Markets · page 5

How to Know When the AI Boom Is About to Go Bust

• Columnist Jonathan Weil argues booms need a steady flow of fresh capital, and can turn to busts once the window to raise new money closes; he says we are not there yet.
• His signal to watch: the return of the phrase ‘funding gap’, which entered the lexicon with ‘burn rate’ in 2000 as the dot-com bubble began to deflate.
• Early nerves: OpenAI ruled out going public this year, Holtec Nuclear paused its IPO plans and Anthropic pushed its IPO from October to November.

Other side: The delays may be bumps rather than warnings: the companies still appear able to raise private money, and Holtec is already profitable. Because OpenAI’s and Anthropic’s finances aren’t public, outsiders can’t easily read how close any funding gap really is.

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Summary based on The Wall Street Journal. Read the full story ↗

The Ph.D. Job Crisis Is a Needed Market Correction

• Universities are cutting Ph.D. admissions and freezing hiring under financial strain: Chicago paused more than a dozen programmes amid a $160M deficit, and Brown suspended six.
• Brown’s faculty committee put the cost of supporting a Ph.D. student at $700,000 to $1M; jobless rates for Ph.D. holders aged 25–34 hit 3%, the highest August reading since 2009 outside the pandemic.
• Columnist Allysia Finley argues falling federal subsidies and rising grad-student pay, such as Cornell’s $48,367 stipend for 15-hour weeks, are correcting a glut of doctorates.

Other side: Universities warn the cuts endanger research, and the jobless data is a short snapshot: in California, Ph.D. unemployment (3.9% in June) is still below that of bachelor’s holders (4.7%). Whether fewer Ph.D.s is a correction or a loss depends on which fields shrink.

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Summary based on The Wall Street Journal. Read the full story ↗

AI hyperscalers are transforming debt

• Meta will tap the European bond market for the first time this autumn, investors say, joining a record hunt for funds.
• Investors have provided about $500bn to AI-linked groups this year, per Goldman Sachs; the five hyperscalers account for about $200bn and are expected to issue over $1tn more in the next few years. SoftBank raised over $11bn in the biggest junk bond issue ever, to fund an OpenAI investment.
• Other borrowers are timing bond sales around the tech giants, and highly rated bonds sometimes trade at discounts to lesser-quality ones. Fed chair Kevin Warsh and Treasury secretary Scott Bessent argue hyperscalers compete with the $31tn Treasury market, where 10-year costs hit their highest since 2007 last week.

Other side: Whether hyperscaler debt is lifting government yields is disputed: HSBC’s Adam Bothamley calls it a stretch, and Morgan Stanley’s Matthew Hornbach sees a far smaller effect than rates and deficits. Morgan Stanley also says euro capacity is untapped. The risk is if AI cash flows disappoint: Apollo’s Torsten Sløk notes the credit case rests on operating cash flow tripling from $600bn to $2tn.

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Summary based on Financial Times. Read the full story ↗

YouTuber flaunts gold online; burglars strike

• Nagercoil home broken into while the family was out, Sept 24.
• Thieves forced the back door and took gold kept in a bureau.
• Police are checking the videos; no link confirmed yet.

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Summary based on India Today. Read the full story ↗

What higher yields mean for your money

• Fed hiked this month, its first since 2023; more signalled.
• Record $6.53 diesel; some savings accounts now pay 4%+.

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Summary based on CBS News. Read the full story ↗

US 10-year Treasury yield at 5.183%, up 1.046 points over the past year

• A TradingView snapshot shows the US 10-year government bond yield (US10Y) at 5.183%.
• That is up 1.046 points, or 25.28%, over the past year.
• The one-year line trends upward and finishes at its high point on the chart.

Watch next: Whether the yield holds above the 5 line marked on the chart. The source makes no prediction.

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Oracle on the hook to pay Project Jupiter investors even if the New Mexico site has no power

• Oracle has issued a force majeure notice on power supply to the project developer, a unit of Blue Owl Capital, after permitting delays amid rising local opposition, according to people cited by the FT.
• Under the contract, Oracle must still pay a carry cost in lieu of rent for up to three years if the project misses its first-phase deadline.
• Construction is under way on the 1,400-acre campus in Doña Ana County; the FT says Bloomberg first reported the notice.

Watch next: A second person told the FT there is disagreement over whether force majeure can be triggered before a scheduled completion date. Oracle said the notices do not establish a delay and that Project Jupiter "remains on our planned schedule." A Blue Owl spokesperson said the notice does not change the financial commitments.

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Summary based on Financial Times. Read the full story ↗