Loading summary
Transcript1 lines
- [00:00]
A
Public.com presents the rundown. Your daily market update in 10 minutes. My name is Zadad Mani and Today is Wednesday, June 10th. In today's episode, we'll break down the latest inflation report and what it means for the Fed. We'll also tell you about the latest AI model that Anthropic just released and why Nvidia and Google are co signing leases for for OpenAI and Anthropic. Then stick around to the end of the show to find out how much money the Knicks are making for every home game during the NBA Finals. We got a great show for you today. Let's go. Well guys, the chip stock bounce back from Monday didn't last long. The stock market pulled back on Tuesday with the S&P 500 down 0.3% while the Nasdaq fell 1%. Yesterday was a really weird trading session and at its lows, the Nasdaq was down 3.7% but then bounced back midday and recovered most of its losses by the close. And here's the thing, there was no major news or economic report driving any of it. The big swings were likely driven by quant funds and algo traders. So yeah, the bots might have taken over the stock market yesterday. Now the other interesting note from yesterday was that despite the overall index finishing lower, nine of the 11s P500 sectors finished in the green with more than 70% of stocks in the index finishing higher. So we're continuing to see money rotate out of chip and tech stocks and into the rest of the market, like transportation stocks, which are up 29 this year. Not to mention the equal weight S P500, which is where every company gets the same weight, is now outperforming the regular S P this year. So that tells you that the rally is now broadening out beyond tech and AI names. And honestly, I think that's healthy for the stock market because you never want to have too much concentration. Now this morning we did get some major economic news. The May CPI report just came out and inflation was measured at 4.2% last month, which is the hottest reading in more than three years. And the culprit here is no surprise. It's the higher energy prices driven by the Iran war. Energy made up over 60% of the monthly increase, with gas prices alone jumping 7% in May. And speaking of the Iran war, things seem to be escalating. The US Military launched strikes on Iranian military targets overnight after Iran shot down an American Apache helicopter near the Strait of Hormuz. So if oil prices stay elevated, inflation might not ease up for a while. Now look, there was a silver linings in the CPI report, which was at core CPI, which strips out food and energy, came in at 2.9%, which was cooler than expected. So yeah, that's going to put the Federal Reserve in a tough spot when it comes to interest rates. You know, as of right now, the market is pricing at a 42% chance that the Fed will hike interest rates by the end of the year. We'll talk more about that over the next week as we get closer to the June 17 fed meeting. So make sure you guys are subscribed to the podcast and tuning in every day to stay in the loop. Let's run through some headlines, starting with Anthropic. Anthropic just released its most powerful AI model to the public yesterday. This is the same model two months ago the company said it was too dangerous to release. Remember, back in April, Anthropic previewed a model called Mythos to a select group of companies and it was so good at finding security flaws that it freaked out cybersecurity experts and people in Washington, D.C. well, mythos is now out to the public, kind of. Anthropic released a model called Fable 5, which is basically Mythos with guardrails. You know, it's the same underlying Mythos model, but if you ask it about high risk stuff like cyber attacks or bioweapons, they're going to block the response. Now, the full Mythos model is still locked down. Only about 200 trusted organizations have access to it so they can security test their own systems. But look, I've been messing around with the Fable 5 model for the last few hours and it's definitely a step up from the Opus model in my opinion. Although I have seen some complaints online that the guardrails are too strict and that Anthropic is blocked blocking answers to basic questions. So we'll see if Anthropic eases up on that. But you know, what really stood out to me about this release was the pricing. Anthropic is including the Fable 5 model in paid plans for just two weeks until June 22. After that, anthropic will remove the model and users will have to pay usage credits to keep using it. And that cost can add up fast. See, what you have to keep in mind is that these paid plans for Claude and Chat GPT are subsidized, meaning when you pay 20 bucks a month or even 100 bucks a month, it costs anthropic and OpenAI more in compute costs for that usage, especially for heavy users. So this move by Anthropic to move to a usage based model could be a sign that the era of subsidized AI plans is coming to an end. And the timing of it makes sense because remember, Anthropic filed for its IPO last week, so they need to start boosting revenues and more importantly, profitability. Now Anthropic did say that Fable 5 could return to the subscription tier down the line, but I think we might be headed for a world where the cutting edge AI models will be pay per use only and only the older AI models will be part of your monthly subscription. Look, I hope I'm wrong about this, but with the IPO coming up and the pressure to improve profitability, it does make sense. Let's stick with the AI theme and talk about a couple interesting deals when it comes to AI infrastructure, the information reported that OpenAI is an advanced talks to lease a 10 gigawatt data center campus in southern Ohio. The data center would cost at least $500 billion to fully build out