0915 | Yields at 2007 Highs, AI's Safety Split, and Oil on Edge

Mia: Good evening, and welcome to the after-market wrap. I'm Mia.

Milo: And I'm Milo. It was one of those sessions where everything seemed to point back to one number — the ten-year Treasury yield — so that's where we'll spend most of our time tonight. Then we'll get into the AI debate, what that means for AI-related investing, the Iran war and oil, some notable company news, and the political headlines with market relevance.

Mia: Let's start with the tape itself, because it was ugly. US stocks fell on Tuesday, with the Dow leading the declines, after the ten-year Treasury yield touched its highest level since 2007. We're talking above five percent — the first time in almost three years the ten-year has jumped above that threshold.

Milo: And the driver here is that traders are pricing in an interest rate hike from the Federal Reserve this week. The sell-off in government debt deepened as investors positioned ahead of the Fed decision on Wednesday, where an increase is expected.

Mia: So what changed: the ten-year yield hit roughly 19-year highs. Affected assets: stocks fell broadly, with the Dow diving, while bond prices sank. Why it matters: five and a quarter percent is, historically, an inflection point. That's the level where, historically, stocks and bonds have reinforced losses in one another — a regime shift toward higher volatility in both and wider credit spreads.

Milo: That's worth distinguishing carefully. The fact is the yield level and the stock decline. The interpretation — that this marks a regime change — is an analytical read, not something we know yet. But it's a serious one, because when stocks and bonds fall together, the classic diversification cushion investors rely on disappears.

Mia: Right, and CNBC's Jim Cramer framed the morning as headed for a slightly lower open, which is exactly how it played out. On the bond side, some commentators are actually finding a silver lining — the argument being that rising yields, while scary, mean the risk-reward in fixed income has improved after the surge from zero rates since Covid. One piece even suggested the beaten-up bond market may be nearing "escape velocity."

Milo: Meaning what, exactly?

Mia: Meaning that after years of near-zero yields, investors are finally being compensated for taking duration risk. That's interpretation, not fact — but it's a real counterweight to the doom narrative. And there's a notable voice on the market side: JPMorgan Asset Management's Priya Misra said on Bloomberg Brief that we may be nearing the end of the rate move. That's her view, not a certainty, but it's worth holding alongside the regime-shift argument.

Milo: There's also been actual policy controversy here. Treasury Secretary Scott Bessent defended the Treasury's recent intervention in the bond market at a contentious hearing, where Representative Jim Himes argued the government's actions distort free markets. Bessent was also facing questions on rising energy prices, government debt, and the broader Trump economic agenda. So you have a bond market in turmoil and the Treasury actively intervening — that's a live uncertainty going into tomorrow.

Mia: What to watch next: the Fed decision itself. A CNBC survey suggests this won't be one and done — respondents expect at least two hikes over the next year, with higher oil cited as a main reason, though roughly three-quarters see inflation as broader than just energy. Tomorrow's decision and the path it signals is the catalyst everything else hangs on.

Milo: And if rates stay higher for longer? Investing pros note that's typically dicey for stocks, but it means you can earn more on fixed income — the same tension we've been describing.

Mia: Before we leave the macro, one economic data point: the Census Bureau reported Americans' incomes rose and poverty fell in 2025. That lands at an awkward moment, though, because the Fed is weighing rate increases that could slow growth. Strong incomes are good news for consumers, but they don't make the Fed's job any easier.

Milo: There's also a historical curiosity in the mix — a piece arguing history won't help us understand Kevin Warsh, and why he might surprise tomorrow. So even the Fed-watchers are flagging uncertainty about what comes out of this meeting.

Mia: Speaking of inflation pressure — let's turn to oil, because it's one of the reasons the Fed's calculus got harder, and it has a direct market transmission.

Milo: The Iran war is now one of the most expensive things happening in the world economy. The Congressional Budget Office calculated the Defense Department's Iran war costs through August first at thirty-eight point one billion dollars — an average of two hundred forty-six million dollars per day over the first five months.

Mia: And the market impact is visible. US crude rose back above a hundred and four dollars a barrel as traders awaited updates on a Saudi pipeline outage. Iran-backed Houthi militants in Yemen carried out renewed strikes on Saudi Arabia this week, and strikes on Saudi infrastructure have driven oil prices soaring.

Milo: Analyst Stephen Schork explained that Iran is squeezing Middle East oil flows both east and west — expanded control of the region's oil — and he said the US strategic petroleum reserve will be drawn down, by November, to its operational limits. That's his assessment, but it's a striking one: the emergency buffer nearly empty going into a supply shock.

Mia: Meanwhile, Russia is on the other side of the trade. Russian crude shipments jumped the most since May as the Middle East war sent prices soaring. So one producer's crisis is another's export opportunity.

Milo: Some knock-on effects worth noting. In the Gulf, Amazon's AWS says it can't restore service to its Bahrain and UAE facilities six months after Iranian strikes — two data centers in the UAE were hit by drones in March. That's a reminder that the physical risks here reach into cloud infrastructure companies rely on.

