Meta Debuts New AI Devices, Oracle Falls After Data Center Construction Faces Delays

0:00public.com presents the rundown your daily market update in 10 minutes. My name is Zadeh Mani and today is Thursday, September 24th. In today's episode, we'll break down why the bond market just had one of its worst days in a year and a half. We'll also recap Meta's big event including new AR and VR glasses, and why Wall Street is so hyped about mute. Then stick around to the end of the show to find out why news about a data center delay are sending Oracle shares lower. We got a great show for you today. Let's go. The stock market took a dip on Tuesday, the S&P 500 fell 0.8 percent while the NASDAQ fell by 1.1 percent and it was basically because of the bond market. The bond market yesterday was making some wild moves. The 10 year treasury yield jumped 15 basis points to 5.11 percent, which is its highest level since July of 2007.

1:01The thing is, bond yields don't typically jump a tenth of a percentage point in one day. But that's what happened yesterday. In fact, it was the biggest one day jump since the Liberation Day tear of chaos back in April of last year. So, you know, we've been talking about rising bond yields for weeks now and it just continues to get worse. Yesterday there were multiple factors that caused the sudden spike in yields. The first factor was a business survey that nobody usually cares about, but this time Wall Street became obsessed with it because it showed the economy growing at its fastest pace in more than five years. Now, on one hand, that is great news, right? But it also means the Fed will likely keep hiking interest rates because the economy continues to grow so fast. In fact, Fed Governor Michael Barr literally said yesterday the Fed will probably need to raise rates further to get inflation back down to their 2 percent target. And that's why traders are now pricing in a roughly 70 percent chance of another quarter point hike at the October meeting. So, those were a couple of reasons driving yields higher, but then in the afternoon came

2:02the part that I think really spooked the bond market. The Treasury Department held a $70 billion auction of five-year notes, and the demand for that auction was pretty weak. Basically, the government tried to borrow money and investors weren't thrilled to lend it to them. So, that caused the bond market to panic yesterday. And by the way, this isn't just happening here in the US. Bond yields are rising all over the world. The average yield on global government debt is now basically 4 percent, which is its highest level since 2007. So, the bond market continues to tell us that the era of cheap money is over. And as you guys know, as yields keep moving higher, it's going to have a ripple effect across the economy. It's going to make more and more expensive, corporate borrowing more expensive, and it's going to impact stock valuations. And that's why I'm kind of surprised that stocks didn't take a bigger hit yesterday. I mean, I sure the NASDAQ was down more than 1 percent, which isn't great, but this was the worst day for government bonds in nearly a year and a half, and stocks didn't have a total meltdown. I think a part of that is equity investors don't want to just abandon the AI trade.

3:05It's just too hot to ignore. But the question moving forward is how much longer can a market rally last if yields keep climbing? Well, that stocks can keep going up even in a world of 5 percent yield, but I'm just a bit nervous that something could break. So we'll continue to keep an eye on the bond market and the stock market. Along with everything else happening, remember President Trump is meeting with Chinese President Chi today, so I'm sure there'll be some headlines coming out of that. We'll recap all that for you, so definitely get subscribed to the podcast if you haven't already, and tune in every day to stay in the loop. Let's run through some headlines. And we're talking meta again. I know we've talked a lot about meta this week, but I mean they are cooking right now. Meta just had their Meta Connect conference last night, and they showed off a ton of cool stuff and announced some updates to Meta Muse. Let's start with the hardware first. They announced a camera-free version of their Rayban smart glasses that only has speakers and a microphone. A lot of people these days are creeped out by these Meta smart glasses that have the cameras in them, so Meta made an audio-only version that starts at $349.

4:09The company said that audio was the most popular feature on their smart glasses anyways. People use it to listen to podcasts and take phone calls. They removed the cameras, made the glasses lighter, and extended the battery life to as much as 12 hours. And personally, I think it's a smart move, especially because they're going to be integrating AI into it, which I'll talk about in a second. Meta also announced new VR glasses, and I think these might be legit. You know, I've been a VR hater for a long time, but based on the demo that I saw, these glasses look like Apple Vision Pro, but in glasses forms, they're much lighter and cheaper. Meta said they'll cost $1300 when they launch Next Spring, which is almost a third of the price of the $3700 for the Vision Pro. And these are the first set of VR products that I actually might get, just based on the demos that I saw. Now, the weirdest announcement last night was something called the Muse Charm. This product basically looks like a Tamagatchee AI gadget with a screen, camera, speakers, microphones, and its own 5G connection, and it's built to have your personal Muse agent

5:11built in. Now personally, I'm not very bullish on this. You know, many companies have launched their personal AI companion devices in the past. I just personally don't get the use case for it. I would just rather use my phone if I wanted to use Muse. But I don't know, maybe Zuck is banking on millennial nostalgia at the Tamagatchee devices and hoping to sell these. Now speaking of Muse, Meta is putting Muse on everything. It's going to be available on all the devices that I just talked about. And might take away from the event last night, is Meta is pushing hard to turn Muse into a platform. They announced new integrations with retailers like Walmart, Best Buy Gap, and Sephora, and they're adding more connections every day. The long-term idea seems to be that instead of us opening an app and clicking around, we just tell our AI agents what to do, and it talks to the app directly to get stuff done. JP Morgan expects Meta to eventually make money by taking a commission on the stuff that Muse does for you and buys for you. In fact, Zuckerberg actually said that himself in his keynote address. I can see the vision, but I think it's going to take some time before people really change their behaviors on how they use their phones and interact with apps.

