PPI came in flat and September hold odds jumped to 68%. Hammack still wants a hike. Eisman named OpenAI and Anthropic as 70% of hyperscaler AI revenue. AMD raised up to $5B. Vantage Data Centers is exploring a $100B IPO.
S&P Closed at a New Record. Two Clean Inflation Prints. The Market Exhaled.
Two consecutive cool inflation prints just changed the rate debate. CPI Wednesday. PPI flat Thursday. September hold odds jumped from 45% a week ago to 68%.
WTI fell roughly 2.5%, slightly above $81 as demand concerns outpaced the Iran premium. Yields retreated. The semiconductor index entered a bull market, up roughly 20% from its July low. Kospi surged for a second day.
Cisco Systems (CSCO) closed down 8.5% despite 50% profit growth. StubHub (STUB) fell 10% after losing money on World Cup revenue. Tapestry (TPR) fell 16.5% on slower Coach growth.
The Signal
Two soft inflation prints in two days and the market's best session in weeks. The relief is real. But Hammack wants to hike now. Barkin called AI investment persistence an open question. The hawks have not moved. Jackson Hole is two weeks away. The Fed has cover to hold. The question is whether it wants to.
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PPI Came in Flat. The Fed Now Has Two Consecutive Cool Prints Before Jackson Hole.
Goods deflation did the work. A 3% energy decline and a 5.7% gasoline slide pulled goods prices lower. Services rose modestly. PPI landed flat against a 0.2% forecast. Core PPI also missed.
Two consecutive soft prints change the calculus heading into Jackson Hole. Bets on no hike at all this year are rising. The pipeline pressure feeding consumer inflation is not building.
The Pipeline Story
- Goods deflation was energy-driven, not broad-based
- Services prices still rising, just slower than forecast
- Jobless claims ticked above estimates the same session
Two prints is not a trend. It is a pattern. The hawks need one reversal to restart their argument. September CPI on September 11 is the last read before the FOMC meeting. That print, not today's, settles the debate.
The Hold Window
Two soft prints give Warsh cover at Jackson Hole to hold without sounding dovish. That window stays open as long as energy prices cooperate. The Iran war can close it fast.
Hammack Wants to Hike Now. Barkin Called AI Investment a Specific Inflation Risk.
The hawkish bloc did not blink. Cleveland Fed's Beth Hammack said she wants to hike now to restrain business borrowing. Businesses are excited to invest. That borrowing feeds the price pressures the Fed needs to restrain.
Barkin called it an open question whether a hike is needed. He named AI investment persistence as the specific risk: investment that keeps running long enough to keep raising prices.
The Hawk Line
- Hammack dissented in July and has not softened
- Barkin named AI investment persistence as the specific risk
- The bloc now has a named mechanism, not just a general concern
- Kashkari's July dissent statement named AI capex borrowing explicitly
The Fed's hawks are getting more specific, not less. Naming AI capex borrowing as the inflation channel is a harder argument to dismiss with soft PPI data than a general "inflation is too high" stance. Jackson Hole is where Warsh has to respond.
The Jackson Hole Setup
Warsh speaks August 27 with two soft prints, a named AI inflation mechanism from his dissenters, and 68% hold odds. A blank piece of paper is no longer an option.
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Steve Eisman Named the AI Achilles Heel. OpenAI and Anthropic Are 70% of Hyperscaler AI Revenue.
OpenAI and Anthropic account for roughly 70% of AI-related revenue at Microsoft (MSFT), Amazon (AMZN), Alphabet (GOOGL), and Oracle (ORCL). They represent 25% to 35% of cloud revenue at all four. Steve Eisman named the concentration problem directly on CNBC.
Chinese open-source models priced well below OpenAI and Anthropic are gaining market share. If they succeed at scale, a price war follows. Every dollar of hyperscaler AI revenue gets repriced. The entire AI capital stack assumes that scenario does not happen.
The Concentration Risk
- 70% of hyperscaler AI revenue in two private companies
- Chinese open-source models priced far below OpenAI and Anthropic
- Michael Burry is betting against Nvidia (NVDA) and chips broadly
The Anthropic IPO is not just a valuation event. It is the moment the market gets to price the specific concentration risk Eisman named. If Anthropic's IPO goes well, the hyperscaler AI revenue thesis gets validated. If it stumbles, the whole architecture gets questioned.
The Two-Lab Dependency
The hyperscalers are structurally dependent on two private companies. That works perfectly if both succeed. It creates a single point of failure if Chinese open-source competes effectively. The Anthropic IPO prices which scenario is real.
AMD Is Raising Up to $5 Billion. The Credit Tiering Across AI Is Now a Formal Market.
AMD (AMD) is raising up to $5 billion in a four-tranche bond offering. AMD committed the same amount to invest in Anthropic. The bond spread is roughly 115 basis points over Treasuries.
Compare that to CoreWeave (CRWV) at 550 basis points over benchmark or Galaxy Digital's bonds near 10%. Same AI cycle. Three very different credit prices. The tiering is now trading publicly every day.
The Credit Tiers
- AMD at 115 basis points over Treasuries
- CoreWeave at 550 basis points over benchmark
- Galaxy Digital data center bonds near 10%
- Three layers of the same buildout, three different credit prices
Six banks run the AMD sale: Barclays, Bank of America, Citigroup, JPMorgan (JPM), Morgan Stanley (MS), and Wells Fargo (WFC).
The Leverage Map
AMD borrowing at investment grade to fund Anthropic means the AI ecosystem's credit quality runs through AMD's balance sheet. It works as long as the rating holds. The rating holds as long as Anthropic generates revenue to justify the investment.
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Vantage Data Centers Is Exploring a $100 Billion IPO. The AI Infrastructure Exit Cycle Has Begun.
The physical infrastructure that holds the AI revolution is going public. Vantage Data Centers, backed by Silver Lake and DigitalBridge (DBRG), is exploring a $100 billion IPO or a sale. Vantage partnered with Oracle (ORCL) and OpenAI on the Wisconsin data center campus tied to Stargate.
Switch is preparing an $80 billion IPO. CyrusOne is targeting 2027. Three data center IPOs in the same window is an asset class creating its own public equity category.
The IPO Pipeline
- Vantage at $100B, partnered with Oracle and OpenAI via Stargate
- Switch preparing at roughly $80 billion
- CyrusOne targeting a potential IPO as early as 2027
A $100 billion data center IPO would be the largest ever in the category. Private equity extracted the buildout value. Public equity prices the operating leverage. The question is whether markets have the same appetite for infrastructure as for growth stocks.
The Exit Timing
CoreWeave gave public markets the AI infrastructure template: real backlog, large losses. Vantage prices against that template. The test is whether data centers trade like utilities or growth stocks. That answer determines the multiple.
PPI came in flat and September hold odds jumped to 68%. Hammack still wants a hike and named AI borrowing as the specific mechanism. Eisman named OpenAI and Anthropic as 70% of hyperscaler AI revenue and the Chinese open-source threat as the Achilles heel. AMD raised up to $5 billion to fund its Anthropic bet at investment-grade spreads. And Vantage Data Centers is exploring a $100 billion IPO as the AI infrastructure exit cycle begins.
Nvidia reports August 26. Jackson Hole is August 27. Both arrive before September's decision.
