Anthropic S-1 Shows Red-Hot Growth, Risks and Massive Computing Costs

(…) The disclosures, many of which have not previously been reported, are part of a draft initial public offering prospectus viewed by The Wall Street Journal that revealed the firm’s financials for the first half of the year. (…)

Anthropic generated around $16.3 billion in revenue in the six months ended June 30, up from $1.1 billion in the year-earlier period, according to the draft prospectus. During that period, Anthropic spent nearly $9 billion on computing capacity and infrastructure, up from $2.3 billion spent on infrastructure during the same six months in 2025. (…)

The company is on the hook to pay around $450 billion in cloud computing agreements over the next seven to ten years. The bulk of these deals are noncancelable.

Anthropic plans to spend $111 billion on Google cloud computing contracts, $110 billion with Amazon Web Services, and $31 billion on Microsoft, “regardless of actual usage.” The firm also agreed to spend up to $86 billion renting Nvidia chips from smaller AI cloud providers Nscale and Lambda through 2033 and 2034, respectively, in addition to other cloud deals.

Including its more than $160 billion obligation to lease Google chips in a deal with Broadcom, Anthropic’s future infrastructure costs top $600 billion. The firm is negotiating additional computing deals that could see its commitments rise by as much as $150 billion, the materials show.

While most of its capacity comes from large cloud providers—including Amazon Web Services, Google and Microsoft—Anthropic is hitting limits. The company said it has sought access to more capacity than “those partners were willing to provide” and they increasingly see it as a competitor, according to the prospectus.

From this rather limited disclosure, there seems to be a 44.8% operating margin in the first 6 months of 2026.

Japan ‘months’ from running out of critical rare earth as China squeezes supply

(…) Washington has urged China in recent months to increase the flow of rare earths, including yttrium — a heat-resistant metal crucial to manufacturing vehicles, jet engines and semiconductors — to the US and its allies. US defence supply chains rely on components made in Japan that contain yttrium.

Unless Beijing changes tack or western allies find substitutes or additional stockpiles, shortages could emerge as early as the end of this year, Japanese government officials and trading house executives said.

“We’re in a serious situation to keep supplying downstream industries,” said a Japanese government official. “Stockpiles are decreasing and rare earth saving efforts have a limit.” “The timeline is not years, it’s months and how to survive next year,” the official added.

“If everyone acts right now, then it will be OK. If everyone ignores the problem, then it will be a systemic risk to the world economy.” (…)

Yttrium shortages have become the biggest pain point for Japanese materials groups. The metal is used to coat engines and plasma-etching chambers for chip manufacturing.

Yttrium oxide prices outside China have skyrocketed to $1,150 per kilogramme, a 179-fold increase versus two years ago, compared with $9 per kilogramme in China, according to price assessments by Argus. (…)

US officials have told Beijing that the US will not export jet engines needed for the Comac C919 — China’s first domestically made airliner — as production has been constrained by the lack of yttrium, which is critical to making turbines.

China also agreed to buy 200 Boeing jets when Trump visited Beijing in May. But the deal has not been completed, partly due to complications related to critical minerals.

Erin Browne, the top US Treasury official for international affairs, told the FT that rare earths were essential to the production of Boeing aircraft and jet engines.

“In order to produce aircraft, you need rare earths,” said Browne. “They’re all sort of under the same umbrella, which is that in order to . . . export engines, you also need rare earths.” (…)

Housing Starts Significantly Below Expectations

• Housing starts declined 5.2% to 1,221k in September, significantly below expectations. August starts were revised down 3.3pp to -5.9%.
• Both single-family housing starts (-4.6%) and multi-family housing starts (-6.7%) declined this month.
• Building permits decreased 0.2% to 1,400k; single family permits: -4.0%, multi-family permits: +6.1%.

The Immigration Crackdown Is Making It Much Harder to Build Houses Home building suffers labor shortage that is freezing projects and raising costs

Nearly two-thirds of builders said immigration enforcement is affecting their labor force, up from 23% in March and 13% a year ago, according to a September John Burns Research & Consulting survey.

“We’re almost dead in the water because our workforce is gone,” said Scott Brannock, president of Jacksonville-based Tidewater Homes and the Northeast Florida Builders Association. “We have national builders who are missing projections, losing hundreds of thousands of dollars because they have slabs sitting on the ground and no one to frame.”

A September survey from the National Association of Home Builders found the cost of labor had increased a median of 4.2% from the previous year.

The shortages come as the country desperately tries to drive down sky-high housing costs that have trapped millions of Americans out of homeownership and stalled sales.

Immigration raids have primarily hit trades such as roofers, painters and framers. Meanwhile, the data center build-out in some areas has siphoned off specialized trades, drawing HVAC technicians and electricians with lucrative wages that home builders struggle to match.

Immigration-enforcement advocates say that deportations will drive down housing costs by removing competition for housing. They say builders should hire U.S. citizens. (…)

Over the summer, the Jacksonville, Fla., area became a hot spot for arrests of residential-construction workers, with some subcontractors estimating 70% of their workforce has been lost. But the immigration crackdown has also started hitting builders in wider swaths of the country.

“It seems to have become ubiquitous,” said Jim Tobin, NAHB chief executive.

