💰 5 Fact Friday: Is Oracle The New Nvidia?

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ECONOMY
1. From “If” To “How Much” On Rate Cuts 📉

For months, the Fed’s dilemma was whether rates should come down at all. After the latest labor-market shockers, the debate has narrowed to one thing: how much to cut.

Why the flip? Three fresh realities:

1) Jobs weren’t what we thought

• The BLS revised away 911,000 jobs from April 2024 to March 2025 in the largest downward revision on record.

• Translation: more than half of the previously reported jobs were never actually created. June’s payrolls were even revised negative — the first monthly job loss since 2020.

• Entry-level postings are down 35% since early 2023, and a NY Fed survey shows confidence in finding a new job is at a 12-year low.

2) Crisis of confidence in the data

• While the Fed is data-dependent, repeated large revisions are raising doubts about the quality of that data.

• The record-setting scale of the latest revision triggered a formal review by the Inspector General into data collection practices.

3) Inflation isn’t blocking the exit

• Producer inflation spiked to 3.3% in July then cooled to 2.6% in August. Core consumer inflation held steady at 3.1%.

• Former Kansas City Fed president Esther George summed up the Fed’s new reality:

Short-Term Reaction

Markets are unanimously betting that a rate cut is coming. Futures tied to Fed policy now show 0% chance the Fed keeps rates steady at the next meeting.

• A 0.25% cut is widely expected and already priced in, so the market reaction may be muted — maybe even a small “sell the news” dip.

• A 0.50% “jumbo cut” would be a surprise and could spark a rally.

• On the flip side, no cut at all would shock investors and likely send stocks lower.

Medium-Term Reaction

Lower rates ripple out in ways that matter for us Maniacs:

• Cheaper borrowing: Mortgages, auto loans, and credit cards get more affordable, freeing up consumer spending that supports company earnings.

• Small-cap boost: Smaller debt-financed companies feel the relief most, which could give indexes like the Russell 2000 a tailwind.

• Real estate lifeline: Lower financing costs help both homebuyers and commercial real estate facing refinancing pressure.

• Risk assets vs. dollar: Easier policy tends to weaken the U.S. dollar, making gold, B*tcoin, and other risk assets more attractive.

Bottom line: There was a widespread fear that lowering rates could be pouring gasoline on the fire. Turns out there may not have been a flame at all.

Now, the challenge is cutting rates quickly enough to protect jobs without letting inflation roar back into high gear.

STOCKS
2. The $455B Backlog Nobody Saw Coming ☁️

On paper, Oracle’s latest earnings looked forgettable: revenue of $14.9B missed expectations, and adjusted profit came up short. But investors didn’t even blink. Why? Because what Oracle booked matters far more than what it earned.

Oracle revealed an absolutely massive $455 billion order backlog — a 359% increase from last quarter. That backlog, known as “remaining performance obligations,” is essentially a legal IOU of future revenue.

Translation? The company has quietly become one of AI’s most important landlords.

The big catalyst: a $300 billion deal with OpenAI, signed over five years. It’s one of the largest cloud contracts ever, and it dwarfs OpenAI’s ~$12B current revenues.

If that number sounds hard to believe, you’re not alone. While it highlights OpenAI’s willingness to burn capital in pursuit of growth, it’s also a stunning display of confidence from both sides.

Here’s why this matters:

• AI is broadening. The top two cloud performers this year aren’t Amazon or Google — they’re Oracle and Broadcom, both massively outperforming the so-called “hyperscalers.” That makes the AI trade feel a bit healthier, a bit more diversified.

• Software is the new infrastructure. Oracle has built out data centers and spent big — $35B in capex expected in 2026 — to be ready for this moment.

• Investors noticed. Oracle stock jumped 36%, boosting the S&P and sending other AI names higher. Even semiconductors caught a bump.

• So did Larry Ellison. The Oracle founder’s stake ballooned by $101B. With an estimated $393 billion fortune, he briefly became the richest person in the world, leapfrogging Elon Musk.

