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So that's what they were really hiding! The rot does indeed go much deeper than a few pedophiles exchanging voluntary girls in a tropical paradise. Now that the Pandora box is open, it will be difficult to close it back.
January 2026 marks a rupture.
It is no longer possible to treat the Epstein case as a sexual scandal
involving powerful individuals. What has now come to light – documents,
images, records, explicit connections – has pushed the debate to another
level. This is no longer about “abuses,” “excesses,” or “individual
crimes.” What has been exposed points to systematic, organized,
ritualized practices. And that changes everything.
For years, the public was conditioned to accept a narrative of ambiguity.
There were always doubts, always a lack of “definitive proof,” always a
call for caution. That time is over. The material released leaves no
room for ingenuousness. When evidence emerges of extreme violence
against children, of practices that go beyond any conventional criminal
category, the discussion ceases to be legal and becomes civilizational.
What is at stake is no longer who “visited the island” or who “caught a ride on Epstein’s plane.” What is at stake is the fact that networks of this kind only exist when they are backed by deep institutional protection. There
is no ritual pedophilia, no human trafficking on a transnational scale,
no systematic production of extreme material without political, police,
judicial, and media cover. This is not conspiracy: it is the logic of
power.
From this point on, the West can no longer hide behind the
idea of gradual decline. It is not merely cultural degeneration or a
loss of values.
It is something darker: an elite that operates outside any recognizable moral limits and yet continues to govern.
People directly or indirectly involved with this world continue to
decide elections, wars, economic policies, and the fate of entire
societies.
Another decisive element is that we still do not know
who is behind the leak. This uncertainty is central. It may be a move by
Donald Trump or by sectors aligned with him, attempting to definitively
destroy their internal enemies and reorganize power in the United
States in a minimally positive direction. It may be the opposite: a
controlled release of material intended to pressure Trump into serving
the interests of the Democrats and the Deep State.
And the
uncomfortable truth, impossible to ignore, is that all of this may
still be part of an even deeper and more macabre plan by the Deep State –
encompassing both Democrats and Republicans – to “resolve the Epstein
issue” through a brutal campaign of collective desensitization,
“normalizing” in public opinion the idea that the Western elite is
composed of pedophiles, satanists, and cannibals.
This reinforces a critical point: the truth only came out because it stopped being useful to keep it hidden.
For
decades, all of this was known behind the scenes. The silence was not
the result of investigative failure, but of a high-level decision.
The press stayed silent. The agencies stayed silent. The courts stayed silent.
The system worked exactly as it was supposed to, all in order to protect itself.
Western
societies now face a dilemma that cannot be resolved through elections,
parliamentary commissions, or encouraging speeches. How can
one continue to accept the authority of institutions that shielded this
level of horror? How can respect be maintained for laws applied
selectively by people who live above them? How can one speak of “Western
values” after this?
The problem is that the modern West has
forgotten how to react to anything that is vile and essentially evil. In
Western societies, the people no longer know how to deal with absolute
evil – especially when it is located at the top of society. Everything
becomes procedure, everything becomes mediation, everything becomes
technical language. Meanwhile, social trust evaporates.
This is no longer about left and right, liberalism and conservatism. It is about a rupture between people and elites.
Between
societies that still retain some sense of limits and a ruling class
that operates as if it were outside the common human species.
If there is anything positive in this moment, it is the end of naivety.
It
is no longer possible to pretend that the system is “sick but
recoverable.” What remained of the Western (anti-)civilizational project
has been corroded from within. What comes next is still uncertain – and
will be contested by all possible and necessary means.
But one thing is clear: after Epstein, nothing can continue as before.
Anyone who acts as if nothing has changed either does not understand
the gravity of what has come to light or is pretending not to
understand.
The real risk is not what will happen in the market but how the authorities will react. They perfectly know, as we do, that we are approaching the end game and there will therefore be no retrain whatsoever in their answer. Expect the worse.
Dowd says, “This is a big call, and what is going to happen does
not happen that often. We will try to call the bottom in the future,
but right now, I have never seen risk like this before in my career.
This has been unfolding. . .. I have not been wrong in the 2025 call.
The stock market did go up 17%, but the rest of the economy imploded.
