Ways to tackle a global crisis ?

Early Warning Signs

As time goes by, these topics become more and more divisive: Are we on the brink of a financial crisis? Does the AI bubble actually exist? Two opposing opinions persist, each with its arguments. AI is certainly mankind’s most promising invention — but perhaps also its last. We are not creating a revolutionary tool like the steam engine or the Internet, but the human thought process itself. Advances in this field are moving faster than society can adapt. The grandiose ambitions of the AI giants are reaching uncontrollable proportions, both in terms of societal security and governance, and in terms of financial wisdom. That is where the topic becomes interesting.

Indeed, OpenAI shows a net performance of –$13.5 billion for $4.3 billion in revenue, yet it aims for a $1 trillion valuation in a future IPO by 2027. Amazon plans to invest $126 billion in building data centers by 2026; Meta, $600 billion by 2028; Google recently invested $6.4 billion in Germany alone; Apple plans $600 billion over four years. In short, an extreme frenzy driven by competition with China, Trump’s pressure, and the promise of a revolution unlike anything before. Simply put, according to an MIT study, 95% of companies developing AI tools generate no revenue. Furthermore, total AI-related revenues in the United States amount to only $41 billion. This shows that while these technologies are being massively adopted, their business models remain unstable for now.

On the other hand, funding mechanisms are complex and circular. Nvidia is investing $100 billion in OpenAI, on the condition that OpenAI buys its GPUs exclusively from Nvidia. It’s like saying: “I’ll give you €10 for your lemonade stand, but you have to buy €10 worth of lemons from me.” Wall Street counts €20, but in reality, €0 is created. These AI investments have surpassed total U.S. consumer spending, whereas until now, the driver of the economy had always been demand. Now, the engine has become the seven largest American companies, representing 37% of the S&P 500, burning cash among themselves. In other words, the U.S. economy is resting on reckless spending disguised as productivity. A representative chart is shown below:

Historical indicators confirm the same trend. The U.S. Treasury yield curve, for example, currently shows higher yields for short-term maturities than for long ones, indicating that institutional investors have decreasing confidence in the future of the economy. In a “stable” economy, longer maturities normally have higher yields — which makes sense. U.S. Treasury bonds are debt securities issued by the American government, allowing investors to lend money in exchange for repayment with interest. The higher the yield, the more investors fear the country might struggle to repay its debt at maturity. Below is the current U.S. Treasury yield curve:

This curve is closely monitored by financial analysts and is usually the primary indicator of uncertainty in financial markets.

Markets do not collapse out of fear, but out of confidence. Today, everything looks fine because the “Magnificent 7” represent 37% of the S&P 500 and inflate their valuations through dizzying circular deals. However, once the euphoria fades — due to the time required for these technologies to reach maturity and generate real productivity — what will remain are vacant jobs, declining purchasing power, oversized mega data centers, and households left without electricity because it is being diverted to power those data centers.

Nevertheless, some assets, aside from gold (which I have already written about), remain well protected from crises.

Lesser-Known Remedies

When public morale is at its lowest, markets are falling, and unemployment is peaking, essential goods become lifelines for investors. Milk, cleaning products, toilet paper, and soap all perform best when times are tough. Basic consumer goods are genuine refuges for human beings in times of crisis, and industries know this well.

Companies like Walmart (WMT) and Dollar Tree (DLTR) are leaders in the U.S. retail sector. During financial crises, these companies do not see their valuations collapse — they often outperform. At the end of 2008, Walmart gained +16% and Dollar Tree +78% while the S&P 500 posted a –35% performance. The same pattern was observed during COVID-19 in 2020, during the dot-com crash of 2001, and the 1987 stock market crash. These two giants capitalize on primary human needs while offering highly competitive prices.

Walmart (WMT), Costco (COST), Dollar General (DG), and Dollar Tree (DLTR) show an average performance of 33% over the past year (to date), while the S&P 500 stands at 14% over the same period. Revenues are stable and their business models are solid. These giants are built to thrive.

ETFs grouping companies that sell consumer staples also include tobacco and alcohol distributors. These two sectors provide products heavily consumed during times of anxiety and crisis. They are therefore assets that deserve just as much attention. Examples include Altria Group (MO), former parent company of Philip Morris and now of Marlboro, or Diageo (DGE), owner of Guinness and Smirnoff.

Common Sense

It doesn’t take extensive analysis or research to understand that essential goods become highly sought after when the world begins to shake. News channels portray this very clearly, and major retailers benefit from it. In France and across Europe, nothing changes: the major companies in the sector offer almost the same services as in the United States, and revenues rise in the same way. This leads us to common-sense investing: if a restaurant is fully booked every night, its revenues will likely grow, and its stock would also have a high chance of rising — if it were publicly traded.

Finally, markets must be monitored closely. A financial crisis is not necessarily imminent, but one must remain objective and rational. Gold and essential consumer goods will still be here in ten years — they meet fundamental needs of civilization, and that alone reassures any investor.