Baltic Dry Index. 1958 +13 Brent Crude 64.50
Spot Gold 3973 US 2 Year Yield 3.58 -0.02
US Federal Debt. 38.154 trillion
US GDP 31.554 trillion.
A pessimist is somebody who complains about the noise when opportunity knocks.
Oscar Wilde
A long overdue reassessment of AI valuations seems to be underway. See yesterday’s LIR technology section for part of the reason.
But what if Nvidia collapses from a five trillion dollar valuation back to a “mere” trillion dollar valuation? How many more cockroaches will come crawling out of US shadow banking?
Remember, remember the fifth of November, this year unfortunately also the night of the full "super" moon.
Looks like Warren Buffett was right all summer in selling out of stocks.
Japan’s Nikkei 225 tanks over 4% as Asia markets
drop amid AI valuation concerns
Published Tue, Nov 4 2025 6:46 PM EST
Japan’s Nikkei 225 plunged below the
50,000 mark on Wednesday amid a wider decline in Asia markets as investors fled
AI-related stocks.
The Nikkei lost 4.65%, while the Topix was
down more than 3%. Shares in Japan’s SoftBank Group plunged
more than 14% Wednesday amid a broader drop in Asian AI-linked companies,
tracking declines in U.S. peers.
South Korea’s Kospi fell over 2%, with
chip heavyweights Samsung Electronics and SK Hynix posting losses of over 7%
and 8% respectively. The small-cap Kosdaq shed 5.39%.
The South Korean won weakened as much as
0.6% to 1,449.50 against the greenback, the lowest since April, data from LSEG
showed.
Hong Kong’s Hang Seng index fell 1.36%,
mainland China’s CSI 300 was down 0.9%.
Losses in Australia’s S&P/ASX 200 were
relatively smaller at 0.77%.
CEOs of Goldman Sachs and Morgan Stanley
on Tuesday cautioned
investors to brace for a drawdown in markets over the next two years.
“Finally, a sell-off hits the tape as the ‘everything rally’ takes a breather
after comments from the CEOs, and Capital Group that markets were due a
correction,” said Andrew Jackson, head of Japanese equity strategy, at Ortus
Advisors.
Overnight
in the U.S., the S&P
500 declined 1.17% to close at 6,771.55, while the Nasdaq Composite traded down
2.04% to finish at 23,348.64. The Dow Jones Industrial Average lost
251.44 points, or 0.53%, to 47,085.24.
Palantir shares shed about 8%, even after
the software company beat
Wall Street’s estimates for the third quarter and gave strong
guidance, fueled by growth in its AI business.
AI stock gains have driven the S&P
500′s forward price-earnings ratio to above 23, near its highest level since
2000, per FactSet.
As those stocks have lifted the broader
market to new highs in recent months, Anthony Saglimbene of Ameriprise said in
an interview with CNBC that without a pullback, valuations were beginning to
get “really stretched.”
Asia-Pacific
markets: Nikkei 225, Kospi, Hang Seng Index, Nifty 50
Stocks close lower hit by AI valuation concerns,
Nasdaq drops 2% after Palantir earnings
Updated Tue, Nov 4 2025 4:20 PM EST
Stocks fell on Tuesday, pressured by
declines in artificial intelligence-related names like Palantir, as investors grew
increasingly concerned about valuations in the bull market-leading shares.
The S&P 500 declined 1.17% to
close at 6,771.55, while the Nasdaq
Composite traded down 2.04% to finish at 23,348.64. The Dow Jones Industrial Average lost
251.44 points, or 0.53%, to 47,085.24.
Palantir shares shed about 8%, even after
the software company beat
Wall Street’s estimates for the third quarter and gave strong
guidance, fueled by growth in its AI business. The stock, which has risen more
than 150% this year, trades at more than 200 times forward earnings. That means
investors in that name and the other AI stocks expect the companies to keep
ratcheting up their profit and revenue forecasts by large magnitudes in order
to justify investors continuing to buy the shares.