Real estate started rolling over. . .. Unfortunately, because this is
such a bubble because they kicked the can down the road . . . the odds
of this happening fast have increased exponentially since the beginning
of 2025.”
Dowd goes on to explain, “The three fundamental risks that we see for
the US economy for 2026. . .. There are two internal risks and one
external risk. The first risk is US housing crisis/white swan event.
Immigrants came in and filled the gap. That’s now stopped. . ..
Deportations are going to continue over the next year to two years, and
that is going to continue to put pressure on homes. Affordability is a
disaster. Incomes do not allow people to buy homes at these prices.
The only way to correct this is home prices dropping 25% to 30% over the
next two years. That would set us up for a recovery.”
Dowd continues, “The second risk to the US economy is a stock market
bubble. The valuations are as bad as the Dot Com bubble. This is
driven by the AI bubble, and we see the cracks are starting there. We
expect that to pop sometime this year. The third risk is China. It is
entering into the acute phase of its economic crisis. This is going to
be a global contagion. It will hurt Japan and South Korea, and this
will spill over to the US. . .. It will be a liquidity crisis, and that
is why we are bullish on the US dollar.” (Dowd has new cutting-edge
analysis on China for institutional investors. It has shocking new and
never before released details about how much trouble China is really
in.)
Dowd goes on to point out, “We have a lot of headwinds
coming at us in 2026. . .. We think the first problems will begin in the
shadow banking system, which is private equity, private credit funds
and all these non-depository financial institution loans commercial
banks made over the last two years. (See BlackRock story above.) All
their loan growth came from that source. There was no loan growth in
commercial and industrial. It was all in the shadow banking system.”
Now for a real mystery in low earth orbit. It could be nothing much although most interesting stuff usually starts with nothing much. An anomaly we can't explain. Data which doesn't square. Information we do not understand. Then, suddenly, a new paradigm.
Just over a month ago, on Dec 17, alongside the news that Abu Dhabi was set to invest billions in OpenAI thus
preventing a year-end tech rout, we said that ORCL CDS - which on that
day hit the widest level since the 2008 financial crisis at 156bps - "may have gone a bit too far"...
... and sure enough, for the next month or so, Oracle CDS tightened rather notably. However, we certainly did not expect
the company to just sit there and do nothing, as the market started
asking questions again about where the tens of billions in committed
funding would come from. After all, we were the first to lay out back in
November the case why Oracle CDS should be trading much wider than it was at the time (see "Oracle Is First AI Domino To Fall After Barclays Downgrades Its Debt To Sell.")
And since nothing changed, the questions started coming in once more.
First, it was Morgan Stanley's analysts (here for pro subs) with a major cut to their ORCL price target. The reason: "GPUaaS is a sizable revenue opportunity, but our collaborative deep dive across the equity, credit and GVAT teams suggests the buildout will push EPS below targets and drive materially higher funding needs. Equity valuation appears to reflect this, while credit still looks rich."
If that wasn't bad enough, in the same report the bank's credit analysts said that they "reiterate our recommendation to buy 5Y CDS protection.
Our new funding and leverage forecasts, paired with technicals, limited
financing plan transparency, and our prior IG situation comp analysis,
all support a move toward ~200bp, in our view. In regards to the bonds, a
common question from investors this year has been whether current
levels are a good entry point. We do not think this is case. We actually
present even wider spread targets (~200bp for 10Y vs. ~170-175bp
presented pre-Thanksgiving, ~250bp for 30Y vs. ~220bp, still using a
media/ cable comp set) and formally introduce sell recommendations on the 35s and 55s."
And
then it went from bad to worse for Oracle just three days later, when
on Jan 26 TD Cowen's Michael Elias, published a report which crushed
ORCL, not only sending its stock to a new 7 month lows, but pushing its
CDS wll above the Dec 17 high.
That's because according to Elias, who certainly does not mince his words when it comes to criticism of Oracle, the
company is considering cutting 20,000 to 30,000 jobs and selling some
of its activities as US banks pull back from financing the company’s AI
data-center expansion. The job cuts would free up $8 billion to $10 billion in in much needed cash flow. Recall that according to Barclays, absent dramatic changes to its business, the company could run out of cash as soon as the end of 2026. Oracle is also weighing a sale of its health-care software unit, Cerner, which it acquired for $28.3 billion in 2022.
