Good morning everybody. Welcome back to another episode of the market open. Folks, we are green in the pre-markets and uh we're really green. And the reason we are really green, when I mean really green, I mean S&P 500 just hit 676. We're talking about new all-time highs in the pre-market type of green.

Uh it's because of CPI, which I'm not going to lie, I forgot was coming out this morning. And I think a lot of you guys also probably forgot that it was coming out this morning, but it did. And uh it was better than expected. It was better than expected. CPI comes in at 3% versus 3.1%. This is the highest read since January. August was at 2.9. So, we are up a little bit month over month, but it's lower than expectations. It came in lower than expectations.

Um, this kind of changes a lot of dynamics. There is a lot to talk about in terms of how the macro reacts to this. Obviously, uh, the stock market is really excited about this and you're seeing this in equity prices. I mean, Nvidia 184. Tesla still holding 447. Palinger trying to break 184. Grab Grab was at 548 3 days ago, it's at 586. Robin Hood 139 trying to break 140. Amazon 221. Meta breaking through 740. Salesforce up another 1%. We got everything across board. Ethereum, it was just at 4,000 before I went live. Now it's just below 4,000. But still 39.64. Bitcoin right here at 111. BMR was breaking 52. I mean, you are seeing a decent amount of excitement. We'll see if this gets faded when the market opens or if this has some legs to continue. Um, but as of now, it looks like the market is happy with the CPI.

Let's get a little bit more coverage on this and then we'll talk about some more of these implications. Coming out September read on the consumer price index. Headline number up 3/10enth cooler than both rear view mirror and what we're expecting. And if we look at the stripping out of food and energy known as core, it comes in also a bit less than expected, up 210. We're expecting up 3/10. Our last look was up 3/10. Here's the money ball numbers year-over-year, 3%. And even though it's less than the 3.1 we're expecting, it's hotter than 2.9. And after all, it's got a three handle. And if we look at CPI year-over-year, X food and energy, it also comes in at 3%. We are also expecting 3.1, but last look was 3.1, so it cooled a bit. So, we're seeing interest rates move down and stocks move up.

You may be asking why. The easy answer, because it's less than expectations. Is it less than the Fed's target of 2%? No. Which in my opinion, that fact will rise above all the issues of the day at some point, but yes, we do see rates moving a bit lower. Ultimately, this is a very important number because the market without any data points has been pretty much viewed on the notion that the labor market is slowing and that really is a good thing if you're looking for the Fed uh cycle to continue its rate cuts. Now, how does this figure in? I can't speak for Fed officials, but if you really have an agnostic view and you look at these numbers, the last thing you think about is we're closing in on the Fed's target.

Now, that that doesn't necessarily mean they're not going to be cutting rates. Uh I mean, the probabilities for cutting continue to be pretty high, still at 98.9%. Uh they might not cut three times as some people are saying towards the end of the year, like an additional three times from the first time we already cut, but we still might get those two cuts that people are looking for. In terms of the summary of this, energy, folks, was the biggest factor. The index for gasoline rose 4.1% in September, was the largest factor of all the monthly items increased. Energy was up 1.5 overall. Food was up 2% on the month uh and home index increased.1%. Uh indexes that increased over the month include shelter, airline fairs, recreation, household furnishings and operations and apparel. Apparel was one of the largest ones. The indices for motor vehicle insurance, used cars and trucks and communication were among the few that actually decreased. Market loves it. Market absolutely loves it right now.

So let me ask a question to everybody because this is something I was thinking about in the morning before I got the CPI data. I was thinking about this really for the past couple of days now. Uh, and the CPI data might be potentially kind of confirming it. So on Monday we had let's call it well realistically this started two weeks ago. This started October 10th. By the way the draw down has been so bad over the p you know we're we you know we're down one or two% away from alltime highs which is quote unquote so bad. Renaissance Technologies the the massive hedge fund they took a $3 billion loss on paper over the past 14 days ever since the whole Trump China stuff started which is kind of crazy. So, their gains for the year have gone to zero and the S&P 500 is up 12%.

Now, they'll probably recover that over the next couple of days, but it just goes to show how much money was in the system that ended up getting wiped out from some of these funds because they were levered long on some of these names. And then when you take a 3% draw down, it really takes a hit. So, the the the 3% draw down on the S&P ended up creating a massive high beta draw down, momentum stock draw down, whatever you want to call it. the Oaklows of the world, nuclear stocks, quantum stocks, all that stuff really took a bit of a beating over the past couple of weeks.