Paul Schwinghammer, co-founder of Hallmark Homes and former president of the Indiana Builders Association, estimated that in Indiana, immigration enforcement has taken out up to 25% of the residential-construction workforce.

In 2024, immigrants accounted for 26% of construction workers, a record high, according to the NAHB. (…)

Hacker said he has seen a 70% reduction of crews available for certain jobs, forcing the leftover crews to double their rates in most cases. He has also started a campaign to recruit new workers, offering significant cash bonuses for applications. (…)

The arrests have also spooked foreign-born workers with legal status, some of whom have been caught up in raids and repeatedly detained, taking them away from the job site for days at a time, builders and subcontractors say. Many legal residents have stopped showing up to work or fled to other parts of the country out of fear.

“People are afraid. If there’s any wind of anything happening, they’re not coming in for a week,” said Matt Risinger, a builder in Austin, Texas.

A June National Bureau of Economic Research paper found that each single arrest by U.S. Immigration and Customs Enforcement causes an average of seven likely undocumented immigrant men to stop working.

Building a house is largely a linear process—one stage can’t occur until another has been completed. “That costs money in interest, site labor, site management, rental equipment, utilities, insurance,” said Schwinghammer, the Indiana builder.

And even if contractors are able to find workers, the labor shortage means they have to pay them significantly more. Brannock, the Jacksonville builder, said local framers’ wages used to work out to around $20 an hour. Now, that is up to $40 to $45 an hour. For the average 2,500-square-foot house, framing labor, which used to cost $10,000, now runs builders $25,000 to $28,000, he said. (…)

Builders and subcontractors say it will be costly and time-consuming to replace workers like Velazquez with U.S. citizens. “There’s no one lining up to do a lot of these jobs,” said Josh Putnal, the owner of a siding-and-soffit subcontractor in Jacksonville.

Last week in the NYT:

Each year, thousands of immigrant workers travel hundreds of miles to clear toxic debris, haul away fallen trees and begin reconstruction in the aftermath of hurricanes.

But as residents start returning to Pensacola, Fla., and other areas where Hurricane Isaias ripped off roofs and toppled trees onto houses last week, workers and organizers warn of a potential labor shortage fueled by fear of the Trump administration’s immigration crackdown.

On Sunday, Immigration and Customs Enforcement confirmed that three undocumented immigrants were taken into custody after they were stopped by sheriff deputies in the town of Milton, which sustained significant damage.

The workers were part of a crew that had arrived from the Midwest, said Saket Soni, executive director of the disaster-worker advocacy nonprofit Resilience Force.

“Other workers who heard about this immediately laid down their tools and fled the area, abandoning hurricane-repair jobs,” said Mr. Soni, whose organization represents about 7,500 workers.

He added that people preparing to deploy to the area were holding back. Many disaster response workers are undocumented. (…)

China Home Price Slump Eases, Fueling Hopes for Recovery

New home prices in 70 cities, excluding state-subsidized housing, dropped 0.14% from August when they slid 0.17%, figures from the National Bureau of Statistics showed on Monday. Resale home values, which are subject to less government intervention, decreased 0.26%. (…)

Values of used homes improved across the board last month. Top-tier cities saw prices of existing homes climb an average 0.23%, faster than the 0.08% increase a month earlier, while declines narrowed in both tier-2 and tier-3 cities on average. (…)

Trump’s New Global Triumvirate? His Yalta 2 courtship of Putin and Xi could blow up alliances at home and abroad.

(…) “Anything I can do to end the war, whether somebody’s there or not, whatever I can do to end the war.” The President in recent weeks has waived new oil tariffs and sanctions on Russia and offered Mr. Putin’s war machine a cash infusion by letting Russian diesel flow into global markets. (…)

A new triumvirate that divided the world into spheres of influence would blow up America’s global credibility as a reliable ally. (…)

Any coerced peace in Ukraine would divide NATO and broadcast to America’s Pacific allies that the U.S. is a dangerous friend. As a practical matter we doubt even Mr. Trump could force Ukraine into capitulation, and the President would own the ugly scenes of carnage that followed if he pulled intelligence and targeting help. (…)

Handing over Europe to Russia, and the Pacific to China, would open a major [republican] party division. Mr. Trump may be two weeks from being a lame duck, and maybe some GOP Senators will finally find the courage to speak up. (…)

• Trump’s Betrayal of Ukraine

(…) Desperate to reduce gas prices before the midterms, he is now helping Mr. Putin wage war. (…)

Let us be clear about the scope of Mr. Trump’s cynicism. He is aiding an autocratic leader and dangerous adversary of the United States who is waging a brutal war against a democratic neighbor. Mr. Trump is doing so partly in the faint hope that gas prices, which have jumped because of his reckless war in Iran, will fall over the next two weeks and help Republicans avoid big losses in the midterm elections. He is damaging America’s national interest, and likely sacrificing Ukrainian lives, for his own political interests.

