The Fed waits for more inflation data... Oil's eight-day winning streak could mean new 2026 highs for crude... Musk's neocloud warning... Where the credit market is starting to break... Did you miss today's event?...
The Federal Reserve held interest rates this month...
This afternoon, the Fed concluded its latest two-day policy meeting... leaving the federal-funds rate in a range of 3.75% to 4%.
Just two voters – Cleveland Fed President Beth Hammack and Governor Lisa Cook – voted to raise rates by 25 basis points (0.25%).
In a statement announcing the move, the Fed noted that "inflation remains elevated," but not enough to warrant a second consecutive rate hike. The Fed said that "the accumulation of more information" will help it make the right decisions to bring inflation down to its 2% target.
We won't have to wait long for more data...
Tomorrow morning, the Bureau of Economic Analysis will release personal consumption expenditures ("PCE") inflation data for the month of September. And in two weeks, we'll get consumer price index ("CPI") data for the month of October from the Bureau of Labor Statistics.
The Cleveland Fed's Inflation Nowcast expects both of those readings to come in above 3.5%.
As for Fed Chair Kevin Warsh's press conference...
Warsh reiterated that the Fed is committed to price stability, adding that the inflation side of the Fed's mandate was the focus of the October policy meeting.
He added that the Fed must make sure that upward inflation pressure in sectors like energy doesn't broaden out to the rest of the economy.
The "bomb" came when Warsh said that, starting in the fall of 2027, the Fed will only have seven meetings where it votes on policy (versus eight currently).
Warsh said that the Fed will still have eight meetings, but one of those will be focused on policy strategy. And in 2028, Warsh said that the Fed will only have six voting meetings and two meetings focused on strategy.
Stocks spiked during the early part of Warsh's press conference, and all three U.S. indexes hit intraday highs today. That's a change from the previous three meetings...
As Bespoke Investment highlighted on social platform X today, the S&P 500 Index has fallen by an average of more than 1% on previous Fed decision days under Warsh. A lot of those losses have come after Warsh begins speaking at 2:30. But investors liked what they heard from both the Fed and Warsh today. The index ended the day up 0.3%.
Oil's October surge could mean higher prices...
Earlier this month, West Texas Intermediate ("WTI") crude surged 17% between October 7 and October 19. Oil was up all eight days during that period.
As our colleague and DailyWealth Trader editor Chris Igou explained on Monday, oil's recent winning streak means higher prices are on the way. From the October 26 DailyWealth Trader...
It turns out, rallies like this are a bullish indicator for the next year.
For 35 years, buying oil after similar setups crushes a buy-and-hold strategy. Check it out...
Oil has big boom-and-bust cycles. But over the long run, investors eke out a mild gain of 3.6% a year. That's not worth all of the drama that can come in the oil market. But you can do better by being long after a hot streak like this.
Similar eight-day rallies have led to gains of 2.4% in one month, 1% in three months, 6.3% in six months, and 12.6% over a year.
WTI crude ended its recent streak at about $103 per barrel. Based on the historical return, crude could rise as high as $116 per barrel over the next year. That would be higher than the three-and-a-half-year high it hit in the early days of the Iran conflict in April.
And energy markets are going to continue to be volatile...
In the October 8 Digest, just one day into oil's winning streak, we wrote that "Iran war risk" was ramping up again. That has continued... with President Donald Trump recently telling a rally in Texas that the Iran war will end "whenever [he wants] it to end."
Trump has previously said that the U.S. will hold off on any more strikes in Iran until after the midterm elections. With that deadline coming next week, the "Iran war risk" may ratchet up to a new level. So buckle up for more volatility.
Elon Musk's AI warning...
In a post on X over the weekend, Tesla (TSLA) and SpaceX (SPCX) CEO Elon Musk raised concerns about capital drying up in the AI space.
We've written before about big AI names like Nvidia (NVDA), Alphabet (GOOGL), Meta Platforms (META), and Microsoft (MSFT) taking on massive amounts of debt to fund AI investments. These companies all have stellar credit ratings because of the strength of their core businesses.
