Good Morning! Mamdani announced a rare profit-sharing deal that would see the New York City invest $30 million in an NYU quantum lab in exchange for 15% of proceeds. Inflation came in hotter than expected and BofA missed profit estimates on weak trading results while booking a $1.2 billion money-laundering penalty.

Tesla-SpaceX merger could be announced ahead of Tesla’s annual shareholder meeting in December, according to a Barclays analyst. Piper Sandler walked away from its acquisition of PWP over concerns senior bankers wouldn’t stick around. And Bending Spoons jumped 35% after Berkshire Hathaway made a $330 million investment.

Plus: Morgan Stanley’s wealth arm brought in a record haul from IPOs, with earnings of $5.8 billion versus $4.9 billion expected; and is reluctance to step into leadership a sign of maturity or a red flag?

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CoreWeave was supposed to be a straightforward way to play the AI boom. Every AI company needs computing power, and CoreWeave rents it to them. Bulls figured the company could borrow big, build fast, and grow into its bills, but bears are starting to wonder whether the bills will win. 

Shares fell around 15% Wednesday because concerns about its borrowing intensified. Yields on CoreWeave’s 2032 bonds approached 15%, and Chamath Palihapitiya even posted a chart highlighting the strain. Elon Musk replied with a one-word analysis: “Yikes.”

The excitement around CoreWeave wasn’t hard to understand because investors could get exposure to AI without betting whether ChatGPT or Claude would win. But supplying all that computing power means buying expensive chips and building data centers upfront. CoreWeave had more than $50 billion in outstanding debt at the end of June.

CEO Mike Intrator thinks investors are overreacting and told employees that markets can “misunderstand and act irrationally”. He pointed to a $104.2 billion revenue backlog and more than $25 billion in net new customer commitments during Q3. The bull case is that customers have already signed up, and the spending will pay off as more capacity comes online.

But bears aren’t convinced that a big backlog solves the cash problem. CoreWeave still has to deliver that capacity, as well as cover operating costs and pay interest before shareholders get their cut. And if construction runs late or borrowing gets harder, those customer commitments won’t necessarily cover the bills coming due today. In a bad enough scenario, the concern moves from disappointing profits to whether the company can meet its obligations.

Takeaway: Bulls thought CoreWeave could grow its way out of an enormous spending bill. But bears think it may need to borrow its way to that growth, and lenders are getting less accommodating. AI demand can keep booming while the companies supplying it struggle to make the math work. Being right about the technology doesn’t automatically mean being right about the stock.

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Description: In Cuckooland, investigative journalist Tom Burgis explores how the world's wealthiest and most powerful figures can manipulate truth, influence institutions, and shield themselves from accountability. Drawing on years of investigative reporting, Burgis follows money and influence across international corporations, former Soviet elites, political circles, and Western institutions. His investigation spans from Russia and Central Asia to the United Kingdom, exposing how legal systems, financial networks, and public relations can be used to shape what the world believes. At the center is a disturbing question: what happens when the powerful have enough money to determine not just what happens, but which version of reality everyone else is allowed to see? The result reads like a political thriller while examining the deeper connections between wealth, corruption, and control of information.

Book Length: 320 pages
Release Date: June 4, 2024

Ideal For: Investors, finance professionals, journalists, and readers interested in oligarchs, geopolitical risk, financial corruption, media manipulation, and the relationship between money and political power.

When wealth can influence the institutions that establish truth, controlling the narrative becomes another form of power.

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On January 28, 1986, the space shuttle Challenger launched at about 36 degrees Fahrenheit, far colder than any previous launch. Engineers at the company that built the rocket boosters had recommended against flying the night before. Seventy-three seconds after liftoff, the shuttle broke apart and all seven crew members were killed.

The O-ring seals that failed had been damaged on earlier flights too. Each time the shuttle came home, so the damage was reclassified as acceptable. The sociologist Diane Vaughan named the pattern normalization of deviance: a standard slips, nothing bad happens, and the slip becomes the new standard.

“It worked last time” is not evidence that something is safe. It may only mean you got away with it. Write down the original standard, and make anyone who wants to bend it say so out loud to someone with the authority to say no.

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