Redeye Macro Note: The Pushback Against Data Centers has Begun, Notes on AI Bubble

In this Redeye Macro Note - we discuss the mounting opposition to data centers at the community level, talk about continued warning signs for the AI bubble, Oracle issues, and more.

Don Johnson (@DonMiami3), Chief Economist

Good Saturday evening MacroEdge Readers & Community,

This evening we’re going to switch away from the in-depth post-FOMC discussions & dive into some of the repo issues that the Fed is attempting to front-run (hint: they’re already late). Tomorrow evening we’ll be pivoting back towards the important end-of-year macro discussions - with things like the Fed’s difficulties in controlling the long end, and what to expect from the Bank of Japan hike, but given the continued narrative-obsession among pundits, investors, and ‘experts’ on the matter - we’ll spend this evening’s brief Redeye Macro Note talking about… what’s being talked about.

My coverage of OpenAI’s troubles has spanned the greater part of 2025 - especially on X - but the thematic is finally starting to gain some steam. Instead of the cancer cures and AGI we’ve been promised, we’re now watching a bizarre devolvement of AI-sector business leaders into Michael Saylor form with calls for data centers in space, nationalization of data centers, & much more in the past two weeks. All of this to say, the calls of industry leaders for these particular items should be a red flag for the financiers of said existing projects, because much of the sector (particularly the LLM space) is built on a profit moat that doesn’t exist… hence the pivot to porno generation. While the data center collection on Americans is a dream for advertisers, marketers, and maybe even… government…(?), the profit dreams are fading into the new year.

The age-old adage of the only two things being guaranteed of this life being death and taxes should really include the world’s oldest profession, which is self-explanatory in the context of this article. This time, we’re merging both the latest technology & its backers, and the world’s oldest profession, combining with the latest LLM technology for super-powered at-home porno/erotica generation.

What bizarre times we’re living in.

Warning Signs - Mass Retail Coverage and Magazine Covers

Jensen Huang - Circular Financial Engineering Cheerleader of the Year (FT)

While Jensen has created a financial war machine, the party’s music has become noticeably less loud of late, with his stock price being flat for the second half of the year.

Just how dumb is it going to get, and what will Americans tolerate? Fox Business - Americans should buy artificial Christmas Trees to support data centers (12/12):

The Time ‘people of the year’ - also happen to the be the ‘Architects of AI’

The above are just a sample of many of the warning signs we’re seeing for the industry, coupled in my mind with the fact (as I alluded to months ago) that several people I know personally have gone out and raised AI-capital in the blink of an eye, and I wound’t trust them with my car keys, or a dime, for that matter.

AI Troubles are Mounting - Porno Pivot, Debt Issues, Investor Skepticism

Why the pivot to porno, one might ask? It’s incredibly profitable (obviously) - and efficient within the constraints of OpenAI’s limitations. It’s likely not enough to save OpenAI with its current model, however.

Fire up your backup generators so that wackos at home can generate their erotica fantasies from the comfort of their homes… Bizarre world, isn’t it?

On top of that - Ellison’s Oracle - one of the architects of the whole data center ‘boom’ - starting with it’s massive Stargate project in Abilene, Texas - is seeing its bonds trade like junk.

Oracle credit default swaps (5-YR) are the highest since the GFC… below:

Rumor also has it (while Oracle denies it) that projects like Stargate have pushed back completion timelines for its Open-AI-related data centers due to a variety of issues (likely financing, though that won’t be said).

Data Center Opposition is Just Beginning

The second major (and undiscussed issue) is that opposition - political, environmental, and community opposition to data centers is starting to ramp up. While the ‘blitzkreig’ first-mover approach of data center builders & backers was rapid in 2024 & 2025 - the opposition is finally finding its feet, and politicians are catching on.

Missing the macro notes from our team? Get 7-day access to MacroEdge Ozone - and never miss a beat.

(Continued below):