The stakes in Ukraine are much larger than the fate of one nation. The war is a test of whether authoritarian expansion can succeed by military force in the 21st century — or whether the West can rally to protect democracy and innocent lives. (…)

Mr. Trump’s solicitousness of Mr. Putin instead encourages him to become more aggressive, in Ukraine and beyond. Seeing the West as weak and divided, Mr. Putin has started a campaign of barely disguised attacks and provocations against other parts of Europe. (…)

“We are already in conflict with Russia,” Chancellor Friedrich Merz of Germany has said. (…)

Mr. Trump, by contrast, offered this disingenuous assessment on Monday: “Russia, frankly, has been fine on Ukraine.” (…)

The people of Ukraine have shown inspiring bravery over the past four and a half years. They defied expert predictions and rebuffed Russia’s invasion. More than 125,000 of them have been killed, and another half million have been wounded. Many live with daily fear and are preparing for a difficult winter. They are fighting a battle that benefits the entire free world. Mr. Trump is fighting only for himself.

• Musk Ordered Starlink Slowdown That Blindsided Ukraine

(…) Last week, Musk capped the speeds at which Ukrainian hardware could stay connected to the satellite-based network, the people said, rendering some offensive drones and interceptor drones virtually useless.

Musk and Trump discussed the Starlink decision in a call soon after the slowdown became public, while the president was campaigning last week, two of the people said. One of the people also claimed Musk and Trump discussed the matter prior to the decision to throttle Starlink. (…)

During the uproar, SpaceX representatives called White House counterparts seeking a unified understanding and subsequent message that the company and Trump administration coordinated ahead of Musk’s directive, the people said. (…)

Some U.S. officials say that Musk acted unilaterally and that Trump didn’t specifically order any retribution against Ukraine. But a person familiar with the situation said Musk talked to multiple senior administration officials, including with Trump, before imposing the new speed cap, which Ukrainian officials said had allowed Russian missiles to evade their defenses. (…)

The episode has spiked U.S.-Ukraine tensions to their highest level since Trump berated Zelensky in the Oval Office last year. But it has also highlighted the singular influence of Musk over the war, as Starlink provides a lifeline for Ukrainian forces on the front lines attacking Russian troops and defending themselves from strikes. With a seeming flick of a switch, Musk has the power to alter the course of a deadly conflict. (…)

Recall that Musk last week said that Starshield, the military-grade sister service to Starlink, “is controlled by the US government”, and “any limits on speed or usage are decided by the US military and ultimately POTUS.

• Airfield Attack Marked Opening Shot in Putin’s Sabotage Campaign Against Europe The Russian leader ordered new wave of attacks against NATO countries

(…) U.S. intelligence agencies say the failed operation at Leipzig-Halle Airport this summer was one of the opening shots in a stepped-up campaign of sabotage and covert action against NATO countries ordered directly by Russian President Vladimir Putin, according to European officials briefed on their findings. (…)

Aides to German Chancellor Friedrich Merz say that if the Leipzig attack had resulted in large numbers of casualties, they would have considered invoking the collective-defense provision of the North Atlantic Treaty Organization, known as Article 5, which would oblige the rest of the alliance to rally to protect Germany. (…)

Since the Leipzig attack, European countries have seen a sharp uptick in so-called gray-zone assaults. In August, arsonists struck drone manufacturers in Estonia and Poland. That same month, Slovak authorities said they thwarted a planned arson attack on a Ukrainian drone factory there.

The attack was part of a broader effort to position agents, explosives and weapons across Europe to strike targets supporting Ukraine and sow chaos that could strengthen political opposition to military aid for Kyiv, according to investigators and intelligence officials.

After the failed attack, a Kremlin official serving as a back channel to the German government contacted his counterpart in Berlin, according to officials familiar with the exchange.

Leipzig, he warned, wouldn’t be the last attack.

In recent weeks, Poland, Lithuania and Bulgaria have all reported sabotage attacks on Starlink stations. There has also been a series of drone attacks on commercial ships in the Black Sea, near the waters of NATO members Bulgaria and Romania.

European leaders are publicly warning about the risks and privately debating how best to respond. “Russia is waging a war on Europe; not just on Ukraine, but also against us,” Merz said earlier this month. (…)

Secretary of State Marco Rubio warned earlier this month that the escalation could spill into NATO countries and “quickly turn what is a war between two countries into a much broader and far more dangerous regional conflict.” (…)

[CIA Director] Ratcliffe personally warned European intelligence counterparts and selected political leaders that Moscow was intensifying sabotage operations against their countries, according to people who received the warnings.

Oh! About the other war:

Trump Envoy Tells Nervous Gulf Allies U.S. Can’t Guarantee Security Forever

Tom Barrack, the U.S. ambassador to Turkey and President Trump’s special envoy for Syria and Iraq, said the grand bargains that have underpinned global security for decades are undergoing major transformation, and countries in the Middle East and elsewhere should focus on securing themselves via regional partnerships.

“America as the guarantor to the world, for the last 80 years, it is no longer there,” Barrack said at the Global Security Forum in Doha, an annual summit that brings together top security officials and experts from around the world. “What’s happening in this administration is not an abandonment. It’s a message for realignment.” (…)

Arrangements forged in the wake of World War II—essentially a quid pro quo whereby the U.S. provided security in exchange for oil—no longer fit Washington’s imperatives, Barrack said. Americans don’t want to sacrifice their lives for the Middle East, and Gulf states know the U.S. can’t assure their security, he said. (…)

“We don’t have a playbook,” he said. “We’re all on audibles. We can go one play at a time.” (…)

The GCCs will eventually wake up to their new reality: the US has benefitted from its war with Iran by grabbing energy market shares from the GCCs:

• US exports of crude oil have increased 33% since the start of the Iran war.
• Refined product exports also rose sharply: diesel +69%, jet fuel +39%, and residual fuel oil +51%.
• Liquefied petroleum gas exports increased as well: propane and butane +24% and +67%, respectively. Naphtha exports, essential for petrochemical production, also surged.
• US Liquified Natural Gas exports jumped 14%.

