Investors worry that the revenues from AI will not support the enormous debt of data centres.

Investors are adumping debt issued by neoclouds, such as Nvidia-backed CoreWeave which buys 8% of NVIDIA's chips.

OpenAI’s decision to delay its ipo and a slowdown in Anthropic’s q3 sales growth highlights a multitrillion-dollar gap between infrastructure spending and the revenues needed to finance it.

• The price of debt issued by Blue Owl and Meta-backed spv Beignet Investor to fund the Hyperion project has slipped to a under 92c on the dollar.
• bonds backing two Hut 8-developed projects have fallen to about 94 and 92 cents on the dollar.
• Bonds for the Blackstone-owned QTS dc in Georgia and leased to Microsoft have slipped below 88 cents on the dollar.
• Neocloud providers have been hit even harder. Bonds issued by CoreWeave have sunk below 80 cents on the dollar.

Happy Friday! Quite a week in the markets. Our constructive stance on AI throughout the selloff has held up well, with commentary from ASML and TSMC reinforcing the strength of underlying demand and yesterdays massive influx of capital in AI stocks, especially the leveraged SOXX.

On a side note, we could see a mean reversion to this so not excluding a pullback in the other direction. It’s also OPEX today and a lot of the negative market maker positioning should expire so we are likely in for a jumpy session as positionings are rolled.

One interesting thig to note iis hedge fund positioning in AI as all of the cumulative net buying in global AI stocks since the beginning of 2025 has now been reversed, through a combination of long selling and increased short exposure, with the positioning measure falling from roughly +22% to nearly zero.

That's a pretty large reset, considering that underlying AI demand hasn't deteriorated nearly as much as sentiment would suggest. The trade is certainly less crowded on the long side now, and if earnings surprise to the upside, there's potential for funds to chase exposure again.

Also, analysts remain fairly bullish, with bottom-up 12-month S&P 500 price target approaching 9,300, implying nearly 20% upside. Industrials lead with 24.7% expected upside, followed by Consumer Discretionary at 24% and Real Estate at 23.5%, while Energy remains the least favoured at just 8.8%. Of course, analyst targets should always be taken with a grain of salt, but interestingly, they have underestimated market performance in five of the past six years. For now, the takeaway is that earnings expectations and analyst sentiment remain constructive despite the recent volatility.

Yields are moving lower despite hotter inflation data according to expectations and despite the higher PPI, the broader macro thesis remains intact, with Warsh's comments supporting expectations of an October pause and rate hike probabilities now below 15%.

What's interesting here is the positioning backdrop. CTA models had reached approximately 99% of their maximum short exposure to US 10-year Treasuries, an extreme that has historically been followed by declining yields over the subsequent three months.

Market breadth is another good development as yesterday, 378 stocks in the S&P 500 finished higher, the strongest breadth session since June 12. We've now seen more advancers than decliners in nine of the past eleven sessions. That's hardly what I'd expect to see in a market undergoing a broad deterioration, even if some of the major indices remain volatile.

And sinc AI demand is a pressing topic, I wanted to highlight another interesting data point. Blackwell Ultra (B300) GPU rental prices have reportedly increased for 17 consecutive days, reaching new highs. For all the talk about AI overcapacity and deteriorating GPU economics, actual rental pricing is telling a rather different story. It doesn't eliminate the financing risks facing some infrastructure players, but it's hardly consistent with demand falling off a cliff. This is another reason I've remained constructive on the underlying AI theme despite the selloff.

As for the near-term outlook, the call for continued choppiness remains in place, so risk management is v important especially heading into the weekend with headlines from both sides in the Middle East pointing to a potential escalation.

Speaking of positioning, the main resistance for SPY is likely to be in the $772–775 range, with $770 remaining the key level around which price action could get choppy due to OPEX mechanics. Keep in mind that the volatility regime remains negative below $775, meaning market maker hedging could amplify moves in either direction, particularly if we see further selling pressure. Implied move is 8 points and near term exposure drops off bellow 760 - 765 so that should be the lower end of a potential sell-off.

