Supermicro Rips on Order Backlog, OpenAI Model 'Goes Rogue' In Marketing Stunt

[00:00:04]All right.

[00:00:05]Good morning everybody.

[00:00:09][music] Good morning all you magnificent melon heads of the world. Happy Wednesday everybody. Today is July 22nd, 2026 and our top story this morning. First off, we've got Super Micro. I just love talking about this company. Um, and and by love talking about this company, I mean I really can't stand this company and I love to see what a train wreck it is on most days. But this happens every time. Every time this company gets caught doing something illegal or some crime, a month later, a week later, they put out a press release and these AI bros just pump the stock like crazy and they pile in. And today is no different.

[00:00:51]Super Micro is ripping this morning after they released a press release yesterday that said their order backlog had risen to $60 billion uh ostensibly because they signed a big deal with SpaceX to supply AI servers for a data center even though SpaceX has already tacitly admitted that they built too many data centers and that's why they're renting out their Colossus data center to Entropic. That's a whole other issues altogether. Uh but $60 billion worth of order backlog and we see this the same thing Oracle does. They love to talk about things like remaining performance obligations. This isn't revenue. This isn't earnings. This is just order backlog. All right. Maybe it'll take them a year. Maybe it'll take them 10 years. It's a pointless statistic, but everybody is harping on it this morning. The stock is up double digits. Also, interestingly, their margins are increasing. They're saying they expect margins of 15 to 17%. that is substantially higher than the 8.2 to 8.4% margins that they had previously guided to. U I suspect the secret ingredient is crime. Uh but also interestingly enough buried in this press release was they came out with their revenue guidance and they said that they expect revenue in this next quarter that they're going to report in about two weeks here that they expect their revenue will come in at the lower end of prior guidance. And that that's kind of a a really lousy period on a very hyperbolic statement like oh my god the order backlog's so big our mer margins are exploding and then our revenue is at the lower end of our guidance. One of these things is not like the other. Anyways we've seen this before. Super Micro pumps their stock with press releases and announces big orders and then the founder gets indicted or there's a short report for their accounting fraud or their other accounting fraud or their office gets raided in Taiwan and three people get hauled away in handcuffs for using haird dryers to peel the labels off their servers and mislabeled them so they can snip ship them into China in violation of US export controls. All kinds of fraud going on at this company, but the stock is ripping this morning because the AI bros will buy anything you put in front of them. Also going on this morning is OpenAI is saying that their latest model, their latest and greatest, which hasn't been released yet, that it has, and I quote, gone rogue and hacked Hugging Face. Uh, coincidentally, it it hacked the competition. Hugging Face is an open- source AI platform. Open AI, the big closed source one. So, what's going on? They're claiming that this model escaped the sandbox, that they created a test environment and they told it to escape the test environment and do something bad and it did it. And they're like, "Oh my god, this is an unprecedented cyber threat." And of course, it's Open AI that's saying that, right? Have you ever seen a company when they have like this massive disaster because of their own product doing something it's not supposed to and then they're like, "Oh, let's put that in a press release and slap it on the front page of every newspaper in the country.

[00:03:50]Let's get our spokespeople to really push that message out." No. Why? Because this wasn't an accident. Because this is marketing is what this is. All these articles in Bloomberg and Wall Street Journal today and CNBC about Open AI going rogue, it's a commercial.

[00:04:04]Anthropic did the same freaking thing.

[00:04:07]You guys remember Mythos? Do you remember all the articles about how dangerous Mythos was and oh my god, we need to stop Skynet before it's built and send somebody back in time to destroy it. Maybe I accentuated a little bit there or elaborated. What's the word I'm looking? Yeah, maybe we took that one a little too far. Uh, but look, Mythos was far too dangerous to be released to the world. And then fast forward a month later, 50% off on Mythos if you sign up today. Well, what happened? And I thought it was too dangerous and it was going to kill us all if we let it loose. And oh, call other generals and get the military involved. What are we going to do? We need more regulation in the AI space.

[00:04:43]And then it's on sale a month later. Not just for sale, but on sale because it's marketing. All right, here's what's going on. Open AAI is desperate for relevance because the company is falling behind because they're grotesqually unprofitable. They're trying to get an IPO out the door. They don't know how.

