Morning Reads

• Brazil’s Markets Set for Sharp Selloff After Lula’s Reelection
• Brazil’s Real Plunges After Lula Wins Presidential Election
• Markets Are Mispricing Brazil After Lula’s Epic Comeback
• French Bond Risk Gauge Falls as Moody’s Keeps Rating Stable
• Is Debt Really the Villain? Ask China, Singapore, and Greece
• Trump’s Midterm Affordability Crisis
• Trump’s Trade Chief Is Trying to Sell Americans on an Unpopular Product
• There Are Solutions to This Crazy Economy. Voters Will Hate Them
• Why Economic Health No Longer Dictates Stock-Market Returns
• The War Bump Is a False Victory for S&P 500 Profits
• The Search for a Sure Thing Beyond Bonds or Cash
• Warsh Tells Traders to Watch the Data. They Still Follow the Fed
• The Messy Fight Over California’s Proposed Billionaire Tax Divides Democrats
• The Best Border Policy Is a Good Paycheck
• Milwaukee, Berlin and Paris Show Us the Way to Prosperity
• South Korea Holds a Key to America’s Shipbuilding Revival
• U.S. Manufacturing Is Adding Jobs Again, but the Hiring Rules Have Changed
• AI Cuts Some Deutsche Bank Corporate Loan Decisions to Minutes
• Hunting for AI Gains Outside Magnificent 7
• What’s Riding on Anthropic’s Market Debut? Nearly Everything
• Anthropic’s Pitch to Investors Starts With Taking Their Jobs
• Meta Seeks Up to $95 Billion in Equity to Fund AI Spending
• Starlink Doubts Have Put a Rocket Under SpaceX’s Rivals
• Musk’s Dream of SpaceX-Tesla Merger Rests on Carmaker’s Shareholders
• Why So Many Shoppers Think Retailers Are Using AI to Jack Up Prices
• Verizon Lifts Outlook, Inks Amazon Deal Worth More Than $2 Billion
• Netflix Users Are Watching Less, Not Opening the App as Often
• Radisson Is Growing at a Time When ‘Instability Is the Norm’
• Pints Alone Won’t Save the British Pub. Activate the Knitting Circle
• Why Some People Are Paying to Make Friends
• Chiquita Sees Cheap Bananas at Risk on El Niño Supply Threat
• The Long Life of the ‘Snacking Occasion’

AI frenzy: Anthropic (ANT) files for mega IPO even as losses swell, flags AI's existential risks.

Add to cart: DoorDash (DASH) falls amid talks for $17B takeover of rival Instacart (CART).

More buyouts: Microsoft (MSFT) offers voluntary exit program to employees in 4 countries.

Capex vs. returns

It's the busiest week of the earnings season, headlined by three Magnificent 7 stocks. The results will be consequential for the AI trade, especially after last week's selloff fueled by massive spending and return on investment fears.

Earnings watch: Alphabet (GOOG) and Microsoft (MSFT) are scheduled to report their results on Wednesday, while Amazon's (AMZN) earnings are due Thursday. For all three Big Tech players, investors will closely look for updates on AI spending plans and to what extent their capital expenditures so far have paid off. Jefferies analyst Jane Gibbons said companies are increasingly pointing to tangible productivity gains from AI in their earnings reports and calls. These include faster workflows, automation of routine tasks, greater service capacity and better cost control. Charu Chanana, chief investment strategist at Saxo, noted that AI demand remains strong, "but Wall Street is losing patience with the cost of delivering it." The clearest example is Meta (META), which posted its third-quarter results last week.

While AI helped boost Meta's (META) advertising revenue, its quarterly free cash flow turned negative — its first ⁠cash burn in over a decade. The company also lifted its capex outlook to support its aggressive AI buildout. "Pressure on free cash flow, as highlighted by Meta's earnings, is placing sharper focus on the sustainability and financing of [AI] spending," said Alexandra Semenova, financial insights strategist, Schwab Center for Financial Research. According to market research firm Gartner, more than $3.5T of AI infrastructure spending could be at risk of impairment by 2030-end if companies continue their current pace of spending. AI providers are expected to spend nearly $1T on AI infrastructure this year, and an additional $6T between 2027 and 2030. But Gartner said enterprise and consumer AI revenue may be insufficient to support profitable returns during this period.

SA commentary: Invesco underscored that Meta's (META) results reflected how AI investments have begun to produce measurable benefits, with AI increasingly embedded in advertising and recommendation engines. "The AI bear case appears to have increasingly focused on the enormous amount of capital being committed to data centers, chips, power, and computing capacity," it stated. "But recent results from select companies demonstrated the other side of the ledger has become increasingly difficult to ignore." Investing Group Leader Julian Lin said a vast majority of the current AI spending is being used for training. "The continued training in advancing the frontier might not lead to the projected gold mine," he warned, adding that it's highly unlikely that the projected revenue generation would be enough to justify the ROI on capex.

Here's the latest Seeking Alpha analysis

The More They Drop, The More I Buy: 11%+ Yields With Massive Upside

Microsoft Q1: A $744 Billion AI Reckoning Is Coming

The End Of The Bull Market

Credo: The Reset Is Done (Rating Upgrade)

The Flight To Quality Has Just Begun

What else is happening...

WSB survey results: Long-term index allocation ahead of midterms.

Meta (META) upsizes Class A stock offering from $22.5B to $25B.

Apple (AAPL) to replace iPhone Duo units with cracked screens.

Broadcom (AVGO) CEO intervened to seal $63B Anthropic debt deal.

These bank stocks rise after scoring plum roles in Anthropic's IPO.

SpaceX (SPCX) wins $40B AI chip funding deal with Apollo (APO).

Moderna (MRNA) CEO sees other indications for cancer vaccine.

Repairing ties: U.S., Canada in talks to ease steel and auto tariffs.

Petrobras (PBR), Braskem (BAK) sink after Lula wins Brazil election.

Energy watch: Middle East diplomacy, European gas at new high.

Today's Markets

In Asia, Japan +1.7%. Hong Kong -0.7%. China -1.3%. India flat.
In Europe, at midday, London -0.7%. Paris +0.1%. Frankfurt +0.1%.
Futures at 6:30, Dow flat. S&P -0.1%. Nasdaq flat. Crude +0.5% to $102.31. Gold -0.8% to $4,007.90. Bitcoin -0.9% to $79,603.
Ten-year Treasury Yield unchanged at 4.99%.

On The Calendar

Companies reporting today include Coca-Cola (KO) and PayPal (PYPL).