Last Wednesday’s CPI report was the second hot inflation print in a row. If you’ve been investing for the last three years, the environment you got used to is changing. Here’s what happened, where it’s likely headed, and how to think about it. September CPI came in at 3.7% year over year, above the 3.6% economists expected. Month over month, prices rose 0.6%. Most of that jump is energy. Oil crossed $100 on Friday as fighting around the Strait of Hormuz escalated. But the Fed can’t do anything about oil prices. Raising rates doesn’t make tankers move faster. So the Fed watches core inflation instead, which strips out food and energy. Core CPI rose to 2.6% from 2.4%, also above forecast. That doesn’t sound like much until you look at the recent trend. Over the last three months, core has been running at a 3.4% annualized pace, up from 2% in August. That’s the part that matters. It means expensive energy is leaking into everything else: shipping costs, services, rent. When inflation spreads like that, it gets sticky. Gas prices can fall in a week. Rent and wages don’t. One more number worth knowing: inflation has outpaced wage growth for six straight months. Most people are getting poorer in real terms, even if their paycheck went up. The Fed already raised rates in September, its first hike in over three years, to a range of 3.75% to 4%. The question now is when the next one comes, not if. As of last week, markets were pricing roughly a one-in-three chance of another hike at the October 28 meeting and around 80% for December. A lot of analysts think the Fed waits until December to avoid moving a week before the midterms. If oil stays above $100, the November CPI will likely run hot too, and December gets close to locked in. A stock or bond is worth what it will pay you in the future, discounted back to today. When rates rise, that discount gets bigger, so future money is worth less right now. That hits hardest on assets whose value sits far in the future: long-term bonds and expensive growth stocks, especially ones that need to borrow to grow. Companies with profits today, or that sell something priced off inflation (like energy), hold up better. You saw this play out last week. The Nasdaq had its worst week since June while energy stocks went up. Same market, same news, opposite reactions.

The biggest IPO in history could hit the market before Thanksgiving. Anthropic, the company behind Claude, starts pitching investors the week of November 9, at a valuation of up to $2 trillion. Trading could start before November 26. Here’s what the numbers actually say, according to Reuters, which reviewed a draft of the company’s filing. The full filing (the S-1) isn’t public yet, so treat everything below as reported, not official. 1. The growth In 2025, revenue grew 12x to about $4.6 billion. Then in Q2 of this year, Anthropic made about $11.5 billion in a single quarter. That’s more than all of 2025, in three months. Nothing this size has grown this fast. That growth curve is the entire pitch. 2. The turnaround In 2025, Anthropic lost about $8 billion running the business. By Q2 this year, it reported a positive adjusted operating income. One thing to watch: “adjusted” means a non-GAAP number, where the company decides what to leave out. The official accounting picture could still show a loss. We won’t know until the S-1 goes public. 3. The risks Two things stood out to me. First, the compute bill. Anthropic has committed about $518 billion to cloud and data centers over the next decade. The biggest pieces go to Google, Amazon and Microsoft, and about 80% of it can’t be cancelled. If growth slows, that bill doesn’t shrink. Second, customer concentration. Nearly a quarter of 2025 revenue came from just two customers. Losing one would hurt. 4. Would I buy? The case for: the fastest growth at this scale we’ve ever seen, and the business is already profitable on an operating basis. The case against: at $2 trillion, you’re paying for years of perfect execution. You’re not buying the company’s past. You’re buying a story about its future, at a price someone else already set. What I’m watching next - The public S-1, especially the GAAP numbers behind that “adjusted” profit - Whether the timeline holds; it has already moved twice - How much of the $518 billion is locked in no matter what

