1007 | AI Debt, Bond Pressure, and Big Deals: The Day's Business Pulse

Mia: Welcome back to the desk — I'm Mia, and tonight we're walking through an after-market briefing built on what actually moved and what actually got reported in the last stretch of trading hours.

Milo: And I'm Milo. The thread running through almost everything tonight is money getting more expensive — yields at multi-decade highs, the Fed hinting at another hike, and companies responding in very different ways, from SpaceX borrowing tens of billions to franchisees balking at upgrade bills. Let's start with the biggest headline number of the day.

Mia: SpaceX. The company is in talks with Apollo and other banks and investors to borrow roughly $40 billion to buy Nvidia chips — and that would rank among the biggest debt financings ever for the AI buildout. This comes after SpaceX's record-breaking IPO in June, and since then rates have sold off, so yields on its own bonds have risen along with other AI-related bonds.

Milo: And the credit market has already reacted. A measure of SpaceX's credit risk surged to a fresh high on Wednesday, and its bonds weakened in the secondary market once the fundraising reports surfaced.

Mia: Jim Cramer, though, is staying bullish on Nvidia off this news. His argument is that SpaceX wanting that much compute shows companies are actually making a return on their AI investments — somebody is willing to put $40 billion of debt behind GPUs.

Milo: So you've got two readings of the same event: Cramer sees proof AI demand is real, while the bond market is pricing rising credit risk on a company taking on enormous debt at higher yields. Both are interpretations layered on top of the same facts.

Mia: The open questions matter here — whether the financing actually closes, and on what terms. Apollo and the banks are still in talks. What to watch is how this ripples through AI-linked credit more broadly: if SpaceX's risk gauge is at a fresh high, other AI-financed issuers' bonds are worth tracking too.

Milo: And there are adjacent threads in the AI story. SK Hynix's US-listed shares face a test Wednesday, because a lockup that prevented the firm, its affiliates, and management from selling shares just expired — that's another potential catalyst for a market already questioning how much further the memory boom can run. Microsoft, meanwhile, is selling a $2,599 Surface Laptop Ultra with an Nvidia AI chip, which shows it remains committed to making its own PCs even though it's not a top device maker.

Mia: Meta's Muse assistant has topped app charts, but it's free for now while the company searches for a business around its personal AI agent — adoption is there, monetization isn't yet. Google was ordered to halt work on two data centers in Finland, which has emerged as a key data center location amid the AI boom. And the FCC is set to vote on auctioning 25 megahertz of prime spectrum — a move that could benefit Amazon and SpaceX as both push direct-to-device satellite services.

Milo: One more voice on the AI question: Novogratz joined the crowd of billionaire investors warning of an AI bubble — but says the speculative frenzy in tech stocks will keep growing, so he's piling in anyway. That's an opinion, worth noting as sentiment rather than fact.

Mia: From AI credit to the Fed, because the rates picture ties directly into why that SpaceX borrowing is expensive. The Fed released minutes Wednesday from its September 15–16 policy meeting, and officials see another hike coming — but the minutes give no sign as to when.

Milo: BofA's Mark Cabana put the choice bluntly: it's hike or bond spike. His view is that markets and economies around the world are starting to feel the bite of higher rates, and the Fed needs to keep hikes on the table.

Mia: Now the tape itself: the 10-year Treasury yield hit its highest level since 2002 — a 24-year high — but backed off after a solid auction of 10-year notes eased demand fears. Treasuries actually rose after that strong auction, which signaled emerging investor demand at multi-decade-high yields.

Milo: And here's the puzzle John Authers tackled: the 10-year is arguably the most important number in global finance, and yields are supposed to move inversely with stocks. A move of this magnitude should be a problem for equities — but it hasn't been. Understanding why high yields aren't sinking stocks is worth the time.

Mia: The consumer side of this: mortgage rates rose again to the highest level in nearly three years, and refinance demand is now half what it was a year ago. Homebuying demand declined further too. And sentiment is souring — the New York Fed's Survey of Consumer Expectations shows the median one-year inflation outlook rose to 3.9%, the highest since May 2023, with Americans growing more pessimistic about their finances and one expert warning of tough choices ahead.