Oracle,
which sports a forward P/E of more than 33 moved almost 4% lower, chipping away
at its almost 50% gain this year. Chipmaker AMD, which has more than doubled
this year, lost nearly 4%. Other AI stocks such as Nvidia and Amazon pulled back as well.
AI stock gains have driven the S&P
500′s forward price-earnings ratio to above 23, near its highest level since
2000, per FactSet. As those stocks have lifted the broader market to new
heights in recent months, Anthony Saglimbene of Ameriprise said in an interview
with CNBC that without a pullback, valuations are beginning to get “really
stretched.”
“We haven’t really seen any major
corrections or any real pressure on stocks since April,” the firm’s chief
market strategist said. “Profits are good, but I think investors are starting
to ask themselves, based on the pace of [capital expenditure] investments from
some of these key Big Tech companies, ‘Are you going to see the profit growth
over the next year to justify the levels of capex?’”
Comments
from chief executives at Goldman Sachs and Morgan Stanley added to the
loss of confidence among investors Tuesday. Overnight, Goldman’s David Solomon
said it’s “likely there’ll be a 10 to 20% drawdown in equity markets sometime
in the next 12 to 24 months.” Additionally, Morgan Stanley CEO Ted Pick said:
“We should also welcome the possibility that there would be drawdowns, 10 to
15% drawdowns that are not driven by some sort of macro cliff effect.”
“Fundamentals are still good, but I would
fully expect that you’re going to see a little bit of some periods of
pullback,” Saglimbene said. “Whether that leads to a 5% or 10% or 15%
correction by the end of the year, we’ll have to see.”
Wall Street is coming off a mixed session,
as the S&P 500 and Nasdaq both ended Monday higher, while the Dow fell more
than 200 points. More than 300 stocks in the broad-market index closed in the
red in the previous session, adding to concerns
about weak breadth and high levels of tech concentration —
particularly after the number of S&P 500 stocks that gained last month was
smaller than the amount that declined.
“Breath in the market has been pretty
narrow for the last several months,” Saglimbene added. “If there is a slowing
momentum or a near-term downturn in AI or tech, there really [aren’t] other
areas that have performed as well, and if we don’t have a lot of clear data on
the economy, and profitability across the rest of the S&P 500 isn’t as
strong, where do you go?”
Stock
market news for Nov. 4, 2025
Bitcoin Summer Erased By Autumn Bear Market
November 4, 2025 at 11:08 PM GMT
Bitcoin on Tuesday saw its summer rally
wiped away as the cryptocurrency fell
as much as 6.5% to $99,963, the first time the digital asset went
below $100,000 since June. That’s down more than 20% off its record high only a
month ago, a plunge that, were we talking about stocks, would be a bear market.
Ether slipped as much as 9.6% and several so-called altcoins posted similar
declines, bringing losses for many of the less easily traded and liquid tokens
to more than 50% this year.
So why all the bad news for the funny
money? The turning point came in mid-October, when a
brutal wave of liquidations wiped out billions of dollars in bullish
positions. Since then, traders have stayed on the sidelines. Open interest
in Bitcoin futures remains far below pre-crash levels, and even with funding
costs turning favorable, few are willing to re-enter. The result? Bitcoin is up
less than 10% this year, lagging equities and once again falling short as a
portfolio hedge.
As for stocks, tech shares were
missing Monday’s good vibes, instead bearing the brunt of Tuesday’s selling as
more worries that the market is a big fat bubble managed to penetrate.
Here’s your
markets wrap. — Jordan
Parker Erb
Bitcoin
Summer Erased By Autumn Chill: Evening Briefing Americas - Bloomberg
IBM cutting thousands of jobs in the fourth
quarter
Published Tue, Nov 4 2025 3:13 PM EST Updated
Tue, Nov 4 2025 3:25 PM EST
IBM said
Tuesday that it will lay off a small percentage of its employees in the current
quarter.
