The Great Disconnect: AI Boom Meets Main Street Bust

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Chris breaks down the growing gap between Wall Street’s soaring AI-fueled gains and Main Street’s mounting financial strain. From restaurant spending declines to a surge in personal bankruptcies, the warning signs are flashing even as tech stocks hit record highs. He draws parallels to the subprime and dot-com bubbles, warning that 40% of U.S. GDP now tied to AI spending could mask deeper structural weakness. Is the economy really as strong as the markets suggest—or are we watching another bubble inflate?

Episode Transcript

Speaker 1 (00:00):
The Watchdog on Wall Street podcast, explaining the news coming
out of the complex worlds of finance, economics, and politics
and the impact that we'll have on everyday Americans. Author,
investment banker, consumer advocate, analyst, and trader, Chris Markowski.

Speaker 2 (00:16):
I want to discuss the stock market as a whole
and the economy as a whole and a bit of
a disconnect that we're seeing right now. And I've seen
things like this in the past, kind of saw this
in the run up to the Great Recession. You saw
some issues underlying economy at the tail end of the

(00:42):
dot com implosion. Both different, okay, very different situations, but
there are issues that are out there that you really,
we all need to pay attention. These are some of
the things that I have discussed. We talked about the
Tricolor subprime meltdown. Now, this one should have been obvious
to anyone with half a brain. We're making loans. We're

(01:05):
making loans to illegals to buy cars. Why aren't they
being deported right now? Again, a whole nother disconnect, But
subprime it's a whole area in of itself. The funny
thing with the Tricolor subprime issue, it is the fact
that they were rating the debt triple a. Hey remember

(01:27):
that that happened during the whole Great Recession, the run
up to the Great Recession, where they were packaging garbage
mortgages together and saying, hey, we got a pile of
dog pool here, but if we add more dog pool
on top of more dog pool on top of more
dog poo, well then it's not really dog poo anymore.
It's I don't know, something much better, it's triple a. Anyway,

(01:50):
Restaurants spending has spent among the first i'm gonna call
it discretionary categories to drip off. This is when consumers
are experiencing economic hardship. Picture right now is emerging and
not the only one that's seeing this lower income consumer

(02:13):
weakness spreading to at least middle income consumers. Yeah, yeah,
weaker the talking management discussions with public and private restaurant chains,
weaker demand trends are going to be reflected in third
quarter earnings, and the weakness is spreading from low income

(02:37):
consumers to middle income consumers. We've kind of seen this
happening little by little. Chapter seven individual bankruptcy filings have
jumped fifteen percent in the first nine months of twenty
twenty five. That again, that's it's jumping Chapter thirteen. That's

(03:04):
when an individual retains all assets, they got a decent
amount of those as well. Total individual bankruptcy filings rose
eleven percent. Again, pressures on households. We're seeing this across
support again, something that we've talked about for some time.
So people are going to say, okay, what about the

(03:25):
stock market, Chris stock market, stock market, stock market, stock market. Okay, Again,
it's it's hard because people they they equate, They basically
put those two things together and they automatically assume that
ge whiz, if the stock market is up well, then
g whiz, the economy must be booming right now. These

(03:50):
numbers are again I never, I can't. I've never seen
anything like this of US GDP this year. Is AI
spending forty percent at minimum, at minimum, some are saying

(04:17):
that it doesn't even fully capture the entire AI spend.
AI companies have accounted for eighty percent of the gains
and US stocks so far. Now again you can also
include in that, you know, companies like Microsoft and Apple.
These are some even IBM, some of these older world,

(04:39):
old school tech companies that they're they're grouping into this,
but that area of the economy, without a doubt, is
where the focus is. For the reality situation. We're pretty
much the only game in town globally when it comes
to this, and we benefit from that.

Speaker 1 (04:57):
We do.

Speaker 2 (05:00):
However, however, is that filtering down to the broader economy
all across the country. No, you can send. There's still
a lot of value, a lot of companies within the
markets that have not done well, that are well off
their highs. And again, these are things that are going
to continue to be hit because again the consumer weakening,

(05:25):
without a doubt, these again issues we talk about the
bare necessities when it comes to inflation, these higher costs
that have gone along with it that have hit people.
We talked about the higher cost of housing problems out
there that quite frankly need to be dealt with. We're
going to continue to watch this. We see the trends

(05:46):
when it comes to AI spending changing much now. No,
we weren't in an arms race right now. We are.
And when you're in that type and everybody's you know,
everybody else is battling, it's one of because they don't
want to be left behind when it comes to this.
You can get a mad rush again. But one of

(06:06):
the things you can do, like we always talk about,
is you know, as you're making money in these areas
like we have been, time and time, you rotate some assets,
you take some profits off the table. Watchdog on Wall
street dot com