[00:05:00]SpaceX trading below its IPO price isn't helping at all. Anthropic will be lucky to get their IPO done. Open AAI probably never will. Their co their own CFO doesn't want to because their books are such a mess. And now you've got Moonshot has eaten their lunch, taking away their business. This is a cry for help. This is they are desperate for relevance. And so they're like, "Oh my god, our AI model went rogue. It's so dangerous.

[00:05:23]Available next month for the low low price of this is just marketing material, guys." Also, we got an interesting story with Reddit and several other publishers are considering cutting off Google's Gemini. Now, this is pretty interesting. All these publishers are they're trying to cut off Google or threatening to cut off Google because they're seeing their traffic decline because people are well Gemini crawled their websites. It paid them.

[00:05:47]Reddit cut a big deal with Google for I think it was like $40 million to allow Google to crawl their posts and then use that to give AI responses. Well, now there's no reason to go to Reddit because when you Google something and get an AI response, it's a Reddit post that you're getting, which I think people need to understand when they're taking AI things and then just like throwing it into their work. That's coming from a Reddit post. It's not a reliable source. Um, but now Reddit is saying, "Hey, our our business is going down the tubes. Nobody's coming to our website because they're getting what they need from Gemini. And so we're struggling to raise money from advertisers." So it looks like Reddit and Politico and a number of these other ones are looking to squeeze more money out of Google who is very rapidly cannibalizing their own search business.

[00:06:32]And that has always been a risk for Google is are they just going to, you know, is it the snake eating their tail?

[00:06:39]Meanwhile, over in Japan this morning, the yen is falling even more. 163 yen to the dollar now. That is the highest since the mid 1980s.

[00:06:50]And look, the things things in Japan are not going well. The fiscal situation is a mess. We were talking yesterday about how Sai Takahichi is trying to ease bank rules to pump even more money into the AI bubble. Well, when you do things like that, you weaken your currency. So, it doesn't matter if you've got your finance minister out saying, "We're prepared to take imminent drastic action to support the currency." When you're doing all that other crap, people are going to dump your currency. And it certainly doesn't help that oil keeps rising. And by the way, oil's up another couple of bucks this morning thanks to Houthy and the Blowfish threatening to blow up boats and the Bob El Mandem. So yeah, this is all not good for Japan.

[00:07:28]And Japan has spent something close to 72 billion in the last month or so to defend their currency. And it's only gotten worse. So what can they really do over there? You've got President Trump is claiming uh he's saying two years from now tariffs on generic drugs will be between 100 and 200%. I'll take things that will never happen for a thousand, Alex. Um, conveniently in two years from now, President Trump will be on his way out of office and they're certainly not going to raise drug prices by 1 to 200% in an election year. So, this is never going to happen, guys.

[00:08:02]This is the old tariffs are expiring. We talked about this yesterday. He's trying to make tariffs a talking point again as the temporary tariffs that he put in after the Supreme Court decision roll off and he tries to replace them with something else.

[00:08:16]We got an interesting earnings miss from GE Vernova this morning. This is pretty interesting. GE Vernova, they make the turbines. The turbines that are in demand because of the data center buildout. Because even though they all talk about nuclear and renewables, what they're really building is natural gas to power this. GE Vernova missed earnings though. They they reported a big backlog. Apparently, they just can't build them fast enough. So, that stock is selling off a little bit, but it's had a pretty good run year to date.