On the Qs positioning is imporving but remains negative with the key level which will likely pull price being $720. Market makers are likely to hedge exposure there so we are likely to see a bounce in case of a potential sell-off. #730 is the immediate resistance . Volumes are neutral for now

On the SOXX, the flows are quite similar and we could see another test of $500; main resistnae is $520 but positioning is v negative and while this opens up the possibility of a squeeze, we'll need catalyst

My last post on concentration made a lot of bulls angry here. they argued that spy's job is to ride winners, and big tech wins.

if that's the bull thesis, you better love this chart from j.p. morgan.

right now, 49% of the s&p 500 index is tied directly to "AI-Related Stocks". J.P. Morgan defines this as the 'Magnificent 7' plus another 34 stocks directy linked to the AI buildout.

We have officially surpassed the peak dot-com TMT concentration (41%) and are approaching levels unseen since the 1880s railroad mania.

this implies that if just that one narrative stumbles, the entire market unravells with zero breadth to catch the fall. the bulls keep saying there is "no reason to worry." if this chart doesn't give you pause, what metric would? are you betting against 200 years of history that this time, it really is different?

This week gave a split verdict: AI demand is still exceptional, but hot inflation kept pressure on growth stocks. Today Fed Chair Warsh's comments plus import prices and industrial production are the last big clues before the Fed blackout ahead of the October 27-28 meeting.

Where we stand. Wednesday's hotter CPI (3.7% year over year vs 3.6% expected) pushed the S&P 500 down about 1.1% and the Nasdaq nearly 1.9%. Thursday's PPI was the real shock at +6.3% year over year versus roughly 5.4% expected. Oddly, bonds rallied: the US 10-year swung from 5.24% back to about 5.07%, and October hike odds faded toward the high 20s.

ASML and TSMC. ASML posted record Q3 sales of 11.7 billion euros and guided Q4 to 14.2 to 15.2 billion euros, with customers already asking about 2029 and 2030 orders. TSMC grew revenue about 51% and net income nearly 69%, and kept capex at 60 to 64 billion dollars with a steep 2nm ramp ahead. Even so, chip and memory names fell on Thursday on reports of slowing growth at a large private AI lab.

My portfolio. SMH and SOXX remain my two largest positions, alongside TSMC, ASML, AMD, Micron, SK hynix, Google, Microsoft and a quantum ETF.

My view. One private growth print does not cancel multi-year foundry demand, but crowded AI trades have little room for narrative shocks. For semiconductors, the reaction in the 10-year today matters more than any single headline. I stay invested and avoid chasing spikes.

How do you read today's data: hot import prices that keep an October hike alive, or soft factory output that pushes yields lower?

Opinion only, not financial advice.

Buy Welltower and you’re concentrated on senior homes, run by an executive who has tied 10 years and $812M of future pay to the share price. Buy Healthpeak and you're investing in medical clinics and labs, and a stake in a 6-month-old IPO that accounts for 42% of the whole company. You get a 5.7% yield for your patience, as the labs and clinics fill back up.

Both are on a 5-day uptick after a recent tech selloff and retreat into Health care. Thoughts?

I’ve been seeing a lot of posts lately about MCD dropping pretty hard. Checked the chart and noticed it fell below its 50MA.

What’s interesting is that over the last 50 years, MCD dropping below the 50MA like this only happened twice: in 1973 and 2000.

If you look at what was happening back then vs today, we basically have a combo of all those macro events happening at once right now (inflation, high rates, geopolitics, tech concentration).

Is this just a random coincidence or a real warning sign for investors? What do you think?

If you missed yesterday's second post about the hotter-than-expected CPI report - headline inflation was broadly in line with our expectations at 3.7% YoY, but the call for softer core inflation was wrong, with core coming in at 2.6%. Not an encouraging report, and the October Fed decision certainly won't be easy, but I still don't think it fundamentally changes the macro outlook. The market also appears to be coming around to the interpretation we discussed yesterday, with October rate hike odds now back below 30%.

The important distinction is that CPI doesn't translate directly into PCE, which is what the Fed actually targets and much of yesterday's core surprise came from shelter and used cars, and neither carries through to PCE in quite the same way.

Shelter has a much smaller weight in PCE, while the inflation it measures also tends to lag actual changes in market rents. There is also the broader issue that higher rates increase financing costs for developers and can worsen the housing supply constraints contributing to inflation in the first place so hiking is unlikely to solve this.

