Good morning — Lots of rumors today.

OpenAI and Nvidia are prepping a multibillion-dollar data center deal in the UK next week... rumored to coincide with Trump’s London trip.

Back home, word is Sam Altman has a plan to restructure OpenAI into a for-profit firm, handing its nonprofit arm an equity stake worth at least $100B.

Meanwhile, Paramount Skydance is circling Warner Bros. Discovery with an all-cash takeover bid that sent both stocks ripping.

On the macro side, 10-year Treasury yields briefly dipped below 4% for the first time in nearly half a year, and mortgage rates hit an 11-month low.

That’s despite a hot CPI, which effectively means one thing: markets are betting on deeper, faster cuts… but, interestingly, not on recession.

Even as jobless claims hit a near 4-year high at 263K and Moody’s Mark Zandi is now calling it a “jobs recession,” stocks are hovering near records with the Shiller P/E at its highest since 2000.

We’ll see how that no-inflation, no-recession, more-cuts scenario pans out.

Quote of the day 

Five things to know before opening bell

🎬📈 Media merger rumors send stocks ripping 

Paramount Skydance is reportedly lining up cash for an all-out takeover of Warner Bros. Discovery. No official offer has landed yet, but insiders say it’s imminent. In response, PSKY jumped 15% and WBD surged 29%. WBD is already splitting itself into two units (streaming and studios), but the Paramount Skydance bid would scoop up the whole lot.

💸 Fed bets fuel bond rally

Bonds popped yesterday as traders doubled down on rate-cut bets. 10-year Treasury yields dipped under 4% for the first time in nearly six months, and mortgage rates hit an 11-month low. The risk is that if stagflation fears ramp up, long-term yields could bounce right back up.

🛒 Consumer sentiment drops today

Michigan’s September sentiment survey lands today after August showed a 6% drop, including falling expectations for jobs and business conditions. Inflation expectations for the next year ticked higher to 4.8%. A New York Fed survey this week also showed confidence in finding a new job at a record low of 44.9%.

🔍 FTC turns up heat on chatbots

Meta, xAI, OpenAI, and Alphabet are all under FTC investigation over how their AI chatbots interact with minors. Regulators are probing design choices, monetization, and data collection practices amid growing concern over inappropriate conversations with kids. 

🕊️ Zurich dangles a golden olive branch 

Switzerland is reportedly offering to build a gold refinery in the U.S. to ease trade tensions after Trump slapped 39% tariffs on Swiss goods. Gold exports inflate Switzerland’s trade deficit with the U.S., and Zurich officials are keen to shrink it. Nothing is official yet, but talks are underway. Gold pulled back slightly overnight after brushing record highs earlier in the week, with bullion still above $3,673 an ounce.

🔥 CPI comes in hot

Yesterday’s inflation report was in line with economist forecasts, which is to say, not good...

📊 By the numbers:

• Consumer prices rose 2.9% annually in August, the highest since January and up 0.2 points from July

• Core CPI, stripping out food and energy, climbed 3.1%

The release followed a better-than-expected wholesale inflation print, but also underscored the toll Trump’s tariffs are taking on consumer prices.

Katy Stoves, investment manager at Mattoli Woods, pointed out that the “buffer inventories” companies built ahead of tariffs are now gone. 

“With the tariffs looking to be more permanent, companies now have cover to pass these rising costs onto consumers, rather than compressing margins,” she said.

🛒 Hitting shoppers where it hurts

The most painful squeeze showed up in the grocery aisle.

Supermarket prices jumped 0.6% month-over-month — the steepest increase in three years — and 2.7% annually, the biggest in two years.

Gasoline prices surged nearly 2%, erasing much of July’s sharp decline. Other pain points: used cars (+1% MoM), energy (+0.7%), and apparel (+0.5%).

✂️ Don’t count on a jumbo cut yet

With warning signs flashing across the economy, some traders had speculated the Fed might swing for a jumbo 50-plus basis-point cut next week. 

Yesterday’s CPI report makes that unlikely.

“The CPI, it’s still too firm. When [Fed officials] cut next week, they will not be cutting because we have good news on inflation. They’ll be cutting because we have bad news on employment,” said Claudia Sahm, chief economist at New Century Advisors.

🤖 AI boom, labor bust

Yesterday’s hot CPI wasn’t the only red flag. Weekly jobless claims jumped again, and the slowdown is starting to look more structural...

📊 By the numbers:

• Initial jobless claims hit 263,000 last week, the highest in nearly four years

• Economists had expected a slight drop from the prior week’s 236,000

• Continuing claims slipped below forecasts at 1.94M, but the trend is still weak

The latest data adds to a string of disappointing jobs reports and downward revisions. And according to two recent Fed surveys, businesses are already scaling back hiring because of AI.

🗣️ What the experts say

Real-world examples are piling up: chatbots replacing call centers, design tools edging out graphic artists. It’s starting to move the needle.

• Mark Zandi, chief economist at Moody’s, says the U.S. is already in a “jobs recession.”

• Rick Rieder, BlackRock’s chief investment officer of global fixed income, warned: “After you get the fiscal tailwind next year, I actually think the bigger issue is going to be putting enough people to work… If you strip healthcare out, you have negative job growth. We’re going to displace a lot of people from jobs.”

• Dario Amodei, CEO of Anthropic, didn’t mince words either: AI could deliver breakthroughs like curing cancer and 10% annual GDP growth — while leaving “20% of people without jobs.”

📌 The bottom line

Whether it’s the 6–7% job loss Goldman Sachs warned about last month or Amodei’s one-fifth doomsday scenario, one thing’s clear, the job market is slowing fast.

📉 Tariffs hit UPS and FedEx

The de minimis loophole is officially closed and delivery giants are feeling the pinch.

📉 The downgrades

Bank of America analyst Ken Hoexter cut ratings on both UPS and FedEx this week, dropping UPS from neutral to underperform and FedEx from buy to neutral. 

In his view, the end of the tariff exemption on goods under $800 is already diverting global shipping flows.

According to Hoexter, these companies had a “sizable” role in handling the roughly 4 million packages that used to enter the U.S. daily under the loophole. 

But with that provision gone, some of their biggest clients (Chinese ecom) are shutting off the tap.

“The removal of the de minimis exemption is expected to result in a muted air peak season in ’25, as the tight peak markets in ’23/’24 were driven by air demand from Chinese e-commerce players using the de minimis loophole.”

📦 The bigger picture

As we flagged earlier, U.S.-bound mail fell off a cliff at the end of August, down 81% in a single week, according to the Universal Postal Union.

Nearly 9 in 10 foreign postal operators say they’ve either cut back or stopped shipping to the States altogether.

For the past decade, anything under $800 has been tariff-free. Now that the loophole is gone, businesses and consumers are left holding the bag.

Whether that’s a net positive or negative is still up for debate. Trump’s camp points to a record $29.5B in tariff revenue last month as proof the strategy is paying off. 

But plenty of duties are still tied up in court, leaving the fate of both future and already-collected tariffs uncertain.

Even Bank of America’s Ken Hoexter admitted this isn’t necessarily set in stone. If prices cool and demand snaps back, UPS and FedEx could recover.

For now, though, they’re the latest casualties of the global supply chain rewiring.