Nobody Special Finance
Flight To Safety as Bonds and Yen Rally while Tech Sells Off
Investors are running for the perceived safety of US treasuries and covering their Yen shorts this morning after earnings from Tesla and Meta were not enough to stop the sell off in AI names.
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SpaceX Turns a Profit While Anthropic Losses $80B in 6 Months
Two wildly different financial profiles have emerged over the last few hours as SpaceX posted their first quarterly profit since going public while Anthropic's losses exploded higher reaching $80 billion in just the first 6 months of this year.
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Amazon Has Billions in GPUs Sitting Idle in Warehouses
Internal Amazon emails leaked to Business Insider show that the hyperscaler is buying billions of dollars worth of Nvidia Blackwell GPUs despite having nowhere to plug them in and no power to run them.
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Neocloud Nscale's IPO in Jeopardy After Microsoft Pulls Out
Nscale is the latest neocloud to run into trouble after Microsoft pulled out of a datacenter project in the UK over the weekend causing IPO investors to push back on the $30B valuation the company was asking for. This combined with what happened earlier this month at Firmus, AirTrunk, and Coreweave has investors worried about neocloud contagion.
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Anthropic Investors Push Back on IPO Valuation As Growth Slows
Potential investors in Anthropic's blockbuster IPO are pushing back on Dario Amodei's proposed $2 trillion valuation after revenue numbers presented at the company Investor Day showed slowing growth.
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Lennar Caught Selling Homes to Themselves | Melody Wright
Melody Wright joins me to talk about a recent short report published by Hunterbrook highlighting how Lennar is using a land bank company they spun off last year called Milrose Properties to artificially inflate it's home sales.
Link to Melody's Substack.
Link to Hunterbrook's short report on Lennar and Millrose.
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Coreweave is Breaking Everything
If only somebody had warned us about this company years ago.
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CPI Shows Inflation Higher Than Expected in September
The Consumer Price Index (CPI) came in higher than expected at 3.7% causing stocks, bonds, and precious metals to trade lower on shifting expectations for the Federal Reserve's next move on October 28th.
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South Korean Stocks Sell Off on China Memory Chip News
Trading on the South Korean Kospi index was halted yesterday after a sudden selloff in memory stocks was triggered by news of a breakthrough at Chinese rival CXMT as AI bubble worries continue to pile up.
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Banks Struggle to Offload Datacenter Debt
A group of big banks has struggled for six months trying offload billions of dollars of debt tied to Oracle data centers. Now the banks are lowering prices and offering Significant Risk Transfers (SRTs) instead raising questions about just how much appetite there really is for the endless stream of new debt being issued by the AI industry.
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OpenAI's Revenue Run Rate is $20 Billion Less Than Reported
Tech stocks sold off yesterday on reports that OpenAI's run rate, a fictional accounting statistic that is not recognized by auditors or regulators, was $20 billion less than previously reported.
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Broadcom to Help OpenAI Raise Another $50 Billion in Debt
Another day, another AI debt story. This time it's Broadcom helping OpenAI to raise another $50 billion just a day after SpaceX announced their own $40B debt deal in a year that has seen AI companies tap debt markets for hundreds of billions even despite rapidly rising interest rates.
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SpaceX Adds Another $40 Billion to AI Debt Bender
SpaceX is borrowing yet another $40 billion to buy Nvidia chips in a financing deal being led by Apollo, who had some interesting things to say about the risk of such debt just a few days ago.
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S&P Opens at All Time Highs As Yields Relax and Oil Flows
Friday's decision by France to avoid a US export ban by releasing crude oil and diesel reserves has resulted in welcome respite for the global bond market and energy prices. But how long can it last?
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Larry Ellison and Oracle Have a Debt and Power Problem
The Ellison Family and the corporations they control have been on a debt bender for the last few years and it's starting to show in the bond and CDS markets as investors begin to wonder about their "Larry Ellison Risk." Making matters worse is the story of yet another Oracle datacenter being delayed by regulatory approval of the transmission lines that would power it.
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Jobs Report Disappoints Casting Doubt on Next Fed Move
The US economy added fewer jobs than expected in September combined with some big downward revisions to prior months. This has traders betting the Federal Reserve will not hike interest rates at their October meeting.
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China Bans Diesel Exports as US Threatens the Same if EU Doesn't Help
China has effectively banned diesel exports in the latest blow to global fuel inventories as the US is threatening to join in with it's own ban if Germany and France don't release their some of their own diesel reserves.
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Oil Up Despite Saudi Pipeline Restart
Oil is higher this morning despite some encouraging supply news out of Saudi Arabia after both Iran and the US planted their feet and refused to budge on their demands for ending the conflict.
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France Sending Troops, Air Defenses to Protect Saudi Oil
French President Emanuel Macron says French soldiers, radar, and air defense systems will be deployed to Saudi Arabia to protect the vital oil port of Yanbu from Houthi attacks. Moments later he reassured the world that France was not getting involved in the conflict(?).
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Global Bonds Selloff After PMI Data and Disaster Auction Send Yields Soaring
There was mayhem in global bond markets yesterday as investors punished US treasuries following a combination of higher energy prices, an inflationary PMI reading, and a disastrous 5 year bond auction. Meanwhile AI debt continues to compete with Uncle Sam for increasingly scarce liquidity.
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Trump Pushes Diesel Ban Amid Record Prices
President Trump is pushing for a US ban on diesel exports as prices continue to make new highs daily. That will almost certainly make things worse.
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Oil Falls Again on Diplomatic Hopium
The price of oil is falling again this morning after unconfirmed reports out of Iran offer a glimmer of hope that a diplomatic solution to the war in Iran might be found
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OpenAI Will Burn Through $278 Billion By 2030
OpenAI will burn through $278 Billion over the next three years according to a Friday news dump that Sam Altman was hoping you missed. Meanwhile pension fund managers are finding that "diversification is an illusion" as AI risk is now everywhere you look.
