• South Korea rocks the US

• Is AI already failing?  (No)

• But Microsoft is tempted to dance with the devil

• Warsh’s inflation bar is higher than people think

• If the memory chip makers can get Apple to take their prices, they can get anyone

• Token-maxing no more

• Dash for trash?

• Volatility is screaming in some parts of the market

• Economic data is better on the margin

• Quick Hits

• Where did all the crypto/fake AI/political scammers/meme money go?

• Chart Crime of the week

• Does Warsh drink White Russians like Reggie Hammond?

It is not often that the international tail wags the domestic dog, but this happened on Tuesday as the memory stocks were hit hard overseas.  A slew of negative one-liners hit the South Korean chipmakers, and the US memory stocks followed suit with ~10% plunges.  Of course, this was only reversing two days of gains!  The hyperscalers succumbed to the new weakness.  The reasoning was simply that they have spent too much money with too little to show for it.  Lending some credence to this narrative is that AI token prices have started to fall.  But this is likely a recalibrating of excess usage (we noted that Uber and Amazon were spending on AI without any restraint…until they got the bill).  We are hearing more stories of real-world use cases for AI.  So, any hiccups in the short term will likely be dwarfed in the medium term.  Then again, Microsoft has already floated the idea of potentially hosting a version of China’s DeepSeek.  This might be good for the users of AI, but not the ones who have invested a trillion dollars into the frontier models that compete with the Chinese.  (We own small bits of the hyperscalers, and we are not buying the dip.)  There are also stories that Nvidia chip prices are starting to fall in the secondary market.  We have not seen any concrete evidence of this.  And lest we forget, Micron reported earnings tonight that knocked the cover off the ball.  In other words, we still like the infrastructure side of the trade vs the model building/housing (hyperscalers).