But as Musk wrote, "debt markets have almost entirely shut off access to money for any company that doesn't have substantial revenue independent of AI data centers." That means smaller companies will have a hard time funding their AI-infrastructure investments.
According to Musk, more than 200 neoclouds – companies that rent out AI chips to developers – are at risk of going out of business. And Musk isn't the only one sounding the alarm on these companies.
As we wrote in the October 22 Digest...
According to Gartner, as much as $3.5 trillion of AI-infrastructure spending could be exposed to write-downs by 2030 if AI software doesn't prove profitable enough. The firm warned that more than 80% of "neocloud providers" may not survive as independent businesses by 2030.
Those fears are showing up in neocloud stocks... CoreWeave (CRWV) and Nebius (NBIS) are both down more than 25% over the past month. And Iren (IREN) is down about 35% over the same period.
So far, the largest cracks in the credit market are contained to one area...
In the portfolio update of the most recent Credit Opportunities issue, editor Mike DiBiase highlighted issues popping up at the bottom of the credit-ratings ladder. These companies "tend to be smaller and much more exposed to inflation and a weakening economy," Mike says. So investors command a higher interest rate on their debt. And right now, rates are soaring. From Mike...
CCC- and lower-rated bonds are now yielding nearly 18% on average. They yield 13.1 percentage points more than similar-duration Treasurys. That's the highest spread since the immediate aftermath of the pandemic in 2020.
This is a troubling sign that could spread to other credit tiers. When the low end of corporate debt begins to crack, other parts usually buckle.
According to Mike, the issues haven't spread to other parts of the credit market yet. But he's keeping an eye on "B"-rated bonds – which make up more than a third of the high-yield bond market. For example, CoreWeave's debt, which we wrote about earlier this month, is currently rated B+.
More from Mike...
B-rated bonds yield 8.1% today, less than half that of CCC- and lower-rated bonds. That kind of difference isn't normal. It could easily set off a contagion that spreads to other parts of the bond market if it persists.
As for the entire "junk" bond market, high-yield credit spreads rose to 340 basis points last week (and sit at 318 basis points today). That was the highest level since March, but still not at the level of 550 basis points that Mike believes will trigger a wider credit crisis.
We've been writing about issues going on in the credit market for a while. And now that the AI ecosystem is starting to see some cracks in its credit, it seems like markets are waking up to the broader credit crunch.
Credit Opportunities subscribers and Alliance members can read Mike's latest issue, including his brand-new recommendation, here.
In case you missed today's 'AI Super Chip' event...
This morning, Stansberry's Investment Advisory editor Whitney Tilson and Silicon Valley veteran Jeff Brown, founder of our corporate affiliate Brownstone Research, went live with their all-new, free presentation detailing the AI boom.
During the event, Jeff and Whitney spoke about a development that could soon transform the entire AI sector and overall market... create a new set of winners and losers... and even spark the next market crash...
It all has to do with an AI "Super Chip" that is 50 times faster than Nvidia's. It's powerful enough to potentially usher in a generational new order in the markets while delivering 1,000% gains for some stocks... and crushing some "old world" leaders of the past decade.
Jeff and Whitney revealed their No. 1 place to move your money now to take advantage of this seismic change.
If you missed today's special presentation, you can watch a replay of the event right here.
New 52-week highs (as of 10/27/26): Amgen (AMGN), Abercrombie & Fitch (ANF), Alpha Architect 1-3 Month Box Fund (BOXX), Commvault Systems (CVLT), Exelixis (EXEL), Forum Energy Technologies (FET), Gilead Sciences (GILD), GitLab (GTLB), Lonza (LZAGY), Qualys (QLYS), and Waters (WAT).
Have a comment or question? As always, send your notes to feedback@stansberryresearch.com.
All the best,
Nick Koziol
Baltimore, Maryland
October 28, 2026
