The money behind the machine.

The capital, the chips, the power and the people betting on all three.

DeepStack

Next on The DocketOct 15, 2026Treasury publishes August foreign holdings; renewed Japanese buying despite poor hedged…
Vol. I · No. 10 Independent analysis of the AI economy

The money behind the machine.

The tape

Live

  • 10-year Treasury5.28%−1 bp this week
  • 2-year Treasury4.77%−11 bp this week
  • 10-year real yield2.92%−1 bp this week
  • S&P 5007,802+2.0% this week
  • Brent crude$125.44+10.1% this week
  • CPI, Aug3.4%Core 2.4%
5 of 5 notes under pressure

Data: U.S. Treasury; S&P Dow Jones Indices via FRED; EIA via FRED; BLS

The Buildout · Part 10Markets

The Bubble Is in the Denominator

The S&P 500 looks cheaper because profits surged. But those profits depend on AI spending, chip values and debt that may be inflating the denominator while raising the discount rate.

By DeepStack9 min read

The Data Desk

Run the numbers yourself.

16 interactive charts built from the figures in The Buildout. Move the yield, cut the earnings, pick your entry point. The arithmetic is ours, and every source is named.

Data Desk · Part 10Markets

Run the denominator

The S&P 500 trades at 19.0 times forward earnings, which sounds reasonable until you set it beside a 10-year Treasury paying 5.31%. Cut the earnings, move the yield, and watch the cushion disappear.

The DeepStack read. The multiple is not the problem. The profits under it are. A 10% earnings miss at today’s prices turns 19.0x into 21.1x and leaves stocks yielding 57 basis points less than a riskless bond.

Source: FactSet (forward multiple and averages, as of Oct 2, 2026); CNBC (10-year close, Oct 5, 2026). Scenarios are DeepStack arithmetic, not forecasts.

Show the data table
ScenarioEarnings change10-year yieldMultipleEarnings yieldCushion
Today0%5.31%19.0x5.26%−5 bp
Earnings 10% lower−10%5.31%21.1x4.74%−57 bp
Howell’s 5.5% line0%5.50%19.0x5.26%−24 bp
Katsenelson’s 6%0%6.00%19.0x5.26%−74 bp
Miss and 5.5%−10%5.50%21.1x4.74%−76 bp
More in the Data Desk

Multiple at today’s prices19.0x

Stocks’ earnings yield5.26%

Cushion over Treasuries−5 bp

  • 5-year average19.8xtoday 0.8x cheaper
  • 10-year average19.1xtoday 0.1x cheaper
  • End of June20.4xtoday 1.4x cheaper

At 19.0x, stocks yield 5.26% on forward profits against 5.31% on the 10-year. Treasuries pay 5 basis points more than stocks. The cushion is gone.

Editorial Notes

DeepStack doesn’t do neutral.

Ten notes on what we cover, how we argue and what we owe you. Read them once. Hold us to them every time.

01

Every AI story is a financing story.

Models make headlines. Balance sheets make cycles. A product launch tells you what a company can do; a $35 billion debt tranche tells you what it has promised. We start where the money moves, in capital spending, credit, contracts and power, because that is where this cycle will be decided, and where it will break, if it breaks.

07

Steelman, then strike.

We give the other side its strongest form, attributed by name to the investor, analyst or company who makes it. Then we say where the evidence points. A piece that refuses to conclude is not balanced. It is unfinished.

09

Every verdict names its test.

We say what would prove us wrong and when we expect to find out. Those dates go on The Docket. When a test arrives, we report the result, especially when it goes against us.

5 of 5 notes are under pressure today.The Editorial Notes, tested against live Treasury, inflation, energy and profit data. Updated Oct 8, 2026, 6:30 a.m. ET. Read all 10 Editorial Notes

The Docket

The dates that will settle the argument.

Every DeepStack story ends with a test. These are the next ones on the calendar, and what each result would tell us.

  1. Treasury publishes August foreign holdings; renewed Japanese buying despite poor hedged returns would undercut the missing-buyer thesis behind the long-end selloff.

    Part 07: The Fed Hiked. The Long End Still Climbed.

  2. September-quarter results test cash flow toward $2 trillion and whether maintenance costs enter accounting.

    Part 08: AI Lenders Are Financing the End of Scarcity

  3. Microsoft, Alphabet, Meta and Amazon report; depreciation, server lives and 29.5% growth will test the earnings denominator.

    Part 10: The Bubble Is in the Denominator

  4. Meta reports its September quarter; users, transaction volume and fees would show whether downloads are becoming a business.

    Part 09: Habit Was the Moat. Agents Are Draining It.

  5. Short-term premiums collapsing toward long-term rates would weaken the backwardation warning; persistence would make it harder to dismiss.

    Part 03: The Machines Will Work. The Debt Might Not.

  6. ERCOT is due to verify its first large-load batch study; the cleared list shows whether Texas weeds out speculators or rations power.

    Part 06: Power Doesn’t Depreciate. Its Premium Moves.

  7. Alphabet discloses its higher 2027 budget; a rise in the stock revives the defense case, another fall validates the return test.

    Part 04: AI Spending Has Met Its First Real Bill

The series

The Buildout

Ten investigations into who pays for the AI build-out, who profits, and what breaks first. Read it in order, or start with the question that keeps you up at night.