1. Anthropic’s IPO Valuation Keeps Shrinking
The Anthropic IPO is coming up, and if you’ve been tracking it, you’ll see there’s been a significant decline from what everybody thought Anthropic would go public at to what’s happening now.
This morning, The Wall Street Journal is reporting that Anthropic is looking to IPO at $1.3 trillion. Not too long ago, we were hearing about a $2 trillion to $2.5 trillion valuation at IPO. That’s a massive decline.
This also impacts the overall AI space. Anthropic is the poster child of AI, so if it’s valued less, what happens to everything else in AI? This is developing, and we’re keeping track of it. We’ve warned about this over and over again: AI valuations are under the microscope.
2. Hotter Inflation Puts a December Hike at 87%
This morning, U.S. inflation numbers came in a little higher than expected. Yields spiked, with the 10-year closing in on 5% at the time of writing and the 30-year at 5.3%.
The odds of a Federal Reserve rate hike in December are getting close to 87%, so there’s a very good chance we get a hike in December.
Keep in mind, we also had a better-than-expected U.S. jobs report, with revisions too. The job market is looking good, and inflation is going higher. The Fed may be forced to hike.
3. Stocks Need a Direction: Watch the November 5th Move
Remember the move that happened on Thursday, November 5th? The indices have to break above or below it to tell us their direction.
If there’s no move, this is just a choppy trade. A move below could bring in sellers, and a move above could bring in buyers. In the meantime, it’s all noise and choppiness. You need direction to make money.
Once again, AI and tech stocks are going to be under the microscope. Be careful. Know what you own and why you own it.
At the same time, defensive positions continue to do much better than tech. So there’s that.
4. Gold Drops $94 as the Yield Trade Returns
As yields go higher, gold has sold off. At the time of writing, it’s down to $4,050, a drop of about $94, or a little over 2%.
Keep in mind, $4,000 is a big level for gold. The trade we saw not too long ago, with yields going higher and gold dropping, is making a comeback. If yields continue to rise, don’t be shocked to see gold move lower.
A break below $4,000 could take gold down to the $3,300 to $3,500 range quickly, because there isn’t really any big support until then.
As gold sells off, silver is selling off too. It’s at $51.88 at the time of writing, and the silver chart continues to look bad. A move below $50 could take the gray metal down to the $45 to $47 range very quickly. That’s where the big support is. If that breaks, silver might look a little uglier.
5. Bitcoin Clings to Its 200-Day
Bitcoin continues to hover around its 200-day moving average. A break below it could make things look ugly.
The U.S. dollar index is seeing a big move today after a big decline yesterday. We continue to watch 102.5 on the dollar index.
Yesterday, we also learned that Japan spent $50 billion in July to boost the yen. That’s a big number. One thing to keep in mind: Japan is one of the biggest holders of U.S. Treasuries. You have to ask, if the yen drops lower, will Japan have to intervene more? And if it does, how will it do it? We know the U.S. supported Japan last time. Will the U.S. support it again if Yen falls again?
Lastly, oil is dropping. WTI and Brent are both below their 200-day moving averages. This is coming amid a lot of noise around concessions, de-escalation, the war, and so on. But keep in mind, oil is still very reactive to headlines.