Ai continuity: Tuesday pre-market update,18 Aug 26
Let's start with a verdict, because yesterday I told you a planning board in New Jersey was the day's most important market event. Last night it voted. Vineland's board backed the Nebius expansion 9 to 1, clearing construction to continue and locking in 300 megawatts at the site, this after Hunterbrook's own photos showed crews ramping work before the vote, which in hindsight was the tell. Now the story that should be getting more attention than it is. Nvidia did not just make another investment yesterday. It agreed to guarantee up to $105 billion in financing for an 8 gigawatt AI campus in Ohio that OpenAI will lease for 20 years, alongside a $1.5 billion equity stake in SB Energy, which will build and run the site starting in phases from 2028. Follow the progression, because it is the whole AI credit story in three steps. Two weeks ago Nvidia organized other people's money, half a trillion of it, into financing platforms. Yesterday it put its own name on the guarantee. The seller of the shovels is now co-signing the mine. And on the very same day, Ray Dalio said the market shows the classic signs of a bubble, comparing the setup to 1929 and 2000. The bulls have an answer, they cite Citadel's arguement that the hyperscalers can actually monetize this spending, and Google Cloud growing 82% year over year is another receipt they point to. Productive infrastructure or unnatural credit. That is the argument, and yesterday both sides raised the stakes. The demand side keeps producing evidence too. Anthropic's revenue run rate reportedly crossed $65 billion in July, up from $47 billion in May and $9 billion at the end of last year, with its latest quarter near $11.5 billion against $787 million a year ago, and positive adjusted operating income. The company has confidentially filed to go public and could list this fall. Whatever you believe about the financing structures, a business going from under a billion to eleven and a half in four quarters, profitably, is the reason the leverage keeps finding lenders. The IPO, if it lands this fall, will be the single biggest test of public appetite for the AI trade since SpaceX listed. The market leaned red on Monday, and the reason was not stocks. Oil rose as the US and Iran traded fresh barbs over Hormuz, and the bond market kept clearing its throat, the 30 year yield touched its highest level since 2007 and the 10 year held above 4.7. Put that beside the number making the rounds, a record $1.4 trillion of annual interest on the national debt, tripled since 2020 and on pace to pass Social Security as the government's largest expense. The equity market parties. The bond market keeps sending the bill. Two internals worth carrying into the week. This year has produced zero days where 80% of NYSE volume came from declining stocks, something no calendar year has done in at least three decades, the average is 21 such days as highlighted on X by Kobeissi Letter. At the same time, 121 S&P stocks now trade with negative beta to the index, the most since the dot-com unwind. Read together, it's resilience and rotation at once. Evercore's Julian Emanuel looks at that and sees a possible melt-up to 9,000 alongside his 7,750 base case, which tells you even the bulls are quoting ranges now. Housekeeping worth knowing: Nasdaq is launching an evening session from 9 pm to 4 am starting December and is talking to regulators about 23 hour trading, five days a week. Between that and yesterday's premarket options debut, the market is becoming a place that never closes. Sleep is becoming a position. Meanwhile China's credit data went the other way, with net loans contracting for only the third time this century and record repayments from the real economy. The two largest economies are running opposite experiments, one borrowing to build intelligence, one refusing to borrow at all. Retail earnings start today with Home Depot ($HD), Target($TGT) and Walmart($WMT) through the week, testing that ugly retail sales print. Fabrinet's record optics quarter last night says the AI supply chain has not blinked. And UBS is already previewing Nvidia at $94 to $95 billion for next Tuesday, which is the day this entire month has been rehearsing for. Eight days to Nvidia ($NVDA). The show accelerates.
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