[00:08:43]Anyway, another interesting story this time in crypto. 21 Capital CEO Jack Mullers. He is out of there after a three-way merger between 21 Strike and Electron collapsed. Now, that's interesting because 21 and Electron are both majority owned by Tether and this three-way merger has fallen apart. Now, Jack Mullers is one of these uh 21 Capital, that's a a Bitcoin treasury company, and then Electron is a crypto miner, and Strike is a Bitcoin payments company. They were trying to merge them all together and create this all-in-one Bitcoin powerhouse. The deal fell apart for whatever reason. Um I think the attorney general of New York may have been playing a role in that because of some prior rulings against Tether and what they're allowed to do in the state may have played a role. Uh but Jack Mullers is basically fancies himself a young Michael Sailor has been like borrow, beg, steal, whatever you got to do. Just buy Bitcoin. That's his business model. Buy Bitcoin phase three profit. And he's out now. And the new CEO who's replacing him is saying things like, "We want to be careful with our capital allocation. We want to try to generate free cash flow." Um not really the kind of things you typically hear from a Bitcoin treasury company. Now, 21 Capital is the third largest Bitcoin treasury company in the world. And it's a stupid business model to begin with, right? Like just buying Bitcoin is not a business model. It's an investment strategy. It's one I do. I own Bitcoin.

[00:10:11]I buy Bitcoin every now and then. But just creating a company and all that company does is buy Bitcoin is a stupid idea. And all these Treasury companies are selling off like crazy during this winter.

[00:10:22]Last but not least, we've got the dollar shortage. We got two stories that show an emerging dollar storage dollar shortage across the world. The first is in Kuwait who is issuing $9 billion worth of dollar bonds. Why? Because their oil can't get out of the straight of Hormuz. If their oil can't get out, the dollars can't get in and Kuwait needs dollars to buy food and to carry on do everything else because everything in the world trades in dollars. So Kuwait is leaning on the bond market.

[00:10:49]And this is a bond market that is already being heavily leaned on by everybody else, especially the data center operators. And by the way, an obscure corner of the junk bond market has now run dry thanks to those same data center operators. Stick around to the end of the show. We'll talk about that one. Guys, there's a lot going on today. Why don't we shrink my big melon of a head and let's see what's going on in the world of finance. Don't forget the like button and the subscribe button so you can have your coffee with us melon heads tomorrow because we do this every business day. And right now we've got the S&P 500 is lower by 23 points or about.3% in the red. We've got the Dow is off. I'm sorry, not the Dow. What?

[00:11:28]What? I got two Nasdaqs here this morning. That's no good. Let's do this right. I am remissed this morning. Let's look at the Dow. Give me my fiveminute candles. Okay, the Dow is down by 39 points or basically unchanged, 15 points lower, 03%. Not a lot happening in the Dow. The Nasdaq, meanwhile, is lower by 247 points or 85% in the red. Uh we were looking over, we've been following Korea the last couple of days. Not so much happening, at least not the dayto day.

[00:12:02]The Cosby index ended up closing higher by 3/4 of 1% yesterday. a pretty quiet day, but you'll notice we still had a pretty big swing up and then right back down. We gapped up at the open in the Korean index and then sold off through the course of the day. Pretty much ending where we ended the day before that. So things still pretty volatile in South Korea and certainly this downtrend is still intact here. So we'll be keeping an eye on that one for the foreseeable future.

[00:12:31]Looking over at the US dollar, it is a little bit weaker this morning, 101.09.

[00:12:35]09. That's off by 11 basis points. And looking at the bond market, we've got yields are higher across most of the yield curve this morning. The 30-year Treasury 5.140.

[00:12:46]That's higher by almost one basis point.

[00:12:49]The 10-year yield is at 4.637, also higher by almost one point. The 2-year yield is up by a point and change at 4.274.

[00:12:58]And the one-mon Treasury is at 3.705.

[00:13:01]That's down by a fraction of one point.

[00:13:05]Looking over at Bitcoin, it's off by about 950 bucks this morning. 65,564 in a reversal from the last couple of days. Bitcoin had been catching a bid since mid last week. That 21 Capital news yesterday may be affecting things this morning. Looking over at commodities, we've got spot gold is higher by $53 or 1.3% in the green.

[00:13:28]$4,130 for spot gold. Back above 4,100 bucks.

[00:13:32]spot. Silver is higher by 60 cents or 1% higher at $59.40.

[00:13:39]Very briefly reclaiming a 60 handle. Oh, by the way, I like the shiny. Copper is lower by 2/3 of a percent. Platinum off by one and a I'm sorry, platinum higher by one and a quarter%. Palladium is higher by 2%. And crude oil is higher by 2.4%. 8639 for September. WTI crude higher by two bucks again this morning. Let's take a look at the oil chart. And uh guys, you can see oil, we are so back here. This is the trend since hostilities resumed with the Iranians about two weeks ago.

