Fed Rate Roulette, Wall Street’s AI Hangover, and Musk vs. Zelensky | The Tom Bilyeu Show

September producer-price inflation jumped 1.3% month over month, its largest increase since March 2022 and, as the host described it, the second-largest on record. Annual PPI reached 6.3%, above the 5.3% forecast, while core PPI was 5% against 4.4% expected; core wholesale prices rose 0.7% in a month, more than twice the forecast. Energy drove much of the headline increase: wholesale gasoline rose 20.3%, and energy prices rose 10.8%, together accounting for more than 80% of PPI’s rise. The host linked the surge to the war in Iran and warned that higher gasoline and diesel costs would pass through to consumers.

Even so, the 10-year Treasury yield fell roughly 9–10 basis points to about 5.08–5.1%, one of its sharpest daily declines since June; the 30-year yield also dropped. The speakers said money leaving chip stocks appeared to be moving into Treasuries, suggesting investors still treated U.S. government bonds as a safe haven and were diversifying portfolios. Tom argued that raising rates amid a weakening economy makes sense only when inflation comes from something the Fed can influence, and said the latest decision was not meaningfully different from what Jerome Powell would have done. He said the administration wants lower rates to reduce government interest costs and that Scott Bessent is trying to support the Treasury market’s long end while shifting borrowing toward short-term debt. Tom stressed that his account of a possible political strategy around rate hikes was speculative.

The semiconductor index fell for a seventh straight session and stood about 20% below its June peak; South Korea’s Kospi dropped 7.5% in one day and Japan’s Nikkei fell 5%. CoreWeave was headed for a 15% weekly loss, and its junk-rated bonds were increasingly seen as distressed. The speakers framed the decline as a weakening investment narrative, not evidence that investors had abandoned AI: markets were questioning whether borrowing to build AI data centers had gone too far, while rapid growth at Anthropic had not met expectations embedded in the infrastructure boom. Private-credit conditions were another gauge of concern about AI-related borrowing. Brad Gerstner said he had reduced AI exposure and repositioned for short-term trades, though he saw prices becoming more attractive and might invest again. The speakers said the selloff could deepen or reverse, and that AI’s draw on liquidity had distorted other parts of the market; they were uncertain whether weaker areas also reflected a stagnant or declining economy.

Tom expects AI to lower costs as intelligence is built into products and services, noting that compute is already getting cheaper. But cheaper services could reduce revenue unless greater use offsets lower prices, a dynamic he connected to Jevons paradox. The timing and scale of productivity gains remain uncertain, he said, and workers who cannot adapt may face lasting hardship. The discussion also cast AI as a potential opening for creators: cheaper, faster tools could let younger people make projects themselves rather than wait for funding or a team. One speaker estimated that 22–24% of people in China fear AI, compared with about 80% in the United States, and used the phrase “liquidity equals trust.”

Tesla’s Roadster reveal divided the speakers between seeing a possible stunt or stock promotion and seeing genuine innovation; one said the demonstration looked potentially computer-generated. Tesla said the car could reach 60 mph in 0.81 seconds, while the road-ready version was said to reach that speed in 1.6 seconds. Musk reportedly said a rocket-equipped version could do it in 0.59 seconds and reach half the speed of sound, with up to two Gs of suction. The demonstration showed the car leaping over obstacles and moving vertically and upside down. One speaker described its compressed-air propulsion as gliding rather than flying, reserving “flying car” for a vehicle able to travel hundreds of miles through the air. The speakers expected timelines to slip and questioned whether the stunt-capable, invitation-only version could be road legal; one considered a more restrained street-legal version plausible. Polymarket was cited as assigning a 9% chance of production on the discussed timeline, and Tesla shares were down 1% after the announcement.

On October 10, Donald Trump said Ukraine should get a new president, and Musk said Zelensky had “gone too far” and agreed Ukraine needed a new leader. The host said possible explanations for Musk’s position, including concern about battlefield deaths or an effort to win Trump’s favor, were speculative. The host also raised reports that military Starshield terminals were cutting out for fast-moving Ukrainian units at about 68 mph. A claim that the White House directly requested Starlink disruptions came from unnamed sources; possible coordination to disrupt Ukrainian attacks was presented as interpretation, not established fact. Zelensky said Starlink coverage in Russia had been made smaller rather than wider, limiting Ukraine’s targeting precision there. He said the United States could remain in the middle but should not take the wrong side, and argued that opening Starlink for Ukraine in Russia could help it destroy Russian ballistic launches and avoid targeting energy facilities. The speakers said any negotiated settlement would involve a trade-off between ending the war and Ukraine retaining territory, and emphasized that the outcome is uncertain and outside observers are exposed to propaganda.