Here's the question to everybody in the chat. Now that we have CPI data and we have some pretty good earnings data that we've seen over the past couple of days and next week will be the big one for earnings. Is the draw down in momentum stocks done? That is my question. Is the draw down in momentum stocks done? Do you think that is the case? Because if it is the case, then obviously anyone who has bought the dip over the past couple days in anything, no matter what the stock is, I mean, you can see everything is up right now. HIMS is up, AS, Micro Strategy, Uber, etc., you know, you're green. Now, look, AS maybe is not going back to 102 anytime soon, but that doesn't mean it's going back down to 36. And I think it's the same thing for like an Oaklow. Maybe it's not going back to 195 anytime soon, but it might not be going back to 85 either. So, it chills out in the 130s, 140s type of range. I don't know if we have the ability to have those momentum stocks make new all-time highs like the S&P 500 is making right now. And that's probably healthy because those stocks likely didn't deserve to be at those types of levels, at least not yet.

But that also means that if the S&P's 500 is at alltime highs and we've basically flushed out all of the the froth that was there, maybe not all of it, but to an extent a decent chunk of it, then maybe this is creating the next leg up to go higher. The earnings haven't come out yet. That's a good point. Their earnings haven't come out yet, and that's another question uh on what's going to happen with a lot of those names. But the sort of structural draw down that we saw across a lot of names that just took a beating and again every name took a beating, right? Pounder took a beating. It got to 169. Hood got to 120. Those those names took a beating. Grab took a beating. Soi got to 25. Those they took a beating but they didn't take as big of a beating as some of those other names. But if everything is kind of back to a little bit more of a stabilized perspective on this, maybe that beating theoretically might not be that crazy.

Funstrat says there could be a correction in the next few weeks. I haven't seen their technical analysis from Mark Newton. I'll try to pull up what he said. Uh but maybe so that that's why I'm asking the question because could this be setting up a little bit more of another draw down because we don't really have anything fundamental. Government's still shut down, etc. to say that we're out of basically I'm trying to say are we out of the woods? Are we out of the woods for the volatility of October? It's been a very choppy October. Could we potentially end out October green? Which, by the way, if October ended today, we would be green. S&P's at all time highs. We would be green. That is what I'm curious to see what people are thinking.

Yeah, it's even a little bit softer. Um, and so that that's great news for the Fed in terms of uh their ability to to cut in October, which didn't really seem that much in doubt, but also to follow the dot plot in December. No, I think listen fundamentals Joe are pretty strong right now. I there's no doubt about it. You know, the economy is not weak per se. I mean, you've had pockets of weakening. I really do believe we're in a K-shaped economy where the lower end is maybe not quite as strong as the higher end. Um today's number for me is actually about broadening more than it is about AI. Although probably the first step forward is going to be more about AI and some of the momentum plays just because they are juiced by liquidity and we do have easy financial conditions and this will sort of pretend more of that but uh you know I think you can make an argument that you get some broadening here and it's not just about AI. and that broadening obviously would be very healthy.

Having a CPI come in better than expected also would be healthy. 57% of you say yes the momentum draw down is over. 50% of you say yes, the momentum draw down is over. I mean, look, the way some of these stock prices are reacting to CPI, which by like it's good CPI, but I I I mean, I've covered CPI for the past two years. This is not a phenomenal reading of CPI. I mean, it's the highest read since January. It's better than expectations, and in the stock market, perception is more important than reality most of the time, but but it's still a still an aggressive read. I just think because we've got so little data and the market was so happy to finally get some piece of tangible data that could justify like that inflation is not as bad as expected. That's why you're seeing some of this momentum right here across the entire board.

So, uh, the CPI story took away from the most important story that happened last night, which I don't even know if it's really that in supportive. I mean, important because I don't know if the market cares, but Trump tweeted at about 10 p.m. Uh, the the Ronald Reagan Foundation has just announced that Canada has fraudulently used an advertisement, which is fake, featuring Ronald Reagan speaking negatively about tariffs. The ad was for $75,000. The only reason they did this is to interfere with the decision of the US Supreme Court and other courts. Tariffs are very important to the national security of the United States. Based on their egregious behavior, old trade negotiations with Canada are hereby terminated. Thank you for your attention to this matter.

So, this came out at 10:40 and immediately I did what everyone else did, which is you went to your brokerage app and you looked to see like how bad is the carnage and like it was nothing. No one cared. No one freaking car. If that country that started with a C was China instead of Canada, I I don't know if CPI would have been able to save us aside. Remember, the whole reason this draw down started two weeks ago on October 10th is because of a tweet about China. So, it's quite incredible. It's almost like the market doesn't care at all about Canada.

