• Commodities: US oil prices crested well over $100 a barrel during the day amid fears that Middle East conflict could soon reignite. Gold prices also dropped to their lowest since July as energy prices added to inflation concerns.
• Stocks: The Dow slid as yesterday’s tech selloff moved towards other areas of the market, with consumer staples and healthcare among those seeing losses.
• Bonds: 10-year US Treasury yields hovered under 5% as traders sought safe haven from higher energy prices and worries about AI spending.

Consumer spending

Illustration: Morning Brew Inc., Photo: Adobe Stock

With the money that hedge-fund bros are dropping on Moncler jackets and Eurotrips to find themselves, it’s no wonder American Express is having a good year.

The premium credit card company reported record third-quarter revenue of $20.1 billion Friday, up 9% year-over-year, while profit jumped 28% to $3.71 billion. Card spending grew 8% to $454 billion, prompting AmEx to raise its full-year earnings outlook.

The company’s results offer another glimpse into the K-shaped economy, where affluent consumers continue splurging while lower-income households pull back with finances tight. AmEx’s well-heeled cardholders certainly aren’t holding back: Travel and entertainment spending jumped 10%, including a 13% increase on flights and 9% at restaurants.

A luxury paradox: But not every business catering to wealthy shoppers is cashing in. Citi’s credit card data showed US luxury purchases actually fell 6% year-over-year in September, while on Thursday Gucci parent Kering reported a 6% decline in comparable Gucci sales last quarter.

The divergence highlights how uneven spending has become, with luxury retail brands reliant on aspirational shoppers under particular pressure. Luxury firms like LVMH and Hermès are trading at their cheapest levels in a decade as the industry endures lackluster sales.

A tale of two wallets

That uneven spending is part of a much broader economic divide. The Federal Reserve’s latest Beige Book found that high-income households were driving consumer spending in more than half of its districts, while financially strained workers increasingly relied on retirement withdrawals and wage advances to make ends meet.

And while wealthier consumers are helping businesses keep sales growing, those gains aren’t necessarily translating into more jobs. Even AmEx, fresh off record revenue, disclosed plans to cut roughly 5% of its workforce, or about 3,500 positions, as part of a restructuring to “prepare for AI.” Barclays also announced roughly 5,000 job cuts this week, while eBay disclosed plans to eliminate about 1,000 positions.

A balancing act

On paper, the cuts could work in AmEx’s favor. CEO Stephen Squeri said the restructuring would free up resources for investment and innovation.

But investors were less enthusiastic, sending shares down 3.73% this afternoon. Revenue and card spending volumes both fell slightly short of expectations, raising questions about whether AmEx can sustain its growth. Still, Jefferies maintained its Hold rating and $330 price target, noting that the earnings beat benefited from lower-than-expected provisions for credit losses.

Whether AmEx’s cost-cutting strategy pays off remains to be seen. Fortunately for its credit cards, their hedge-fund clients are still finding ways to help maximize shareholder value, one questionable puffer coat at a time.—SY

      

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Stocks

🟢 What’s up

• SLB jumped 7.08% after beating quarterly earnings expectations, helped by recovering demand in the Middle East and growing momentum in its AI data center business.
• CrowdStrike rose 8.25% and Palo Alto Networks gained 7.22% as newly disclosed vulnerabilities in widely used PHP software raised demand for cybersecurity firms.
• SpaceX climbed 1.89% following a double upgrade from PhillipCapital to Buy from Sell, citing unexpectedly strong growth in its AI business.
• Robert Half surged 21.74% after reporting its first quarterly earnings growth since 2022, with profit per share rising 14% despite flat revenue.
• First Citizens BancShares rallied 8.15% on stronger-than-expected quarterly results and plans to repurchase up to $1.2 billion in stock.
• Crown Castle popped 9.06% and American Tower gained 4.08% on reports that SpaceX is in talks to secure access to 80,000 cell towers as it expands its wireless ambitions.

🔴 What’s down

• AT&T, Verizon, and T-Mobile US, meanwhile, fell 7.96%, 1.18%, and 7.71%, respectively, as SpaceX’s expansion plans raised concerns about growing competition from Starlink.
• Bloom Energy sank 11.24% after reporting negative quarterly free cash flow despite raising its full-year earnings outlook.
• Deckers Outdoor dropped 4.91% after the parent company of Ugg and Hoka cut its full-year revenue forecast.
• LKQ plunged 22.47% after ousting its CEO and warning of disappointing quarterly earnings.
• Infosys slipped 6.69% after trimming its fiscal 2027 revenue outlook and narrowly missing quarterly earnings expectations.

Stat of the day

The retirement number no one wants to know

Illustration: Morning Brew Inc., Photo: Adobe Stock

Everyone looks forward to retirement. But a shocking number of us are fuzzy on the math to get there.

In an Evergreen survey of 2,000 Americans ages 25 to 75, 42% of respondents said they’ve never calculated how much money they’ll need to retire—including nearly one-third who hope to kick back within 15 years.

The head-in-the-sand approach is understandable: Nobody wants a cold, hard number telling them just how far they are from a hammock on the beach. But procrastinating on retirement plans is like putting off a dentist appointment—the longer you wait, the more painful the reckoning can get.

A longer ways to Margaritaville

As for how much people think they need to retire, that number hovers at $1.2 million, according to 1,500 investors surveyed by asset manager Schroders. Still, even this is way less than what people have actually saved: About half of respondents say they’ll have under $500,000 saved by retirement, including roughly a quarter who will have under $250,000. Another survey by the National Institute of Retirement Security pegs the median nest egg at a mere $955.