Last Friday, the US jobs report came out, and it was bad. Economists expected 84,000 new jobs in September. The actual number was 29,000. August had 162,000. The S&P 500 went up 0.74% that day. The Nasdaq hit a new all-time high. The Fed has been raising interest rates to fight inflation. Higher rates make borrowing more expensive, which slows the economy down and (eventually) cools prices. So the Fed is watching for one thing: signs the economy is slowing. A weak jobs report is exactly that signal. That's why traders read Friday's number as good news. Before the report, the market priced in roughly a 70% chance of another rate hike at the October meeting. After the report, plus a comment from the New York Fed's John Williams that there was no rush to hike again, that dropped to about 43%. It wasn't just jobs, either. Job openings came in below expectations, and consumer confidence dropped sharply. The whole picture points to a cooling economy. . A stock's value is basically what the market thinks all its future profits are worth today. When rates are high, money in the future is worth less in today's terms, so companies whose big profits are years away get hit hardest. That's tech. So when hike odds dropped, tech jumped the most. The Nasdaq is now up three weeks in a row, while the Dow actually finished the week down 1.3%. The part most people are missing Rates didn't fall. The 10-year Treasury yield closed the week at 5.26%, near its highest level in about 20 years, and it's up half a percentage point in just a month. The market didn't get good news. It got less-bad news. Fewer people now expect rates to go higher, but nobody is expecting them to come down soon. There are also some warning signs underneath. Inflation pressure in manufacturing jumped last month, which gives the Fed a reason to keep hiking anyway. And the extra yield investors demand to hold risky corporate bonds has widened seven times in a row, while stocks sit near record highs. When bonds and stocks disagree like that, someone is usually wrong.

Most people watch stocks. Not many watch bonds. But if you want to understand why the market sometimes drops for no obvious reason, bonds are usually where the answer is. Stocks and bonds compete for the same money When bonds pay 1%, nobody really wants them. Investors put their money into stocks because there's no better option. When bonds pay 4 or 5% with almost no risk, that changes. Now a safe asset is paying you a solid return, and stocks have to work harder to justify the risk. The way they do that is by getting cheaper. That's why the stock market can fall even when companies are reporting good numbers. Higher yields make money expensive Bond yields also set the cost of borrowing. When they go up, companies pay more on their debt and people take out fewer mortgages and car loans. Less spending means lower profits, and lower profits mean lower stock prices. Not all rising yields are the same If yields rise because the economy is strong, stocks can usually handle it. The dangerous version is when yields rise because investors are nervous about government debt or inflation. In that case, stocks and bonds can fall at the same time, and the usual "bonds protect you when stocks drop" idea stops working. What I'd watch - The 10-year Treasury yield, especially sharp moves - Credit spreads, which is the gap between what companies and the government pay to borrow. When it widens, trouble is often coming. - Weak demand at Treasury auctions The takeaway: the bond market sets the price of money, and every other asset gets priced off it. If you only watch stocks, you're missing half the picture.

Last Wednesday, the Fed raised interest rates by a quarter point, to 3.75%–4.00%. It's the first hike in three years, and the vote was unanimous. The surprising part: Kevin Warsh, the Fed chair Trump hand-picked earlier this year to bring rates down, voted for it. Why the Fed hiked Inflation is stuck. Prices are up 3.4% from a year ago, and inflation has been above the Fed's 2% target for five straight years. A big driver is oil. The conflict with Iran has kept energy prices high, and that feeds into almost everything else we buy. Warsh's explanation was simple: inflation is too high and has been for too long. Raising rates makes borrowing more expensive. When loans cost more, people and businesses spend less. Less spending is supposed to bring prices down. It's the Fed's main tool, and it's a blunt one. This is the part worth studying. The hike itself barely moved stocks, because everyone expected it. Stocks only sold off once Warsh started talking and hinted that more hikes could be coming. The 10-year Treasury yield pushed up near 5%, its highest level since 2007. Then on Thursday, stocks bounced right back. Oil got cheaper, bond yields came down, and chip stocks led the rally. What investors should take from this 1. Markets react to surprises, not news. The hike was already priced in. What nobody knew was how tough Warsh would sound. If you're trading on headlines, you're usually trading on information the market already has. 2. First reactions are often wrong. In 24 hours, Wall Street went from "the Fed is scaring us" to "good, the Fed is serious about inflation." Anyone who panic-sold on Wednesday sold into a one-day dip. 3. Watch what's actually driving inflation. Thursday's rebound didn't come from the Fed. It came from cheaper oil. If you want a clue about where rates go next, energy prices will tell you more than any press conference.