Milo: Internationally, the same rates pressure is showing up. European bank stocks sank toward their lowest since July — Societe Generale and Deutsche Bank both tumbling more than 5% — as political turmoil fears pushed bond yields higher. France's battered bonds are starting to tempt bargain hunters as the yield surge makes them look cheap. Mexico's companies are tapping the local bond market at a record pace, helped by lower rates at home and looming maturities.

Mia: Which brings us neatly to earnings season, because rate-sensitive consumers and blockbuster profit expectations are about to collide. Q3 earnings kick off this week, and the anticipation is for results that could propel the S&P 500 to new heights.

Milo: Two early reads tell you the picture is mixed. Constellation Brands beat earnings and revenue expectations as its beer brands gained share — but overall beer demand is weakening, so Constellation is getting creative to bring drinkers back, and inventory rebuilding plus consumer caution are clouding the demand picture.

Mia: Levi Strauss also beat earnings expectations Wednesday and hiked profit guidance — but there's a caveat: part of the benefit came from tariff refunds, and its sales outlook is less optimistic. So you've got beats at both names, but neither is a clean demand story.

Milo: And the consumer backdrop is softening behind these numbers — we just covered the pessimism data. Lululemon made a competitive move in this space, poaching Athleta CEO Maggie Gauger as its new chief product officer, a newly created role.

Mia: Around the equity market itself: there's talk of a strange market anomaly creating a buying opportunity in the Nasdaq 100 — the argument being that instead of buying QQQ outright and taking severe downside risk, buying calls at current option prices is a smarter, capital-efficient way to stay long. That's a trade interpretation, not a fact.

Mia: And there's skepticism showing up too: at a record high for stocks, two big bearish trades were spotted, including a 100,000-lot put spread in SPY about an hour after Tuesday's open.

Milo: Some other single-name and market items worth a beat: used car prices fell in the third quarter, with Cox Automotive forecasting prices to fall more than previously expected this year, while demand grows for fuel-efficient vehicles. Tax filing note — the SALT deduction limit is $40,400 for 2026, and experts are out with ways to maximize the break before year-end.

Mia: Two regulatory items: Webull dropped 18% after a congressional panel found its China ties create a national security risk, saying the trading platform exposes customer data to Chinese surveillance. And Kalshi submitted a bid to the CFTC for a perpetual-style oil contract — a futures contract linked to oil that only expires every decade.

Milo: From earnings and the tape to energy, because the diesel story is one of the more dramatic supply squeezes we've seen. President Trump issued an order on surging diesel prices amid mounting political pressure, with midterms only a month away — but the move also exposed the limits of what the White House can do to counter fuel prices.

Mia: The consumer impact is measurable: heating oil prices are soaring on a tight global diesel market, and the federal outlook shows winter bills could rise 21% for users, with Northeast households hit hardest.

Milo: Chevron's CEO is warning against an unwise diesel export ban, saying it could make things worse. His comments came as rising Middle East crude exports and an emergency G7 stockpile release appear to have eased supply fears.

Mia: And the shipping numbers are staggering: a supertanker was chartered from the Gulf Coast to China for $76 million — ten times the pre-war level — as the war in the Persian Gulf created a shortage of available tankers. Iran has stepped up attacks on tankers transiting the Strait of Hormuz, which has renewed supply worries among traders, though oil prices fell as IEA members agreed to prioritize releasing diesel stocks.

Milo: Two more things layered onto that: Tropical Storm Isaias is expected to be a hurricane — possibly Category 2 with winds topping 110 miles an hour — by the time it hits the US Gulf Coast on Friday, the first Atlantic hurricane of the season. And Kalshi's decade-long oil contract, which we mentioned, is another sign markets are trying to build tools around exactly this kind of energy volatility.

Mia: From the energy tape to the deals desk. M&A is slowing — deal values are slipping as uncertainty rises around elections, rates, and regulation. Paul Aversano of Alvarez & Marsal explains that large, debt-heavy buyouts are feeling the most pressure, while mid-market deals are holding up.

