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Tomorrow we get the PPI report, and estimates are for it to rise by 0.3% m/m, down from 0.9% last month, with the y/y rate expected to remain at 3.3%. If the PPI stays unchanged on a y/y basis, I would be really surprised. Every Fed regional survey shows that prices paid measures have increased significantly this year, and historically, these surveys track inflation metrics extremely well. It would seem highly odd to me not to see producer prices reflect this in a more meaningful way than they have so far.
It would be surprising if the PPI index didn’t show some kind of uptick for inflation. Then again, this is the BLS—and today we learned that 911,000 fewer jobs were created than originally reported, marking the largest revision to non-farm payrolls ever on an absolute basis.
Meanwhile, Oracle didn’t report the most stellar quarter, yet the stock is up about 25% after hours because it signed three deals that boosted its performance obligations by roughly 359% to $455 billion. On the call, we learned the customers were none other than OpenAI (already known), Meta, and—interestingly—Nvidia.
Here’s where it gets puzzling: Nvidia sells GPUs to Oracle, and then Nvidia signs contracts to use Oracle’s data centers. So what—Oracle then buys more GPUs? At the same time, Meta continues to spend at an astonishing pace, as does OpenAI.
It feels like one big revolving door to me with all the same customers and suppliers. I could see if we saw big contracts for new players, but it’s all the same companies. I’m simply not smart enough to make sense of it—because it just doesn’t feel right.
-Mike
Glossary
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After Hours: Trading activity that occurs outside regular market hours, typically after the major U.S. exchanges close.
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BLS (Bureau of Labor Statistics): The U.S. government agency responsible for collecting and analyzing labor and economic data, including inflation and employment reports.
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Data Centers: Facilities housing computing and storage infrastructure used to deliver cloud and IT services.
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Fed Regional Survey: Economic surveys conducted by the twelve Federal Reserve Banks to gauge regional business conditions, including prices paid.
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GPU (Graphics Processing Unit): A specialized electronic circuit designed to accelerate processing, widely used in AI and high-performance computing.
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m/m (Month-over-Month): A comparison of a data point relative to the previous month.
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Non-Farm Payrolls: A monthly measure of U.S. employment that excludes farm workers, private household employees, and non-profit organization staff.
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Performance Obligations: Contracted commitments in financial reporting that represent promised goods or services yet to be delivered.
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PPI (Producer Price Index): A U.S. inflation measure tracking the average change in prices received by domestic producers for their goods and services.
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y/y (Year-over-Year): A comparison of a data point relative to the same month in the prior year.
Disclosure
This report contains independent commentary to be used for informational and educational purposes only. Michael Kramer is a member and investment adviser representative with Mott Capital Management. Mr. Kramer is not affiliated with this company and does not serve on the board of any related company that issued this stock. All opinions and analyses presented by Michael Kramer in this analysis or market report are solely Michael Kramer’s views. Readers should not treat any opinion, viewpoint, or prediction expressed by Michael Kramer as a specific solicitation or recommendation to buy or sell a particular security or follow a particular strategy. Michael Kramer’s analyses are based upon information and independent research that he considers reliable, but neither Michael Kramer nor Mott Capital Management guarantees its completeness or accuracy, and it should not be relied upon as such. Michael Kramer is not under any obligation to update or correct any information presented in his analyses. Mr. Kramer’s statements, guidance, and opinions are subject to change without notice. Past performance is not indicative of future results. Neither Michael Kramer nor Mott Capital Management guarantees any specific outcome or profit. You should be aware of the real risk of loss in following any strategy or investment commentary presented in this analysis. Strategies or investments discussed may fluctuate in price or value. Investments or strategies mentioned in this analysis may not be suitable for you. This material does not consider your particular investment objectives, financial situation, or needs and is not intended as a recommendation appropriate for you. You must make an independent decision regarding investments or strategies in this analysis. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Before acting on information in this analysis, you should consider whether it is suitable for your circumstances and strongly consider seeking advice from your own financial or investment adviser to determine the suitability of any investment.
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This report contains independent commentary to be used for informational and educational purposes only. Michael Kramer is a member and investment adviser representative with Mott Capital Management. Mr. Kramer is not affiliated with this company and does not serve on the board of any related company that issued this stock. All opinions and analyses presented by Michael Kramer in this analysis or market report are solely Michael Kramer’s views. Readers should not treat any opinion, viewpoint, or prediction expressed by Michael Kramer as a specific solicitation or recommendation to buy or sell a particular security or follow a particular strategy. Michael Kramer’s analyses are based upon information and independent research that he considers reliable, but neither Michael Kramer nor Mott Capital Management guarantees its completeness or accuracy, and it should not be relied upon as such. Michael Kramer is not under any obligation to update or correct any information presented in his analyses. Mr. Kramer’s statements, guidance, and opinions are subject to change without notice. Past performance is not indicative of future results. Neither Michael Kramer nor Mott Capital Management guarantees any specific outcome or profit. You should be aware of the real risk of loss in following any strategy or investment commentary presented in this analysis. Strategies or investments discussed may fluctuate in price or value. Investments or strategies mentioned in this analysis may not be suitable for you. This material does not consider your particular investment objectives, financial situation, or needs and is not intended as a recommendation appropriate for you. You must make an independent decision regarding investments or strategies in this analysis. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Before acting on information in this analysis, you should consider whether it is suitable for your circumstances and strongly consider seeking advice from your own financial or investment adviser to determine the suitability of any investment.