All at much higher prices and margins.

Once the war ends (?) and the GCCs resume shipments, they will find it difficult to negotiate their former clients back to unsecured supplies. The end of OPEC. Energy price wars ahead!

Trump’s approval falls to record low of 31% as midterms near, Reuters/Ipsos poll finds

 

• Musk has spent $276 million on midterms to help Republicans retain control of Congress
• Trump PAC Unleashes $277 Million to Aid Republicans in Midterms

(…) In a Truth Social post Tuesday, Trump wrote that he would spend more than $400 million to help Republicans in the November midterm elections, seeking to reassure the GOP it will have adequate funding as the political environment worsens for the party. He added that he had already spent $300 million. (…)

Would Trump accept GOP midterm losses? 7 in 10 Americans doubt it.

Most Americans are confident that next month’s midterm elections will be conducted fairly, but 7 in 10 lack confidence that President Donald Trump will accept the results if Republicans lose, according to a poll by The Washington Post, ABC News and Ipsos.

The doubts extend into Trump’s own party. Thirty-six percent of Republicans say they are not confident Trump would accept GOP losses, along with 77 percent of independents and 94 percent of Democrats. Yet Democrats and Republicans agree nearly identically on whether the elections will be fair and accurate: 70 percent of Democrats and 67 percent of Republicans say they are confident.

Another WaPo poll:

Nearly 2 in 3 Americans say President Donald Trump is using the presidency to enrich himself — and most of the increase over the past year has come from people who lean Republican, according to a Washington Post-ABC News-Ipsos poll.

Among Republicans and independents who lean Republican, 34 percent believe Trump is enriching himself, up from 22 percent in September 2025. Democrats and Democratic-leaning independents were already nearly unanimous, at 88 percent a year ago and 92 percent now, while independents who don’t lean toward either party were unchanged.

Trump Pushes to Evict the Press From the White House President Trump has talked about replacing the James S. Brady Press Briefing Room with an indoor swimming pool.

Simply replacing a pool of reporters…

U.S. Import Prices Rose in September

Friday we got the third element of the inflation flywheel after the CPI and the PPI.

US import prices increased 1.1% MoM in September
following a 0.5% rise in August. On a YoY basis, imports rose 8.1%.

Prices for nonfuel imports increased 0.7% MoM in September and have not
declined on a monthly basis since August 2025.

Nonfuel import prices are up 6.0% YoY.

• capital goods (+4.2% YoY but +5.8% a.r. in the last 4 month),
• industrial supplies and materials (+12.8% YoY),
• consumer goods,
  ex-automotives (+4.0% YoY but +1.1% MoM in September),
• foods, feeds, and beverages (+9.0% and +14.2% a.r. in the last 3 months),
• automotive vehicles, parts, and engines (+2.6% YoY but +6.5% a.r. in the last 3 months).

Import prices exclude duties, such as tariffs imposed on imports by the Trump administration, as well as transportation costs.

(Ed Yardeni)

In all, core CPI rose 0.3% in each of August and September, +3.7% a.r.. Core PPI final demand rose 0.43% on average since July, +5.2% a.r.. Core Import prices rose 0.65% on average in August and September, +7.9% a.r.. The pipeline is full and accelerating.

Core PCE inflation (Oct. 29) is now forecast at between +0.29% and +0.36%. It was +0.25% in August after +0.13% in each of June and July and +0.27% on average in Q2. Core PCE monthly inflation needs to be sustained at +0.17% for the Fed to achieve its 2.0% objective.

The Atlanta Fed’s GDPNow is at +3.6% for Real GDP in Q3, while the NY Fed model sees +2.8% for Q4. Strong demand vs restricted supply. Productivity, where are thou?

Several Fed officials, including the influential John Williams, assess that there is no urgency to raise rates. Market odds for October are at 17%.

Let’s see what Trump does after the midterms. Lower oil prices or a forever war?

Investors dump data centre bonds as AI borrowers face ‘Darwin moment’

(…) Investors are also dumping debt issued by so-called neocloud companies — of which the best known is Nvidia-backed CoreWeave — which have been the most aggressive in how they finance their AI build-out. (…)

“Data centre bonds are having their Darwin moment, where the weakest credits struggle to survive,” said Ludovic Subran, chief investment officer at Germany’s Allianz. “The surge in credit spreads following power and construction delays show that data centre debt is priced too tight for execution risk.” (…)

Neocloud providers have been hit even harder. Bonds issued by CoreWeave have sunk below 80 cents on the dollar — prices typically considered distressed — pushing yields close to 15 per cent on Thursday. The company’s shares are down 17 per cent this week, while rival Nebius has lost 18 per cent. (…)

The rout has come as a report this week by tech consultancy Gartner predicted that 80 per cent of neoclouds would “cease independent operations” by 2030, because of a multitrillion-dollar gulf between the pace of capital spending and expected returns from AI.