Milo: And in Venezuela — a country caught in this wider conflict — the central bank is squeezing liquidity to support the bolivar as higher government spending tests the currency, and a close financial fixer for ousted president Nicolas Maduro, Saab, pleaded guilty in Miami to money laundering related to food-import contracts and oil sales that violated US sanctions.

Mia: What to watch: crude prices and that strategic reserve drawdown. The Fed survey already cites oil as a main reason for the hawkish shift, so the transmission from Riyadh and Tehran to the rate decision is direct.

Milo: Which connects neatly to the next subject — because the other big driver of both markets and policy right now is AI. And AI is officially a two-camp fight.

Mia: Here's the split. On one side: President Trump and Nvidia's CEO Jensen Huang, arguing the private sector can solve AI threats, that pacing the industry is a "false choice," and that US dominance over China in the fast-expanding industry is essential. On the other side: Anthropic's Dario Amodei, OpenAI's Sam Altman, and Elon Musk, urging safety checks and slower development.

Milo: The trigger was Amodei's essay, published just days before Dreamforce, urging the AI industry to slow the pace of model development. At Dreamforce itself, Huang and Amodei diverged publicly — Huang dismissing the fast-versus-slow framing as a false choice.

Mia: And note the irony here: the labs calling for mandatory safety checks — Anthropic and OpenAI — are being undercut by the very administration that could impose them. Trump's opposition to AI rules makes their calls for mandatory checks politically dead on arrival for now.

Milo: Yet the critics aren't just tech executives. At a Future of Life Institute event in Washington on Tuesday, figures ranging from Bernie Sanders to Steve Bannon urged regulatory action to rein in the technology — while Congress and the Trump administration idle. When Sanders and Bannon agree, you know the anxiety crosses every political line.

Mia: The AI pioneers themselves have weighed in — the so-called godfathers of the field responding to concerns from Anthropic and OpenAI researchers over existential safety risks. And there's a possible coordination path: OpenAI, Google, and Anthropic are discussing collaboration on AI safety issues, with talks ongoing since Google's Demis Hassabis released a proposal in July calling for a US-led standards body.

Milo: Even Musk, despite being in the slowdown camp, has a market-friendly proposal — he urged the top AI labs and Chinese companies to peer-review each other's models before public release, as a way to evaluate safety. So the practical debate is less about whether to assess safety and more about who does it and whether it's mandatory.

Mia: For investors, the relevant uncertainty is regulatory: whether Washington imposes anything, or whether the industry polices itself. That's unresolved, and the two-camp divide makes it harder to predict.

Milo: Which brings us to what all this means for the money in AI — because the investment narrative has genuinely shifted.

Mia: Michael Santoli's framing captures it: the youthful phase of AI is over. The narrative has flipped to a focus on risk, with the technology unpopular with the public, and projections of order backlogs beyond a few quarters now regarded as suspect.

Milo: And the bears are getting louder. George Noble, managing partner at Noble Capital Advisors and a former Fidelity fund manager, said AI will be the biggest misallocation in history. Note the correction on that headline — the quote is "biggest misallocation in history," and it's his opinion, but it comes from someone who's watched capital cycles for decades.

Mia: There's a genuine dilemma for tech executives here, and it's worth spelling out. They've plowed hundreds of billions of dollars into AI. They're keen to telegraph their safety concerns — but they're trying to calm people down without spooking investors and customers. That tension showed up in the market: Digital Realty and Equinix, two of the largest data center REITs, saw their stocks slump after warnings over AI advancements.

Milo: But Digital Realty's CEO pushed back, saying a potential AI slowdown is not the "end of the world" for data center real estate. That's a company with a stake, so weigh it accordingly — but it's a direct management response to a direct stock reaction.

Mia: And connect this back to our first topic: President Trump dismissed AI fears as a "hoax" on the same day the ten-year hit 2007 highs. So the AI skepticism narrative and the rate shock hit risk assets at the same time. The big unknown is how much capital expenditure actually gets cut next — nobody in the source material has an answer to that, and it's the number that would settle the misallocation debate one way or the other.

Milo: From the macro and AI stories, let's move to individual companies — several of which had real catalysts today.

Mia: Start with Ford. The company is increasing V-8 engine availability and lowering performance prices for the 2027 F-150 trucks. Ford said the changes are meant to give customers more choice and help expand sales of key models — a strategy CEO Jim Farley has touted. For investors, it's a demand-side play on the F-150, their key product, though the sales impact won't show until the 2027 model year.

Milo: In robotics, Agility Robotics unveiled Digit 5, a new humanoid designed to safely work alongside people without the physical barriers earlier models required. CEO Peggy Johnson discussed taking on more complex warehouse and manufacturing tasks as Agility looks to expand beyond the nine customer facilities it operates in today — and how AI can accelerate the timeline for Digit 5 to learn new skills. Agility is private, but it's a read on how fast the warehouse automation sector is moving.

Mia: Now crypto, which took a direct hit today. The Senate cloture vote on the Clarity Act failed Tuesday, dealing a regulatory blow to the industry's push for a comprehensive market framework.