Below we excerpt from Elias' note "Oracle:
Ability To Procure Incremental U.S. Data Center Capacity Faces
Challenges Amid Financing Struggles, Raising Questions On The Potential
For Incremental U.S. RPO Growth", also available to pro subs.
In
June 2025, we were the first to highlight via our channel checks
Oracle's intention to procure ~5GW of data center capacity in support of
OpenAI workloads, which proved accurate as Oracle in late 3Q25 leased
~5.2GW of U.S. data center capacity (which we highlighted in October)
including: 1) 1.4GW in Shackleford, Texas, 2) 902MW (critical IT) in
Port Washington, Wisconsin, 3) 1.0GW in Saline Township, Michigan, 4)
1.2GW in Doña Ana County, New Mexico, and 5) an incremental 672MW
(critical IT) expansion in Abeline, Texas. Amidst the largest ramp in
data center demand in history, there has been a material increase in the
demand for frontend construction loans/project financing from private
data center operators, particularly concentrated with Oracle given
timing, leading to ~$58B of debt being raised for Oracle/OpenAI data
center projects ($38B for Shackleford/Wisconsin and $20B for New Mexico)
in a two-month period, with more behind it.
However, with Oracle
to procure what our channel checks now indicate is ~3MM GPUs (and other
IT gear) to support its existing OpenAI agreement, both equity
and debt investors have raised questions regarding Oracle's ability to
finance this buildout, as demonstrated by widening of Oracle's CDS
spreads and pressure on Oracle's stock/bonds. Assuming a conservative $30MM/MW in IT fit out costs, the implied ~$156B capex requirement, coupled with separate questions on OpenAI's ability to fund its ~$1.4T in outstanding multi-year commitments, has led to multiple U.S. banks to pull back from lending to Oracle-linked data center projects. Furthermore, our channel checks indicate that multiple
Oracle data center leases that were under negotiation with private
operators struggled to secure financing, in turn preventing Oracle from
securing the data center capacity via a lease. In cases where U.S. banks are still open to lending, our checks indicate that borrowing
cost spreads for Oracle-linked data center projects have widened to
Non-IG levels (i.e. now SOFR+300-450bps vs. SOFR+225-250bps in
September).
As the borrowing costs for operators rise, the
result has been a slowdown in +100MW U.S. Oracle data center leasing by
private operators as the market digests the current Oracle financing
requirements. Importantly, our channel checks indicate that
banks in Asia are still willing to lend (at a slight premium relative to
historical rates) to data center operators undertaking Oracle leases as
these banks look to gain exposure to the AI sector, providing a path
for international Oracle expansion in support of incremental RPO. However,
the pullback in U.S. financing has raised questions regarding Oracle's
ability continue growing its revenue (RPO) in the U.S. if it continues facing challenges securing U.S. data center capacity to support OCI customer contracts.
The
punchline: amidst these surging capital requirements, which can no
longer be met by US-based banks, TD's latest channel checks indicate
that Oracle is now requiring 40% upfront customer deposits as it
looks to mitigate the incremental capex requirement for incremental
revenue (RPO) growth.
Furthermore, the channel checks
indicate that Oracle is evaluating multiple paths forward to address
financing questions including:
a RIF of 20-30K employees which could drive ~$8-10B of incremental free cash flow,
asset divestitures (potentially Cerner) which would allow Oracle to reduce its debt load,
vendor financing
Bring Your Own Chip (BYOC) which was highlighted as a potential on Oracle's latest earnings call
In the event of BYOC (which the TD channel checks confirm is a potential), TD questions if any
existing Oracle/OpenAI contracts would need to be re-cut given the
current $/GPU/hour pricing structure which includes the cost of the
GPUs. In the interim, Elias writes that the near-term
incremental demand needs of OpenAI have shifted to be fulfilled by
Microsoft and to a lesser extent Amazon.
It's
not just Morgan Stanley and TD: Sanchit Vir Gogia, chief analyst at
Greyhound Research, said the banking divergence as a critical warning
sign. “The difference in sentiment between US and Asian banks isn’t just
a minor detail; it’s the first serious sign of financial friction in
Oracle’s hyperscale ambitions,” he said. The $300 billion OpenAI deal
may look impressive, he added, but “when you look closer, it’s built on backlog with no guaranteed revenue and massive capex requirements.”