“In the fourth quarter we are executing an
action that will impact a low single-digit percentage of our global workforce,”
a spokesperson told CNBC. “While this may impact some U.S.-based roles, we
anticipate that our U.S. employment will remain flat year over year.”
IBM employed 270,000 people at the end of
2024, according to its latest annual report. A 1% cut to headcount would
represent the loss of 2,700 jobs.
Other technology companies have been
slimming down lately, with executives looking for ways to improve productivity
by increasing reliance on artificial intelligence tools.
In October, Amazon said that it would
cut 14,000
corporate employees, while Facebook parent Meta said its AI unit would
get rid of 600
workers.
More
IBM
layoffs: Cutting thousands of jobs in the fourth quarter
In UK AI news, infringe copyright in the “right” jurisdiction and import the infringement into GB Scot free. Must have made sense to M’Lud.
Court rejects Getty Images’ core claim in historic
case against AI image generator
Tuesday 04 November 2025 11:23
am | Updated: Tuesday 04 November 2025
11:44 am
The High Court dismissed Getty Images’
core intellectual property claims against an AI image generator, but also
granted it limited historic success in a landmark UK lawsuit.
US giant Getty Images sued UK-based AI
image generator Stability AI, alleging it unlawfully copied and processed
millions of copyrighted images to train its image generation technology.
The case was centred around Stable
Diffusion, a tool owned by Stability AI, which automatically generates images
based on text or image prompts inputs.
Getty Images alleged that its intellectual
property rights have been infringed by Stability’s tool, as it claims that its
copyrighted images were used in the training of Stable Diffusion.
The case, which was at the
High Court in June,
saw Getty Images dropping
one of its claims over
primary copyright infringement, just two weeks into the trial.
The arguments that remained before Mrs
Justice Joanna Smith was Getty Images’ secondary infringement claim, along with
trademark infringement and passing off.
On Tuesday, the court handed down a
205-page ruling, the court ruled that Getty Images was successful in part of
its trademark infringement claim, but this success was limited to older models
and was based on isolated examples.
Legal sector reacts
However, the court dismissed Getty Images’
central claim of secondary copyright infringement under the Copyright, Designs
and Patents Act 1988.
The court found that although an “article”
may be an intangible object for the purposes of the Act, an AI model such as
Stable Diffusion is not an “infringing copy”, such that there is no
infringement under the Act.
The judge also dismissed its other
copyright claims over primary copyright infringement, but this claim had
already been abandoned by Getty during the trial.
Robert Guthrie, partner in the IP Disputes
Practice at Osborne Clarke, stated: “This judgment is a big win for Stability
AI and AI developers generally.”
“Although the judgment is a big win for
Stability AI and AI developers generally, it is worth flagging that it did not
decide whether the use of third party copyright protected works in the training
or refinement of AI models infringes copyright in the UK, as Getty was unable
to establish that any such training had taken place in the UK,” he added.
Rebecca Newman, legal director at law firm
Addleshaw Goddard, said: “Despite the protection UK copyright purports to
offer, Stability have got away with exploiting authorial works for their huge
value in training model weights.
“The texture of the end product should be
irrelevant, extracting value from protected works (reaping what has been sown)
is an act reserved to the copyright owner.”
“Today’s finding means that copyright
owners’ exclusive right to reap what they have sown has been avoided on a
technicality. In practice, models trained on infringing data outside of the UK
can be imported into the UK without legal repercussions,” she added.
More
Court rejects
Getty Images' core claim in historic case against AI image generator
In other news.
Trump administration says SNAP will be partially
funded in November
Updated 10:34 PM GMT, November 3, 2025
PROVIDENCE, R.I. (AP) — President Donald
Trump’s administration said Monday that it will partially fund SNAP for
November, after two judges issued rulings requiring the government to keep the
nation’s largest food aid program running.