This is the ad for those that wanted some context that Trump was so pissed off about. "When someone says, 'Let's impose tariffs on foreign imports,' it looks like they're doing the patriotic thing by protecting American products and jobs. And sometimes for a short while it works, but only for a short time. But over the long run, such trade barriers hurt every American worker and consumer. High tariffs inevitably lead to retaliation by foreign countries and the triggering of fierce trade wars. Then the worst happens. Markets shrink and collapse. Businesses and industries shut down and millions of people lose their jobs. Throughout the world, there's a growing realization that the way to prosperity for all nations is rejecting protectionist legislation and promoting fair and free competition. America's job and growth are at stake." So this is what this this was paid for the government of Ontario.

So yeah, I mean, Trump's point is that it's out of context and it's like it's misinterpreting what they said. uh and you know he governs policy through through tweeting and so that's what he said yesterday. But the point is for investors no one cared which is kind of hilarious because you would think like there would be some impact of Trump saying we're not going to do trade with China. All negotiations are quote unquote over. But the market was just like no they're not. You'll be back to normal in a couple days. You'll be okay. And as a result you get good CPI and now we're continuing to go green.

Okay, so let's have this uh sort of transition into the data center conversation because this is the other big story that came out last night and this is why Nebius, Cory, etc., a lot of these names are also green. Um, well, we got a lot of debt coming into Oracle. Oracle completed a $ 38 billion debt deal to finance, you guessed it, more data centers. Um, this is quite remarkable. 23.25 billion will be financed for a data center in Texas. 14.75 billion will be financed for a data center in Wisconsin. Vantage Data Centers is developing both of those, which are going to be used by Oracle to power another company that we all know about, OpenAI.

Now, there's a bull case to this and there's a bare case to this. And let's do the bare case first. I think all of you guys understand the bare case. It's uh you know, one of the things that's kind of glaring you right in the eye, which is that this 38 billion is not free cash flow. It's not net income. It's not operating income. It is debt. It is debt. Oracle is taking on basically $40 billion worth of debt likely through the the sale of of corporate bonds. Uh which they did a couple of weeks ago as well at to the tune of 13 billion. And they were paying six and a half% on those corporate bonds. And so in layman's terms, they are getting 40 billion.

They are saying, "Hey, we'll pay you back the 40 billion with 6%, 5%, 7%, whatever rate they're offering to the debt issuers." And the debt issuers are happy to give the money because they believe that data centers are real. there's going to be an ROI on all this AI capex spend and Oracle knows that their market cap is likely going to go much higher and they can afford to pay back that debt eventually even with interest because of how massive the opportunity is for data centers and I think that is one of the major reasons I ran and cipher and uh a lot of these other smaller names Navius Coriv etc exploded last night in the overnight market CPI is just adding fuel to the fire is that Oracle saying there is 40 billion of demand and this is just for two data centers in two different states

The Bitcoin mining data center companies are up because Jane Street just disclosed a 5% stake in three of them. Okay, so let's talk about this real quick because I think it's very very important for people to understand what's going on right here. When you see the market makers like a Jane Street or a Black Rockck or a Citadel take a stake in these companies, you have to be very cautious in looking at what you're reading here. Jane Street is a market maker. They operate essentially the way they make their money is through a deltaneutral option strategy. So, when you see a Jane Street discloses a 5% stake in Cipher, it's not because they're actually bullish. Bridgewwater you know an actual money manager that has an opinion on the market going long on these names a Stanley Ducken Miller that's a lot different than a market so that's the only difference there.

First of all, Intel, massive earnings. This stock is up 6%. EPS is up 150% year-over-year. The stock is up more than 90% year-to date. 13.6 billion in revenue versus 13.1 billion. They beat by 4%. So, this is very, very exciting to see. Uh, yeah, only 2200%.

It's not just Intel yesterday. I mean, pretty much every company beat on the top and the bottom line. So you got Intel right there that beat by 22 100%. Deckers beat by 15% on EPS. Pneumont beat by 19%. Ford beat by 25%. We're talking about freaking Ford Legacy Auto Company, they also beat by three billion on revenue, which means there was $3 billion worth of more demand for Ford to be able to sell these cars. I think the core argument for all these companies that beat yesterday on earnings is that there is margin efficiency that is happening across the board.

And this is the real reason to be bullish for a cipher or INE or any of these other data center plays is because the reg reason some of these companies are beating if it is because of AI and increasing their margins that goes back down to the data centers. Like if these companies are utilizing artificial intelligence, increasing their margins, that means you need compute in order to keep increasing their margins, you need more and more demand for that compute. Based on this Oracle deal, we're seeing more and more demand. And then these smaller companies, Nebas, Corey, Vyan, Cipher, Galaxy, etc. They are the ones that are getting a lot of these deals because they have more facilities than other people. And that is leading back to the ecosystem of a lot of these other companies, whether it's an Intel or a Realy Income that are actually generating EPS growth.

