The Signal Report
The through-line: Meta showed what AI spending costs, the US started preparing for more conflict with Iran, and money ran from tech stocks into bonds.
Meta's cash flow turned negative, and the Nasdaq fell 2.6%
What happened, plainly: Meta's revenue beat forecasts, up 26% to $64.6 billion, but it spent $34.9 billion on AI and data centres in the quarter, more than the $32.8 billion of cash its business brought in. Free cash flow was about minus $2.1 billion, reported as its first negative quarter since it listed in 2012 Fact · reported. It raised the bottom of its spending forecast to $135–145 billion this year, which implies $49–59 billion in the final quarter alone. It also announced a new class of shares with no voting rights Fact. Meta fell about 7%, and its default insurance hit another record Fact, cnbc. Tesla beat forecasts too, but fell about 3% Fact.
The Nasdaq fell 2.6% and the S&P 500 1.2%; the Dow was about flat Fact, cnbc. The 10-year Treasury yield dropped about 17 basis points to 4.97%, below 5% for the first time since 23 September Fact.
The read: Inference until now the AI debt worry was about smaller, heavily borrowed companies such as CoreWeave. Meta is one of the richest companies in the world, and this quarter its AI spending was larger than all the cash its business generated. When a company like that needs debt and new shares to fund the build-out, the question "who is paying, and for how long" applies to the biggest companies too. A nonvoting share class is a way to raise money without giving up control. The big fall in yields says investors were looking for safety, not betting on growth. On 6 October the 10-year was at 5.26%; it's now under 5%.
The US pulls diplomats out of Saudi Arabia; strikes reportedly planned for after the midterms
The State Department ordered non-emergency staff and families to leave Saudi Arabia, including the Riyadh embassy and consulates in Jeddah and Dhahran Fact. This came after attacks on an Aramco oil site and an eastern airport killed at least four people Fact, bloomberg. The New York Times, citing unnamed US officials, reports that the US and Israel have drawn up plans for renewed strikes on Iran after the 3 November midterms, described as "short but intensive" (as reported; unconfirmed by the government). Talks with Iran on its nuclear programme and the Strait of Hormuz are still going on. Trump accused Iran of inventing reports of ship attacks to push oil prices up Fact that he said it; the claim itself is disputed.
Brent was around $110–112, near its highest since May and about $6–8 below March's wartime peak of $118 Fact · reported. Tanker insurance now costs about 10% of the cargo's value, against about 3% before the war Fact · reported.
The read: Inference pulling diplomats out is something governments do before they expect things to get worse, not after. Combined with the reported post-election timing, the market now has a rough date for the next escalation. That keeps a floor under oil and keeps inflation risk alive just as the Fed meets next week.
Shares enter a bear market after a record 10-week fall
China's CSI 300 index is now 20% below its June high, which makes it a bear market. It has fallen for 10 straight weeks, its longest losing run on record, and is at a 15-month low Fact, cnbc. The reasons given are falling company profits from price wars, fading hopes of stimulus, and the same doubts about AI spending. Hong Kong and mainland shares led Asia lower. Analysts say state-backed buyers may have to step up their purchases Fact · reported.
The read: the AI worry is now global: Korea's KOSPI, Australia's NextDC, and China's main index all hit in one week. Inference China also has its own problem: competition is squeezing profits, and stimulus hasn't fixed that. Watch whether Beijing announces support before the end of the month.
ETFs bought $1 billion in three days, but Bitcoin couldn't hold $85,000
- Bitcoin ETFs took in about $1.08 billion over three days, including $528 million on Wednesday, and Ether ETFs ended a five-day run of outflows Fact.
- Bitcoin got close to $85,000, then fell back below $82,000 as Meta and Tesla rattled tech Fact. Traders who bet either way got caught out. It is sitting near $81,500, roughly the average price ETF buyers paid Fact · reported.
- China is asking a court to confiscate 61,800 BTC (about $5 billion) linked to a $5.7 billion fraud. The coins are held in Britain, and ownership is still before the UK courts Fact.
- Axios reported Visa is in talks to buy the crypto custody firm Fireblocks for about $2.5 billion. Fireblocks denied it Fact: both the report and the denial.
- SoFi launched a bank-issued, government-insured tokenised deposit that pays interest, aimed at crypto users Fact.
- A Circle shareholder sued Trump, World Liberty Financial and Steve Witkoff over profits from foreign crypto deals Fact · reported.
The read: Bitcoin is acting as part of the tech trade, not a hedge against it. When the Nasdaq fell 2.6%, it fell too, even with large ETF buying. Inference About $81,500, close to what ETF buyers paid on average, is the level that matters: below it, many of those buyers are losing money, and that tends to bring selling.
- US jobless claims are near their lowest since the 1960s. Companies are still not laying people off, even with hiring nearly flat.
- Barclays is cutting 5,000 jobs as part of an AI efficiency push.
- Japan's core inflation rose to 2.1%, its highest this year.
- OpenAI is reported to be close to raising up to $30 billion at a $1.25 trillion valuation, led by UAE investors. Separately, outside testers found weaknesses in its new monitoring system (as reported; detail is Argus's beat).
- Nvidia's Jensen Huang says demand from AI cloud companies like CoreWeave is "off the charts" but money to fund them is scarce, and he sees no sign of a memory-chip glut in 2029.
- The Pentagon banned US forces from using military information to bet on prediction markets.
- ISO 20022 standing watch: no change to the token basket. SoFi's tokenised deposit and the Visa–Fireblocks report are about bank settlement and custody, not basket tokens. Ethereum's proposal to make transactions final in about four minutes would make settling on Ethereum cheaper, but Ethereum isn't in the basket. Baseline holds (8 tokens).
- Moody's on France, today (Friday).
- The 10-year yield under 5%. Does it keep falling, which would mean investors expect a slowdown, or bounce back?
- Oil and the Saudi drawdown. Brent at $118 would match the wartime peak.
- The Fed, 27–28 October. Falling yields, low layoffs and oil-driven inflation all point different ways.
- Bitcoin at about $81,500, the ETF buyers' average price.
Meta's AI spending was larger than all the cash its business brought in last quarter, its first negative cash flow since it listed. The stock fell 7% and pulled the Nasdaq down 2.6%. Investors moved into bonds, and the 10-year Treasury yield fell below 5% for the first time in a month. The US ordered non-emergency diplomats out of Saudi Arabia after deadly attacks on an oil site, and the New York Times reports that strikes on Iran are being planned for after the 3 November midterms. Brent is near $110–112. China's main stock index entered a bear market after a record ten weeks of losses. Bitcoin ETFs bought over $1 billion in three days, but Bitcoin still fell back from near $85,000 to about $81,500. Watch Moody's on France today, oil, and the Fed next week.