The U.S. Department of Agriculture, which
oversees the Supplemental Nutrition Assistance Program, had planned to freeze
payments starting Nov. 1 because it said it could no longer keep funding it
during the federal government
shutdown.
The program serves about 1 in 8 Americans and is a major piece of the nation’s
social safety net. It costs more than $8 billion per month nationally. The
government says an emergency fund it will use has $4.65 billion — enough to
cover about half the normal benefits.
Exhausting the fund potentially sets the
stage for a similar situation in December if the shutdown isn’t resolved by
then.
It’s not clear exactly how much
beneficiaries will receive, nor how quickly they will see value show up on the
debit cards they use to buy groceries. November payments have already been
delayed for millions of people.
“The Trump Administration has the means to
fund this program in full, and their decision not to will leave millions of
Americans hungry and waiting even longer for relief as government takes the
additional steps needed to partially fund this program,” Massachusetts Attorney
General Andrea Joy Campbell, who led a coalition of Democratic state officials
in one of the lawsuits that forced the funding, said in a statement.
The administration also provided an
infusion to the Special Supplemental Nutrition Program for Women, Infants, and
Children, which helps low-income mothers buy nutritious staples. WIC received an
additional $450 million in funding, according to a senior administration
official who spoke Monday on condition of anonymity because they were not
authorized to discuss the decision publicly. POLITICO first reported on the
funding Monday afternoon.
Last month, some states warned they only
had enough money to operate their WIC programs until mid-November. The
administration last month reallocated $300
million in
unspent tariff revenue to keep the program running.
More
Trump
administration says SNAP will be partially funded | AP News
Global Inflation/Stagflation/Recession
Watch.
Given
our Magic Money Tree central banksters and our spendthrift politicians,
inflation now needs an entire section of its own.
Bessent
says high US interest rates may have caused housing recession
3
November 2025
(Reuters)
-Parts of the U.S. economy, particularly housing, may already be in recession
because of high interest rates, U.S. Treasury Secretary Scott Bessent said
Sunday, repeating his call for the Federal Reserve to accelerate rate cuts.
"I
think that we are in good shape, but I think that there are sectors of the
economy that are in recession," Bessent said on CNN's "State of the
Union" program. "And the Fed has caused a lot of distributional
problems with their policies."
Bessent
said that, although the overall U.S. economy remains solid, high mortgage
rates still hinder the real estate market. Housing, he said, is effectively in
a recession that is hitting low-end consumers the hardest because they have
debts, not assets.
Pending
home sales in the United States were flat in September, according to the
National Association of Realtors.
The
treasury secretary characterized the overall economic environment as in a
transition period.
Fed
Chair Jerome Powell last week signaled that the central bank may not cut rates
further at its December meeting, prompting sharp criticism from Bessent and
other Trump administration officials.
Federal
Reserve Governor Stephen Miran, who is on leave from his post as chairman of
the White House Council of Economic Advisers, said in an interview with the New
York Times published on Saturday that the Fed risked inducing a recession if it
did not swiftly lower interest rates.
Miran,
who is due to return to his White House job in January, was one of two central
bank governors who dissented from last week's Fed decision to lower interest
rates by 25 basis points, arguing instead for a cut of 50 basis points, or 0.5
percentage point.
"If
you keep policy this tight for a long period of time, then you run the risk
that monetary policy itself is inducing a recession," Miran said in the
New York Times interview, which was conducted on Friday. "I don't see a
reason to run that risk if I'm not concerned about inflation on the
upside."
Bessent
echoed that view, saying that the Trump administration's cuts in government
spending had helped to lower the deficit-to-gross-domestic-product ratio to
5.9% from 6.4%, which in turn should help lower inflation. The Fed
can also help by continuing to bring down interest rates, he said.
"If
we are contracting spending, then I would think inflation would be dropping. If
inflation is dropping, then the Fed should be cutting rates," he
said.
