The government reopens, but no CPI… another $50 billion toward data centers… the next big trade within AI… where we’re seeing cracks in the rally
An important inflation report didn’t show up today – and it’s throwing fuel on an already tense interest-rate debate.
After a record-breaking 43-day shutdown, Washington reopened last night. However, the data disruptions mean the October CPI report will be delayed until mid-December.
Without it, the market is split down the middle on whether the Fed will cut rates or hold steady next month. More on this in a moment.
First, even though we didn’t get new CPI data this morning, that doesn’t stop Wall Street from guessing.
Here’s Barron’s:
Economists surveyed by FactSet estimate that inflation rose 0.2% over the month, translating to a gain of 3% year over year…
October’s projected price growth would be a touch slower than the 0.3% month-over-month rate in September, though it would match September’s annual pace of 3%…
Core inflation, which also rose by 3% year over year in September, is expected to remain at that pace in October as well. [It’s] expected to rise 0.3% month over month in October, an acceleration from September’s 0.2% monthly pace.
The real question: Did inflation improve enough to cement expectations for another cut in December?
On one side, the doves argue that restrictive policy has already done its job and real rates are too high. They’d support a quarter-point cut – and in Fed Governor Stephen Miran’s case, a half-point.
On the other side, several regional Fed presidents have said the Fed shouldn’t risk reigniting inflation while shelter and services inflation remains sticky. They prefer a pause.
Wall Street traders are equally split.
As you can see below, the CME Group’s FedWatch Tool puts 53% odds on a quarter-point cut with a 47% likelihood that the Fed holds rates steady.
Let’s go to legendary investor Louis Navellier for his take.
From Tuesday’s Flash Alert in Growth Investor:
I’m still expecting a Fed rate cut in December.
I know bond yields have backed up just a tad, but all you need is some bad job numbers and the Fed will react.
They didn’t want to say what they’d do in December because the government shutdown was disrupting some of the economic data, but they should be cutting in December – and that’ll give the stock market another little boost…
Later in the update, Louis provides a bullish forecast for the remainder of the year, ultimately telling his listeners:
So, hang on. Don’t worry about the gyrations.
Any dip is a buying opportunity.
Louis’ bullish call lines up with a powerful secular force that continues to accelerate beneath the surface – the AI infrastructure buildout.
Speaking of which…
Yesterday, Anthropic announced plans to invest $50 billion in new data centers in Texas and New York
It’s just another illustration of the breakneck pace at which we’re building out AI infrastructure.
Here’s CEO Dario Amodei on what’s driving the expansion:
We’re getting closer to AI that can accelerate scientific discovery and help solve complex problems in ways that weren’t possible before.
Realizing that potential requires infrastructure that can support continued development at the frontier.
These sites will help us build more capable AI systems that can drive those breakthroughs, while creating American jobs.
This announcement follows a wave of AI-related infrastructure deals, including OpenAI’s $1.4 trillion pipeline of data center and energy commitments. And it reinforces a theme we’ve been hammering for months here in the Digest…
The AI infrastructure buildout isn’t just a tech story. It’s one of the most powerful wealth-creation trends in today’s market, comparable to the rise of the internet or the early smartphone era.
Behind every new model or breakthrough, enormous demand for energy, chips, cooling systems, and data capacity follows. And the companies providing that backbone are quietly becoming the biggest beneficiaries of the AI revolution.
Now, there are many ways to play this. A few include…
- Broad infrastructure ETFs like the Global X Data Center REITs & Digital Infrastructure ETF (VPN)…
- Energy suppliers like NextEra Energy (NEE) and Constellation Energy (CEG)…
- Or data center operators like Equinix (EQIX)…
But while these are good options, they don’t address an issue – and opportunity – that our technology expert Luke Lango from Innovation Investor just identified:
Improving energy infrastructure takes years; sometimes decades.
AI can’t wait.
