The Brief by Introduction.com - Fintech Friday: The $20 Billion Haircut

Hey guys, happy Friday. Hope you're well.

This was the week money got expensive everywhere at once. Borrowing costs hit their highest level since 2002, India's central bank surprised everyone with a hike, and shipping one tanker of oil now costs more than launching a rocket. Then the biggest name in AI found out its revenue was $20 billion smaller than everyone thought.

Here's our take on what's happening out there, and what we actually think about it. Grab a coffee, let's get into it.

On Wednesday the 10-year Treasury topped 5.35%, the highest since 2002. Mortgages climbed to 7.40%, up for the 7th straight week.

Then the bond market blinked. Buyers showed up big at Wednesday's 10-year auction, and the rate closed Thursday at 5.22%. Traders now see about an 18% chance of an October hike, but most Fed officials still expect one more by year-end.

It's not just us. India's central bank raised rates for the first time in nearly four years, and Indian stocks fell more than 2% in two days. UK 30-year rates hit their highest since 1998, and Japan sold 10-year bonds above 3%.

Money got more expensive everywhere at once.

🇺🇸 The numbers that moved

Full rates table, at home and abroad, on the Big Board.

The biggest check this week was cash, not hype. Uber paid $2.3 billion in cash for ezCater, the app offices use to order catering.

The rest of the money went to the pipes. Stablecoin companies like Spiko, Noah and IMMIX raised money, and Anchorage bought Routable to pay businesses in digital dollars. Homeward and Valon, two companies fixing how people buy and pay for homes, raised $600 million between them, including debt, while mortgages sit at 7.40%.

When money is expensive, investors fund what already works.

Biggest checks this week

All 15 deals on the Big Board.

Brent rose about 2% this week to around $105, even as countries keep draining their emergency reserves. A record 10 tankers were hit in the Strait of Hormuz in a single week.

About 325 million of the 400 million emergency barrels agreed in March are already gone. Think of it as a spare tank that's almost empty.

Pump prices barely moved. The hit is showing up elsewhere: heating oil bills are forecast up 21% this winter, and Delta cut its outlook after its fuel bill jumped 62%.

The real money is in moving oil. Renting a supertanker from the Middle East to Asia now costs about $1.3 million a day, up from about $30,000 in January. BWET, a fund that bets on those shipping rates, is up about 52x this year.

Oil isn't just a driver problem anymore. It's on the earnings call.

🌐 At the pump and the barrel

Full price sheet, plus power for AI and the East, on the Big Board.

🐦 Tweet of the Week

"It is now cheaper to book a standard Falcon 9 launch ($74m) than it is to take a VLCC from the USG to the Far East (~$80m)." @shippingenergy

Translation: sending a rocket to space now costs less than one oil tanker trip from Texas to China.

Last month, reports said OpenAI was bringing in money at a $70 billion yearly pace. On Thursday the FT reported OpenAI told investors the real number is closer to $50 billion.

Nobody lost a sale. The gap is about how AI companies count. The $70 billion figure included money that passes through partners like Microsoft. OpenAI's own number counts only what it keeps, and there's no standard rule for which is right.

That number props up hundreds of billions in data centers and the price tag on every AI startup. Wall Street noticed. On Thursday Oracle fell about 5%, AMD about 4% and Nvidia about 3%, and the Nasdaq dropped 1.25%.

That matters most for Anthropic. It's reportedly preparing to go public after the November midterms at a value above $2 trillion, and its leaked filing shows at least $518 billion in computing bills. In a 5% world, IPO buyers will check its revenue math line by line. Cheap money would have given it the benefit of the doubt.

And it landed in the worst week to be wrong. When money is cheap, investors take a big number on faith. When the 10-year is above 5%, they check the math.

Cheap money buys the story. Expensive money checks the receipts.

When safe government bonds pay over 5%, investors don't need to take big risks to earn a return. So money moves out of the riskiest bets first, and crypto is near the top of that list.

That's what happened this week. As the 10-year topped 5.35%, investors pulled $487 million out of Bitcoin funds on Oct 7, the most in a single day since June. Bitcoin fell about 4% to around $82,900, Ether about 9% and Solana about 10%. Bitcoin is now about 34% below its $126,080 record, set one year ago this week.

But the building didn't stop. Starting in late October, 82 million Galaxy phones in the US can send USDC, a digital dollar, straight from Samsung Wallet. It runs on Solana and arrives in seconds.

The money left. The pipes got built anyway.

🪙 The majors

All five coins and the week's crypto rules on the Big Board.

Saw this online. Three big names, three different reads on expensive money.

Michael Burry says Big Tech's AI spending is a bet on a "too big to fail" club, and much of it will end up wasted. He holds bets that pay if Micron and Nebius fall by June 2027. His line: "People say this time is different. This is how it is different."

Ray Dalio on Thursday: "We are in a bond bear market... there's more to go." Tom Lee sees the opposite. He expects yields to cool within six months and says a 10-year below 5% would be "really positive" for stocks.

The trade nobody saw coming: BWET, a fund tied to oil tanker rates, went from about $19 to over $1,000 this year. Every tanker hit in Hormuz made shipping oil pricier, and this fund cashed in.

How we read it: when money gets expensive, the winners are the things the world can't do without, like a ship that can still get through. Not advice.

The Stake: Should the US own a piece of the AI labs?
🟦🟦⬜⬜⬜⬜⬜⬜⬜⬜ Yes, like Intel: 20%
🟦🟦🟦🟦⬜⬜⬜⬜⬜⬜ No, keep them private: 40%
🟦🟦🟦⬜⬜⬜⬜⬜⬜⬜ Only with strict limits: 30%
🟦⬜⬜⬜⬜⬜⬜⬜⬜⬜ Not sure: 10%

The Winner: Who wins AI over the next five years?
🟦🟦🟦⬜⬜⬜⬜⬜⬜⬜ OpenAI: 30%
🟦🟦🟦⬜⬜⬜⬜⬜⬜⬜ Google: 30%
🟦🟦⬜⬜⬜⬜⬜⬜⬜⬜ Anthropic: 20%
🟦⬜⬜⬜⬜⬜⬜⬜⬜⬜ Meta: 10%
🟦⬜⬜⬜⬜⬜⬜⬜⬜⬜ Someone else: 10%

The Trade: Where would you put new money?
🟦🟦🟦⬜⬜⬜⬜⬜⬜⬜ Long bonds at 5%+: 30%
🟦🟦⬜⬜⬜⬜⬜⬜⬜⬜ Gold: 20%
🟦🟦⬜⬜⬜⬜⬜⬜⬜⬜ AI chip stocks: 20%
🟦🟦⬜⬜⬜⬜⬜⬜⬜⬜ Bitcoin: 20%
🟦⬜⬜⬜⬜⬜⬜⬜⬜⬜ Cash: 10%

Disagree? Reply and tell us where you'd put it.

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We showed you what money costs. Members know who's still lending.

We showed you the deals. Members got the ones worth a call.

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