[00:14:12]And that trend is continuing pretty much unchanged for the last two weeks here.

[00:14:18]Now, interestingly enough, we have not seen this chart accelerate to the upside. We we have had the Houthis have been claiming they're going to get involved, threatening to take action, threatening Saudi shipping in the Babel Mandeb. Remember, millions of barrels of oil that used to flow through the straight of Hormuz is now being piped across the Arabian Peninsula to Yanbu where it's loaded in the Red Sea and they sail to China through the Babo Menddev Straight. If the Houthis get involved, well, that's several million more barrels of oil that could potentially not be reaching the market.

[00:14:49]And so far, even though we're continuing to grind higher here, we haven't really seen any noticeable change in this trend since the Houthies got involved here.

[00:14:58]They haven't actually shot at any ships yet, but they haven't had to. We had stories yesterday of several tankers, changing course, headed for the straight, and then they abruptly did a U-turn. Some were heading in, they're like, "No, back into the Arabian Sea."

[00:15:12]And then some were heading south in the Red Sea toward the straight and decided, "No, I'll take my chances. I'll head north and head back through the Suez.

[00:15:20]And so you've already got shipping traffic is avoiding the Babel Menddev straight. Even though the Houthis haven't actually shot at anybody yet, they're achieving the effect of diverting traffic. Even Chinese vessels, which during the conflict in 2024 and 2025, it used to be these vessels, you know, from China would say China crew or China company in their AIS data and the Houthies would leave them alone alone.

[00:15:42]We've got Chinese vessels are changing course to avoid the area now, too. That is a different that's new this time around.

[00:15:50]But here is the main story this morning.

[00:15:52]Super Micro sees strong margins and books $60 billion in orders and the shares drop. Super Micro Computer said on Tuesday it had secured more than $60 billion in new orders in the fourth quarter and now expects gross margin to exceed its previous forecast, sending its shares surging by 17.5% in extended trading. AI infrastructure firms have seen demand accelerate as tech companies and cloud providers ramp up investments in data centers to support large language models and other AI applications. The AI server maker expects gross margins in a range of 15 to 17% for the quarter ended June 30th well above their earlier forecast of 8.2 to 8.4% primarily due to favorable customer and product mix. What has happened that all of a sudden the profit margins have almost doubled for this company? I have no idea. But all of a sudden, 15 to 17% up from eight. That's a big jump. Super Micro's backlog grew to record levels at the end of the fiscal year 2026. It said in a preliminary statement of results. But then this is the part that doesn't quite fit this narrative. It expects quarterly revenue near the low end of its 11 billion to 12.5 billion forecast range.

[00:17:04]Analysts had expected 11.67 billion. So why would they come in and say our revenue is going to be in the low end of prior guidance when saying our margins are nearly double and our backlog is exploding but the revenue is going to be light.

[00:17:18]That doesn't quite fit the pattern here.

[00:17:20]Not really sure what explains that but the company is set to port post results on August 11th. Super Micro had said in June that it would raise $7 billion through a series of equity and equity linked financing transactions and use the proceeds to fulfill orders worth about $39 billion for its advanced AI servers from more than 20 customers. So, Super Micro raising billions of dollars in the equity and bond markets just like all the other AI companies are doing.

[00:17:45]Uh, look guys, I get it. the company said a thing, but this is a company with a history of accounting fraud. And this is a company where executives, founders, employees are all being indicted for breaking the law for for illegally shipping servers to the Chinese in violation of export controls. So great, the company said a thing and people are buying the stock. Guys, the company's run by criminals and crooks. So who cares what they say? That is supposed to be how reputation works, right? When people become known for being criminals, what they say has no value. Try explaining that to super micro shareholders who are piling into the stock ahead of the opening bell, up 13%, $28.91.

[00:18:26]But look at a 5-year chart of this thing. All right. Prior RIPs like this have been sold off or have been completely destroyed by short reports, accounting frauds, and export control violations, and founder getting indicted. So, be careful with this one, guys.

