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Weekly Newsletter
🔹 Key Points From FOMC Meeting
🤖 Anthropic’s New AI Model In The Limelight
⚡ Compute Power Demand Continues To Accelerate
📊 Earnings Season Kicks-Off Next Week
🌍 US-Iran Fail To Strike Deal
QUOTE OF THE WEEK:
“Everybody is constrained to start with just the hyperscalers, even Nebulous and CoreWeave. They are also constrained in it. But you have to remember one thing, and we just learned again from the AWS and the Amazon letter today — they are seeing a level of demand that they have not seen before. And this is something we go back on in our work — if you look at the backlog of deals we have seen, you could see cloud commitments north of 1 trillion. I think it's not at 1.5 trillion at this point from everybody. Microsoft — it's over 600 billion they have on their balance sheet that needs to drop into sales. So everybody is getting those backlog orders, either from just the model companies or they're also coming from enterprises that are infusing more AI into their daily work.” - Anurag Rana, Bloomberg Intelligence
KEY US ECONOMIC EVENTS NEXT WEEK:
MARKET CLOSE:
CNBC - EOD 4/10
WEEKLY MARKET WRAP:
Good Afternoon. Comeback week for the markets with the S&P 500 crossing 200DMV. All major indices gained 3%+ for the week, with the Nasdaq leading the way with 4.68% gains. As the US and Iran failed to reach a deal this weekend, some of these gains could reverse amid expected volatility. However, the earnings season kicks off next week. Earnings are expected to grow by ~14% in Q1, which will support the markets. This week highlighted the computing power demand story again, with deals between Coreweave+Meta, Google+Anthropic+Broadcom.
Below are the key things to note this week:Volatility to Continue:
U.S.-Iran talks in Islamabad ended without a deal after 21 hours, leaving a fragile two-week ceasefire at risk. The key sticking points remained Iran’s nuclear commitments, the Strait of Hormuz, reparations, and a broader regional ceasefire.
Anthropic’s Mythos: Compute Constraints and Cybersecurity Risks:
The limited rollout of Anthropic’s new AI model, Mythos, to an exclusive group of just 40 companies has sparked a major debate across the tech and financial sectors. While Anthropic cited the model's immense capabilities and the need to manage security risks, a memo from OpenAI accused Anthropic of insufficient computing power. I believe there are two key issues driving this dynamic that we need to pay attention to:
The Compute Power Bottleneck – The underlying disagreement between the two leading AI labs centers on computational power. OpenAI projects its compute capacity will reach 30 gigawatts by 2030, while it estimates Anthropic will only reach roughly 7 to 8 gigawatts by the end of next year. OpenAI views this massive scale as a critical differentiator, accusing Anthropic of hiding a severe lack of compute hardware behind their security claims. In contrast, Anthropic is taking a much more conservative approach to capital allocation, criticizing OpenAI’s aggressive, "YOLO approach" to data center expansion.
Systemic Cybersecurity Threats – The restricted rollout isn’t just about hardware; the cybersecurity implications are drawing serious attention. Wall Street banks are currently stress-testing the model at the urging of the US government to uncover potential vulnerabilities. The risks of cyberattacks and systemic financial disruption are severe enough that Treasury Secretary Scott Bessent and Federal Reserve Chair Jerome Powell have directly warned bank CEOs about the model. With the Bank of England also preparing to launch discussions, managing these unprecedented capabilities against high-stakes security threats is becoming a central focus for financial regulators globally.
In short, I am certain that the demand for computing power will keep surging. If OpenAI is right about Anthropic’s lack of compute power, you know what Anthropic is going to do. It already struck its largest deal this week with Broadcom and Google. Sustained compute demand will benefit all stocks in the supply chain. I have a 20X max plan for Claude and also pro plans for all other 4 major LLMs, as I am building some models. From my personal experience, I can clearly see that Claude is gasping for more computing power. Claude is my favorite among the five, but it throttles, even with the best plan. I believe what OpenAI is saying.
U.S. Consumer Spending Cools: Consumer spending rose 0.5% in February as PCE inflation increased 0.4% month over month and held at 2.8% year over year, showing price pressures remained firm even before the Iran-driven oil shock. Core PCE rose 0.4% for a third straight month, reinforcing the case for higher-for-longer rates.
For the week:
The S&P 500 is up 3.56%, the Nasdaq is up 4.68%, and the Dow 30 is up 3.04%.
barchart
CNN's Fear & Greed Index now stands at 38 (Fear) out of 100, up 19 points from last week. Details here
The top five trending stocks on Reddit are Palantir, Microsoft, SPY, Jingdong Mall, and ServiceNow. Read More
Liquidity:
Banking Reserves + ON RRP: Banking reserves remain at approximately $3.2 trillion. ON RRP balance remains immaterial.
Standing Repo Operations: The New York Fed’s standing repo operation (primarily reflecting SRF take-up) as of April 10th is zero.
Here is a summary of this week’s key economic releases:
Target Rate Probabilities for March 18th FOMC Meeting:
CME FedWatch
CURATED INSIGHTS & ANALYSIS:
Earnings Season Kick-Off:
First-quarter reporting kicks off with major U.S. banks, anchoring expectations for a strong profit cycle despite geopolitical tensions. ~10% of the S&P 500 reports by next week, with broader results to follow. Earnings are projected to grow ~14% YoY—sixth straight double-digit quarter, longest since 2011. Growth remains uneven: technology +40%.
