The Fed’s two-day meeting starts today. The decision comes at 2 p.m. tomorrow, and Warsh speaks right after. Our momentum readings haven’t moved much since yesterday. The Nasdaq is up almost 1% early. The AI names are leading, with Nebius up 11% and CoreWeave up 7%.
Russell Clark, a macro writer in England, compares compute to nuclear weapons. I think he’s right. Once a country has a handful of nuclear weapons, it doesn’t need more. U.S. policy has always been to have more anyway. Compute works the same way. Washington will never decide it has enough, which makes AI as much a national bet as a market one.
The country can’t have too much compute. A company can have too much debt. Musk said Sunday that more than 200 neoclouds will fail or get swallowed by bigger players. He said it right after SpaceX closed $40 billion in new debt. I think the strongest borrowers are happy to push the weaker ones out the window.
Clark also says you can’t pair-trade this group. When one name gets hit, they all get hit. Applied Digital, which builds and runs data centers for AI customers, is up 9% this morning. It’s still down about a third from its September high.
Two insiders bought near the lows. On Oct. 16, CEO Wes Cummins bought about $1 million of stock at $18.04. President Jason Zhang bought about $5.7 million at $18.86.
I like selling put spreads into November here.
Keep it small, because this group still trades as one. If the basket breaks again, this goes with it.