Ringing the bell
December 18, 2025
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–Usually I feel like there are a lot of market forces that are nuanced. There’s a huge premium for thoughtful analysis that can weave diverse themes together. This isn’t that.
Yesterday CNBC put it this way ‘Oracle stock slid after a report that Blue Owl Capital won’t back a $10 billion data center for OpenAI.’ Bloomberg headline: ‘Oracle-Blue Owl Split Over Data Center Rattles Markets Banking on AI Boom’. In my mind, THAT’S ringing the bell near the top. I’m an armchair observer of the AI boom. But I do know that big tech companies used to be able to finance expansion through free cash flow. Now they are borrowing. The businesses have become capital intensive. There’s a groundswell of public opposition to huge data centers. I assume that the Blue Owl guys are smart, and I recently saw the CEO uncomfortably making the financial news rounds to defend the company’s financial acumen and strength. But what did he ACTUALLY DO? Pulled the plug on incremental investment. Now I respect the guy. “Be first, be smarter, or cheat…It’s a hell of a lot easier to just be first.” OWL is down 35% ytd. Surprisingly. ORCL is UP 7.5% ytd but down 40% from late Sept and down 5% yesterday. The AI boom has been the driver. It’s over.
–Related, TSLA made a new all-time high yesterday at 490, but had an outside reversal day, closing -4.6%. I can’t help myself. Bought puts. And if I am wrong? I get out on new highs.
–Waller said yesterday that funds are still 50-100 bps above neutral, and said the labor market is very soft. Little movement in rate futures with SOFR strip +0.5 to -2.0. Peak contract SFRZ6 unch’d at 9690.5. TYH6 down 0.5/32 to 112-16. TYH6 112.5^ down to 1’44 from 1’49 Tuesday. Cash ten yield anchored at 4.15%.
–News today includes ECB, Jobless Claims expected 225k, CPI yoy 3.1% and Core 3.0%. The new midpoint FF is 3.625%, I would say it’s a bit hard to argue that neutral is 100 lower given 3% inflation. Philly Fed was -1.7 last, expected to see a bounce.
