Rising inflation is pressuring valuations, AI revenue remains strong
Daily Briefing 2026-10-15
This program provides general macro-market quantitative analysis and educational discussion for a general audience, not for any specific individual. The ETF directional judgments are quantitative model predictions of general market trends and do NOT constitute investment advice, an offer, solicitation, or personalized recommendation under the Ontario Securities Act or the securities laws of any other jurisdiction. Such judgments do not consider any viewer's personal risk tolerance, financial situation, investment objectives, or tax circumstances.
The system's quantitative judgments may contain errors, biases, or limitations; model outputs are not absolutely accurate. The market includes many factors the system cannot capture or predict. Any decision based on system output is made at the decision-maker's own risk.
Viewers should independently assess and judge risk based on their own financial situation, investment objectives, risk tolerance, and understanding of the markets and instruments discussed. Before any investment decision, please consult an investment advisor licensed in your jurisdiction. Investing carries risk; past performance does not guarantee future results.
On Wednesday (2026-10-14) US stocks fell: SPY down 1.08%, QQQ down 1.97%, down 0.98% and 3.80% respectively over the past 5 trading days — a clear broad-market pullback. The new development today is that US September CPI rose to 3.7% year-over-year, while AI companies’ revenue numbers remain strong; inflation and growth are pulling the market in opposite directions.
Inflation rising, AI growth story meets high rates
The Wednesday decline had a characteristic: the more elastic and higher-valuation assets fell harder. Semiconductor ETF SOXX fell 4.50% in a single day, CHPS fell 4.27%. Bitcoin-mining-related WGMI fell 10.67% in one day, BITQ fell 6.07%. Silver miners SIL fell 5.45%, SLV fell 6.11%. Capital rotated to defense: healthcare XLV rose 2.53%, consumer staples XLP rose 2.22%. This looks more like a market-wide de-risking rather than a single-sector problem.
The new data overnight was CPI. A quick report from The New York Times showed US September CPI up 3.7% year-over-year, with rising fuel prices the main driver. CPI is the Consumer Price Index, measuring how a basket of everyday expenses has increased. The Gulf conflict has kept oil prices high; Brent crude is around $107 per barrel. Oil first pushes up fuel, then seeps into overall prices — that chain found an anchor in today’s data.
If prices won’t come down, rates are hard to cut. As of October 14, the US 10-year Treasury yield was 5.19%, up 19 basis points over the past 20 trading days (1 basis point equals 0.01 percentage points). The 2-year yield was 4.82%, up 15 basis points over the past 20 trading days. The 10-year yield has fallen 8 basis points over the past 5 trading days, and TLT is up 2.26% over the past 5 days, but the one-month trend remains upward. No reports directly attributed Wednesday’s decline solely to this CPI release. Still, high rates combined with rising inflation put pressure on high-valuation assets.
News on the AI front runs the other way. The BBC reported that Anthropic disclosed to investors that revenue grew 45% in the three months through the end of September, reaching 168 hundred million USD, and the company is preparing to go public. This indicates AI demand is indeed turning into revenue. A Reuters commentary raised another concern in its headline: the AI investment boom may be masking cracks in the US economy. The logic behind such concerns is that if growth’s bright spots are concentrated in AI, once that pillar is stressed other weaknesses will be exposed.
The pressure has spilled overseas. Asian tech stocks were sold off in early Thursday trading, but after London opened the FTSE still rose slightly, showing that the tech pullback did not drag down all markets.
Linking the threads: rising fuel prices push up CPI, making rate cuts harder; tech valuations are the first to be hit; yet AI revenue growth remains real. Both sides have tangible evidence, so the market simultaneously buys defensive sectors and sells high-elasticity assets.
Other things worth knowing
UK economic data beat expectations. Monthly GDP outside the third quarter grew 0.1%, exceeding market forecasts, but headlines also noted rising fears of more rate hikes. Growth isn’t weak, yet rates may continue to rise — the UK situation resembles the US, with a globally elevated rate environment appearing across multiple markets.