Bessent says high
US interest rates may have caused housing recession
‘Business
continues to be severely depressed’: U.S. manufacturers blame tariffs.
Last
Updated: Nov. 3, 2025 at 10:59 a.m. ET First Published: Nov. 3,
2025 at 10:24 a.m. ET
American
manufacturing contracted for the eighth month in a row, a new survey showed,
and there appeared to be no end in sight because of high tariffs imposed by the
Trump administration.
A
closely followed manufacturing index slipped to 48.7% in October from 49.1% in
the prior month, the Institute for Supply Management said Monday. Any number
below 50% signals contraction.
More,
subscription required.
‘Business
continues to be severely depressed’: U.S. manufacturers blame tariffs. -
MarketWatch
Covid-19
Corner
This
section will continue only occasionally when something of interest occurs.
Technology
Update.
With events happening fast in the
development of solar power and graphene, among other things, I’ve added this
section. Updates as they get reported.
The AI industry is running on FOMO
At least according to Big Tech’s latest earnings calls.
Nov 3, 2025, 5:06 PM GMT
For Big Tech, a penny invested in AI is a penny earned... Maybe.
After an indeterminate amount of time. Investors hope.
On earnings calls last week, Amazon, Google,
Microsoft, and Meta reported more than $350 billion this year on capital
expenditures, or longer-tail investments in a company’s future. All
four told investors to expect the number to skyrocket even further next year:
Microsoft said “higher,” Amazon an “increase,” Google a “significant increase,”
and Meta “notably larger.”
That probably translates to more than $400 billion total for the
four companies next year, according to Joe Fath, partner and head of growth at
Eclipse VC.
The return on investments for these companies so far is opaque.
Dedicated AI companies are burning through cash in the meantime: OpenAI
reportedly hit $12 billion in
annualized revenue this summer — while reportedly being on track to burn
through $115 billion through
2029.
Tension over this mismatch, Fath said, is ratcheting up. There’s a
“push and pull between those companies and investors,” he added. “Investors are
saying, ‘Am I going to get a return on this spend?’” It’s one of the
increasingly clear indicators that some parts of the AI industry are a bubble —
but it doesn’t yet tell us what happens after it pops.
AI hype has remained extremely high for several years, and startup
valuations have hit eye-popping numbers. OpenAI, for instance, is reportedly hoping
for a $1 trillion IPO in 2026 or 2027 and planning to raise $60 billion or
more.
But AI companies insist there’s still not enough money for chips,
data centers, and other resources. In a Q&A with reporters at OpenAI’s
annual DevDay event last month, executives repeatedly
emphasized their concern over lack of compute to expand services like
Sora’s video-generation AI and ChatGPT’s daily Pulse feature, and discussed the
need to eventually turn a profit from such services. Amazon, Google, and
Microsoft — which provide cloud services on a quickly growing scale — have “all
called out being pretty capacity-constrained,” Molly Alter, a partner at
Northzone VC, told The Verge.
If these claims are accurate, they indicate that simply coming up
with good products won’t be enough to make AI companies profitable — because
they can’t afford to scale those products to support a huge user base. Even if
they’re exaggerated, the systems are incredibly costly to operate. OpenAI is
still thought to be losing money on
even the $200 monthly subscription tier of its ChatGPT service, thanks to the
cost of running queries.
OpenAI’s rumored IPO is a perfect example of the conundrum, Alter
added. The company wants to secure about 26 gigawatts of computing capacity for
data centers (which translates to about $1.5 trillion at current costs, per
Alter) — meaning that even with the company’s current revenue, an up to $100
billion investment from Nvidia, and other “circular deals,” Alter says she
still hasn’t been able to understand how the company’s clear funding gap gets
solved.
More
The AI industry is
running on FOMO | The Verge
Next, the
world global debt clock. Nations debts to GDP compared.
World Debt Clocks
(usdebtclock.org)
With age comes wisdom, but sometimes age comes alone.
Oscar Wilde
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