Gartner said AI data centre owners would need to generate revenues of $8.5tn by the end of 2030 to cover their capital and financing costs and generate healthy returns on those investments. But it forecast that consumer and corporate spending on AI services that would flow to data centre providers would reach “no more than $3.6tn”.

“A continued AI infrastructure investment trajectory could leave more than $4tn in asset value exposed to writedown risk through 2032,” Gartner said. (…)

I wrote last Thursday:

Gartner’s analysis sees a need for $8.5T in revenue through 2030 to achieve a 12% ROIC but it only expects $3.6T in AI revenues.

The Columbia analysis says that $3.7T revenues by 2032 would be enough to generate a 10% return.

But how can we reliably forecast usage and revenues at this time? We have yet to see how AI agents penetrate our lives. The first chart (from JP Morgan) plots token volume through August but the second chart shows how agent demand has been exploding after June.

Unlike the internet bubble, infrastructure spending is following demand and can’t supply enough.

If Anthropic’s Q3 profitability is sustainable, Jevons Paradox could well take care of the current revenue and financing angst.

But it would be nice if bond yields could stop rising…

All this is the context that this is an existential race

• for frontier model developers like Anthropic and OpenAi and
• for the US vs China

China may be somewhat behind on frontier models and may be hindered by various export restrictions but

• it has the clear backing of the government
• it has abundant cheap power
• it faces little if any social backlash
• it is built on open source models and apps
• it does not face the same financing challenges

US AI is clearly too sensitive and critical to fail.

Ed Yardeni is right: “If some AI-related credits do blow up, the Godfathers of the AI mafia (along with their protectors in the government) will clean up the mess.”

• Citi becomes latest US bank to restrict AI agents from accessing accounts

Citigroup and Bank of America have become the latest US banks to restrict AI agents from accessing client accounts, as lenders raise concerns with regulators that agents could drain deposits by moving idle cash in search of higher returns.

Citi said it does not permit “third-party AI agents or assistants to log into a customer’s account or transact directly within our digital banking platforms”, adding that this was designed to help safeguard customer accounts and information.

Bank of America’s Brian Moynihan also suggested the bank was restricting AI agents’ access to consumer deposits while it comes up with protocols to determine which entity was ultimately liable for payments authorised by artificial intelligence. (…)

AI companies are rushing to launch new tools and chatbots designed to help consumers manage their personal finances. (…)

JPMorgan Chase chief executive Jamie Dimon said this week that the bank would restrict AI agents from accessing client’s accounts “because you don’t want rogue agents and there could be thousands of them”.

Client interest or banks’ interest?

A report from Apollo’s chief economist, Torsten Slok, amplified the concerns, with the economist warning that AI assistants could automatically sweep household cash into accounts paying 3.3 to 5 per cent instead of the 0.1 per cent national average on checking accounts.

JPMorgan, Bank of America and Wells Fargo hold $1.6tn of non-interest-bearing deposits — 16 per cent of their liabilities. Paying a 3 per cent rate on those would cost them $47bn a year, almost half of their collective annual earnings.

If banks are forced to pay higher interest rates on retail deposits to keep them from seeking a higher rate elsewhere, it could put a big dent in their profits. (…)

Wall Street executives have also contacted regulators at the Federal Reserve to express concerns about the sharp rise in consumers using AI agents to carry out financial transactions on their behalf, according to a person familiar with the discussions.

Meanwhile in China (via Gemini 3.0):

• In August 2026, the Payment and Clearing Association of China, guided by the People’s Bank of China (PBOC), introduced the nation’s first AI agent-driven payment rules.
• The rules mandate a strict “Know Your Agent” (KYA) identity mechanism to verify autonomous software before it transacts.
• Transactions are subjected to tiered risk management boundaries based on the agent’s model capabilities.
• Fund clearing must remain with licensed entities, making banks legally liable for any rogue AI transactions.
• In October 2026, Ping An Bank became the first listed Chinese lender to formally pass comprehensive AI management board rules.
• Tech giants like Alibaba and Tencent are building highly scrutinized ecosystems (such as Alipay’s Zhixiabao) to let AI agents use financial mini-programs safely inside their walled gardens.
• These measures follow severe security warnings, including an October 2026 discovery by Tencent of rogue third-party AI agents attempting to bypass bot protections in Chinese cloud sandboxes.

When it comes to AI agents doing your shopping, a sharp geographic divide has emerged: the US relies on fragmented corporate gatekeeping and platform-by-platform blocks, whereas China uses a top-down, unified framework integrated into its giant super-apps.

While American retail giants are locking their digital doors to keep autonomous software out, Chinese platforms are building a regulated toll-road to let verified agents spend money.

In the United States, there is no federal framework governing agentic commerce. Instead, individual retail and e-commerce platforms are using updated terms of service (TOS) to unilaterally block or permit AI software.

Retail giants are locking down their interfaces. Amazon blocked Meta’s transaction-focused Muse agent, citing concerns over unauthorized account data capture. Research shows Amazon also aggressively blocks agents from OpenAI, Google, Anthropic, and Perplexity. Similarly, eBay barred shopping agents from taking automated actions on its marketplace without express written permission.

While Amazon blocks everything, Target permits select approved AI providers, and Walmart actively partners with tech firms to build co-developed agentic shopping pipelines. This forces AI developers to negotiate access retailer by retailer.