[00:18:44]Also, OpenAI models hacked another company's systems by mistake. Wink wink.

[00:18:50]Yeah, it was totally a mistake. Open AAI said its advanced AI models inadvertently hacked hugging face in an unprecedented incident that prompted fresh calls for curbs on the technology.

[00:19:01]Yep. Inadvertently. It was totally an accident that our competition got hacked by our product in a in a move that's eerily reminiscent of exactly what Anthropic did two months ago. The chat GPT maker said in a blog post on Tuesday that the models broke into Hugging Fac's system which hosts AI models and data sets during an evaluation of their cyber capabilities. By the way, in a blog post, since when companies have these big accidents, don't they usually bury it and try to hide it and oh my god, if this gets out, we're ruined. They don't write freaking blog posts about it.

[00:19:33]Unless, of course, this is really just marketing materials. The models, which included GBT 5.6 six soul and another even more capable model that hasn't been released were operating with lower guard rails so they could be tested. The startup said the incident raises questions about the ability of advanced AI models to carry out cyber attacks even as governments work to impose guardrails on the technology. All right, so we took the guard rails off and it did guardrail this Oh my god, it's so shocking. We told it to hack the competition and it hacked the competition. Oh my goodness. Let's write a blog post about it. OpenAI's latest suite of models was widely released after weeks of discussion with government officials to allay concerns over its potential misuse. Washington had considered limiting foreign access to anthropics advanced Claude 5, Claude, Fable 5, and Mythos 5 models, but stopped short of those curbs after the company imposed additional guard rails.

[00:20:26]We consider this to be an unprecedented cyber incident involving state-of-the-art cyber capabilities and are responding accordingly. OpenAI said in a commercial, I mean blog post. We are sharing preliminary findings at this stage to help defenders understand what happened and to help calibrate on what models are now capable of. While OpenAI's models are operating in a so-called sandbox testing environment, they exploited a vulnerability in the software of an unidentified third-party vendor to gain access to the internet and ultimately breached Hugging Faces infrastructure.

[00:20:58]Oh my god, it's so dangerous. We can't release it to the public. And that's why we're writing a blog post about it. And it's why we're going to release it to the public in a month anyway and then put it on sale when people don't buy it.

[00:21:08]Why?

[00:21:10]Because OpenAI is losing market share.

[00:21:13]That's why they're doing this. Check out this one. In crypto briefing, Microsoft tests Kimmy K3. That's the the Moonshot model, the Chinese moonshot model that was just released. Microsoft tested for co-pilot in a bid to cut AI cost by $600 million. That's right. Microsoft, the I think the biggest shareholder in OpenAI.

[00:21:34]Soft Bank may own more than Microsoft.

[00:21:36]Don't quote me on that. But Microsoft has been one of OpenAI's biggest customers and biggest supporters. And now they're using the moonshot model.

[00:21:43]Just just as OpenAI is like, "Oh my god, I hacked hugging face." Microsoft is adding Moonshot AI's Kimmy K3 to Azure and evaluating whether it can power co-pilot features currently handled by OpenAI anthropic model. The potential shift could reduce Microsoft's AI inference cost by as much as $600 million. According to the report, Microsoft has not publicly confirmed the estimate or detailed which copilot features could move to Kimmy K3. That is billions of dollars worth of OpenAI and anthropic revenue disappearing if they do this. And as it just so happens, all of a sudden you get this. Oh my god, OpenAI hacked hugging face. Yeah, because OpenAI is losing market share.

[00:22:25]That's why they're doing that. It's all marketing, guys.

[00:22:29]Elsewhere in the AI space, Google was a lifeline for publishers. Now, some are thinking of cutting it off. Reddit, Politico, and others are weighing how or even if they can work with the tech company as AI tools supplant traditional searches. One of the richest sources of online information is re-evaluating its relationship with Google. Is Reddit really a rich source of information? I like Reddit, but a rich source.

[00:22:55]Reddit, the online messaging board that powers a swath of Google search results, has discussed shutting off the technology giant's access to its content for AI use. According to people familiar with the matter, it's part of a growing course of online media companies expressing frustration with the tech giant as AI changes the way people ask questions, siphons off search traffic, and upends publishers revenue models.

