Trading Post August 13, 2026

Welcome to the Sausage Factories

For those that have not seen it yet, Bloomberg’s latest picture of circular financing in the AI fever dream is one to behold.

The idea that AI companies are funding each other to buy from each other is now rather well understood.

The Bank of International Settlements said as much in its June annual report.

All this is out in the open, and it must be a real problem, because Wall Street itself never discusses it.

This is a concentrated effort to inject capital into the AI ecosystem that literally comes back to these companies as revenue. Wall Street and the markets then judge the participants on their amazing revenue growth.

Still, increasingly, that capital is debt. I will not dwell here in a Trading Post, but this puts the bubble on a clock, with a concrete cost of capital.

My base case is 2028.