China has bypassed the corporate litigation phase by funneling agentic shopping into pre-existing, state-monitored “super-apps” and establishing clear financial guardrails.

• In China, AI agents do not scrape external web pages to shop; they operate natively inside apps like WeChat and Alibaba’s updated Qwen model. Qwen connects directly to Taobao (retail), Fliggy (travel), and Alipay (payments). Because identity, product data, and payments sit on one single proprietary rail, there are no web-scraping or bot-blocking battles.
• Guided by the People’s Bank of China (PBOC), the nation utilizes a strict “Know Your Agent” (KYA) framework. Every software agent attempting to execute a transaction must be formally identified, risk-ranked (high, medium, low), and bound to clear spending limits assigned by the human user.
• To handle the inevitable legal issue of unauthorized purchases, Chinese guidelines force payment firms to maintain a tamper-evident evidence chain. This logs the user’s original settings, the AI model’s internal prompt decision, and the final payment node to quickly resolve any disputes regarding rogue agent transactions.

Anthropic offers Blackstone double-digit yield in latest chip financing High borrowing costs complicate AI lab’s goal of achieving investment-grade status

The $60bn debt package, dubbed “Project North Star”, would help fund Anthropic’s procurement of about 1.5 gigawatts of custom semiconductors developed by Google, known as tensor processing units. (…)

Blackstone funds would invest $9bn in the debt backed by Anthropic’s five-year lease payments on the chips, accounting for about half of the $18bn junior loans, according to people familiar with the matter. 

The private capital giant was offered a coupon of 10 per cent and an even higher total return after accounting for new-issue discounts and other fees, the people said. A borrower with a similar credit profile typically pays a yield of about 7 per cent in the public bond market, according to the ICE BofA BB US High Yield Index. The rest of the $9bn would be sold to a broader group of investors in the coming months, potentially with a lower yield, the people added.

Just four months ago Anthropic sold about $4.4bn of debt in a similar deal known as “Project Big Sky” at an interest rate of 8.5 per cent, the FT reported at the time. (…)

EARNINGS WATCH

We have 45 reports in: the beat rate is 84% with a surprise factor of +4.1%.

The 45 companies having reported (21 Financials) showed earnings up 51.4% on revenues up 14.1%.

S&P 500 earnings are now expected to rise 30.7%, ex-Energy 26.2%.

Very much K-shape sectorial growth however:

• 5 sectors AI or war-related: +58.1% on average on average revenue growth of +19.0%
• 6 sectors “normal economy”: +4.1% on average on average revenue growth of +6.8%.

Note the decline in margins for ““normal economy” sectors. Costs are biting now. Producer prices are rising 2.6pp faster than consumer prices (core +1.3pp, right chart). Either consumer prices play catch up or margins decline.

 

Citadel Securities observes that

• MU and NVDA alone account for 36% of expected S&P 500 earnings growth
• The ten largest contributors represent roughly two-thirds of expected growth
• Excluding those ten companies, expected earnings growth falls to ~11%
• The smallest 300 S&P 500 companies by market cap are expected to grow earnings ~5%

Being small is tough nowadays.

And when the biggest are so big like now, most everything else is small …

I like this NDR chart courtesy of Steve Blumenthal: the deviation from the trend is a better way than Warren Buffett’s to relate equities with GDP:

Last week I showed this other NDR chart plotting demand vs supply of equities. The lines have now crossed …

Citadel Securities also observes that

Another remarkable feature of this market has been the absence of broad-based selling. We are approaching a full year without a single 80% NYSE downside-volume day, defined as a session when at least 80% of NYSE total volume is concentrated in declining stocks.

Since 1996, the average calendar year has experienced 21 such sessions, and no completed year has recorded fewer than five. The last occurrence was November 17, 2025, roughly 225 trading sessions ago, already the longest stretch in nearly 30 years of data. The previous record was just 129 sessions.

Despite macro uncertainty, geopolitical headlines, and some extreme moves across individual sectors and themes, investors have continued to rotate between winners and losers rather than indiscriminately reduce equity exposure.

Maybe, the corporate sector will push demand back up after the earnings season … US corporates have already announced a record $1.3 trillion of share repurchase authorizations YTD, 8% ahead of last year’s record pace. Technology alone accounts for $573 billion, or 43% of the total.

… potentially helped by seasonality:

Topdown Charts Professional

The Most Polite Trucker in America Is a Driverless 18-Wheeler They’re on the interstate in Texas and can do almost everything a human truck driver does, except honk

(…) Self-driving cars are on the cusp of moving from novelty to commonplace. Waymo driverless taxis buzz around cities like San Francisco and Phoenix. Next up are the biggest, loudest, most-daunting-to-other-drivers vehicles on the highway: the trucks. (…)

This stretch of Texas, flat, straight and filled with trucks, is the perfect testing spot for dozens of driverless big rigs, some without a human driver and others with one riding along just in case. About half a dozen companies, including Aurora, develop the technology for driverless trucks and team up with truck makers to produce them. Aurora, based in Pittsburgh, expects to have 200 autonomous trucks on highways in Texas and nearby states by year-end, up from around 30 big rigs today.   