Evergreen also found that nearly half of respondents asked an AI chatbot about their money in the past year. Among them, 77.8% acted on the answer, and 28.7% did so without checking with a human like a financial advisor. This worries Evergreen CEO Bill Harris, who warned, “Americans are desperately seeking financial guidance…the question is whether the tools they are using were built to deserve their trust.” 

Makes you wonder: Of all the money questions people are feeding ChatGPT, how many were brave enough to pop the big one: “How much do I need to retire?”—JD

Valuations

Illustration: Morning Brew Inc., Photo: Getty Images

Would you pay Equinox prices for a gym with one treadmill? Or penthouse rent for an apartment still under construction? AI investors are starting to ask why they should do the equivalent with IPOs.

SK Hynix shelved plans today for a US listing of its flash-memory unit Solidigm, which had been considering raising $10 billion to $15 billion at a valuation as high as $150 billion. The memory chipmaker blamed market conditions and share-price trends, while stressing that Solidigm’s growth prospects haven’t changed.

AI data-center demand is still driving memory prices higher, and SK Hynix has been benefiting from one of the strongest chip cycles in years. But that hasn’t been enough to make investors comfortable with every price tag attached to the boom.

Mind the markup

Australia’s Nvidia-backed Firmus learned that lesson earlier this month. The AI data-center operator scrapped its planned IPO after investor demand came in weaker than expected. Firmus had been seeking an equity valuation of about $30 billion, nearly triple what investors valued it at in a funding round just two months earlier.

That’s a pretty aggressive markup for a company with limited operating history and roughly $30 billion in debt.

And the gap between what sellers want and what buyers will pay is widening beyond AI. Renaissance Capital says the IPO market is increasingly stuck in a “valuation mismatch” after a strong second quarter encouraged companies to come to market with richer expectations.

Oura ran into a version of that problem in September. The smart-ring maker delayed its US IPO after marketing shares at a valuation above $13 billion. Oura’s deal was reportedly around five times oversubscribed, showing that plenty of demand doesn’t necessarily mean investors will accept the asking price.

Public markets want receipts

Through September, 83 traditional US IPOs raised more than $120 billion, according to PwC. But new listings have returned only about 2% on average this year, compared with a 12% gain for the S&P 500. AI infrastructure offerings have been among the weaker performers, just as investors have grown more focused on profitability, leverage, and whether companies can actually deliver the growth embedded in their valuations.

Even the biggest AI names are feeling some price pressure before they reach the public market. OpenAI has reportedly cut the valuation target for its latest funding round to $1.25 trillion from $1.4 trillion after weaker-than-expected investor demand—a key signal as it raises money ahead of a possible IPO next year.

For everyday investors, that makes the IPO market more than a sideshow. New listings help set the price investors are willing to pay for growth across an entire sector. If public buyers start demanding lower valuations from private AI companies, that could put pressure on the lofty multiples already attached to listed AI stocks, too.

AI demand hasn’t disappeared. Neither has the IPO pipeline. But after years when private investors helped companies name increasingly ambitious prices, public markets are reminding them that asking price and selling price are two very different things.—HC

      

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News

• The Treasury wants to further limit US investment in Chinese AI, biotech, and advanced chips, while leaving one pharma-friendly loophole.
• US officials say President Trump called Elon Musk personally asking him to lift restrictions on military-grade Starlink in Ukraine.
• Jane Street and Hudson River Trading are spending billions on AI infrastructure to stay ahead in Wall Street’s speed race.
• Apple’s $1,999 folding iPhone Duo finally hit stores today, although good luck getting one with the current state of long store lines.
• Fitness-racing group Hyrox expects 2.5 million participants next year as investors bet that sweating can become a global sports empire.
• A federal crackdown threatens the $1.5 billion THC-drink market, along with some very high-profile celebrity brands.

Calendar

Monday: Verizon leads the earnings lineup, while chip-design firm Cadence, AI hardware supplier Celestica, and chip-packaging specialist Amkor report across the tech sector. Real estate giants Welltower and Public Storage, steelmaker Nucor, and insurer Hartford also report.

Tuesday: AI hardware takes the spotlight with SK Hynix and Seagate reporting. Visa, HSBC, S&P Global, and Robinhood deliver financial-sector earnings, along with Coca-Cola, Boeing, Novartis, and UPS releasing reports. We’ll also hold our breath as the Fed kicks off its meeting to decide whether it will raise or maintain interest rates.

Wednesday: It’s a major day for the economy, with the Fed announcing its decision on interest rates. Microsoft and Alphabet headline Big Tech earnings, joined by software giant ServiceNow and chip-equipment maker KLA. GE Vernova, Vertiv, T-Mobile, Santander, UBS, Deutsche Bank, eBay, Garmin, Ford, Chipotle, and GSK also update earnings.

Thursday: More hot announcements come down with the advance GDP estimate for Q3, plus PCE and core PCE inflation. Amazon and Intel headline tech earnings, while Eli Lilly and Merck report from Big Pharma. Mastercard, Starbucks, Caterpillar, and energy giants Shell and TotalEnergies also release quarterly numbers.

Friday: The Employment Cost Index comes in. Coinbase and bitcoin heavyweight Strategy headline crypto earnings. Digital Realty, Monolithic Power Systems, Howmet Aerospace, L3Harris, D.R. Horton, Cheniere, Takeda, and Roblox also report.

recs

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♠️ Play these chips. Top strategists from Citi, BlackRock, and more weigh in on how to hedge your bets in the AI trade.

⭐ Musk’s SpaceX moonshot may be threatening internet providers, but these five telecom stock picks are poised to blast off anyway.

👾 Hackers could be coming for your iPhone. Here’s how to protect your money from new iOS threats.

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