1021 | AI Wobble, Yields Rise, and a SpaceX Boost

Mia: Good afternoon, and welcome to the after-market briefing. I'm Mia.

Milo: And I'm Milo. We've got a session where the closing tape and the after-hours calendar are both doing a lot of work — CoreWeave under pressure, SpaceX lifting sentiment, Meta and Tesla reporting after the bell, and a bond market that's making everyone nervous.

Mia: The thread connecting all of it is credit and the AI trade. If you can price debt, you can do almost anything in this market right now — and if you can't, things stall fast. Let's start with the parts of the tape that are actually cracking.

Milo: So CoreWeave. Shares are down 29 percent in October, and the spreads in its credit default swaps are widening. That's the key detail — it's not just the equity. Credit protection is getting more expensive, which tells you the bond market is repricing the risk of the AI infrastructure buildout, not just day traders.

Mia: And it's not an isolated story. Companies have postponed more than five billion dollars in U.S. and European debt sales this month — the biggest spate of delays this year. Investors are increasingly alarmed about rising rates, resurgent inflation, and potential cracks in the AI boom. When issuers can't clear a deal, that's a real signal, and it feeds back into everything else.

Milo: EQT put a fine point on it. CEO Per Franzen warned that portfolios that look diversified may still be exposed to the same underlying risks — AI spending being the headline one. He was speaking on Bloomberg Open Interest about potential overinvestment, strong demand for data-center capacity, and how higher capital costs are shaping the buildout.

Milo: The interpretation there — and it's interpretation, not fact — is that diversification may be more cosmetic than real if AI capex is the common exposure underneath.

Mia: Then there's the neocloud question. Investors are scrutinizing the debt, borrowing costs, and economics of companies building AI infrastructure. Nebius is pushing back, saying AI computing prices are rising — which is their answer to the bear case. Whether prices rise enough, and stay up, is the material uncertainty.

Milo: The same test is about to be applied to IPOs. Nscale is facing opposition to the valuation target it's pursuing, according to people familiar with the matter, after a series of market setbacks for AI companies. The CEO has sent employees a note saying contract values to deliver computing power have more than doubled since the March funding round — so management's defense is that the business has grown into the valuation. Investors apparently aren't fully buying it yet.

Mia: Anthropic's IPO is also in the queue. The watch item for the next sessions is simple: can these deals actually price, and at what level? A pulled or marked-down IPO would be another data point in the credit-and-valuation story. And the counterweight to watch — whether a strong SpaceX print can lift AI sentiment enough to reopen the window.

Milo: Which is actually the natural segue, because SpaceX did deliver. Shares jumped 10 percent after the company reported surging revenue growth in its third quarter — and Elon Musk floated a potential SpaceX-Tesla merger. That's the headline that gave Meta and Tesla bulls a confidence boost heading into their reports, which were due Wednesday afternoon.

Mia: Let's be careful with the merger piece. What we know: SpaceX stock jumped 10 percent on the earnings beat, and Musk hinted at a Tesla tie-up. Whether a merger is real remains unknown. So treat it as a sentiment catalyst, not a deal fact.

Milo: The broader tape agreed, at least for a while. U.S. futures climbed with the SpaceX results helping boost AI sentiment. But the S&P 500 retreated from session highs in late Wednesday afternoon trading after a report the U.S. was preparing departure orders for some staff from Gulf embassies — adding to concern about escalating conflict in the region. So a strong session that faded late on geopolitics.

Mia: There's also a smaller sentiment item in that cluster: Altimeter's Brad Gerstner said Musk's planned SpaceX share gift through Trump Accounts could be the tip of the iceberg for a broader philanthropic push. That's commentary, not a market move, but it's part of why SpaceX is dominating the conversation.

Milo: Okay, so from SpaceX sentiment to the earnings that are already on the tape. IBM beat on both the top and bottom lines, with CEO Arvind Krishna touting traction for what he's calling "Super Intelligence" and indicating IBM is helping clients in artificial intelligence. That's a clean beat with an AI narrative attached.

Mia: And around the AI theme more broadly: GM is targeting a roughly two-year vehicle development cycle as it expands its use of AI, simulation, and vehicle software. Nvidia announced plug-and-play Vera Rubin racks — its DSX Pod AI Factory combines seven racks in a shipping container, and the company says it could cut the time to start serving AI tokens to 14 days. Those are product and strategy announcements rather than market moves, but they show how aggressively the AI supply side is scaling.

Milo: OpenAI made two moves worth noting: ChatGPT Ads is expanding to 26 new countries as the diversification push accelerates, and OpenAI is bringing its AI models to Google's cloud — meaning its models will now be on all three of the top clouds, beyond its Microsoft relationship. Corporate developers get more choice; the cloud-competition picture shifts.