And that’s where batteries enter the picture as the bridge between today’s strained grid and tomorrow’s digital economy.
Why batteries might be the next big AI trade
Massive, utility-scale battery packs installed onsite or near data centers can supply stable, instant power, allowing these facilities to come online years ahead of schedule and operate more efficiently once they do.
This next wave of energy storage could be the missing piece that accelerates the entire AI buildout while providing a new investment opportunity for investors.
Here’s Luke with one such opportunity:
Most batteries on the grid today are lithium-ion. But lithium-ion has limits: it’s expensive, it degrades quickly when cycled hard, and it’s not optimized for multi-hour storage.
Enter Eos Energy (EOSE).
Eos builds zinc-based batteries that are specifically designed for longer applications, between four and 10 hours. That’s the sweet spot for data centers…
The company has quietly amassed a multi-billion-dollar project pipeline. And if other data centers [move toward battery power], the AI Boom could pour gasoline on that fire.
By the way, a quick “congratulations” to Luke’s Breakout Trader subscribers.
They jumped into an EOSE trade in August and are already sitting on 124% gains.
Veteran trader Jonathan Rose just gave this trade a fresh nod of approval
Jonathan is the latest addition to our InvestorPlace family. He’s a veteran trader who earned his stripes at the Chicago Board Options Exchange, having earned more than $10 million throughout his career.
Today, he’s making a name for himself as one of the best trading teachers in our industry. If you’re a regular Digest reader, you’ve seen screenshots of Jonathan’s subscribers writing in to thank him for his teaching – and posting their triple-digit returns from his trades.
Here are a handful of examples of Jonathan’s official wins from recent months:
- 209% in 13 days – LYFT
- 275% in 25 days – ETHA
- 700% in 15 days – MP
- 227% in 49 days – Unity
- 534% in 3 days – MP
Jonathan and Luke often trade in the same spaces – the biggest investment trends driving the market. But while Luke tends to focus more on medium- and longer-term setups, Jonathan targets shorter-term trading profits. And his analysis just led to a bullish trade on EOSE.
From Jonathan’s Advanced Notice Trade Alert yesterday:
EOSE is a frequent flyer on our scanner and is seeing repeat, heavy call flow across several December expirations over the past two sessions.
Jonathan’s scanner is a screening tool he created that tracks the options market, looking for Unusual Options Activity (UOA).
The goal is to detect unusually large options trades – often the footprints of institutional players placing high-conviction bets.
Time and again, these trades have foreshadowed major price moves before they hit the mainstream radar. For traders who see them and position themselves accordingly, it can result in fast triple-digit trading returns.
Earlier this week, Jonathan went live with the biggest event since he joined InvestorPlace – The Profit Surge Event. He dove into greater detail about his UOA trading approach, and provided free stock picks that his system is flagging right now. You can catch a free replay right here.
In any case, take a look at EOSE – a dual stamp of approval from Jonathan and Luke is a ringing endorsement.
But not everything is bullish today…
Market breadth is one of the most important gauges of the stock market’s underlying health.
If you’re less familiar with it, breadth measures how many individual stocks are participating in a market move, typically by comparing the number of advancing stocks to declining ones.
When a rally is supported by strong breadth (most stocks are rising), it suggests the uptrend is broad-based and sustainable.
But when major indexes climb, yet only a handful of leaders are driving gains, it can signal underlying weakness. Narrow breadth often precedes pullbacks, as it reveals that investor enthusiasm is concentrated rather than widespread.
With that context, Goldman Sachs just reported that only 26% of stocks in the S&P 500 outperformed the index over the last three months. This is one of the worst market breadth readings since 2020.
When only 26% of stocks beat the index, it means the rally is running on fumes. Historically, readings this low have preceded volatility spikes.
Just a heads-up that this bull could be in for a breather – and with all three indexes down more than 1% as I write Thursday, it might have already started.
We’ll keep you updated here in the Digest.
Have a good evening,
Jeff Remsburg
