Wall Street Journal

Although Bank of America’s “sell signal” has ended, this is by no means a signal to buy the dip. The Federal Reserve's restoration of credibility and the alleviation of concerns over AI financing, the two prerequisites for returning to risk assets, have not been fulfilled. Currently, the cracks in AI financing are widening, and tech stocks are extremely crowded. Strategists warn that whether we can return to tech stocks in November hinges entirely on the “semiconductor prices” as the decisive factor. The short-term recommendation is to temporarily avoid technology, maintain a defensive stance, and focus on small-cap stocks and REITs.

In a survey consulting primary dealers, the Ministry of Finance asked about the repurchase plan for long-term government bonds, how to improve repurchase efficiency, the timing of short-term bond issuance, and the economic and financing outlook, but did not directly address the issue of reducing the supply of long-term bonds. Some investors originally expected that the Ministry of Finance would use this questionnaire to more clearly hint at considering a reduction in the scale of long-term bond auctions, or even stopping the issuance of 20-year government bonds. The refinancing announcement released by the Ministry of Finance on November 4 became the next observation point. Citigroup expects that at that time, the auction scale for 20-year and 30-year U.S. Treasury bonds will each be reduced by $3 billion, believing that this survey indicates the Ministry of Finance is considering a reduction in the issuance of long-term bonds.

Anthropic has received its first credit rating of BB+, the highest speculative grade (junk grade) score, just one notch below investment grade. The rating agency KBRA completed the assessment using a "risk score" in place of a complete financial model due to extremely limited disclosure. However, KBRA is smaller in scale compared to Moody's, S&P, and Fitch, and the latter three will ultimately determine the official credit rating for Anthropic after its public listing.

Waller emphasized that the Federal Reserve is clearly committed to achieving price stability, does not support prematurely predicting the outcomes of monetary policy meetings, and does not advocate for disclosing potential policy actions for the remaining meetings in 2026 in advance. Inflation is not a problem unique to the United States. Currently, most regions around the world are tightening monetary policy in sync, which means no country can "free ride." Waller also announced that the Federal Reserve's productivity and employment working group will hold a field hearing in the San Francisco Bay Area on November 16 to study various issues, including the economic impact of artificial intelligence.

After Jensen Huang's speech, CoreWeave's stock price, which had previously dropped by 9.5% in early trading, turned positive. The company's five-year CDS broke above 1190 basis points during Thursday's trading, reflecting a historical high for the indicator of debt default protection costs, with some corporate bond yields rising to over 15% to 16%. The five-year CDS spreads for Oracle, Amazon, Google's parent company, and Meta are all at historical highs. Deutsche Bank analysts believe that as the AI capital expenditure cycle increasingly relies on debt rather than free cash flow, investors must pay more attention to the price signals in the credit market. Overall, while the financing costs related to AI are not yet considered high, there are already some concerning signs.

According to media reports, Anthropic's Q3 revenue increased by 45% quarter-on-quarter, far less than the over 140% growth in Q2. Some investors believe that underwriters should lower the IPO valuation expectations, which may be below $1.5 trillion, while the level previously discussed privately by some investment banks was around $2 trillion. Jefferies analysts stated that Wall Street may expect Anthropic's annualized revenue to reach at least $80 billion and hope it exceeds $105 billion by the end of the year.

In September, the PPI in the United States exceeded expectations, rising 6.3% year-on-year, reaching a new high since December 2022, with a month-on-month increase of 1.3%. The surge in energy prices was the main driver, with a single-month increase of over 10%. Following the CPI exceeding expectations, inflationary pressures on the production side further spread, coupled with strong manufacturing sentiment, raising expectations for the Federal Reserve to continue increasing interest rates in the coming months, putting pressure on the market.

The sell-off of Asian tech stocks continues to escalate, with the South Korea Composite Stock Price Index plunging 7.6% in a single day, reaching a new high in oversold levels since October 2022, and volatility surging sharply. The divergence in performance between South Korea and the Philadelphia Semiconductor Index in the United States has widened, and the Taiwan stock market has also begun to weaken. As concerns about AI capital expenditure prospects arise and related long positions become highly crowded, the market fears that panic will spread from South Korea to the entire Asian semiconductor sector, with the Taiwan stock market's decline synchronizing with the downward risks of U.S. semiconductor stocks.

The Korea Composite Stock Price Index opened down 5.6% and further declined, with the drop expanding to 7.56%. Samsung Electronics and SK Hynix fell over 9% and 10%, respectively. The Nikkei 225 Index dropped more than 4%, SoftBank plummeted nearly 10%, and Kioxia fell over 10%. The MSCI Asia-Pacific Index decreased by more than 1%, marking the fourth consecutive trading day of decline.

On Wednesday, Anthropic held an investor briefing at its headquarters in San Francisco, where the executive team focused on explaining the company's safety-first philosophy, rapid growth trajectory, and efficiency improvement results, seeking support for the IPO expected to launch in November. Currently, the main industry headwinds are the risks of AI technology, intensified industry competition, and high interest rates that constrain financing.