Oracle (ORCL) has been an anchor on the artificial intelligence (AI) trade, but yesterday, it rocked the boat even more, and not in a good way. Investors fled after the private equity firm, Blue Owl Capital (OWL), declined to back a new data center.

Big Hopes

When the “Stargate” deal was announced, the governor said it was “the largest economic project in Michigan history.” This matters on so many levels.

Can it be pulled off?  The numbers do not add up to many.

Oracle Hammers OpenAI

Shares of Oracle (ORCL) were slammed by 5.4%, and the contagion swept across other players with big data center lease commitments. These are also prominent in the OpenAI universe, which itself is said to have excessive debt and obligations, too. Investors must be selective. However, the AI trade has only just begun.

• CoreWeave Inc (CRWV): - 7.1%
• Advanced Micro Devices (AMD): -5.3%
• Nvidia (NVDA): -3.8%

The Rest of the Market

There were more advancers than decliners in the S&P 500 (SPX) yesterday.

Utilities' (XLU) names were hammered on the ORCL news and data center pushback. But another Energy (XLE) story emerged, with fossil fuel names populating the top advancers list.

Private Equity Public Embarrassment

As chance would have it, one of the significant fraud cases sparking concern about risk within private equity and the world of private credit had news yesterday. The Tricolor CEO, Daniel Chu, was charged with fraud and immediately blamed his lenders.

Meanwhile, shares of Blue Owl pulled back after a blistering rebound driven by a spike in money flow.

Micron to the Rescue

Micron Technology (MU) posted quarterly financials after the close, and they were terrific. They were so good I was worried the stock would move lower – that’s the crazy world we currently live in.

The company had great things to say about the use of artificial intelligence (AI).

Inflation Check

This morning, the November Consumer Price Index (CPI) report will be released on a year-to-year basis:

• Headline 3.1%
• Core 3.0%

Anna Wong, Chief US Economist at Bloomberg, suggests that several tariff-exposed goods have already seen peak inflation.

The market has often gotten a spark from the CPI release, especially this year.

For My Next Trick

Late last night, a story broke that OpenAI is close to raising $100 billion at a $750 billion valuation. I don’t know how, but I think they will eventually get the $1.4 trillion they’ve pledged to be the top AI destination.

Today’s Session

Lots of economic data came out this morning, so it’s a lot to comb through, but the most important release was the inflation report.

Everyone waited with bated breath for the CPI report this morning, and when it was released, there was an immediate double followed by a collective “wow!”

Even commentators hoping for higher results had to shift from saying it was “a little better” than expected to “it is a very good number.”

Considering the recent pullback in energy, and the continued decline in home prices and rents, those two categories would help the December numbers.

I wonder if the hawks on the Fed will continue to gaslight the public, with claiming inflation risk is posing a greater threat than labor market weakness.

Please make no mistake, there will be efforts to dismiss or diminish this number, but it was terrific.

This is unfortunate, but it has been the case all year with nonstop fearmongering.

But another problem is that Wall Street can’t seem to get these things right. Their estimates were not even close.

• Headline: 2.7%; consensus 3.1%
• Core: 2.6%; consensus 3.0%

Tweet

 

Home | Products & Services | Education | In The Media | Help | About Us | Disclaimer | Privacy Policy | Terms of Use | All Rights Reserved.