Volvo Autonomous Solutions said it plans to roll out 300 autonomous trucks with Aurora and Waabi, another autonomous-trucking company, by the end of 2027 that would run in Texas and Oklahoma. Aurora estimates that by 2030, 30,000 autonomous trucks could be on the roads. (…)

Around two dozen states, mostly in the southern half of the U.S., now allow autonomous trucks on the road without a human operator under certain conditions. (…)

“Its ability to see long distances is better than a human driver,” said Matt Detmar, chief executive of Detmar Logistics, which currently uses two driverless Aurora trucks to transport sand in a 60-mile loop in Midland, Texas. The trucks use lidar to see more clearly in the dark, dust and foggy weather and can react faster or avoid a hazard.  (…)

Today, a typical driverless truck run is best suited for what shippers call the middle-mile, or the stretch from depot to depot. It looks like this: Humans load a trailer and drive it to a depot where they hand it off to a driverless tractor. Without a human, the truck drives from depot to another depot or yard where the trailer is either unloaded or a human driver takes over for docking or driving the final mile. Driverless 18-wheelers can’t back up without a human driver, though the companies say they’re working on adding that feature.  (…)

It cost an average of $2.34 per mile to operate a truck in 2025, and about 44% of that represents driver wages and benefits, according to the American Transportation Research Institute. Fuel made up 21% of the cost in 2025. Autonomous trucks can reduce fuel consumption by 10% because they can calibrate speeds and optimize acceleration, braking and coasting with more precision, the companies say. Goldman Sachs forecasts that autonomous trucking will become cost-competitive with human-operated trucks in 2028 in the U.S. (…)

• Chinese Auto-Driving Tech Takes on Europe’s Wildest Roundabout

Navigating the massive star-shaped junction around the Arc de Triomphe in Paris is among the most hair raising experiences in European driving.

A phalanx of cars, vans, motorcycles and trucks maneuvers across lanes without formal markings, funneling haphazardly into 12 avenues that spread off the Place Charles de Gaulle. Adding to the anarchy is a unique rule that road users driving into the swirling traffic have right of way.

The result is a stop-start jumble of vehicles nosing into gaps with motorcyclists hunting for tiny spaces to squeeze through. A nightmare for autonomous driving systems, you might think.

But ensconced in a Jaecoo 7 SUV guided by Chinese startup Momenta Global Ltd.’s automated driving technology, I could let the car work it out for itself. It threaded smoothly through the chaos, negotiated its way around the roundabout and picked an exit without once asking for human intervention. (…)

Taking on the congested roads and impatient drivers in the French capital, I got a glimpse of how advanced driver-assistance systems can make urban traffic safer and less exhausting. It also laid bare the challenge of fine-tuning systems for different locations. (…)

Trump Waives Most Russia Sanctions Passed by Congress The president signed an executive order to exempt Russia from most parts of a law he signed last month

• Brazen Russian Attacks Are Testing NATO

On Thursday, the North Atlantic Treaty Organization said drones had struck two ships in Romanian territorial waters of the Black Sea overnight. A third vessel was hit just outside Romania’s territorial waters, leaving seven crew members missing.

European authorities have accused Russia of targeting the ships, and four other ships in nearby waters off Bulgaria days earlier. Romanian President Nicușor Dan and Bulgarian Prime Minister Rumen Radev on Thursday met with NATO Secretary-General Mark Rutte about the situation, but announced no responses. (…)

NATO’s military commanders “are doing exactly what they need to be doing at this time,” said U.S. Army Col. Martin O’Donnell, spokesman for the alliance’s top military leadership. “They are consulting.”

None of the recent incidents has reached the threshold of what NATO members consider to be acts of war, which creates a dilemma: How can Western countries compel Russia to stop provocative, illegal actions—without going to war?

Diplomats increasingly fear what is known as a boiling-frog situation, where Russia gradually gets bolder and NATO’s public grows inured, normalizing or ignoring incessant aggression.

“Obviously there are some attempts by Russia to…destabilize society, to reduce support for Ukraine,” Romania’s Dan said Thursday. “Our answer is we will continue to support Ukraine.” (…)

Attacks in the Black Sea follow months of airborne incursions into NATO territory by Russian warplanes, drones and missiles. Europeans have also accused Moscow of staging or provoking dozens of acts of sabotage and cyberespionage across the continent, showing a growing appetite for risk over recent months. German Chancellor Friedrich Merz accused Russia of attempting to attack planes at a Leipzig airport with explosive-laden drones in August and Dutch intelligence agencies accused Russia of hacking internet-connected video cameras to spy on European support for Ukraine. (…)

But as attacks linked to Russia become deadlier and occur inside NATO borders, ignoring them becomes impossible. Diplomats and military officials fear that Moscow’s provocations increase the risk of its war in Ukraine triggering a wider military clash with NATO, even if through accidental escalations that quickly spiral. (…)

Some analysts also worry that unchecked Russian boldness could tempt it into uncharted areas of aggression. On Thursday, a Russian satellite, Cosmos 2612, was on a trajectory to approach a U.S.-registered satellite that delivers sensitive information to support Ukraine’s war efforts, according to commercial satellite data. This has raised the prospect of Moscow targeting commercial satellites and taking its sabotage campaign against the West for the first time into space, said researchers at the Center for Strategic and International Studies, a think tank in Washington.

No worries, Trump is taking care of business.

So is Putin.

• Russia Is Using an Army of Bots to Push Fake US Election Videos

Are we sleepwalking into World War III?