Milo: But it's not a shutdown — the Weston family, Canada's billionaire dynasty and former Selfridges owners, agreed to buy Boots, the UK health retailer, for $8.9 billion including debt. Another change of hands for the pharmacy chain, and a UK return for the family.

Mia: Other deal flow: Morgan Stanley is selling pieces of a $3 billion loan that helps fund Royal Caribbean's purchase of a 50% stake in Sandals Resort International. Hertz's lenders are organizing across at least two groups with advisers, bracing for possible negotiations over its billions in debt coming due over the next few years.

Milo: LIV Golf — the bankrupt, Saudi-backed tour — got a potential lifeline: a financing commitment of up to $300 million from BC Partners' credit arm, potentially enough to fund a 2027 season. And McDonald's franchisees are balking at the cost of the company's restaurant and menu overhaul — upgrades will run at least $800,000 per location, and Bloomberg's Michael Halen also covered the recent Texas Roadhouse stock plunge.

Mia: Two more threads on the deals desk. Defense investing is drawing a wave of new money amid global tensions, with Jefferies' Sheila Kahyaoglu arguing drone companies will eventually consolidate. And the talent war continues — Citi's David Friedland says private equity hasn't slowed its poaching of young bankers, so Citi is accelerating promotions and raising junior pay. Friedland also confirmed that announced activity in the market is slower.

Mia: Separately, a serious legal story: the London Bullion Market Association's certification program is accused of serving as a smokescreen enabling abuses at a Tanzanian gold mine where two men died — a trial that could threaten its existence.

Milo: Now the global picture, and France is the name to know. The country is caught between angry students and unforgiving bond markets — student protests took a breather Wednesday after weeks of unrest, but market pressure on the government intensified ahead of budget talks. That's the same French bond selloff we mentioned that's now tempting bargain hunters.

Mia: Brazil, by contrast, got a vote of confidence: foreign investors poured a record 10.06 billion reais — about $2 billion — into Brazilian stocks on October 5, the highest single-day inflow ever recorded on the B3 exchange, on hopes that an election surprise brings fiscal fixes and interest-rate cuts. That's opposition hopes, to be clear, not a done deal.

Milo: Around Europe and beyond: Spain's biggest labor unions are calling a general strike for November 11 to focus on housing, just before campaigning for the November 29 election. Germany's energy ministry dissolved a key division for liaising with the wind and solar industry, reflecting shifting spending priorities. Canada is reviewing its ban on foreign homebuyers ahead of its year-end expiry, with Finance Minister Champagne mulling options.

Milo: And for investors looking abroad, Bloomberg has a 2026 guide to investing in Africa, looking at which industries benefit from the geopolitical climate. One more headline from the region: in India, police blocked a voter-roll protest for a second day in Delhi, detaining opposition leader Rahul Gandhi.

Mia: Last stop, two domestic stories with longer horizons. First, enforcement economics: research links ICE enforcement surges to lasting declines in local spending, foot traffic, and jobs — and in Minneapolis, businesses are still recovering.

Milo: Second, streaming sports: Disney confirmed that Disney+ will stream the 2027 Super Bowl. Bloomberg's Geetha Ranganathan says it's not necessarily a surprise, and Disney+ will also air two Monday Night Football games leading up to the championship.

Mia: So let's pull the tape together. The close: the 10-year backed off a 24-year high after a solid auction, Treasuries rose, and stocks are sitting near records despite yields that historically should be a problem. SpaceX's credit-risk gauge hit a fresh high on the $40 billion borrowing talks. Webull fell 18%. Levi's beat with a cautious sales outlook.

Milo: What to watch next: whether SpaceX's financing closes and on what terms — and how AI-linked credit broadly absorbs it. More auction results and the timing question hanging over the Fed's next hike. The rest of earnings season, to see whether the profit boom is broad or consumer-stressed. Diesel prices and tanker traffic through Hormuz, with Isaias bearing down on the Gulf Coast. And France's budget talks, where bond-market pressure is the real scoreboard.

Mia: That's the briefing for tonight. Thanks for listening — we'll see you at the next close.

Milo: Take care.