[00:23:17]They say the search engine is no longer a reliable source of visitors, especially after Alphabet's Google expanded its AI search features in recent months. USA Today, Politico, The Economist, People, and Reuters are all evaluating how or even if they will continue to work with Google. Reddit struck a $60 million a year deal in 2024 that allowed Google to use its material to train AI models. But with AI generated answers to queries, reducing clicks to outside websites, Reddit executives are assessing what the upside is of continuing to feed its content to Google, said the people familiar with the matter. The companies are in talks about potentially renewing their deal, which is ending soon. All right. So, the fact that they're in talks about renewing the deal, there's certainly Reddit is trying to just squeeze more money out of Google here, right? That's obviously playing a role here. But the fact that they're releasing this to the press is they're saying, "Hey, we will take our data and walk if you don't pay us what we want." Reddit stock though is tanking on this news, down 10.1% ahead of the opening bell, $167.30, because, well, Reddit makes most of its money from selling its data to Google.

[00:24:21]And if they're no longer going to do that, well, not gonna not gonna have a good time.

[00:24:28]All right. Meanwhile, over in Japan, Katyama warns of bold action as yen slides past 163 per dollar. And the fact that the yen is sliding past 163 per dollar is the market saying, "We don't care about your warnings of bold action, Satsumi. That's what they're saying."

[00:24:44]Two senior Japanese officials warned that authorities are ready to take action in the currency market if necessary in comments that did little to support the belleaguered yen. The situation involved the US and Iran has taken a sudden turn for the worse. A deterioration that the world did not foresee. Yeah, nobody could have seen that coming, right? I thought the memorandum of understanding was going to hold, said freaking nobody. creating a very difficult environment. Minister of Finance Satsuki Katyama told reporters on Wednesday, "Our policy remains completely unchanged. We will take appropriate and bold action at any time should the need arise." Chief Cabinet Secretary Minaru Kihara warned that officials would respond to currency movements appropriately as needed. But the yen slid past 163 to the dollar overnight for the first time since 1986 after renewed tensions in the US Iran conflict pushed oil prices higher. The yen was steady around 163.16 per dollar on Wednesday following those comments.

[00:25:40]"The market is ignoring it because they keep repeating the same message," said Marito Uea, president of SBI FX Trade.

[00:25:47]"While we can't rule out the possibility of intervention, the market sees through the fact that the associated costs make it difficult to execute. Authorities in Tokyo spent $71.9 billion intervening in the market to support the yen between April 28th and May 27th. Yet, the currency remains at its weakest level in four decades due to concerns over fiscal expansion in Japan and expectations that the Federal Reserve is going to is getting closer to raising interest rates. Against that backdrop, investors have largely shrugged off recent efforts by Japanese authorities to boost the currency. Last week, Hachama warned speculators that the ministry was ready to take decisive action in response to currency moves at any time in what was her strongest threat in weeks. And yet, the comment did little to support the yen. All right, this is important here, guys. The jawbon in Japan is not working anymore. They spent $72 billion back in May and June to defend the currency.

[00:26:42]That was this little blip right here.

[00:26:45]This is USD JPY. They spent $72 billion defending their currency. And a month later, we're even worse than we were going into it. Why? It's got a lot to do with the fiscal situation in Japan. The Keynesians are just running a muck in Japan. They're loosening bank controls to pump more money into data centers.

[00:27:02]They want to spend all this money. They want to hand out stimi cash to offset inflation. Well, you can't expect your currency to strengthen when you're doing all these things that debase your currency. And so, it doesn't matter what your finance minister says. The market is voting its wallet and the market is saying yen's going lower. USD JPY going higher. 163, the highest since 1986.

[00:27:25]Problems continue in Japan and they cannot stop it.

