreightWaves

  GLP-1 drugs are a much bigger drag on food consumption than most people realize.

  Craig's firm talks to companies in reverse logistics and returns processing, which show food products sitting on shelves longer, concentrated in food categories. He describes his own three years on a GLP-1, where appetite disappears, and argues that across the 10+ million users this shows up in the freight data.

  “And then I think the GLP one factor is a much bigger deal than most people believe it is.”at 10:22

US housing

• Craig Fuller · FreightWaves

  US housing is weakening further and is a major drag on freight and manufacturing demand.

  Craig says housing starts are falling and the remodeling boom has run out of steam, since homeowners locked into low mortgages are not moving or renovating and flipping no longer pencils out. He estimates about 20% of US freight volume is indirectly tied to housing through appliances, furniture, paint and construction, so the slump is a meaningful drag on freight.

  “The other one is housing. Housing is a big contributor to freight demand. It's a big contributor to US manufacturing.”at 11:41

Tariffs & trade policy

• Craig Fuller · FreightWaves

  Tariffs aren't moving food prices, since most calories consumed are produced domestically.

  Craig says about 95% of the calories Americans consume are produced in the US, so tariffs are not actually affecting food prices. He contrasts this with apparel, which is mostly imported, so tariffs hit freight volumes in apparel more than in food.

  “Most of our food, by the way, is produced in The United States. Like 95% of the calories we consume... The vast majority of the food we consume is domestic. And so tariffs are not actually impacting food prices.”at 15:00

Commercial real estate

• Craig Fuller · FreightWaves

  Overbuilt multifamily faces a potential debt crisis, held up only by people unable to buy homes.

  Craig says the US overbuilt multifamily apartments, and landlords are offering big incentives to fill units. He argues the main thing holding the market up is that people cannot afford to buy houses, since otherwise a multifamily debt crisis would be a real possibility. He hedges by calling it a potential crisis.

  “Probably the best thing holding that market up is the fact that people can't afford to buy houses or else I think there would be a potential debt crisis in multifamily”at 18:07

Natural gas & LNG

• Craig Fuller · FreightWaves

  Cheap US natural gas, not oil, is the lifeblood of US industry, and high energy prices now help it.

  Craig argues the old thesis that high energy prices hurt US industry no longer holds. Since the shale revolution, US energy is cheap relative to the rest of the world, the US has been oversupplied in natural gas for about five years, and US energy exports are high. Foreign buyers now purchase US petrochemical-based and industrial goods such as polyester, so US natural gas is what drives industry.

  “Not really. It's US natural gas that's actually the lifeblood of The US industrial economy.”at 22:24

Defense

• Craig Fuller · FreightWaves

  US defense spending is good for the economy and industrial base, since defense was never outsourced.

  Craig argues US defense spending is very good for the US economy and industrial base, conditional on the printing press rules holding. He cites defense as one of the few sectors not outsourced, with about 65% of global defense spending American and allies at 75-80%. He says allies must buy American goods because of NATO.

  “As long as those rules apply, then war... A war economy and US defense spending is a very good thing for The US economy, even US industrial base. Because guess what? One of the only sectors of the economy that we did not outsource was the defense.”at 26:07

AI bubble & tech valuations

• Craig Fuller · FreightWaves

  AI companies' revenues and cash flows are real, unlike a stimulus-driven boom; he sees both bubble arguments.

  Craig says he can make both arguments about whether AI is a sustainable bubble, but he believes the revenue numbers of leading AI-linked companies are real and not exaggerated. He argues they are generating cash flow and deploying it, which is very different from government stimulus through tax-appropriated or printed dollars.

  “I believe those numbers are real. I don't think they're exaggerated. I mean, the level of revenues that these companies are achieving ... is very different than the government sort of stimulating the economy.”at 28:53

Power demand & the grid

• Craig Fuller · FreightWaves

  Without new US power generation, AI, robotics and EV growth stall; data centers fund the build-out.

  Craig says utilities need dependable customers to finance new nuclear or natural gas plants, and hyperscalers have the credit to be underwritten by banks to serve as that base customer. He argues that without new US power generation there will be no AI data economy, robotics economy or EV adoption. Electrifying every US vehicle would need more power than all AI data centers consume.

  “If we do not create electricity and power generation in The United States, we are not going to have not just an AI data economy. We're not gonna have a robotics economy”at 34:02

US inflation

• Craig Fuller · FreightWaves

  Diesel-driven inflation is overstated; the consumer slowdown shows up in spending, not prices.

  Craig acknowledges that higher transport costs show up in goods inflation, with food among the most transport-sensitive categories. He argues the effect is smaller than commonly portrayed. Restaurants have a more efficient supply chain than grocers, and the slowdown appears mainly in dollars and total units spent. He thinks inflation is a politically convenient talking point more than a major economic factor.

  “I think the inflation thing is very good politically. I don't think it's as big of a factor as it's been made out to be.”at 41:07

Robotics & autonomous vehicles

• Craig Fuller · FreightWaves

  Self-driving trucks are still eight to ten years from ubiquity, though adoption will eventually happen.

  Asked whether the driver shortage would be met by self-driving trucks, Craig says they will eventually arrive but are still eight to ten years away from ubiquity. He expects the trucking industry to keep dealing with labor constraints through one or two administrations in the meantime.

  “It will be eventually, but we're still eight to ten years out before we have ubiquity on self driving [trucks].”at 45:50

AI & jobs

• Craig Fuller · FreightWaves

  AI job losses not yet visible; could dominate politics if they arrive by 2032.

  Craig suspects AI data centers and AI automation will become a major election issue, possibly in 2028 and certainly by 2032. For now, he says job losses from AI have not appeared at the degree people can point to. If large job losses start to show up as the country moves toward 2032, he thinks AI will become the most important political topic.

  “We just haven't seen job losses yet at the degree people can point to. I think if we start to see big job losses as we move towards 32, then I think that will become the most important topic.”at 46:19

Software & SaaS

• John Lodrey · New Harbor Financial Group

  Software has outperformed semiconductors recently, undercutting the AI-will-kill-SaaS narrative.

  John notes that software was widely called a dead sector because AI would replace SaaS. Yet in the recent relative-strength data, software has performed better than semiconductors, which have weakened in recent weeks and months. He says it is far too early to call a turn in the cycle, but this is the kind of market action he watches for signs of a changing trend.

  “software, which everybody called the dead sector because AI was going to replace all [SaaS] software, that's actually been performing recently relatively stronger than things like semiconductors”at 58:11

AI chips & semiconductors

• Mike Preston · New Harbor Financial Group

  Semiconductors broke down, so the market can't make much upside progress.

  Mike notes semiconductors had been bouncing between swing highs and lows. Over the last ten days they fell in a straight line, and he expected them to take out the swing high but they did not. Because technology is so central to the market's gains, he doesn't think the broader market can make much progress to the upside. He also doesn't expect a blow-off top, and he is watching whether the tech selling is a panic reaction or something that spreads.

  “It looked to me like we were going to take out the swing high, but in the last ten days, we went from north to south in a straight line. So I don't really think that the market can have a lot of progress to the upside.”at 1:04:53

US elections & politics

• Mike Preston · New Harbor Financial Group

  Market likely rallies after the midterms regardless of outcome, as uncertainty clears.

  Mike says the midterm outcome could be part of why the market is uncertain now. He argues that once the election result is known, the market will probably like the outcome no matter what it is, because markets dislike uncertainty. That could set up the kind of pop he thinks may come.

  “We've said on this program ... the market will probably like that no matter what the result is because the market doesn't like uncertainty.”at 1:06:53