6:12But the market seems to be very hyped about Meta right now. They have a ton of momentum. JP Morgan want us far to say that they think that Muse could become the most widely used consumer AI app in the world. Right now that title belongs to ChatGPT. Meta stock is up around 3% today, and it's gone up more than 30% in the past month alone. About billions of dollars that Zug spent on hiring all the AI talent last summer, I guess it's starting to pay off now. Let's talk about some stocks making moves today. Shares of a construction company called Knife River are up 5% this morning, after the activist investor Starboard value took a big stake in the company and basically told the company to either fix themselves or sell it. Now Knife River isn't really a household name, honestly, it sounds like a name of a Netflix drama or maybe a casino in Oklahoma, but this company sells construction materials like Crush Stone and Sand and Gravel that goes into asphalt and concrete, and they also work as a contractor on infrastructure projects. While the stock has been struggling, it's down 30% on the year, so they became a target

7:15for Starboard to come in, and the market thinks the pressure from Starboard could turn things around. As a result, shares of the construction company are getting a nice boost this morning. Now on the flip side, shares of Darden are falling after the restaurant company reported mediocre earnings. Darden is the parent company of restaurants like Olive Garden and Longhorn Steakhouse, and their main problem right now is higher costs. The sales growth was decent last quarter revenues grew 5.1% to 3.2 billion dollars basically right in line with expectations, but total operating costs jumped 6.5% to 2.88 billion dollars as food, beverage, and labor costs increase. So even though Darden is selling more food, net income actually fell about 9% from a year ago to 233 million dollars. As a good news is that Darden did reaffirm their full year earnings outlook, so it wasn't a disaster earnings, but Wall Street clearly doesn't love seeing expenses grow faster than sales. As a result, shares of Darden are down around 5% this morning at the time of this recording.

8:16We got one more bonus loser today. Oracle shares are taking a dive this morning over some concerning news from Bloomberg about Oracle's massive AI data center project in New Mexico called Project Jupiter. Oracle sent what's called a force-major notice to the project's developer. Basically, it's a legal protection that Oracle could potentially use to delay payments to the developer as circumstances outside their control prevent the data center from opening in 2028 as originally planned. Now Oracle says that Project Jupiter is still on schedule and that it's fully committed to the project, but the project is running into some real problems. They're facing permanent setbacks and also a key natural gas pipeline that was supposed to supply the site has already been delayed by about 6 months. So Oracle could be looking for a legal way to get out of the deal and things keep going sideways and as a result Oracle stock is down about 4% this morning in reaction to the news. This is a great example of one of the main AI bear cases right now. It's really easy to announce these massive data center deals, but building these massive

9:19data centers is a whole other story. As some of you guys probably know, before I was a podcaster, I was a civil engineer and so I have some construction management experience and I'm telling you just from personal experience, like when you're in the field, it's not easy, especially for a project of this size. Let's wrap the show with a fun fact. Disney announced another round of price hikes yesterday for their streaming services. The ad free version of Disney Plus is going up 13% to $21.49 a month and Hulu without ads is also going to $21.49. When Disney Plus launched back in 2019, it cost just $7 a month. So in seven years, the price has more than tripled. In fact, this is now the sixth year in a row that Disney has raised streaming prices. And no, the reason that Disney is doing this is because of profitability. Disney had spent years losing billions of dollars on their streaming services, but that business has finally started to turn into a real profit center. The first quarter of Disney's entertainment division, which includes Disney Plus saw

10:20operating income jump 64% from a year ago. And by the way, Disney isn't the only company doing this Netflix, Peacock, Paramount Plus, HBO Max, pretty much everybody has been raising prices. So at this point, if you sign up for all these streaming services, it is more expensive than having cable back in the day. The good thing though with these streaming services is that it's much easier to cancel and restart whenever you want to. That was always the most annoying parts of cable was like trying to cancel cable TV. Like you had to call somebody, you had to sit on a hole for 30 minutes and then get transferred around. And then when you finally were able to cancel, you had to go drop the cable box at the store. And now you can cancel any streaming service in like 30 seconds and then re-subscribe the next month. So at least we have that going for us, but everything else is just a worst experience. Well alright guys, that's the rundown for today. Hope you guys enjoyed today's episode. Thank you guys so much for listening, watching and commenting. Shout out to Mike and V for all the work behind the scenes.

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