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Palantir CEO Says OpenAI and Anthropic's Goal is be Nationalized
Palantir CEO Alex Karp made waves yesterday when he claimed in an interview that the AI safety narrative is being used to hide the real goal of OpenAI and Anthropic which is to get nationalized in order to shield themselves from liability.
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Market Rallies Following Fed Rate Hike
Just about everything is rallying this morning, reversing yesterday's broad selloff following the expected rate hike at the Federal Reserve. So now what?
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OpenAI Needs Money Again | Asian Oil Buyers Scramble
OpenAI needs money again, and with their IPO stalled that means they are once again turning to a private funding round, this time at an eye-watering $1.2 trillion valuation. Meanwhile Saudi Arabia has cancelled September loading of crude oil following the Houthi attacks on their east-west pipeline. This has buyers from all over the world scrambling to find supply in the spot market.
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Private Credit Defaults Hit 6.3% and Software Isn't The Problem
For months, the prevailing narrative in the financial press surrounding private credit has been a) the worst is behind us and b) the problem is AI disruption of software. Well you can forget everything the financial press has told you about private credit because a recent report from Fitch says the exact opposite is true.
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Tech Falls as AI CEOs Call For Slowdown | Oil Rips on Pipeline Damage
Tech stocks are selling off this weekend after Anthropic CEO Dario Amodei published an essay calling for a slowdown in the pace of AI development with OpenAI CEO Sam Altman and SpaceX CEO Elon Musk quickly chiming in to support the idea. Meanwhile oil is higher this morning after initial damage assessment from the recent Houthi attacks on the Saudi East-West Pipeline suggests the multi-million barrel per day supply disruption could last several weeks.
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CPI Shows Inflation at 3.4%, Oil Drops Despite Headline Risk
The Consumer Price Index (CPI) came in at 3.4% for August, in line with expectations but still high enough to convince most that The Federal Reserve will raise interest rates at next week's FOMC. Meanwhile oil is sharply lower this morning after ripping higher yesterday amid a flurry of headlines from the middle east.
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PPI Inflation Hits 5.4%, Oil Breaks $100, 10yr Hits 4.9%
Inflation, crude oil, and long term interest rates are all higher this morning driving stocks and metals lower.
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Bessent Talking Smack to Yen Carry Traders, Brent Crude Hits $100
Scott Bessent is out with some fighting words for Yen Carry Traders this morning as the Yen continues to strengthen. Be careful what you wish for, Mr Secretary. Meanwhile oil is rising again after a series of escalations in the Strait of Hormuz saw multiple tankers sunk and a missile barrage launched at US bases in Jordan.
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Here's Everything You Missed in Private Credit's Friday News Dump
The private credit industry waited until you were distracted by the start of a long holiday weekend before they dumped several stories about bad loans, a developer collapse, resigning CEOs, and hundreds of millions in fraud exposure. Here is everything they were hoping you missed.
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Blowout August Jobs Report | The Yen Carry Trade is Unwinding
The August jobs report showed the US added 162K jobs for the month with a further 55K in upward revisions to previous months. Meanwhile there is an important story developing in Japan as the Yen Carry Trade appears to be unwinding, reversing years of capital flow out of Japan to the rest of the world with major implications for US tech and bond markets.
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They're Messing With The Yen Again, Oil Higher on Inventory Draw
The Japanese Yen is once again surging against the dollar this morning in what appears to be another episode of "Yentervention" where entities such as the Japanese Finance Ministry, The Bank of Japan, or even the US Treasury dump dollars and buy Yen to support the struggling currency. Elsewhere oil is higher this morning as US exports surge to offset supply disruptions caused by the war with Iran.
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Chevron Makes First Move in Venezuela, Data Points to Frozen Job Market
Chevron will spend $7 billion to roughly double it's Venezuelan oil production over the next five years, a relatively small yet symbolic move marking the first US oil major to invest in expanding production there since the Maduro raid back in December. Meanwhile several data points released since yesterday point toward continued weakness in the labor market ahead of Friday's all-important Nonfarm Payrolls report.
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Interest Rates Rise as Global Bond Selloff Continues
Interest rates are rising all over the world this morning as an ugly mix of inflation expectations and liquidity concerns are punishing long bonds in the US, UK, and Japan.
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Market Adjusts to Hawkish Warsh, Oil Up on Iran and Venezuela News
Markets are resetting their expectations for Fed rate hikes this morning after Kevin Warsh struck a notably hawkish tone Friday afternoon in his speech at Jackson Hole. But not all market participants are convinced Warsh will back up the tough inflation talk with action. Meanwhile oil prices are higher this morning after a busy weekend of geopolitical developments involving Iran and Venezuela.
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Markets Hold Breath Ahead of Jackson Hole and Annual Jobs Revisions
Markets are quiet (for now) ahead of Fed Chairman Warsh's speech at Jackson Hole and the annual benchmark revisions to the nonfarm payrolls reports.
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Nvidia Rips on Earnings, Magic Johnson's Insurance Co Under Scrutiny
Nvidia reported another quarter of significant revenue growth which is great news to anybody who can't read a 10Q and doesn't care about accounting fraud. Meanwhile Magic Johnson is the latest professional sports icon to be caught up in the Mark Walter Insurance Fraud scandal.
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PCE Shows Stubborn Inflation, Retail Earnings Indicate Consumer Stress
PCE Inflation came in slightly higher than expected doing little to change the market's current state of confusion regarding the Federal Reserve's next move on interest rates. Meanwhile earnings from Dick's Sporting Goods and Kohl's points to a consumer that is cutting back amid that stubbornly high inflation.
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