1The AI sell-off has moved from share prices into credit, and private valuations have not caught up
The trigger was a bond, not an earnings miss. Ed Elson, on Prof G Markets, noted that one CoreWeave bond touched a 15% yield last Tuesday, its highest ever. The shares fell 26% on the week. Elson then listed the knock-on falls from the same week. Nebius lost 22%. Micron lost 16%, and SK Hynix 18%. Nvidia fell 7%, AMD 12%, Intel 13% and Oracle 9%. One company's borrowing cost repriced the whole supply chain. That makes it a read-through, not an idiosyncratic miss.
Scott Galloway, on the same show, put the mechanism in balance-sheet terms. He cited a market value of about $37 billion against roughly $52 billion of debt. When two-thirds of a firm's value is debt, a modest fall in enterprise value can wipe out most of the equity. He added that each extra five points of interest on $50 billion costs about $200 million a month. Bryce Leske and Ren Tan, in an Equity Mates clip, gave the operating version. CoreWeave guided its quarterly interest bill up about 40%, to $860–940 million, while revenue is guided up 37%. For now the two are growing at the same pace.
Public prices have adjusted faster than private ones. Elson called Nvidia reasonable at about 16 times forward earnings, and said memory makers trade at three to five times. His concern is the private labs. He said Anthropic reported third-quarter revenue of $16.8 billion, up about 50% on the quarter, which was slower than the prior quarter's doubling. A $2 trillion listing would be roughly 30 times that run rate, against about 10 times sales for listed chipmakers. Galloway expects the listing to slip. Kalshi prices an official Anthropic IPO announcement before 1 December at 59%, down from 63%, on about 100,000 contracts of open interest. That leans the same way, but it is not a verdict.
Monday's tape cut against the panic. The Nasdaq 100 had its best day in nearly a month, and Morgan Stanley's call for Amazon as a top pick led Dow gainers. The bounce did not carry into Asia: South Korea's KOSPI opened 3.5% lower on Tuesday, led by tech. Two sources on Excess Returns described the next stage differently. Ben Hunt expects the government to backstop AI debt eventually, but only after more pain. Jim Paulsen sees a 15% fall in the S&P 500 and over 20% in tech, followed by another leg up. Neither is predicting a 2000-style collapse.
Software is where the selling stopped. Galloway cited weekly gains of 9% in Salesforce , 7% in SAP and 5% in Shopify . His point was that buyers preferred companies already selling AI over those financing its build-out. The so what: until neocloud yields fall, the debt market, not earnings, is setting prices for the build-out.
2Ten-year yields above 5% make bonds a real alternative again, as inflation keeps running ahead of pay
Barry Ritholtz, in a clip on Excess Returns, said he loves bonds, something he said he had not said in a quarter century. His reasoning is the yield. FRED shows the 10-year Treasury at 5.09% on 16 October, down from 5.19% two days earlier, and Yahoo quoted it near 5.14% overnight. He puts high-tax-state munis at roughly 8–8.5% tax-equivalent. He attached two caveats: stay investment grade, and avoid "the wacky circular AI-funded stuff" held in special-purpose vehicles. A Compound and Friends clip made the same point more plainly. One host buys individual Treasuries timed to fall due when his quarterly tax bills arrive.
The inflation data behind the yields is poor for wage earners. Elson cited September consumer prices up 3.7% on the year, the highest since May, with gasoline up 34%. Producer prices rose 6.3%. Average hourly earnings grew 3%, so real pay fell 0.7%, the sixth straight monthly decline. FRED's CPI index rose 0.65% in September alone, from 334.13 to 336.30. Galloway framed the result as an asset-owner economy. He said wealth for Americans 75 and over is up 37% since 2022, while for those under 35 it is down 23%.
The outlook for rates is split. Fed funds averaged 3.75% in September, up from 3.63% in August, after the first hike of this cycle. Kalshi prices a hold at the 28 October meeting at 86%, with a 25-point hike at 14%, on about 1.9 million contracts of open interest. Both were unchanged on the day. Paulsen argues the other way. He says oil stuck near $100 stops adding to inflation month to month, so slowing growth will force the Fed to ease and yields will fall. His warning is that cuts made for recession reasons have often come with falling stocks, not rising ones. Kalshi's November inflation contract still prices a reading above 3.8% at about 65%, on thin daily volume. The market does not yet see the disinflation Paulsen expects. The so what: if he is right, today's yields are a ceiling worth locking. If the market is right, they could rise further.
3Oil's war premium is easing near term, but the December tail is still priced
Crude has fallen since Washington waived some Russia sanctions to keep diesel flowing. Reuters reported Brent edging lower even after Houthi attacks on Saudi infrastructure. December WTI traded near $99 overnight, up 0.6%. Kalshi's contracts show October's high is probably in. Every strike up to $103.50 has already settled "yes", and a move above $104 by 30 October trades around 36% on thin volume. The longer tail has barely moved. A WTI print above $115 before year-end still trades at 36%, down from 38%, on about 708,000 contracts of open interest.
Two forces pull in opposite directions. The waiver dominates near term because it changes this month's diesel supply. The Strait of Hormuz is still disrupted. Iran's foreign minister blamed the US for the tension on Sunday, and Egypt has delayed a vote on military support for Saudi Arabia to 26 October. Neither front looks settled. The so what: the market is pricing a calmer October without pricing a resolution.
The next ten days test whether earnings can outrun the borrowing bill
Capital One and General Motors report on Tuesday. Meta, Tesla, IBM, Lam Research and Texas Instruments report on Wednesday after the close. Netflix is also expected this week, though no confirmed date was found. The Fed decides on 28 October, the same morning GE Vernova reports. That report checks Ross Givens' reiterated case, in a short re-cut from last week's video, that its gas-turbine order book reaches into 2031.
Two numbers matter most. One is whether hyperscaler capital spending guidance holds now that funding costs more. The other is whether the Fed's statement validates the 86% hold priced on Kalshi, or moves toward the second hike some sources expect.
