Marcus Padley

Priced for miracles. Anthropic's growth has slowed to about 45% a quarter, and there is US$245bn of compute payments behind it. marcustoday.com.au/2026/10/c…

Mag7 is currently trading on a PE of 24x vs the 10-year average of 29x and 33x last year. Amazon is under 20x for the first time since 2008. Valuations have been compressed due to AI spending yet earnings expectations remain sky-high. Mag7 profits are expected to rise 34% YoY, and growth forecasts for next year have risen from 19% to 27% in less than two months. It explains why the MAGS ETF had been on such a tear vs the rest of the market until CoreWeave kicked off the latest round of debt concerns. Last quarter, Microsoft and Amazon were rewarded for their capital discipline while Alphabet was punished. Let's see what we get this time.

Gold hasn't been a safe-haven trade since its huge bull run kicked off in 2024. Stable store of value and a hedge against inflation turned into a speculative, crowded trade.

$META free cash flow was +$2.12bn against an expected -$9.22bn, after capex came in at $33.94bn against $40.95bn. Don't read that as fiscal discipline. Meta raised the bottom of its full-year capex range to $135–145bn and has spent only ~$86bn through nine months. That leaves $49–59bn to spend in the December quarter alone, against September quarter operating cash flow of $32.79bn. The negative free cash flow everyone was worried about arrives in three months rather than now.

Selling overdone or justified? marcustoday.com.au/2026/10/n…

On @ausbiztv this morning. ausbiz.com.au/media/the-open…

Signs of the Big Tech peak. The Anthropic IPO looks like being repriced from $2 trillion to $1.5 trillion. $CRWV debt is at 78 cents in the dollar only 4 months after being issued, with the yield almost doubling to over 15%. $ORCL CDS prices are at a record 343bps and $META at a record 114.8bps. The Firmus Technologies IPO has been pulled. The Korean market is down 40%. 5% risk-free in the bank is looking good. For the moment.

Searching outside the Big Tech AI space for opportunities. The only area of interest is the Australian bank sector. NAB's 2500 job cuts and the CBA's AGM comment that they cannot guarantee no loss of jobs because of AI – there is just a chance the banks turn out to be one of the biggest beneficiaries of AI adoption. Too early? Results are around the corner. And the dividends. Hmmm.

Forget the CPI number – the issue of the day is CoreWeave's corporate bonds (debt issues) cratering. Their July 2032 issue for instance, was issued in July at $1 on a yield of 8.25%. And this is just one AI-related company and only one of its corporate bond issues. The $CRWV share price was down 15.46%. Others (Nebius) are heading the same way. Now the funds that buy corporate bonds are asking, "Are my current corporate bonds caught in this?" And every financial institution is asking, "Who has exposure to AI buildout-related debt and am I exposed to them?" This is GFC-style stuff. Then you ask who has debt, who has to roll debt (it's going to cost more), who has to issue debt. Do you think anyone is up to lending to Firmus if this cascades? What price the Anthropic IPO? You get the idea. It'll probably never happen, but we'll be keeping an eye on it.

The US investment banks didn't exactly set the sector alight last night despite dropping 10% ahead of the announcements. Might have to wait on that BNKS ETF. Citigroup down 5.6%. Wells Fargo down 3.1%. Goldman Sachs down 0.23%. JP Morgan down 0.86%. And Johnson and Johnson falling 5.9% on results despite a beat doesn't exactly set a sexy tone for the results season so far.

The S&P 500 is up 3% in the last four months, against a >10% rise over the first five months of the year. That is despite second-quarter profits up 35.1% and the first half up 30.1%, the best since 2021. The earnings have been extraordinary, yet the index has barely moved as yields and the oil price took payment. The S&P has now been bumping along the ceiling for the last 10 weeks. Tonight the earnings start and we find out whether the growth is still there.

The question of the day is – have bond yields peaked and has the US dollar topped out? The short end certainly has (2-year yields). The dollar isn't there yet, but it's a crowded trade and could turn quickly. On the flip side, the Euro is the most uncrowded trade of all. Can we buy the Euro?

Bond yields – a good 30-year bond auction has them turning around. A bit. A Fed rate cut at the end of the month is getting less likely by the day, down from 78% to 17% in two weeks. The US 30-year mortgage rate is now 7.40%, the highest since November 2023 and up 142bp since the war started. Enough is enough?

Kids – the worst financial decision you will ever make. A member sent me this page from my book this morning. Written in 2008 – four kids, 12 years of school fees ahead. $1.3m pre-tax to cover it. The numbers have changed. The point hasn't. You just have to hope they balance the ledger in non-financial ways!

Australia's SpaceX has come back down to earth. At about $9, there's still little margin for error. marcustoday.com.au/2026/10/f…