In China, on October 15 Hangzhou released implementation details for the “8.28” real estate measures, following Beijing, Shanghai, Guangzhou, Wuhan, and Tianjin. The measures include supporting phased project development and staged completion filings, allowing the use of housing provident funds to pay for owner-occupied home renovations, increasing the upward adjustment ratio of provident fund loan limits for multi-child families, and supporting the introduction of home-purchase subsidies. Yan Yuejin of the E-House China R&D Institute believes this new policy combines medium- and long-term institutional construction — such as reforming existing-home sales and optimizing the provident fund system — with the immediate goal of stabilizing demand.
Tracking the oil shock
This supply shock is still ongoing. Tanker traffic through the Strait of Hormuz has averaged only 0.6 vessels per day over the past 7 days, roughly 1.3% of pre-conflict normal levels (as of October 11). The Brent spot-to-futures premium has averaged 21.6 dollars/barrel over the past 5 days, compared with 4.5 dollars a month ago. The diesel-to-crude spread has narrowed: the New York Harbor diesel spot premium to Brent spot has averaged 76.4 dollars/barrel over the past 5 days, versus 94.2 dollars a month ago.
Today’s logic: Revenues surged, so why did chip stocks fall so much?
Stock prices buy many years of future profits, not just today’s profits. As an analogy: the total rent from a rental property over the next ten years is fixed; the higher the bank rate, the lower the present value of that future rent. Most semiconductor companies’ profits are further out in the future; when rates rise, those distant profits are discounted more heavily. Also, good news is often priced in during the run-up.
Today’s example is SOXX. DRAM spot main contracts rose a total of 15.86%, storage demand is strong, and fundamentals are not bad. SOXX has already risen 11.70% during this window, yet fell 10.88% over the past 5 trading days and fell 4.50% on Wednesday alone. Over the same period the US 10-year Treasury yield rose 19 basis points over the past 20 trading days. Money also flowed out: since October 8, SOXX has seen net redemptions of about 312 million USD.
ETF Radar model view
First look at SOXX. SOXX fell 10.88% over the past 5 trading days (about a week). This move is directly related to today’s main themes: high rates and rising inflation suppress valuations, money has flowed out, and put-protection implied volatility (44.06%) in the options market is higher than call implied volatility (41.13%), showing the market is paying for downside protection. Looking ahead, the ETF Radar model’s 1–3 month directional judgment is mildly positive. The reasoning is DRAM spot gains and industry and regulator-level arguments that existing liability laws can address most AI risks, lowering the short-term probability of strict legislative limits on AI compute; cloud providers’ compute investment may continue. The big drop in the past week but a positive model outlook are not inconsistent: the model looks 1–3 months forward, so the short-term selloff isn’t fully reflected.
Next, QQQ. QQQ fell 3.80% over the past 5 trading days (about a week). ETF Radar’s judgment is mixed. On the bullish side, Nasdaq futures speculative net shorts shrank to 19,212 contracts, contracting by 5,511 contracts in a single week, indicating shorting pressure is easing. On the bearish side, QQQ has had net redemptions of about 4,227 million USD since September 28, equal to 0.85% of its assets, and option implied volatility sits at the 98th historical percentile, meaning the market is heavily pricing event risk. QQQ and SOXX are both part of the AI compute chain; today’s rate pressure affects both, so the model does not give a one-sided conclusion.
Finally SLV. SLV fell 6.69% over the past 5 trading days (about a week), with a single-day drop of 6.11% on Wednesday. This is related to today’s CPI: silver does not pay interest, so when inflation data is hot and rates are harder to cut, the opportunity cost of holding it rises. As of October 13, the US 10-year real yield (inflation-adjusted) was 2.88%, up 28 basis points over the past 20 trading days. CFTC positions show speculative silver long positions fell from 13,124 contracts to 7,528 contracts, at the low end of its own range. SLV still had net creations of 0.40% over the past 5 days, offering some support. The ETF Radar model’s 1–3 month directional view is mildly negative. The model also acknowledges some of the decline has already occurred and the path forward may not be a straight downtrend.
Summary
The new development today is US September CPI rising to 3.7% year-over-year; high rates have pressured tech and precious metals, while AI revenue continues to grow. Reminder: the above are directional predictions from systematic quantitative models for general markets and do not constitute personal investment advice; consult a licensed investment advisor before investing.