Last week the market stopped asking if AI demand is real. It started asking who pays for it. CoreWeave's bonds sank, a $5 billion AI loan needed a discount to sell, and the Nasdaq lost 4.5%.
This week, the payers report. Meta (META) and Lam Research (LRCX) report Wednesday after the close. Blackstone (BX), a major lender to the buildout, reports Thursday.
The Fed can't help. Its quiet period began Saturday and runs through its Oct. 27–28 meeting. The market will have to judge on earnings, bond auctions and oil.
Five tests, then the calendar.
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1. Wednesday night tests the AI trade
Meta, Tesla (TSLA), IBM (IBM), Texas Instruments (TXN) and Lam Research all report after Wednesday's close.
Meta matters most. It is one of the biggest AI spenders, and it borrows too. Meta and its big-tech peers have sold more than $200 billion of bonds this year. Last week punished AI builders that need outside money.
Watch what Meta says about 2027 spending, and how it plans to pay for it. More spending funded by cash flow, with ad sales strong, would ease the scare. More spending leaning on debt or partners would move it from the edges of the AI trade to the center.
Lam is the cleaner read on equipment demand. ASML said last week its planned supply won't fully meet demand in 2027 or 2028. Lam fell 4.9% on Friday anyway. A firm outlook from Lam would support the view that demand is fine and the problem is funding.
2. The lenders take the stand
Blackstone reports Thursday morning. It is one of the largest private-credit managers and a big investor in data centers. Its shares closed Friday about 35% below their 52-week high, a sign the market already expects some damage.
Listen for two things. Is money still flowing into its credit funds? And is it still eager to finance data centers at today's prices?
Card lenders frame the consumer side. Capital One (COF) reports Tuesday after the close. American Express (AXP) reports Friday morning.
Steady inflows and calm card losses would suggest last week's stress is limited to a few AI borrowers. Slower lending, wider spreads or rising charge-offs would suggest it is spreading.
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3. The Fed goes quiet. Bonds won't.
Futures price roughly an 85% chance the Fed holds rates in October, according to CME FedWatch. Prediction markets still price a December hike as likely, near 80%. With no Fed speakers, the bond market sets the tone.
The Treasury sells $13 billion of 20-year bonds on Wednesday and $26 billion of new five-year TIPS on Thursday. Weak demand, especially for the 20-year, would push long yields up. Higher long yields raise the discount rate on future profits, which hits long-duration tech hardest. That is the last thing the AI trade needs this week.
Friday brings the final October consumer survey from the University of Michigan. Its first read put one-year inflation expectations at 4.7%. A higher final number would strengthen the case for a hike, even with the Fed silent.
Solid auctions and cooler business surveys on Friday would do the opposite. They would back last week's bond rally.
4. Who eats the costs
Last week's producer price report showed price pressure building in the middle of the supply chain. This week, companies tell us who pays.
General Motors (GM) reports Tuesday morning, a read on tariffs and car demand. United Airlines (UAL) reports Tuesday after the close, with Brent near $110 testing fuel budgets. Procter & Gamble (PG) and Union Pacific (UNP) report Thursday, covering shoppers and freight.
The question for each is pricing power. If they say price increases are sticking, costs are moving toward shoppers. That would challenge the bond market's bet. If they say margins are taking the hit, the bet holds, but earnings forecasts come under pressure.
Either way, someone pays. This week shows who.
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5. The world weighs in
China reports third-quarter growth Sunday night, U.S. time. A Reuters poll expects 4.4%. A miss would add to emerging-market stress after MSCI's Indonesia move. Bank Indonesia sets rates on Wednesday, its first decision since that proposal.
Inflation reports land from the U.K. on Wednesday and Japan on Thursday night. Japan's comes a week before the Bank of Japan meets on Oct. 29–30.
Prediction markets are watching two flashpoints. Brazil holds its presidential runoff Oct. 25. The two latest polls show a dead heat, though Flávio Bolsonaro has led most polls this month. Polymarket traders price him near 79 cents. Traders also give long odds to a U.S. announcement ending its naval blockade of Iranian shipping by Oct. 31. Oil is not pricing a quick fix, and neither are they.
Read more: Two more polls put Brazil's runoff at a dead heat | Twelve ship attacks in a week
6. The week on one page
All times ET.
- Sunday: China Q3 GDP, about 10 p.m.
- Monday: NAHB homebuilder index, 10 a.m.
- Tuesday: GM, GE Aerospace (GE) and RTX (RTX) before the open. Housing starts, 8:30 a.m. Netflix (NFLX), Capital One and United Airlines after the close.
- Wednesday: AT&T (T) before the open. U.K. CPI. Bank Indonesia decision. EIA oil inventories, 10:30 a.m. 20-year bond auction, 1 p.m. Meta, Tesla, IBM, Texas Instruments and Lam Research after the close.
- Thursday: Procter & Gamble, Lockheed Martin (LMT), Union Pacific and Blackstone. Jobless claims, 8:30 a.m. Five-year TIPS auction, 1 p.m. Japan CPI, 7:30 p.m.
- Friday: American Express and SLB (SLB) before the open. Flash PMIs, 9:45 a.m. Final UMich sentiment, 10 a.m.
He predicted the 2008 financial crisis…
He predicted Trump’s election in 2016….
He even predicted the rise of COVID-19 writing:
“The chance we don’t have something on the scale of a national pandemic in the next few years is near zero”
That was three months before the first reported case.
If he’s right again, God Bless America…
Because this crisis will be tectonic in scale…and it's going to begin with the bubble popping in AI.
THE MARKET SIP TAKEAWAY
Last week asked who pays for AI. This week, the spenders, the lenders and the companies passing on costs all answer.
If Meta funds its spending from cash and Blackstone keeps lending, last week looks like a scare at the edges. If spenders lean harder on debt and lenders pull back, the scare moves to the center. The bond auctions could set how much patience the market has while it waits.
UNTIL THEN, SIP SLOWLY!
The Market Sip Desk
REPLY PROMPT: What would Meta have to say on Wednesday to change your mind about AI spending? Hit reply.
Rates Just Reset. Who Feels It First?
On January 2, the 10-year yielded 4.19%. By September 30, 5.29% — most of it in one quarter.
Some companies earn from higher rates. Some pay. Each runs on a different clock.
We traced three: IBKR, WRB and FIS. One has already reported. The other two report next, and the report tells you the exact line to check.
Free report, texted to your phone.