Gideon Rachman is the FT’s chief foreign affairs commentator.

(…) “I can’t believe we’re having this conversation in the 21st century.” (…)

Mark Rutte, Nato’s secretary-general, warned European leaders in 2025: “We are Russia’s next target . . . and we must be prepared for the scale of war our grandparents or great-grandparents endured.”

The fear that a global conflict may be brewing extends well beyond Europe. Xi Jinping consistently warns of the dangers of the US and China falling into a “Thucydides Trap”.

The Chinese leader is picking up on a theory advanced by Graham Allison, a Harvard academic, that throughout history the dominant global power has tended to end up at war with the rising power. (…)

But could the Russia-Ukraine war turn into a truly global conflict? In the eyes of some of the participants, it already has. When North Korean troops arrived on the frontline to support the Russians in their fight against Ukraine, Zelenskyy called the development “the first step to a world war”.

The war between the US and Iran has also overlapped with the Ukrainian conflict. The Iranians are widely believed to have received assistance in targeting US bases in the Middle East from Russia. Ukraine, meanwhile, has offered its expertise in counter-drone warfare to the Gulf states.

Western security officials are increasingly worried about the close ties between an “axis of adversaries” centred around Russia, China, Iran and North Korea. (…)

The four countries of the axis are united by their discontent with the US-led world security order. Russia resents Nato expansion and wants to see the alliance pushed back. Iran has attacked US military bases across the Middle East. North Korea threatens South Korea, which relies on the US for protection. China claims Taiwan and most of the South China Sea as its territory — and seems intent on displacing the US as the dominant power in the Pacific.

Mark Rutte of Nato has frequently discussed the idea that China and Russia might launch co-ordinated military offensives in Asia and Europe at the same time. (…)

The Iran and Ukraine wars dominate the global headlines. But the International Crisis Group recently counted 65 ongoing conflicts around the world — the highest number since the end of the second world war. The conflict in Sudan, fuelled by outside powers, is particularly bloody — punctuated by massacres of civilians and the displacement of more than 14mn people. (…)

Russia’s all-out invasion of Ukraine did not emerge from nowhere; it was preceded by Russian military aggression against Georgia in 2008, as well as the annexation of Crimea in 2014 and military intervention in Syria in 2015. China meanwhile has constructed military bases on artificial islands it created in the South China Sea — and pushed the Philippines out of Scarborough Shoal, which is much closer to the Filipino coast than to China.

The emergence of a new generation of strongman leaders has contributed to this new atmosphere of international insecurity. Leaders such as Putin, Xi, Trump and Benjamin Netanyahu are nationalists and self-styled men of destiny. Asked from whom Putin was taking advice in the run-up to the full-scale invasion of Ukraine, Russian foreign minister Sergei Lavrov reportedly replied: “Ivan the Terrible, Peter the Great and Catherine the Great.”

In different ways, all these strongman leaders have embraced the idea of a “might makes right” world — and turned their back on the idea of a rules-based international order. Stephen Miller, Trump’s deputy chief of staff, gave a chilling summary of this view when he told an interviewer, “you can talk all you want about international niceties and everything else. But we live in a world, in the real world . . . that is governed by strength, that is governed by force, that is

The embrace of the idea of territorial annexation by the world’s major powers [including the US vs Greenland and Canada] — alongside the gleeful embrace of a “might makes right” philosophy — clearly increases the risk of international conflict.

There is a theory of peace, nonetheless, that lies behind some of Trump’s proclamations — as well as the territorial aspirations of Putin and Xi. This is the idea that great powers should be allowed to dominate a “sphere of influence” in their immediate neighbourhoods. Their smaller neighbours — such as Ukraine, Taiwan, Canada or Cuba — must accept the domination of the regional hegemon. What is more, if all great powers respect each other’s spheres of influence, then global peace can be maintained. (…)

It ignores the views and interests of neighbouring countries. Must Canada meekly submit to the will of Trump? Is it inevitable and right that democratic Taiwan must simply submit to China’s one-party state? As Russia has discovered in Ukraine, smaller countries have rights and agency and can put up a fight. (…)

The US is unlikely to accept the absorption of Taiwan into China, as long as the Taiwanese produce 90 per cent of the world’s most advanced semiconductors. The EU will never accept that member states such as Poland or Romania should be returned to Moscow’s orbit. (…)

By and large, deterrence — underpinned by the fear of nuclear war — worked. (…)

But Trump is clearly attracted to the idea that the US should retreat from its security commitments to its allies — whom, at various times, he has denounced as freeloaders and cowards. (…)

The final crises that led to the first and second world wars both involved alliance systems and security commitments that had lost credibility. In 1914, Britain had guaranteed the neutrality of Belgium but the German government believed that the UK would not go to war over a “scrap of paper” that had been signed in 1839. That was a miscalculation. In 1939, Britain and France extended a security guarantee to Poland in an attempt to deter the Nazis. But Hitler’s previous encounters with British and French leaders convinced him that they would back down again. He was wrong.

Today, Xi has to consider whether America’s Taiwan Relations Act — which commits the US to opposing the use of force against the island — still means something. Putin must make a similar calculation about Nato’s Article Five — which commits all 32 alliance members to defend each other. Is it still an ironclad commitment — or just another “scrap of paper?” 

These are the questions on which the peace of the world may depend.