1AI money is splitting between firms that fund from cash and firms that must borrow
The firms paying for AI out of their own cash flow were rewarded on Wednesday. Meta beat third-quarter revenue estimates and announced a 2-for-1 stock split. Its shares traded about 6% above the $698.54 close in early after-hours trading. SpaceX closed at $159.31, up 7.7% on the day after its Tuesday beat. Nicholas Owens, an equity analyst at Morningstar, told Prof G Markets that SpaceX's AI revenue rose more than 800% from a year ago. He added that two customers make up about 40% of that revenue. He also said his fair value is roughly half the market price.
The borrowers are paying more. Andy Constan, founder of Damped Spring Advisors, said on Excess Returns that CoreWeave issued debt at around 8%, and that debt now trades near 15%. The interest it already pays is unchanged, but its next dollar of funding costs nearly twice as much. Ross Givens, on his own channel, cited a Bloomberg report on a $38 billion loan for two data centres built for Oracle and OpenAI. He said banks took months to sell it down, and some lenders offered their pieces at a discount. Ed Elson, on Prof G Markets, noted Oracle's five-year credit default swaps hit a record last week. On Equity Mates, Bryce Leske and Ren Tan said CoreWeave's swaps imply a better than 60% chance of default within five years.
Constan does not expect contagion. He argued the neoclouds are backstopped by promises from Microsoft, Google and OpenAI, which are tiny next to those firms' size. His risk case is a slower build-out that could cut AI stocks by 30%, which he called "stocks selling", not a financial crisis. FRED supports the narrow reading for now. The US high-yield spread was 3.33% on 20 October, barely wider than 3.29% the day before. Givens frames the same facts as a bubble at stage three of four. He says the missing trigger is falling GPU rental prices, and those are still rising. He cited a median $3.81 an hour to rent an Nvidia H100, up 28% in a year. The so what: lenders are already separating the AI build-out by balance sheet. The equity market will only follow if rental prices roll over or a hyperscaler cuts its capex plan.
2Whether the chips already bought are being used is now an open question
A Business Insider report says Amazon is taking delivery of Nvidia server racks it cannot yet install. Ed Zitron, of Where's Your Ed At, went further on Prof G Markets. He estimates at least $200 billion of AI chips sit in warehouses. He reads the report's "early rack receipt" programme as Nvidia pushing sales into the channel to support its revenue. Elson pushed back on the show. He said slower data-centre construction, power hook-ups and local opposition explain the mismatch just as well. The two did not settle it. A cut to hyperscaler capex plans would favour Zitron. Rising construction-in-progress balances with stable orders would favour Elson. Elson also cited Ramp data showing token spending flat for two months. The Equity Mates hosts made the same point, partly crediting cheaper and more efficient models.
Anthropic's filing landed in the middle of this. Elson read the Wall Street Journal's account of its draft prospectus. It shows a first-half 2026 net loss of $81 billion, of which $72 billion is a non-cash fair-value charge on convertible notes. Zitron put the underlying loss nearer $8 billion, against about $413 billion of commitments that cannot be cancelled. A host of The Compound and Friends read it the other way. He said revenue growth now outpaces expense growth, which is what the company needs to show to list. Prediction markets moved toward a listing. Kalshi prices an IPO announcement before 1 December at 81%, up from 71%, on about 106,000 contracts of open interest. Before 16 November is 25%, up from near zero. The so what: Anthropic's pricing will be the first public mark on an AI lab. Zitron expects about $1.5 trillion rather than $2 trillion.
3Treasury policy is leaning against 5% long yields while Gulf risk pushes oil up
The 10-year Treasury yield was 5.12% on 20 October, down from 5.15% a day earlier, per FRED. Constan argued Treasury is holding long yields down by policy. He counts $192 billion a year of buybacks of 20- and 30-year bonds against about $444 billion of long-bond issuance. He said the buybacks are funded with bills. That lowers yields and lifts asset prices, but he called it inflationary and outside Treasury's mandate. The next test is the quarterly refunding on 4 November. A further cut to long-bond supply would, in his view, send equities and gold up and the dollar down. He expects instead 10-year yields to sit between 5% and 5.25% for three to four months. That would weigh on borrowing and spending, so he said he owns bonds and is short equities.
Oil is pushing the other way. Reuters reported the US ordered diplomats to leave Saudi Arabia after Houthi strikes, and one person was killed at King Fahd airport. December WTI futures rose 2% overnight to about $99. FRED's spot WTI printed $107.89 on 20 October, so the front of the curve still carries a large premium. Kalshi's contract on WTI above $115 by year-end fell to 35% from 39%, on about 715,000 contracts of open interest. Polymarket prices WTI touching $110 in October at 15.5%. So the escalation is moving prompt prices, not the year-end tail. Kalshi still prices a hold at the 28 October Fed meeting at 89%, up from 88%, with a hike at 11%. The Fed already raised rates in September, FRED's effective funds rate shows, from 3.63% to 3.75%.
Gold is caught between the two forces. It fell 1.5% overnight to about $4,087 an ounce. Felix Prehn, on Felix & Friends, cited Goldman Sachs estimates that central banks bought about 100 tonnes a month over the last three months. That is about five times the pre-2022 pace. He also cited UBS seeing value near $4,000. The Equity Mates hosts warned that gold often falls with shares at the start of a crash. It dropped almost 30% in 2008 and about 12% in two weeks in March 2020. France is the warning case. Thierry Wizman, a strategist at Macquarie, said on Prof G Markets that France's 10-year yield reached 4.93%. He said the US differs because it still grows faster and borrows in its own currency. The so what: 4 November decides whether long yields are set by policy or by supply.
4Democratic Senate odds rose again as the campaign turns to company pledges
Kalshi prices a Democratic House at 91.8%, up from 90.8%, on about 14.3 million contracts of open interest. The Senate moved more. Kalshi has Democrats at 66%, up from 65%, and Polymarket has 66.5%, up two points, on about $131,000 of 24-hour volume. A commentator on Prof G Markets said Republican money is being moved to defend Senate seats in Texas, Iowa and Alaska. The President is campaigning on investment announcements. He posted that Apple committed up to $100 million to buy Pennsylvania titanium for its next iPhone, and urged voters to "remember this Investment on Election Day". A separate post said large new data centres should generate their own electricity and pay local communities a "dividend". He also urged the UK to drill the North Sea "FULL BLAST" and take down wind turbines. The so what: the House is largely priced, so the Senate is where a surprise would still move policy-sensitive sectors.
Thursday tests whether the Meta rally survives an oil-led open
US futures fell overnight. Around 00:30 ET, S&P 500 futures were down 0.9% and Nasdaq futures 1.6%. Headlines pointed at the Saudi evacuation and at investors weighing Tesla and Meta results, but none confirmed the cause. The first test of claim one is whether Meta's after-hours gain holds once the cash market opens. Lockheed Martin and General Dynamics are scheduled to report Thursday morning. On 28 October the Fed decides, and Microsoft and Alphabet report. Amazon follows on 29 October. Givens named those calls as the first place a capex cut would show. Treasury's refunding on 4 November then settles claim three.
