TheChek News Flow

US stock markets remained near all-time highs this week despite higher oil prices and surging interest rates. The exploding popularity of Meta’s personal AI agent Muse, and the promise it could bring AI to the masses through Meta’s billions of monthly and daily active users propelled AI sentiment. Meta’s narrative largely overshadowed continued signs of cracks in the financing cogs for key data center projects and rising corporate AI bond spreads. Breadth narrowed, with a small subset of technology names driving the overall performance of the topline indices. For the week, the S&P added 1.2%, the DJIA rose 0.3%, and the Nasdaq gained 2.1%.

US Treasury yields broke out to new cycle highs climbing above 5% in the benchmark 10-year yield. Investors seemed take the higher rates in stride, perhaps because the driver appeared to be signs of a robust US economy rather than dislocation in the bond markets. S&P PMI’s revealed the strongest growth surveyed in 5-years accompanied by stubbornly high inflation levels tracking back to 2022. Aug preliminary durable goods data topped expectations, in particular, the closely watched proxy for business spending capital goods orders surged. Fed commentary was decidedly hawkish, setting expectations that policy markers very well could hike again in October and perhaps two more times into 2027. Oil prices remained tightly correlated to interest rates climbing this week amid another barrage of headlines regarding the Mid-East and potential measures Western governments could take to offset rising energy costs. Iran and US officials met on the sidelines of the UN general assembly in New York but no new breakthrough appeared imminent despite discussions on reopening the Strait.

Chinese President Xi arrived in Washington for the second summit this year with President Trump. The two sides agreed to extend the previously instituted trade truce by two months to January 10th, with US officials referring to it as a “compliance” period. Agreements were said to be reached on further subsets of goods for trade, but as usual details were sparse with additional information promised next week.

Outside of the news made by Meta’s new shopping AI agent, a few other AI-sector stories were highlighted in the week’s corporate news. Akamai shares were lifted on a new circular investment deal in which it agreed to support Anthropic’s CPU workloads while offering the client company warrants that could convert into a 5% common equity stake in Akamai. Meanwhile, Oracle sent some shivers through the sector as it sent a force majeure notice over its New Mexico data center, trying to put off payments on the project if it is delayed. Laboratory services companies names were hit on Tuesday after CMS announced it had found significant overcharges for their services to Medicare and would seek payment curtailments that could trim costs for Americans by $1B annually. On the inflationary side of the ledger, Celanese announced its fourth straight price increase this year for key industrial chemicals. McDonalds shares hit fresh 52-week lows as its investor day brought to light an $8.5B franchisee support plan and management warned that elevated inflation would keep customer traffic flat. And Tesla stock was dinged on Friday based on a report that its plans to ramp up Optimus production was hitting a snag due to supplier constraints related to the complex hand assemblies for the humanoid robots.

(US) CMS Announces New Preliminary Medicare Payment Rates for Laboratory Services, Saving Taxpayers an Estimated $1B Annually; Determined that Medicare has been paying 16% more than private payors

(CA) Bank of Canada (BOC) Gov Macklem: We don't want to raise rates and restrain growth if inflationary pressures are contained; If new US tariffs remain in place, growth could be roughly halved in the fourth quarter, to below 1%

CE Raises again acetyl product prices in Americas and EMEA, effective immediately [**TTN Note: Celanese had announced broad Acetyl price actions in February, March and May]

BABA *CEO Wu: Aims to make global data center capacity operated by Alibaba Cloud >20GW by 2032; notes the launch of the Zhenwu V900 chip in Q1 2027 - comments from the Alibaba Apsara Conference

ODFL Raises tariff rates 4.9% under the existing ODFL 559, 670, and 550 tariffs, effective from Oct 5th; Aims to offset continued cost pressures related to real estate, equipment, technology, and competitive wages and benefits

(US) Pres Trump: Have been talking with Iran, even today officials talked for three hours; Discussed energy, immigration and Rolls Royce with UK PM Burhman

(SA) SAUDI ARABIA SAID TO BE RESTARTING EAST-WEST OIL PIPELINE; PREPARES TO RESUME CRUDE OIL EXPORTS FROM YANBU PORT LATER TODAY - CGTN'S X POST

(US) Fed's Collins (non-voter): Now see an increased likelihood of future scenarios in which inflation remains notably above 2%; Supported last week's rate hike, will help return inflation to target

(EU) EURO ZONE SEPT ADVANCE CONSUMER CONFIDENCE: -16.5 V -16.0E

(US) SEPT RICHMOND FED MANUFACTURING INDEX: -2 V 2E; Volume of new orders: -6

(US) TREASURY $69B 2-YEAR NOTE AUCTION DRAWS 4.787% V 4.204% PRIOR; BID-TO-COVER: 2.63X V 2.60X PRIOR AND 2.58 OVER THE LAST 12 AUCTIONS

DEEPSEEK.IPO China probes DeepSeek and Moonshot over data breaches to Claude - The Information

IONQ Demonstrates real-time quantum error correction decoding on a single CPU; Says breakthrough removes a major bottleneck in fault-tolerant quantum computing, enabling real-time error correction across millions of operations without slowing down execution time

(IR) Iran Senior official: Tehran is reviewing the US response to its proposal to end hostilities; There are still many differences between Iran and the US but diplomacy continues

(US) White House: Not considering diesel export ban, any report is "fake news" [denies earlier Politico report of a 90-day diesel ban being planned]