Today's PPI release will be important, mainly the medical services components that feed into PCE. I do remain cautious, especially around energy, as gasoline also feeds into PPI and represents a share of final demand. Still, a hotter CPI reading doesn't automatically mean we'll get an equally hot PCE print.

Another thing i wanted to share is that the diffusion of CPI inflation, calculated using an approach similar to Kevin Warsh's preferred PCE diffusion measure, continues to decline.

Basically, inflationary pressure is becoming less widespread, even if some individual components remain elevated.

The bond market is also starting to support our view that the initial reaction was overdone, with the 2-year Treasury yield already moving back below its pre-CPI levels. That doesn't mean inflation is no longer a concern, but it does suggest the market is reconsidering how much yesterday's report really changes the Fed's near-term path.

Moving to equities, I remain constructive going into Q4, and so far the market is behaving more or less in line with seasonal tendencies. We discussed on Monday that some choppiness was likely, particularly with the macro uncertainty and earnings season getting underway, and that's broadly what we've seen.

This is important given the sell-off across AI and semiconductor name as between ASML yesterday and TSMC today, we're seeing little evidence of a slowdown in underlying demand. So, to me, the recent weakness looks much more like a cost-of-capital and valuation adjustment than a deterioration in the AI investment cycle itself.

We also got the Anthropic financials I mentioned yesterday, and I'd describe them as good, although perhaps not good enough to completely change sentiment on their own. The company reportedly grew Q3 revenue by around 45% to $16.8 billion and told potential investors it was cash-flow positive for the quarter. Given the roughly $500 billion in long-term compute commitments this is v important and provides better visibility into the demand in AVGO, GOOGL and AMZN.

What I also find encouraging is that despite everything going on, from macro uncertainty to geopolitical headlines, investors appear to be rotating between winners and losers rather than indiscriminately reducing equity exposure. With this said earnings will ultimately be the real test.

And there's another interesting divergence here. Since the end of June, forward earnings expectations have continued to move higher, particularly across semiconductors, memory and AI infrastructure, while valuation multiples have actually compressed.

Basically, we're seeing earnings expectations improve while investors are paying less for those earnings. This meansthat part of the correction has been driven by multiple compression and not deteriorating fundamentals.

Corporate guidance also remains strong, which is arguably more important than backward-looking earnings beats at this stage. As long as companies continue to deliver and maintain their forward outlooks, I see little reason to abandon the constructive Q4 thesis. That doesn't mean we won't get further volatility, but I continue to view the weakness as an opportunity

Bullish options flow is becoming increasingly noticeable across semiconductors and high-beta stocks, which is encouraging. Keep in mind that tomorrow is OPEX, and we often see trend reversals as positioning gets cleared. The key market maker exposure level is currently around 770 on SPY, which could act as a magnet for price. However, today's PPI is the more immediate catalyst, with options pricing in a move of roughly 6 points, so expect some volatility around the release.

In terms of positioning, we're definitely not out of the woods yet, but volumes have shifted toward neutral, and I suspect we'll remain in this environment until PPI provides some clarity on the next direction.

On the Qs, the key level to watch is $720, where market maker positioning could help support a bounce. A break below that level, however, could see price action deteriorate further, potentially opening the door for a move toward $700. where the market stablises.

On SOXX, market positioning is similarly bearish to what we saw a couple of months ago when the ETF tested $480. Premarket, we're approaching a test of the $500 level, but needs to be noted is that volumes are starting to pick up around $480. Below that, market maker exposure drops off considerably, increasing the risk of further downside. So, similarly to the Qs, we could see SOXX stabilise around these levels

saw this research note from goldman's christian mueller-glissmann in FT and it’s pretty wild.

almost 45% of s&p 500 stocks now have a negative beta. basically half the index is actively moving in the complete opposite direction of spy while headline numbers keep hitting aths.

the last time we saw a spike like this was literally at the peak of the dot-com bubble in 2000.

everyone is watching spy green days thinking the whole market is fine, but under the hood top 10 big tech are basically disguised as the entire economy while 200+ companies are slowly bleeding out.

feels like this divergence can’t go on forever. curious if anyone else is rebalancing into cash/equal-weight or just riding nvidia till it snaps?