Mia: One of the most striking numbers of the day belongs to the sell side. Goldman Sachs, JPMorgan, and Morgan Stanley have generated 52 billion dollars in equity trading revenue this year — capturing about 80 percent of the market — helped by rising margin lending to hedge funds. That's directly connected to the AI stock boom we opened with: the same trade is fattening Wall Street's trading desks.

Mia: If the trade cracks, that revenue concentration is a risk, though that's our reading, not a stated warning.

Milo: And the quiet outperformer: Berkshire Hathaway hit a new high Wednesday as investors move on after Warren Buffett's departure. Shares at record levels without the legendary leader at the helm — that's the story in one line.

Mia: Now the other earnings on the tape, including the two everyone's waiting on tonight. Tesla beat on earnings and sales even as auto revenue declined — better-than-expected third-quarter results, but with a soft spot in the core business. And Meta stock advanced ahead of its after-the-bell report. The Investing Club has been flagging what to watch for in that print, with their Morning Meeting covering the setup.

Milo: Away from the megacaps, Moody's fell short of estimates and shares declined — weaker revenue in its ratings business as rising yields weighed on corporate bond sales. Notice how that loops straight back to our opening theme: when yields spike, debt issuance slows, and the rating agencies feel it.

Mia: eBay announced it will lay off 9 percent of its workforce — about 1,000 employees — its second round of job cuts this year, as it focuses on top strategic priorities. And Intel installed the first major structural truss at its Ohio chip fab — but that fab is at least five years behind schedule, and Intel has yet to announce a major outside customer. The truss is a milestone; the commercial question is still open.

Milo: That Moody's result is the bridge to the bond market conversation, because there are two very different views on rates right now. BlackRock's Rick Rieder, CIO of global fixed income, sees a "historic" opportunity in high-quality bonds, laying out his fourth-quarter expectations. Meanwhile BofA's Mark Cabana, co-head of global rates strategy, is asking the Fed "why wait now?" on rate hikes — he sees policy outlook divisions within the Fed ahead of the upcoming decision.

Mia: So one camp says yields have made quality bonds attractive; the other says inflation may force the Fed toward hikes rather than cuts. Both can't be right about the direction, and the Fed meeting is the near-term arbiter.

Milo: Housing is caught in between. Mortgage rates dropped for the first time in two months — but demand still fell further, because borrowers are still having trouble getting into the market. Affordability, not the rate headline, is the blocker.

Mia: A related structural story: tokenized stock trading is taking off in international markets, even as Goldman and other major U.S. companies push back against introducing them domestically. Worth tracking for market structure, though the immediate market impact is limited.

Milo: From yields to oil. Crude prices were little changed as traders assess Middle East developments — Iran's Revolutionary Guards said naval mines prevented three tankers from passing through the Strait of Hormuz. That's an escalation on paper, but the flow data doesn't show it.

Mia: Right — oil shipments from the Middle East are showing little sign of buckling despite Iran's more frequent and damaging attacks on merchant ships.

Mia: Kuwait Petroleum's CEO, Sheikh Nawaf Al-Sabah, says output is well over two million barrels a day, and the company has kept crude deliveries largely at pre-conflict levels by using alternative shipment arrangements and its strategic tanker fleet — and it told customers it would do everything possible to keep shipments going despite the Hormuz closure, with future pipelines under study. So the supply disruption is being routed around, which is why crude barely moved.

Milo: But fuel costs are still biting downstream, and that's where it gets political. Ukraine's drone strikes on Russia have crippled the world's second-largest diesel supplier, driving prices up — and President Trump has blamed Ukraine for surging diesel prices that he says are hurting Republicans' election chances with midterms just two weeks away. So you have a commodity move with direct electoral transmission.

Mia: Airlines are the clearest corporate example. Southwest became the third major U.S. airline this month to cut its 2026 profit forecast due to higher fuel prices. Third this month — that's a pattern, not an outlier.

Milo: United is the contrast case. CEO Scott Kirby says United is "still solidly profitable" as fuel costs rise, citing the ability to pass along higher costs and continued strength in customer demand. Same input cost, different pricing power. Kirby also defended his support of a U.S. wealth tax — his view of a fair system would tax wealth growth coupled with lower income taxes. That's a policy position, not a market event, but it's notable coming from an airline CEO.

Mia: From U.S. fuel politics to Argentina, where the market scare is about politics and debt all at once. A rout in Argentina's bonds has taken bullish investors by surprise. The selloff compounds a global emerging-markets pullback with concerns over President Javier Milei's reelection prospects and the country's ability to meet billions in upcoming debt payments. Notably, several managers still consider the debt cheap — which is exactly why the move blindsided the bulls.

Milo: The economy isn't helping. Argentina posted a sluggish rebound in August after a much sharper drop in July, with growth sputtering in the second half. And Spanish-language coverage noted the bond selloff is intensifying ahead of the 2027 elections — so the political calendar stretches well beyond this one vote.

