AI Money Got Pricier and Seoul Fell 5.5%, While Getty's Public Shareholders Get Nothing

5.46%.

Korea's Kospi fell 5.46% on Tuesday, its fifth straighÞt loss. Early on, a 5% drop in futures tripped a five-minute halt to program trading. Its two biggest chipmakers, Samsung and SK Hynix, fell 7% or more. Hong Kong rose 0.3%. Tuesday's drop followed a chip selloff in New York on Monday. Micron (MU) lost about 4% and SanDisk (SNDK) about 6%. Traders cited a Chinese rival's chip progress. One fund chief pointed to crowded bets and pricier money. The market most tied to memory chips fell hardest.

• Treasuries rallied as the cash market reopened. The 10-year yield was near 5.2% early Tuesday, off last week's 24-year high. On Kalshi early Tuesday, a December Fed hike traded near 74 cents.
• Brent settled at $106.65 on Monday, its highest close in more than two weeks. Early Tuesday it was near $104.60. Goldman Sachs now sees Brent at $90 in December.
• September CPI is out at 8:30 a.m. Wednesday. Forecasts call for core prices to rise 0.2% from August.
• The big banks opened earnings mixed. JPMorgan (JPM) missed, a rare one, on $5.57 a share against about $5.90 expected, as trading and investment-banking activity cooled from a strong second quarter. Wells Fargo (WFC) beat on profit but fell short on revenue. Goldman Sachs (GS) jumped 29% to its second-best revenue quarter ever, led by a 72% rise in equities. Citigroup is due later this morning. Dimon called the economy solid but flagged “sticky inflation, elevated asset prices, rising interest rates.” JPMorgan also cut back share buybacks, Dimon said, in line with its capital priorities.

AI's Builders Can Still Raise Money. It Is Costing Them More.

Last night, PMD said a sold-out order book counts for less if money is AI's limit. Broadcom's chief said two things on Monday. Capital "might be the biggest constraint," Hock Tan said. He also said, "There is more demand for compute infrastructure than we can supply." That could last through 2029, he said. Broadcom (AVGO) slipped about 2%. Ciena, which makes optical gear, fell about 10%.

The cost of funding the AI build is rising. Firmus pulled its IPO last week. SoftBank paid as much as 9.75% on $4.5 billion of notes last month. On Tuesday, Tencent was selling dollar and yuan bonds. Its first price talk on 10-year dollar notes implied a yield of about 6.35%. The final price was due later in the day.

The IMF warned Tuesday that "the consequences of an AI correction could be global."

Money Is Choosing, and Suppliers May Feel It First

For owners of AI parts makers, Tan did not doubt demand. He said money might be the limit. If money gets choosier, orders could slip or be redone before any are canceled. No supplier has reported a change in orders. ASML on Wednesday and TSMC on Thursday are the first reads.

SIGNAL 1: Getty's Owners Will Take It Private, and Public Holders Get Nothing. Bumble's Reported Price Is About a Year of Sales.

Getty Images' founding family and Koch's investment arm are set to own all of it. They plan to put in up to $533 million, through a prearranged bankruptcy. The common stock would get nothing. It fell about 68% Monday, to about a penny and a half.

A tech holding firm is in advanced talks to buy Bumble (BMBL), a person familiar said. The price, about $1 billion, is roughly one year of last year's revenue. Bumble was worth about $14 billion after its first day of trading in 2021. The shares jumped about 50% Monday. The market still valued it below the reported price.

What resolves this

Getty's bankruptcy filing should show what the new company is worth and how the owners split it. For Bumble, a signed deal would show whether $1 billion includes its debt.

SIGNAL 2: The IMF Raised Its Growth Forecast. It Leans on AI Spending and Cheaper Oil.

The IMF now sees world growth of 3.1% this year, up a tenth of a point from July. It assumes oil averages about $96 this year, and that Hormuz reopens by March. Brent is well above that. AI investment offsets much of the war's damage, the IMF said. A long Hormuz closure alone would have cut about 0.9 point from this year's growth. After offsets, the net hit is about 0.3 point.

The gains are narrow. Just 32 economies make up 95% of growth, down from 54 in April. Its chief economist said resilience "is reaching its limits."

What resolves this

Ships moving through Hormuz, or oil near the mid-$90s, would back the forecast. Fed Chair Kevin Warsh appears with the IMF's chief in Bangkok late Thursday, Eastern time.

SIGNAL 3: Chip-Stock Futures on Crypto Venues Lost More to Liquidations Than XRP.

Crypto exchanges wiped out about $803 million of borrowed bets in a day, CoinGlass data show. Most were bets on higher prices. Futures tied to SanDisk shares lost a bit more than those on XRP, about $19 million. Some exchanges now list such bets on U.S. stocks. Traders can hold them in the same account as bitcoin.

Bitcoin hit its low in the hour Seoul opened. Then it rose while Korean stocks kept falling. By about 6:40 a.m., it was near $83,200. U.S. bitcoin funds saw outflows Monday. Ether funds saw withdrawals for a 10th straight day.

What resolves this

Daily flows into U.S. spot bitcoin funds will show whether the rebound draws new buyers. Wednesday's CPI is the next test for leveraged bets.

• About six in 10 Americans oppose betting on election results, an Ipsos poll found. Most Democrats and Republicans oppose it, too. The midterms are three weeks away.
• A London court ruled that Chinese law governs claims to about 61,000 seized bitcoin. Some legal experts have said that could limit victims to their original losses plus interest. Much of the rest could stay with the British state.
• Service Properties Trust closed Monday below its price before a $2 billion cash bid for its hotels. Most of the bid's terms are not binding. It expires Friday.

Private Market Trends Driving Public Market Moves

Money has not left AI or the buyout trade. It is choosing, and it charges more.

The banks said it first Tuesday. JPMorgan’s clients pulled back on trading and deals, and the bank trimmed its own buybacks. Goldman’s money went where the action was, equities up 72%. That is the pattern down the line. AI’s builders can still borrow, at a higher price. In buyouts, whoever brings the cash sets the terms: at Getty, the owners who bring it keep the company and public holders get nothing; Bumble’s buyer may pay about a year of sales. If money keeps getting choosier, the IMF’s forecast feels it too, since AI spending props it up. Citi’s print and Tencent’s final price are the next reads.

On the calendar...