By Eric Peters, CIO of One River Asset Management

Colosseums

"Classic late cycle," said Sparks. "Beginning of the end, that's what's unfolding," said the investor, entrepreneur, iconoclast. "At the end, everything converges to financial flows." In every huge cycle, the last stage is Ponzi-like. "Who's going to buy the last CDO? Who's going to buy the last CDO-squared? How do those securities even work? That's what happens in these cycles. The last securities to be issued are the most complex and hardest to understand. They're the riskiest," he said. "The cost of capital starts going up. This is how it always ends."

"You saw the Aussie data center IPO [here] that failed this week, right?" asked Sparks. "It's their neocloud equivalent, like CoreWeave, it's the type of sign we saw when the Bear Stearns hedge funds failed." Summer of 2007. "Some of the marginal deals will not pencil anymore." And that slows the whole machine down. "When that happens, investors go from the fear of missing out to the fear of holding the bag. That's a process, it doesn't happen overnight, but by the time these sorts of things are glaringly obvious, it's too late, checkmate."