The Overnight RateThree moves
The Fed. The Fed held its target range at 3.75% to 4.00% on Wednesday, but two voters, Lisa Cook and Beth Hammack, wanted a quarter-point hike (Federal Reserve). The statement said activity is expanding “at a strong pace” and that “inflation remains elevated.” Kalshi had a December hike at 79% at 3:37 a.m. ET, up from 73% before the meeting (Kalshi). Yesterday we said those odds would climb if the statement leaned on fuel. It didn’t name fuel, and they climbed anyway. Then again, ten members still voted to wait, and the post-meeting statement made no promise about the next move. Our view: two hawkish dissents mean December is half argued already.
Credit. Oracle told investors it will raise no more than $20 billion of new money from markets through fiscal 2030, $10 billion in stock and $10 billion in debt, excluding refinancing (Oracle). That comes after a $20 billion at-the-market stock sale finished in its fiscal first quarter. Capex peaks in fiscal 2027 and 2028, and free cash flow turns positive in the back half of fiscal 2028. The plan names vendor financing, customer-provided hardware and prepayments as ways to cut upfront cash. To be fair, Oracle counts vendor financing as debt in its target of net debt below 3.5 times adjusted EBITDA. We think a cap on bond sales moves part of the bill to suppliers and customers.
Jobs. ServiceNow grew third-quarter revenue 20.5% to $4.106 billion, with subscriptions at $3.988 billion, while severance costs rose to $87 million from $24 million (ServiceNow via SEC). On the call, finance chief Gina Mastantuono said internal AI tools are worth more than $1 billion a year, “we’re able to not hire as many people,” and sales operations is “down significantly.” Chief executive Bill McDermott said total headcount “has actually slightly declined” (Investing.com transcript). The flip side: she said quota-carrying sales staff are up by double digits. Our read is that back-office roles absorb AI savings first.
What could move prices
Amazon reports after Thursday’s close, with its call at 5:00 p.m. ET (Amazon). Microsoft set the bar Wednesday: $39.4 billion of property and equipment spending in one quarter, double the $19.4 billion a year earlier, against $58.0 billion of operating cash (Microsoft via SEC). If Amazon’s spending outruns its cash, the AI funding worry spreads past Oracle. If cash covers it, that worry stays narrow and Oracle-shaped.
The calendar
The Bureau of Economic Analysis releases its advance estimate of third-quarter GDP and September personal income and outlays, which carries the PCE price index, at 8:30 a.m. ET (BEA). It is the last full read on spending and prices before the Fed’s December meeting. A hot inflation print would make 79% December odds look cheap.
Who pays: the device buyer
Samsung says server demand “led to higher market prices across all applications” for memory (Samsung). Its chip division earned KRW 106.5 trillion of operating profit on KRW 147.1 trillion of revenue, while the division selling phones, TVs and appliances lost KRW 0.8 trillion. Every laptop and phone needs memory, and AI servers outbid them. Samsung plans about KRW 84.4 trillion of 2026 capex, but new fabs take years. Microsoft’s Windows OEM and devices revenue fell 22% (Microsoft via SEC). We think PC makers raise prices or skimp on memory.
Net net: when data centers bid up chips, the household buyer pays more for the same machine.
Also moving
- Fed schedule: Chair Warsh said one of eight FOMC meetings in 2027 will cover strategy only, with no rate vote or statement, and he expects two such meetings in 2028 (Federal Reserve).
- Cloud backlog: Microsoft’s commercial remaining performance obligation rose 73% to $677 billion, and Azure revenue rose 48% to $33.2 billion (Microsoft via SEC).
- Buybacks: Samsung expects KRW 90 to 110 trillion of shareholder returns for 2026, with KRW 55 to 75 trillion still to go, including a substantial share repurchase and cancellation program (Samsung).