And so there's a lot of conflicting data here because there's tons and tons of data we looked at on why the consumer is struggling, private credit, auto delinquencies, credit card loans, etc. But then you look at these earnings and unless these numbers are fake, if more and more people are buying shoes and jeans with Levis's a couple weeks ago and cars with Ford, I mean, maybe the consumer is not necessarily in that bad of a place, especially with CPI starting to be a little bit lower than expected. You know, maybe inflation is not eating them up as much as people thought.

So, we had some big updates today in the world of crypto that actually potentially were the reasons why Ethereum and Bitcoin broke out a little bit in the morning. Um, take a look at this, folks. JP Morgan as for Bloomberg will allow Bitcoin and Ethereum as collateral if you now want to take out a loan or if you want to finance an opportunity. JP Morgan plans to allow institutional clients to use their holdings of Bitcoin and Ether as collateral for loans by the end of the year and a significant deepening of Wall Street's crypto integration. Look, I think this is bullish for the broader industry. I mean, when you have the most important consumer finance companies coming out and saying, "Hey, we are ready to take uh your Bitcoin as collateral before we give you a loan, it only institutionalizes and legitimize bit Bitcoin and all these other assasses even more."

Yeah, I mean it's like a stock, right? If you're up big on Nvidia, but you don't want to sell your Nvidia to pay the taxes, you can borrow against it. If you can borrow against your Bitcoin and Ethereum on an institutional level with a JP Morgan, it creates first of all more loans, which means more money in the system, more capital spending activity, more um underwriting for a lot of these banks, which is bullish financials, but it also means that those assets don't have to be sold.

And then if we go deeper into Ethereum, this came out yesterday. Robin Hood has now brought on 493 assets on chain, including stocks, ETF, crypto ETFs, commodities, US treasuries, and private equities. The exciting thing about this and how it's playing out is Vlad was tweeting a lot last night basically saying that tokenization is beginning to eat the entire financial system. And when people asked him, what is the next big asset to tokenize, he ended up saying real estate.

The stock market is now open. All right, wake your ass up. Let's get into it. S&P 500 opens at an official all-time high. Look at that green candle. 676, baby. Tesla 450. Robin Hood 138. Palenture busting through 184. They did get that $200 million contract with Lumen yesterday and that was also very bullish for them. S&P again 675.95. SoFi 2880. Grabby Grab 587. Google 255. Nvidia that's up 1%. Maybe Nvidia getting ready to go back to 185. Amazon 222.

So, the momentum names, they took a beating over the past two weeks. Going back to what I was saying at the beginning of the show, maybe that beating is now over. If we look at the rare earth stocks, they are all green. If we look at the Bitcoin miners, they are all green. SoFi 29. IBM says it can successfully run a quantum computing algorithm on AMD chips. Stock didn't really react to that when they announced three weeks ago, but on a day like this when you get a CPI, that's as bullish as we get it. There you Wow. AMD 24875 busted through 248 right there. Nvidia 185. So, AMD really liking that headline. AMD 250. There it is. AMD 250 for AMD.

Oh, we got PMI. Hold on. We got PMI. That's some more data. Let me pull this up. Looks like it's a beat on PMI as well, which is good. Uh, PMI comes in at 52.2 versus 52 expected. Services PMI 55.2 versus 53.5. That's a big beat. Overall composite PMI 54.8 versus 53.9. So those are two beats, one miss. The miss was very slight. Dude, that is pretty incredible. I mean, those are some pretty decent PMI numbers along with good CPI. Yeah, look at the S&P new alltime high. S&P loves it. S&P loves it. She wants to break 678.

I think Bitcoin should really build upon this 120 before the end of the year. So, you know, 200,000, maybe 250 if someone wanted to under. Yeah, I mean we have a lot of time. We have we have 10 weeks. Um as you know Bitcoin makes its move in 10 days a year. So are Bitcoin's best days in the fourth quarter? Probably because we have catalyst the Fed's easing. We have a shutdown that's been riskoff. We have China US tensions that look every time there's a headline on China like Bitcoin takes a gut punch, right? Um because it it is money flows and deleveraging uh so that goes away. We have seasonality that favors stocks moving up and stocks moving helps Bitcoin. So to me uh the chances of Bitcoin having a huge fourth quarter are really high and not all of these would be tailwinds for gold. So I I you know I wouldn't count I still think it's possible for Bitcoin to hit 200,000 by the end of the year.

Again, if you got if you got super bearish a couple weeks ago, it ended up being a buy the dip. And a lot of the bears, if they thought that was going to be where they kind of find their way to to make to to essentially call a thesis that would stop the earnings growth, stop the capex band, you know, claim recession. We're just not there yet. We don't have the data to suggest that's the case. And the market's not acting like that's the case either.