and OpenAI's lease would be its largest infrastructure commitment to date. In fact, this deal is so big that as part of it, Nvidia would act as a financial guarantor for OpenAI's lease. Basically Nvidia is co signing the lease like your parents co signing your first apartment lease after college. And by the way, Anthropic is also running the same playbook with Google. According to Bloomberg, Anthropic is leasing advanced chips at Facebook, five U.S. data centers and a $35 billion financing deal. And Google has agreed to backstop the lease payments, meaning if things go sideways, Google will step in to make the payments. So it's kind of funny that despite these AI companies like Anthropic and OpenAI being worth nearly a trillion dollars and having tens of billions of dollars in revenue, they still need another multi trillion dollar company with a strong balance sheet to co sign for them. And keep in mind, Nvidia also sells OpenAI billions of dollars worth of their chips. And not to mention Google makes the TPU chips that Anthropic is using now. So the suppliers like Google and Nvidia are guaranteeing their own customers debt so these customers can keep buying their stuff. These kind of deals feed into the worry of circular financing and how all these AI companies are now tied together and if something goes wrong or belly up, I mean it could have a devastating cascading effect across the entire AI ecosystem and not to mention the entire economy. For that matter. So, yeah, I think it's these worries that are playing into why Chip and AI stocks might be selling off over the last few days. Let's talk about some stocks making moves today. Shares of Cracker Barrel are rallying this morning after the restaurant chain reported a surprise profit and lifted their full year guidance. Wall street was expecting a loss of $0.48 per share, but Cracker Barrel posted an adjusted earnings per share of $0.29. The company said that profitability was driven by cost cutting, including a corporate restructuring that's expected to save the company between 20 and 20 million a year. On top of that, the company posted revenues of $797 million, which also topped estimates. So Cracker Barrel beat on both top and bottom line. Now, to be fair, the bar was pretty low for the company. Cracker Barrel was still trying to bounce back from their botched logo redesign from last summer. That sparked a massive backlash, plus a ton of complaints about food quality as well. Now, they've since brought back the old logo and the fresh baked biscuits, which is nice to hear, but traffic is still down nearly 7% last quarter and revenue was down around 3% from a year ago. But management thinks that things will turn around. They raised their annual revenue guidance to $3.3 billion at the high end. Investors seem to be really excited though. Cracker Barrel stock is up more than 30% this morning at the time of this recording. And if you zoom out, the stock is up more than 70% on the year. Now. On the flip side, shares of Super Micro Computer are down after the company announced plans to raise $7 billion through stock offerings, which is a move that dilutes existing shareholders. Supermicro makes AI servers. And no surprise, your business is booming right now. The company said that it has received $39 billion in orders from more than 20 customers in recent weeks. But the problem is building all that hardware is getting more expensive these days. The CEO said last month that memory costs have more than tripled. So Super Micro needs the additional capital to cover the component purchases. So as a result of the stock offering, shares are down around 13% at the time of this recording. But the stock was up around 30% this year coming into today. Let's wrap the show with a fun fact. The New York Knicks are generating more than $20 million in revenue for every home game they play at Madison Square Garden during the NBA Finals. I gotta say, the NBA Finals this year between the Knicks and Spurs has been really good so far. The Knicks won the first two games in San Antonio. They had all the momentum going into game, but they lost on Monday night in Madison Square Garden in New York City. So, yeah, imagine dropping five figures for tickets and still seeing your team lose. I mean, that's got to be brutal. I even read a funny report about fans basically day trading their tickets. Like, one group sold their seats for $12,000 each, and then they bought worse seats for around $7,000 just to be in the building. So, yeah, man, it is nuts out there. Anyways, the biggest winner here has to be Knicks owner James Dolan. NBA fans know that he wasn't very popular with Knicks fans for the longest time, but now the team is two wins away from its first championship in 53 years. And the company stock, MSG Sports, which owns the Knicks, is up nearly 50% on the year, adding more than $200 million to James Dolan's net worth. By the way, he also owns the sphere in Las Vegas, which might be the greatest invention of the decade, maybe even the 21st century. Game four is tonight at Madison Square Garden, and if the Knicks lose Game 4, the series will be tied 2 2. But it will also guarantee a Game 6 in New York, which would bring another $20 million in revenue for James Dolan. So, yeah, he's gonna end up winning either way. Well, all right, guys, that's the rundown for today. Hope you guys enjoyed today's episode. If you did and you have like five extra seconds, consider giving us a five star rating on Apple, Spotify, YouTube, wherever you listen to your podcast. All that engagement really does help us out and it helps other people people find the show. Thank you guys so much for listening, watching and commenting. Shout out to Mike for all the work behind the scenes and we'll see you guys back here tomorrow.