(US) Reportedly White House making plans for a 90-day diesel export ban, despite split within the Administration and the energy industry - Politico

(SA) TankerTrackers.com: Our month-on-month sightings show that Saudi Arabia's crude oil loadings along at its east coast are up sevenfold

(PL) Polish Army Official: Russian military helicopter made brief incursion into polish airspace from Kaliningrad; Airspace incursion said to be only for 42 seconds

(US) TREASURY $70B 5-YEAR NOTE AUCTION DRAWS 5.033% V 4.393% PRIOR, BTC 2.21 V 2.37 PRIOR

(US) SEPT PRELIMINARY S&P MANUFACTURING PMI: 57.0 V 53.7E (highest since May 2022 and on track for 13th straight expansion); Overall rate of inflation hitting the highest since October 2022

(US) DOE CRUDE: +3.0M V -0.5ME; GASOLINE: -1.7M V 0ME; DISTILLATE: -0.4M V -0.5ME

(ZA) SOUTH AFRICA CENTRAL BANK (SARB) RAISES INTEREST RATE BY 25BPS TO 7.25%; AS EXPECTED

META Insurify blocks Meta's Muse AI shopping agent from the insurance marketplace, stating that Muse strips the context of insurance carrier quotes for coverage – press

MCD Targets 2030 operating margin in low-to-mid 50% range and +1.5pp chicken and beverage share gains; Targets nearly 2.5% contribution from unit expansion to Systemwide sales growth in 2027, moderating to about 2% by 2030 - Investor Day

MCD 09:30 ET investor_meeting: Expects Q3 SSS slightly negative, with comps turning positive in September

GM 03:00ET JPMorgan US All Stars Conf: GM remains “very much on track with our higher range” as it approaches the end of Q3; There is “no trigger for stopping repurchasing” and remains committed to buybacks while its free-cash-flow yield stays attractive and the stock trades at a low multiple.

ANTHROPIC.IPO Launches life sciences research lab; Claude AI identifies previously uncharacterized CRISPR-like enzyme system in bacteriophages

(US) Pres Trump: Encouraged by more balanced trading relationship with China; Will be discussing issues in security, AI and technology - White House comments

(CN) China Pres Xi: We must avoid conflicts and increase points of cooperation; We have a responsibility to manage AI - statement from White House

(CN) Chinese President Xi: We have competition with the US on AI, though we can also cooperate

(IR) US and Iran said to discuss phased deal to reopen Strait and end blockade – press

(IR) Iran Semi-Official Fars: Conflict with U.S could expand further; Next phase could reach Indian Ocean - citing Supreme Leader Advisor Safavi

(RU) Reportedly US intelligence has warned several European govts that Russia may be preparing a drone operation against Spain, France or Italy - Spanish press

(FR) French President Macron: Maybe we could think about releasing strategic oil reserves in a coordinated way; CIA has not warned France about Russian threats

(US) Fed Pres Paulson (voter): September inflation drove rate hike; May need to raise rates again to address inflation; Inflation remains stubbornly elevated and some modest further tightening may be warranted

(US) Treasury debt buyback targets coupons maturing 2037-2046; Receives $10.5B of offers for buyback, accepts $4.1B (v maximum of $6B for the operation; falls short of maximum for 2nd week in a row)

(US) TREASURY $44B 7-YEAR NOTE AUCTION DRAWS 5.085% V 4.512% PRIOR; BID-TO-COVER RATIO: 2.42X V 2.50X PRIOR AND 2.48X OVER THE LAST 12 AUCTIONS

(US) INITIAL JOBLESS CLAIMS: 197K V 201KE; CONTINUING CLAIMS: 1.719M V 1.74ME

(US) WEEKLY EIA NATURAL GAS INVENTORIES: +53 BCF VS. +52 BCF TO +54 BCF INDICATED RANGE

ARAMCO.SA CEO: Any interruption can be fixed within days due to redundant and resilient infrastructure

ORCL Sends force majeure notice over New Mexico data center and trying to put off payments on project if it is delayed - press

AKAM Secures $11.6B, 7-year Anthropic cloud commitment; Potential expansion of up to $9B; Issues warrants for 7.7M shares to Anthropic

SNX Reports Q3 $5.68 adj v $4.64e, Rev $21.6B v $18.8Be; Guides Q4 very strong

RPI.UK CEO: Memory prices are at or near their peak, easing pressure that has forced the low-cost computer maker to raise prices as component costs surged - post earnings comments

HMB.SE Reports Q3 (SEK) Op 6.04B v 5.03Be, Rev 57.2B v 56.8Be; Sees Sept sales +1% local FX; Op includes the positive one-time effect related to tariffs

(IR) Reportedly the US and Iran talks have entered 'technical stage' - Al-Jazeera reporter

(US) Fed's Williams (moderate, voter): Can't ignore persistent supply shocks; Tariffs generally don't produce sustained inflation

(US) Fed said to be working on a plan to raise the asset thresholds that trigger stricter oversight of big banks - press

(US) SEPT FINAL UNIVERSITY OF MICHIGAN CONFIDENCE: 48.1 V 47.5E

ORCL Traders circulating WSJ article from this morning saying Oracle’s lease for the New Mexico facility contains “hell-or-high-water” terms, meaning the agreement cannot be terminated and Oracle remains obligated to make rent payments regardless of whether power has been secured to operate the data centers

TSLA Optimus reportedly hits production snags around its intricate robot hand assemblies due to supplier constraints - The Information