Gogia
argued that enterprises need to fundamentally rethink how they view
Oracle cloud contracts. “CIOs need to treat Oracle’s cloud buildout not
as a service agreement, but as a shared infrastructure risk,” he said. “If they can’t fund it, they can’t build it. And if they can’t build it, you can’t run your workloads.”
And
all of this, of course, takes place against a background of historic
cash incineration by Oracle and negative cash burn as far as the eye can
see, making what until recently was unthinkably, all too possible.
So
with the company facing a creeping squeeze of corporate distress and
junk bond spreads as sentiments turns apocalyptic, amid growing
speculation it will be forced to lay off tens of thousands and liquidate
its best assets, Oracle has predictably panicked, and on Sunday it unexpectedly announced plans to
raise $45 billion to $50 billion this year through a combination of
debt and equity sales to build additional cloud infrastructure capacity.
The
company plans to raise half of the funds via equity-linked and common
equity issuances, including mandatory convertible preferred securities
and through an at-the-market equity program of as much as $20
billion, something will will certainly depress its stock for the
foreseeable future as it sells stock on even the smallest of
breakouts. The rest of its funding target would be raised via a
single issuance of bonds early in 2026. The company borrowed $18
billion in 2025 in what was one of the year’s largest corporate bond
offerings.
Of course, as noted above, if Oracle does not raise
the money, it may very well find itself in a liquidity crisis or much
worse, so all David Ellison is doing, is whatever the market said he
should have done long ago.
According
to Bloomberg, Oracle is raising money to build additional capacity to
meet the contracted demand from the company’s largest cloud customers,
including Advanced Micro Devices, Meta Platforms, Nvidia, OpenAI, TikTok
and xAI, the company said in a statement Sunday.
The announcement
coincides with persistent fears about whether massive artificial
intelligence-linked investments by tech companies such as Oracle will
pay off. The company’s shares have fallen around 50% from its record
price on Sept. 10, wiping out roughly $460 billion in market value. And
the looming stock sales will lead to even bigger losses.
Developing
AI data centers - without concurrently collecting cash from its clients
- has pushed Oracle’s free cash flow negative, where it is expected to
stay until 2030. As a result of its terribly structured deals, the
company is on the hook for tens for billions of dollars in spending in
the coming years, largely on semiconductors and leases.
Issuing
equity would help send a message to the market that Oracle is serious
about maintaining its investment-grade debt rating, wrote John DiFucci,
an analyst at Guggenheim, in a January note.
“If Oracle
can complete the raise successfully it will start digging itself out of
the considerable hole it has found itself in,” said Gil Luria, an analyst at DA Davidson & Co.
Actually, even if Oracle can complete the raise, it still is facing massive funding shortfalls; and if it can't it could very well be lights out.
Making matters worse, the debt market will not have
an appetite for this much investment-grade debt from Oracle given its
existing commitments and trading in its credit default swaps, Luria
said. Issuing equity may also hurt the company’s stock price, which in
turn will spill over into its bonds.
Making this significant of
an announcement on a Sunday afternoon is unusual for a mature company
like Oracle. The timing, “could be the management team trying to stop
the endless slide in the share price by trying to give investors some
hope ahead of Monday’s open,” Luria said. Judging by where futures are
trading, the company could not have picked a worse day for its
announcement which will likely see the stock tumble double digits when
it opens for trading.
A key part of Oracle’s cloud investment is
its contract with OpenAI, which has committed to spending about $300
billion to rent servers from Oracle. OpenAI is not profitable, adding to
worries about the financial strains from huge capital expenditures
without a clear timeline for meaningful returns. In fact, OpenAI has
some $1.4 trillion in commitments to various other companies and if for
some reason the company announces this money won't be forthcoming in
time... well, just don't be stuck holding the world's biggest circle
jerk bag.
If you are worried about what's going on in the Gold and Silver markets, listen to the clear explanation below.
The moves at this stage are irrelevant. What's important is that the markets are breaking down and consequently are not able to reprice the precious metals in order to respond to the rush towards real, actual assets.
As paper assets revert to their intrinsic value of zero (as they have always done historically), the price of real assets are exploding in nominal terms. The more tensions, instabilities and conflicts around, the faster the pace.
This is history happening, not markets misbehaving.