Reuters
Key points from FOMC minutes:
The Committee held rates steady at 3½–3¾%, citing solid growth, stable labor conditions, and inflation still above target.
Economic activity continued to expand at a solid pace, with resilient consumer spending and firm business investment; housing remained weak.
Labor market conditions stabilized: unemployment was near 4.4%, but job gains remained low and hiring demand was subdued.
Payroll growth slowed materially, reflecting weaker labor force growth alongside softer labor demand.
Inflation remained elevated around ~2.8–3.0% PCE; core goods inflation was driven by tariffs, while services disinflation continued.
Energy prices rose due to Middle East disruptions, pushing up near-term inflation and lifting short-term inflation expectations.
Longer-term inflation expectations remained anchored near 2%, though participants flagged risks from repeated supply shocks.
Participants viewed tariff and energy inflation as largely one-time effects, but emphasized uncertainty around persistence and pass-through.
Growth projections were revised higher, supported by productivity gains and continued investment, including AI-related activity.
Policy was characterized as near neutral to modestly restrictive, allowing flexibility to respond to evolving risks.
The Committee emphasized balancing risks: the downside of employment vs. the upside of inflation, with neither clearly dominant.
Policy remains data-dependent, with no preset path; future actions hinge on inflation progress and labor-market dynamics.
FRONT PAGES:
Treasury, Fed Flag AI Cyber Risks: Treasury Secretary Scott Bessent and Fed Chair Jerome Powell warned major bank CEOs about cyber risks tied to Anthropic’s new Mythos model after the company said it could exploit weaknesses across major operating systems and web browsers. Access will be limited to about 40 tech firms. Read
Morgan Stanley Launches Bitcoin ETF: Morgan Stanley became the first Wall Street bank to launch a Bitcoin-tracking ETF, debuting the Morgan Stanley Bitcoin Trust on NYSE Arca, as the market already has more than 10 spot Bitcoin ETFs holding over $85 billion in assets. Read
Fed Probes Bank Private Credit Risk: The Fed is seeking details from major U.S. banks on their exposure to private credit as redemptions rise and troubled loans increase, signaling closer scrutiny of whether stress in the roughly $2 trillion market could spill into the broader financial system. Read
U.S. Banks Set for Capital Relief: Revised draft capital rules could free up as much as $320 billion across 36 U.S. banks, up 20% from the current $266 billion estimate. The Fed said capital levels could fall 4.8% to 7.8%, boosting capacity for lending, dividends, and buybacks, with regional banks and GSIBs among the biggest beneficiaries. Read
Anthropic Expands Compute Partnership: Anthropic signed a new deal with Google and Broadcom for multiple gigawatts of next-generation TPU capacity starting in 2027, marking its largest compute commitment yet. The expansion is aimed at meeting surging Claude demand, with run-rate revenue rising above $30 billion from about $9 billion at end-2025 and $1 million-plus business customers doubling to over 1,000 in under two months. Read
EARNINGS UPDATE:
Levi’s Beat: Net revenue rose 14% to $1.742B, with 9% organic growth, led by 16% DTC growth and 21% e-commerce growth as DTC reached 52% of revenue. GAAP EPS was $0.45 and adjusted EPS was $0.42, ahead of $0.38 estimates. FY2026 guidance was raised to 5.5%–6.5% revenue growth, $1.42–$1.48 adjusted EPS, and ~12% adjusted EBIT margin. CFO Harmit Singh will retire after a planned transition.
Delta Airlines Mixed: Adjusted revenue rose to a record $14.2B, up 9.4% YoY, while adjusted EPS of $0.64 landed within initial guidance despite higher fuel costs. Operating cash flow reached $2.4B and free cash flow $1.2B. Adjusted net debt fell to $13.5B, below 2019 levels. Non-fuel CASM rose 6% YoY to 15.13¢, while corporate, premium, and loyalty demand remained strong.
EARNINGS PREVIEW:
Date | Symbol | Name | Time |
13-Apr | GS | Goldman Sachs Group | Before Open |
14-Apr | BLK | Blackrock Inc | Before Open |
14-Apr | C | Citigroup Inc | Before Open |
14-Apr | JNJ | Johnson & Johnson | Before Open |
14-Apr | JPM | JP Morgan Chase & Company | Before Open |
14-Apr | WFC | Wells Fargo & Company | Before Open |
15-Apr | ASML | Asml Holdings NY Reg ADR | Before Open |
15-Apr | BAC | Bank of America Corp | Before Open |
15-Apr | MS | Morgan Stanley | Before Open |
16-Apr | ABT | Abbott Laboratories | Before Open |
16-Apr | NFLX | Netflix Inc | After Close |
16-Apr | PEP | Pepsico Inc | Before Open |
16-Apr | SCHW | The Charles Schwab Corp | Before Open |
16-Apr | TSM | Taiwan Semiconductor ADR | Before Open |
VIDEO’s OF THE WEEK:
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This newsletter's content is for informational and educational purposes only and should not be considered trading or investment recommendations. All the opinions in this newsletter are personal and do not belong to any organization.