[00:27:30]All right. Meanwhile, Trump says generic drugs to face no US tariffs for 2 years, then 100% and 200% tariffs later. Uh, this was like front page news for a while this morning and then people realize this says nothing here because President Trump is leaving office in two years and whoever comes in behind him is definitely not going to double or even triple medicine prices. So, this is never going to happen. I get why he wants to do this. we buy too much of our medicine from China and if we go to war from with China, they're probably not going to sell us medicine. So, we better do something about that. That being said, no politician will ever stand up, especially a politician facing re-election, stand up and say, "I want to triple drug prices. It's just not going to happen."

[00:28:15]Meanwhile, we got earnings from GE Verova and the shares fall as second quarter earnings mis expectations. That is unexpected. GE Verova reported second quarter results that missed earnings expectations despite beating revenue estimates with shares falling 2.7% in pre-market following the announcement.

[00:28:32]The company posted adjusted EPS of $247 for the quarter falling short of analyst consess consense estimates of 304. So it was a big miss for earnings. Revenue reached 11.1 billion exceeding the 10.7 billion estimate and marking a 22% increase from the prior year period. The revenue growth was driven by strong performance in power and electrification segments up 12% organically.

[00:28:57]Despite the earnings shortfall, the company raised its full year 2026 revenue guidance to 45 to 46.5 billion, up from 44.5 to 45 1.5. The midpoint of 46 billion sits slightly above the consensus of estimates. GEnova also increased its free cash flow outlook to 11.5 to 12.5 billion, up from 6.5 to 7.5. The company's making money hand over fist here while maintaining their adjusted EBIT margin of 12 to 14%. So, if I had to speculate on what's going on here, I'd say GE Vernova just can't build their turbons fast enough. And so, their earnings missed even though revenue and free cash flow look great.

[00:29:35]Uh, the stock is down 6.6% this morning, but over the last year, this stock is up 90%. So, probably just some profit taking here. I wouldn't look too far into this. As long as we're pumping money into data centers day in and day out without end and then this is going to keep going up over time. That being said, Google reports their earnings tonight after the bill. Will Google cut their capex? Will anyone in big tech cut their capex? Or will they continue with this great game of capex chicken burning hundreds of billions of dollars? I guess we'll just have to wait and see, won't we?

[00:30:11]All right. This is an interesting story that happened yesterday. And this could be weighing on Bitcoin today. Tether's three-way crypto deal is called off and Mish steps down.

[00:30:21]A proposed merger of three crypto firms has been scrapped with one of their leaders stepping down and another consolidating power across the tetherbacked franchise. 21 Capital, Strike, and Electron Energy no longer plan to combine according to details the company shared with Bloomberg News. Jack Mers, the CEO of 21 Capital and Strike and a prominent name in crypto circles, has stepped down from his role at 21 Capital, while Electron CEO Raphael Zaggery is taking over that position.

[00:30:49]Strike intends to remain a standalone company, according to the statement.

[00:30:53]There are no plans for it to unite with 21 Capital anymore, though discussions between 21 and Electron are ongoing.

[00:30:59]Tether owns majority stakes in the latter two. The original idea proposed by Tether back in April was to bring together three distinct crypto businesses. 21 Capitals Digital Asset Treasury or DAT strikes crypto trading and Electron's Bitcoin mining. Tether is the largest stable coin issuer globally with a wide range of investments.

[00:31:21]DATs or uh digital asset treasuries, Bitcoin treasury companies have fallen on hard times as Bitcoin's price has slumped resulting in financial losses and job cuts at major crypto firms. Few companies have Bitcoin accumulation, customer trading, and crypto mining inside the same house. And it's not entirely clear why the Tether proposed deal fell apart. 21 Capital launched in December through a special purpose acquisition company or spa backed by Tether as well as Japanese investment firm Soft Bank and investment bank Caner Fitzgerald. Oh, it's just great that SoftBank is involved here. It had more than 40,000 Bitcoin, the third largest corporate holding at the time. 21 Capital share price has since slumped 40% from a peak in early May to $5.32.

[00:32:05]Uh it's down a lot more than 40%, guys.

[00:32:08]Look at 21 Capital here. It's trading at $468 after hitting an all-time high of $59.75.

