Frank’s GM

Tuesday was the worst day for markets since March’s banking crisis, with the Dow, Nasdaq and S&P all falling by between 1.1% and 1.6%. The drop represents strong continuation and further acceleration of last week’s weakness across the major stock indexes.

On Wednesday of last week, the Fed was defiant and resolute in its commitment to “higher for longer” interest rates. This posturing has started to enrage equity markets, which have begun to remind the Fed that the tail doesn’t wag the dog - and that the Fed is ultimately at the mercy of the market, and not the other way around.

We’ll see how long the selling persists, but I’m not expecting an immediate turnaround.

One final note: I’m getting married on Saturday, so there will be no newsletter on Friday or this upcoming Monday. It’s the first break we’ve taken since March!

Today’s newsletter is brought to you by The AI Tool Report. Please consider subscribing and opening their emails - it’ll directly support us at The BRRR. 👇

Market News

Microsoft Goes Nuclear for AI Domination

Microsoft aims to power its AI and cloud data centers with small modular nuclear reactors. This would provide the massive computing power needed for AI while pursuing carbon-free nuclear energy. Microsoft posted a job to lead the strategy for integrating small reactors, building on its investments in AI and nuclear fusion startups. The tech giant sees small nuclear as fitting with its sustainability goals, but many challenges remain. Uranium, anyone?

• Cost and Time Savings: Small modular reactors under 300 megawatts can be built in factories and shipped to plant sites, slashing construction time from over 5 years to 2-3 years. Capital costs are estimated to be $3-4 billion rather than over $10 billion.

• Carbon Reduction: Nuclear power generates 53% of America's carbon-free electricity. Microsoft sees small nuclear fitting with its goal of being carbon negative by 2030.

• Energy Resiliency: Small nuclear reactors can provide steady, always-on baseload power perfect for data centers. This limits reliance on variable wind and solar energy alone.

  Read more

Macro News

S&P and Nasdaq Scars Deepen

Stocks fell sharply yesterday with 10-year Treasury yields holding at multi-year highs, sparking concerns about prolonged high interest rates. However, dip buyers emerged Wednesday with yields retreating slightly, lifting megacap growth stocks in premarket trading. Though volatility persists with hawkish Fed projections, analysts hope the longer-term momentum remains positive.

• Government Shutdown Concerns: The Senate took steps Tuesday towards a bipartisan bill to avoid a shutdown, while the House pushed a Republican measure. Partisan gridlock has begun negatively impacting Wall Street's view of U.S. credit.

• Monthly Data Ahead: Investors await Q2 GDP figures this week along with the PCE price index and remarks from Fed Chair Powell to gauge policy direction. August durable goods orders rose unexpectedly, signaling business spending resilience early in Q3.

• Losses Mount: The S&P 500 and Nasdaq indexes are on track for their worst monthly losses this year, while all 3 major indexes eye their first quarterly declines in 2023 amid rate hike concerns.

  Read more

Today’s Reader Poll

For those of us wanting to travel next week (given it’s “Fall break” time of the school year for some), this gov’t shutdown may have repercussions even through the FAA. While we usually don’t support blank checks on spending, travel disruptions affect everyday Americans and point to more headaches down the road.

So we ask once more, given this evolving maelstrom…

Here are the results from Monday’s poll. Looks like we had more faith than those on Capitol Hill.

AI Art of The Day

Got feedback? Follow the writer on Twitter @frank_locascio and send a message.

The BRRR is meant for informational purposes only. It is not investment advice. Please consult with your investment, tax, or legal advisor before making any investment decisions.