Another Diesel 'Nothing Burger'
Inflation comes in hot... A 50/50 shot at another rate hike... Yields are testing their highs... Another 'nothing burger' White House diesel deal... AI startups' financials... There are better opportunities out there...
Inflation is running 'hot' again...
This morning, the Bureau of Labor Statistics released its consumer price index ("CPI") report for September.
Inflation rose 0.6% month over month and 3.7% from the same month last year. That means inflation has now been above the Federal Reserve's 2% annual target for 67 straight months.
As has been the case since the start of the Iran war, energy was the main culprit pushing prices higher. The energy component of the CPI rose 20.4% over the past 12 months, led by a 74% jump in fuel oil and a 34% increase in gasoline prices.
But even core CPI – which strips out energy and food prices – is accelerating... It was up 0.3% from August and 2.6% over the past 12 months. Both of those numbers came in above Wall Street expectations, with the annual core CPI reading its hottest since June.
As the Wall Street Journal's Nick Timiraos posted on the social platform X, the three-month annualized rate for core CPI hit 3.4% after this morning's report – up from an annualized rate of 2% in the three months ending in August.
Rate hikes are back on the table...
Coming into this morning's report, federal-funds futures traders put the odds of a rate hike at the Fed's October meeting at around 22%. Shortly after the report, they were pricing in a 50% chance of a rate hike – the highest since the "cool" personal consumption expenditures report two weeks ago.
That's not what investors want to see...
Both stocks and bonds sold off immediately after this morning's report. Futures for all three major U.S. stock indexes flipped from positive to negative, opening lower. And the 10-year Treasury yield rose back above 5.3%, testing its 24-year high set earlier this month.
While bond prices recovered throughout the day and yields ended up falling, the S&P 500 Index and Nasdaq Composite Index both fell more than 1%.
The White House is still working to lower diesel prices...
In the October 6 Digest, we wrote about the "small" answer to surging diesel fuel prices. Essentially, President Donald Trump signed an executive order letting farmers and truckers temporarily use "dyed" fuel without paying taxes or penalties.
But as we wrote last week...
Even with that tax relief, the average diesel price would be more than $6 per gallon, based on the AAA data. So, diesel fuel prices would still be up about 65% from the same time last year.
Now, we have another small answer to diesel prices...
In a Truth Social post on Friday, Trump announced a deal for Russia to supply the global energy market with 4.8 million metric tons of diesel fuel – equivalent to about 36 million barrels.
According to Trump, Russia will deliver 2.2 million barrels "immediately," 3.7 million barrels throughout November, and 7.5 million barrels "immediately thereafter." Russia will release the remaining 22.4 million barrels of diesel fuel "within a short period of time," depending on the condition of its diesel refineries. (Energy infrastructure has remained a target in the ongoing Russia-Ukraine war.)
But it's another 'nothing burger'...
According to the Energy Information Administration, the U.S. transportation sector uses about 2.95 million barrels of diesel fuel per day. Based on that consumption rate, the Russia deal will provide the U.S. with about 12 days' worth of diesel fuel.
And that's if its refineries don't get targeted by Ukraine. The International Energy Agency estimates that Russian diesel refining is down 30% from 2025 levels because of drone strikes on Russian refineries.
So the deal really only guarantees about 14 million barrels of fuel. That's between four and five days of diesel supply at 2025 consumption levels.
Meanwhile, diesel prices at the pump haven't moved at all...
According to AAA, diesel is averaging $6.30 at the pump – the same as it was before Trump's deal announcement. And it's still up 72% from the same day last year.
It's going to take a lot more than these two actions to bring down diesel prices. And that means fuel is going to put upward pressure on inflation until at least the March report – when we start to lap the impact of the start of the Iran war.
How much are AI companies really bringing in?...
Last week, the Financial Times caused a stir in the market by reporting that AI startup OpenAI's annualized revenue run rate is actually $50 billion, not the $68 billion that had previously been reported. Put simply, revenue run rate takes a company's short-term results (usually over a month or quarter) and annualizes it out over an entire year. So it can be a good measure of real money moving through AI products.
After the report, shares of AI bellwethers Nvidia (NVDA) and Oracle (ORCL) dropped sharply.
However, OpenAI's number wasn't wrong. It's simply a difference of what's included in the run rate...
The $50 billion revenue run rate only includes sales through OpenAI. But, according to CNBC, the $68 billion revenue rate includes revenue sharing from OpenAI's partners. CNBC added that OpenAI including revenue sharing in its run rate makes its financials more comparable to its chief competitor, Anthropic.
However, our colleague and Stansberry's Investment Advisory editor Whitney Tilson says OpenAI is still a "cash-burning furnace." Whitney has questioned if the company will ever follow through on its initial public offering ("IPO") plans.
And speaking of Anthropic, the company is hosting institutional investors at its headquarters this week to run through its third-quarter numbers. Anthropic is planning to hold its IPO next month, after delaying it twice. So the meeting this week may be one last attempt to drum up demand – or shake out any concerns over its financials – before Anthropic hits the public markets.
A battle for the 'most ridiculous' title...
Whitney believes Anthropic will also push back its IPO again. As he wrote in the September 25 edition of his free daily e-letter...
As of earlier this morning, real-money bettors on Kalshi think there's a 72% chance that Anthropic announces its IPO by the end of the year and an 89% chance before March 1, 2027. Shares would likely begin trading four to five months later.
I think the chances are somewhat lower. But ultimately, Anthropic will go public by mid-2027 – albeit at closer to a $1 trillion valuation than the $2 trillion that's being discussed today.
Whitney isn't the only one questioning Anthropic's $2 trillion target valuation. In a report last week, research firm New Constructs said that Anthropic would be the "most ridiculous IPO of 2026."
Anthropic and OpenAI may very well go through with their massive IPOs to raise capital. As Whitney says, that could keep the AI ecosystem churning, since the companies would have the capital to fuel their massive spending plans.
But there are better opportunities out there...
As our colleague and Market Maven editor Gabe Marshank explained in an all-new, free presentation, most IPOs are a "losing bet." As he went on to explain...
That sounds crazy, but the numbers prove it: the average IPO this year is underperforming the market.
But that's nothing new. In fact, over the past DECADE, the median IPO traded down from its first day close over the first year.
Gabe has identified a small group of stocks that can outperform both IPOs and the broader market.
You can learn more about these companies – as well as Gabe's five-part scorecard for finding these opportunities – in his presentation right here.
New 52-week highs (as of 10/13/26): Alpha Architect 1-3 Month Box Fund (BOXX), BP (BP), Hagerty (HGTY), Kimbell Royalty Partners (KRP), Marathon Petroleum (MPC), Microsoft (MSFT), Saturn Oil & Gas (SOIL.TO), Ternium (TX), Visa (V), Veeva Systems (VEEV), Valero Energy (VLO), State Street Energy Select Sector SPDR Fund (XLE), and ExxonMobil (XOM).
In today's mailbag, a question about the "cost of government debt" – stemming from us writing about how nearly 11% of U.S. government spending is going to interest payments on its debt... Do you have a comment or question? As always, e-mail us at feedback@stansberryresearch.com.
"Where do Japan, China, Russia, and S. Korea fall in the cost of government debt?" – Subscriber J.T.
Corey McLaughlin comment: Good question. I did some digging for answers... Russia is near the top, at about 9% of federal spending. Japan is around 11% of its budget and rising fast as yields climb, and South Korea and China are near 5%.
All the best,
Nick Koziol
Baltimore, Maryland
October 14, 2026