[00:32:16]I'm no mathematician here, but uh I think uh that's a little bit more than a 40% decline from the highs. This thing has absolutely plummeted. It's it's done what every other spa has has done. I mean, this is another Chamath Poly Wikipedia company is is exactly what this one looks like. Jack Mers was one of those sell your kidneys and buy Bitcoin kind of guys. He fancied himself a lot like Michael Sailor and well, he's out. And this guy Zaggery that's replacing him is much more cautious. So, it shows a shift in the narrative here from this lever up and buy Bitcoin at any cost to we better survive winter.

[00:32:53]Let's do prudent capital management and maintain our cash flow here. So, does this mean 21 Capital is going to turn into a Bitcoin seller? I don't know.

[00:33:02]Probably. There's nothing to indicate that they'll be a seller, but there's plenty to indicate that they won't be buying Handover Fist. That's for sure.

[00:33:09]Uh, so this one probably weighing on Bitcoin this morning.

[00:33:14]All right, two more. And these two, these last two are both pointing to an emerging dollar shortage because of what's going on with the Iranians.

[00:33:23]First, Kuwait bond sale bids topped $9 billion even as Iran strikes. The Kuwaitis need dollars and they're going to the bond market. Kuwait has drawn more than $9 billion of investor orders for a dollar bond sale on Wednesday, highlighting resilient demand for the OPEC members debt, even as it comes under daily missile and drone attacks from Iran. The Gulf Arab country hired banks including Goldman Sachs and Cityroup to arrange the three-part deal with teners of three, five and 10 years.

[00:33:49]According to a person familiar with the matter, the final terms including the size of the bonds and the pricing may be announced later today. All right, so Kuwait needs dollars. They're borrowing 9 billion bucks from the bond market like a lot of people are doing right now. A lot of people dipping into the bond market and they're even dipping into the bond market in Norway. This is interesting. AI borrowers are pushing a niche credit market to its limits.

[00:34:15]Data center developer Polar DC Group discovered an unlikely source of cash for its AI ambitions back in May. The Nordic high yield bond market. Again, when you hear high yield, you got to think junk. All right? High yield is just polls better in focus groups. This is junk bonds. All right? So, they're going to Norway. In a first for Europe, the HIG Capital LLC backed firm raised a record €800 million. That's about $913 million, uncovering a well of demand to finance the industry's enormous appetite for capital. The deal quickly spawned imitators. But as issuers test the Nordic bond market, a small, flexible, and risk tolerant venue better known for funding medium-sized companies than digital infrastructure, they're finding there are limits to its appetite. Or as Mish said in our call this morning, he said it's a kid soccer game in the Nordic junk junk bond market where oh, one company managed to raise some money and then every kid on the field runs to the ball. That's what's happening here.

[00:35:16]Uh, US firm Prime Data Centers sheld a planned Norwegian law bond after investors balked at the proposed terms despite the company cutting the expected size of the offering from $600 million to 500 million. Just days later, Pure Data Centers, a UK firm backed by Oak Tree Capital Management, abandoned their plans for what would have been a record-breaking 1 billion euro bond sale in favor of bank financing. The episodes highlight the challenges of funding ever larger data center projects and signs of indigestion in the Nordic bond market after just a few deals. So, what's going on here, guys? The data center builders are borrowing all the money in the world. All right, you get this one obscure niche in the market, the Nordic junk bond market. One guy manages to raise some money. Next thing you know, every one of these a-holes is flying to Norway trying to raise money, and the market says, "No, we're tapped." So, onward to greener pastures. What's the next little obscure circle of the debt market that they'll tap into to try to raise money to keep this bubble going?

[00:36:17]Or will they finally just say, "Guys, we you know what? Maybe this $20 trillion asset bubble was a bad idea to begin with and let's stop. I I I know I'll see myself out. What a crazy idea. I I just I don't know where I come up with these things. I'm sorry. Hey, I just want to say thanks everybody for having your coffee with us Melon heads this morning.

[00:36:36]Don't forget the like button and the subscribe button on the way out. Thank you also to my magnanimous melon heads on YouTube, Patreon, and buy me a coffee for supporting the channel. I appreciate that, guys. Links down below should you feel so inclined. Hi mom. Hi dad. Love you guys. Google earnings after the bell. That's going to be a big one. Till next time, live small and dream big.