Mia: That Argentina story is a case study in something bigger, and Professor James Robinson of the University of Chicago made the argument explicitly on the Odd Lots podcast, recorded live in Chicago with Joe Weisenthal and Tracy Alloway: politics is economists' blindspot.

Mia: He argues conventional economics says capitalism would be better off without trade unions, rent stabilization, and price controls — and that economists need to consider politics and inclusive institutions to understand what actually works. He also discussed what made the U.S. economy thrive and whether the U.S. has become a failing state.

Milo: The U.S. political economy is very live right now, two weeks from midterms. Trump-aligned super PACs are pouring hundreds of millions into House and Senate races as Republicans defend an expanding battleground map — once-safe GOP House seats are now in play. And the money is flowing through traditional channels: broadcast TV is set to capture nearly half of political advertising spending, with local stations benefiting from record spending, even as digital gains share.

Mia: Fuel politics ties in here too — the diesel price surge Trump has blamed on Ukraine is itself an example of economics and politics colliding, as is the wealth-tax debate Kirby waded into.

Milo: Brazil offers a parallel. Bloomberg's Barbara Nascimento reported on how Brazilian music reflects the country's political divide — culture entering the political arena. And the policy pitches are textbook populism from both sides: Lula and Bolsonaro are courting voters with free bus rides, cash back on energy bills through an instant payment system, and debt forgiveness for millions of small entrepreneurs.

Mia: Two quick news items to clear: Trump denied ordering a Starlink slowdown in Ukraine, saying "I don't know who did it, but I was not involved" — asked whether Elon Musk ordered it. And the New Mexico attorney general has sued Epstein's attorney and accountant, Darren Indyke and Richard Kahn, alleging they helped finance and conceal the sex trafficking, including abuse at Zorro Ranch.

Milo: Now the deal desk, where financing costs are shaping everything. Legendary Entertainment has revived talks and made a takeover offer for Lionsgate Studios, according to people familiar with the matter — the studio behind The Hunger Games and John Wick. Media consolidation is back on the table.

Mia: Utilities is the bigger one, and it connects back to our opening AI theme — because data centers are why utilities matter now. Virginia Governor Abigail Spanberger won't support NextEra's 67 billion dollar takeover of Dominion Energy without a six-year freeze on residential power rates. That raises the bar for a utility mega-deal already facing increasing skepticism. If AI-driven power demand is the growth story, regulators want residents protected from the cost of it.

Milo: Sports and real estate round it out. The NFL picked General Atlantic to set up an investing platform for a deeper push into global sports investing. And Ken Griffin, Vornado Realty Trust, and Rudin landed a 3.3 billion dollar construction loan for a new office tower on Manhattan's Park Avenue — a project whose future had been clouded earlier this year after Mayor Zohran Mamdani provoked Griffin's ire.

Milo: Getting a loan that size done tells you something about credit availability at the very top of the market, even as mid-market deals struggle.

Mia: Which brings us to private markets, where the squeeze is most visible. H.I.G. Capital CEO Brian Schwartz says he's waiting for the "dam to break" on exits — private equity managers have struggled to sell assets amid higher borrowing costs and weaker valuations. Higher rates lock sellers in and buyers out.

Milo: On the activism side, Sidley Austin's Kai Liekefett and Olshan's Rebecca Van Derlaske joined Bloomberg Deals to separate the bluster from reality in proxy fights — what actually happens versus the public rhetoric. Useful context given how much activist noise surrounds the mega-caps reporting tonight.

Mia: A legal footnote from the hedge-fund world: ex-Brevan Howard portfolio manager Robert Sicari is being sued by a quant who joined his new fund, accused of withholding millions of dollars in promised trading profits.

Milo: And one geographic exit: JPMorgan Chase's securities unit in Turkey said it plans to cease operating in the country.

Mia: Before we wrap, three wrap-up items. UBS cut the pay bump for junior bankers promoted to first-year associate by 20,000 Swiss francs, following changes to compensation structures. And on the retail side, studies show gambling — including sports betting — is eating away at savings and investing funds, especially among younger generations. One example cited: a 50-dollar sports bet costing a young investor hundreds later in foregone returns.

Milo: So let's close with the watch list. Tonight: Meta and Tesla results — Tesla already beat on earnings and sales despite declining auto revenue, and Meta stock advanced into the print. This week: the Fed decision, where BofA's Cabana sees internal divisions on whether to hike. Ongoing: whether Nscale and Anthropic can price their IPOs, whether CoreWeave's credit spreads stabilize, and whether more debt sales get pulled.

Milo: And geopolitically: Gulf developments, Hormuz flows, and the midterm calendar now two weeks out.

Mia: The through-line for tomorrow: when credit is cheap and plentiful, the AI trade runs. Today, credit got more expensive for the names building it — and that's the metric to track above all. Thanks for listening.

Milo: We'll be back with the next session's briefing. Stay measured out there.