Rekt Mkts: Crypto bounces while AI stocks bleed

Borrowing costs eased a bit yday, but memory stocks kept selling off...pretty frustrating PA if you're looking for lower yields to get the AI trade going again. The competition question hasn't gone away, and CPI is up next. A better inflation number would help the backdrop, but it does feel like to me bond yields are sort of "de-risking" ahead of that already.

September US CPI is due today. With borrowing costs still this high, the question is whether inflation gives bonds a reason to keep recovering...a small dip in yields hasn't been enough to get risk assets moving again. The expectation is for the headline number to come in at 3.6%, slightly above last month's 3.4%, while core is projected to drop by 0.1PP. The US 10Y was around 5.22% in yday's session, down roughly 2.3bps, while the 30Y was around 5.56%, down about 3.5bps. Some relief, but still close to the levels we were discussing on Monday rather than a big change in the rates backdrop. WTI futures are around $94.53, up roughly 0.4%, while gold futures are around $4,166, down about 0.3%. Oil isn't giving the inflation outlook much help at these levels.

Memory stocks are still dealing with reports of progress at China's CXMT on memory-cell technology and a push into server memory. The concern is competition getting closer and putting pressure on pricing...that isn't the same thing as AI demand suddenly disappearing...the pain trade here is that AI advancements keep going parabolic while the requirement for memory declines due to technological advancements; I actually flattened out all my memory risk a few days ago and feeling comfy with no exposure there. Micron lost roughly 3.6% yday, while Nvidia finished up about 1%. SK Hynix fell another 1.7% in Korea today, with Samsung flat. So it isn't a uniform exit from AI, and Hynix still isn't seeing much of a bounce. The question for memory is how much competition risk is already priced in and whether the next updates on production and customer demand justify it. Reported technical progress isn't proof that CXMT can match the established players' yields or product quality, but ppl aren't waiting around for that proof before selling.

BTC is down smalls over 24H, with ETH and SOL both off less than 1% and HYPE down around 1.9%. Still fairly muted in the majors, rather than much of a move ahead of inflation. ZEC is holding up better, up roughly 1.8%, while VVV is only slightly higher. Both were among the stronger names in Monday's brief, when privacy and AI resistance were a big part of the discussion. That relative strength is still there, altho STRK is down around 6% today after the recent strength discussed on Monday. Being attached to a popular theme doesn't mean all the names move together. Crypto is kind of funny because both bears and bulls are extremely vocal on the timeline which often leads the average doom scroller to believe prices are going to either i) go up a lot ii) go down a lot...without considering the alternative scenario of iii) they might just chop a lot here. I think there is a clear bid to the privacy/quantum resistance narrative as it feels consensus to me that that will continue to perform during the bull cycle...lots of people preying on the downfall of these coins or for them to nuke but with each drop there is some quite clear accumulation...I think it's easy to get yourself feeling depressed about crypto on weak prices action, especially at this stage of bear market fatigue...but we must keep telling ourselves that it is early bull which means patience + the best is yet to come (cue man pointing in mirror meme). Good luck today.