• Quiet week until Volatility sprung back to life

• Higher inflation and AI/SI worries stoke the fears

• But GDP growth is still tracking higher

• The banks are saying the consumer is just fine

• Agentic AI/SI might be sticking

• Inflation accelerates in all the obvious places

• Europe’s energy policies are a mess

• Quick Hits

• Where did all the crypto money go?

• Chart Crime of the week

• CPI report says you might not have to do this

It was a relatively quiet week until Volatility sprung back to life today.  The impetus was a higher-than-expected CPI inflation report for September.   Interest rates instantly shot higher as the chances for an October rate hike increased quickly and dramatically (from 20% to 50%).  This move brought the debt-fueled Artificial/Super Intelligence infrastructure trade back into doubt.  Gartner, an independent research company, tossed some gas on the fire by proclaiming that “80% of neocloud providers will cease independent operations” by the year 2030.  These resellers of compute were all hit hard.  CoreWeave suffered the most (-15%) as Chamath (one of the “All In Pod” guys) raised the question on X why its debt was trading so poorly (he did this on Tuesday).  This is not a novel observation, but Musk thought it warranted a reply of “Yikes.”  Adding to the AI/SI uncertainty was the anticipation of Anthropic holding an investor day.  There have been conflicting reports about its revenues lately (it appears that different media outlets have been reporting on different accounting items which is beyond silly, but it added to the uncertainty).  Lastly, there was a broad downgrade of Tech stocks by a likeable strategist at RBC.

As usual, the noise was louder than the signal.  Interest rates started to move lower after about 30 minutes.  By lunchtime, rates across the curve were below where they were before the CPI release!