Milo: And the market reaction was immediate: crypto stocks like Coinbase fell on the session. Cathie Wood's ARK sold more than sixty million dollars worth of Coinbase, Bullish, Circle, and ARK's Bitcoin ETF ahead of the vote. That's a reported action by a major holder — interpret it how you will, but the direction of travel in crypto equities was clearly down.

Mia: It ties into the broader debasement theme, too. With Treasuries sinking and the dollar falling this year, Bitcoin and gold have been touted as hedges against currency debasement — but that trade is splitting, with gold and Bitcoin bets diverging. So even the alternative-asset crowd isn't united.

Milo: One more crypto-adjacent story with longer legs: the AMC-Robinhood feud. Five years after Adam Aron and Vlad Tenev became defining figures of the meme-stock boom, they're clashing over who gets to create a tradable, blockchain-based version of a public company's stock. That's a structural question about tokenized equities — no immediate price move reported, but worth tracking.

Mia: And a genuine feel-good number to close the company section: Nike co-founder Phil Knight is donating one point one billion dollars to Providence St. Vincent Medical Center in Oregon, supporting the creation of an all-women's hospital and advancing cardiovascular care across the state.

Milo: From companies to Washington and the world — a few items with varying market relevance.

Mia: First, the Kennedy Center. President Trump says it will stay closed without renovation unless his name is added back. This comes four months after the same judge ordered the Center could not be renamed to include Trump's name.

Mia: Mostly a cultural-political story, but it's part of the same pattern we saw with the Supreme Court: Trump blasted his three appointees for blocking a Postal Service rule that would have allowed mail-in ballots in November's elections, calling it a "big loss for Republicans."

Milo: Election mechanics matter for markets, so the mail-ballot ruling is the one to note there. Meanwhile, Mitch McConnell returned to the Senate after a three-month health absence — the eighty-four-year-old Kentucky Republican was out after a fall, hospitalization, pneumonia, and weeks of rehabilitation. Senate arithmetic in a closely divided body makes his return relevant.

Mia: A few tax and consumer items. The Trump Account program has a December thirty-first contribution deadline, and employers can complicate the math — they can offer benefits via direct contributions or by letting workers make pre-tax contributions to a child's account. On mortgages, lenders working with Fannie Mae and Freddie Mac now have the green light to use VantageScore 4.0 if they choose — an evolution in credit scoring that homebuyers should know about.

Milo: In travel — which connects back to the inflation story — airfares, gas, and hotel prices were all up this summer, but Americans traveled anyway. If fall looks like summer, costs stay high and people keep spending. And at the very top end, the new airport luxury is a five-thousand-dollar private lounge for flying commercial — massages, private suites, a chauffeur to your plane. Premium travel demand is clearly intact.

Mia: Internationally: the Dutch government will propose a capital gains levy next year, bringing the Netherlands in line with most of Europe on wealth taxation. Canada's Prime Minister Mark Carney is expanding a major investment tax write-off, adding oil and gas pipelines, oil production equipment, mining property, and more to immediate expensing eligibility. And Germany's Chancellor Friedrich Merz promised drivers relief on surging gas prices, pledging action on "price gouging" by suppliers.

Milo: Mexico is facing a harder problem — losing the tourists who spend the most, with visits from high-spending travelers to its beach destinations decelerating. The country is betting on China to reactivate growth, and it's another worrying signal for a struggling economy.

Mia: Two legal and corporate disputes before we wrap. Radiant World Group and Sapphire Minmetals have sued Glencore in Singapore for two billion dollars in damages, according to a senior executive. Glencore, for its part, accuses Radiant World and associated companies of sending falsified invoices to lenders — so both sides are alleging wrongdoing, and the truth is unresolved.

Mia: Separately, a federal judge dealt a setback to Susquehanna International Group's insider-trading lawsuit, denying a request to keep the alleged traders' accounts frozen — calling the case into doubt.

Milo: And in deal news, Brookfield is nearing a recapitalization of Center Parcs valuing the British holiday park operator at about six billion dollars. Brightshore Capital — formerly GTIS Partners — also launched its first real estate debt investment platform with an initial two hundred fifty million dollars, at a time when homebuilders' financing needs are mounting.

Mia: So let's pull it together. The single most important thing tomorrow is the Fed decision, against a ten-year yield at 2007 highs above five percent and a stock market already reflecting a possible regime shift in stock-bond correlation.

Milo: Layered on top: oil above a hundred and four dollars from the Iran war, which is itself feeding the Fed's inflation problem; an AI sector caught between safety fears and a capital-expenditure reckoning; crypto equities down after the Clarity Act failed; and a Treasury Secretary defending intervention in the very bond market causing the trouble.

Mia: The honest uncertainties: whether the rate move is ending, as JPMorgan's Priya Misra suggests, or just beginning; how much AI capex gets cut; and whether Washington does anything on AI at all. We'll be watching all of it.

Milo: Thanks for listening — we'll see you tomorrow, after the Fed has its say.