Bottom line: The demand for AI compute isn’t just hype — it’s backed by contracts, commitments, and cloud. Oracle’s surprise jump may mark the beginning of the next wave of AI infrastructure winners.

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COMMODITIES
3. $5,000 Gold? Goldman Thinks So 🚀

Gold prices are shining brighter than ever, up 41% this year and nearing $3,700/oz. With the Fed preparing to smash the rate-cut button, some say the rally is just getting started.

But what’s behind the rally? And what could keep it going?

1) Central bank buying

For the first time since 1996, global central banks now hold more gold than U.S. Treasurys. The People's Bank of China just marked its 10th straight month of gold purchases, adding another 60,000 ounces in August. China’s gold reserves now total $250 billion, a record 8% of its reserves.

2) De-dollarization in action

While loading up on gold, China is quietly dumping Treasurys. In the past year, its U.S. debt holdings have dropped by over $23B, part of a broader risk-diversification strategy that puts pressure on the dollar.

3) Dollar drop

The greenback just had its worst first half of the year since 1973, making the yellow metal more attractive globally. Historically, the two move in opposite directions.

4) Safe haven demand

Dollar weaponization, rising tariffs, and global instability have made gold a top choice for investors seeking protection from inflation and uncertainty.

The Bull Case 📈

• Goldman Sachs says gold could hit $5,000/oz if money invested in the U.S. Treasury market shifted just 1% to gold.

• J.P. Morgan, UBS, VanEck, and others have published bullish notes as well.

• It’s now the top-performing major asset of 2025, and the best over the past 20 years.

The Bear Case 📉

Gold has no underlying cash flows, so the only way to profit is through price appreciation. That’s worked since 2023.

But the current rally has pushed gold’s inflation-adjusted price to more than 2x its long-term average, a level that previously triggered multi-year declines (see 1980 and 2011).

And while there’s no sign of a reversal yet, gold’s momentum is tied closely to China’s buying spree and U.S. debt growth. If either trend shifts, the rally could unwind.

MARKETS
4. Why Wall Street Loves A Clean Break 💔

Corporate America is having a midlife crisis — and the answer, apparently, is to break up.

Spinoffs are back in vogue, and 2025 is shaping up to be the busiest year since 2016.

• FedEx is unloading its freight division

• Kraft Heinz is peeling off its grocery arm

• Warner Bros. Discovery may separate its TV networks from streaming

• Keurig Dr Pepper plans to acquire JDE Peet’s, then uncouple soda from coffee

• Honeywell is slicing itself into three: aerospace, automation, and advanced materials

So, what gives?

A spinoff happens when a company turns part of its business into a standalone public entity. Existing shareholders receive stock in the new company, so you go from owning one big firm to two smaller ones.

The idea is focus beats complexity.

The market tends to value big conglomerates at a discount because they're messy and hard to analyze. But when you split a company into clear parts? Investors often reward it.

According to Trivariate Research, spinoff companies outperform the S&P 500 by 10% on average in the first 18-24 months.

That said, the performance of the company left behind can vary. Sometimes it's shedding dead weight, and other times it’s losing the crown jewel.

Personal aside: Back in my Wall Street days, spinoffs were my bread and butter. If you're ever dying to know the inner workings of a breakup like HP and HPE, I'm your guy.

STOCKS
5. Guess That Stock 🕵️‍♂️

This brand was once the face of luxury athleisure, but lately, it’s been stuck in a downward dog.

Can you guess the stock?

1. Once a must-have in yoga studios, the brand is falling out of fashion as rivals like Alo Yoga, Vuori, and On win over more young shoppers.

2. In an effort to stretch further into menswear, the company recently signed athletes like Lewis Hamilton, Frances Tiafoe, and Max Homa.

3. Despite this new lineup, North America sales grew just 1% last quarter, a sour showing that led the company to slash its full-year outlook.

4. Tariffs have crimped its margins, and new rules ending the “de minimis” exemption could disrupt it’s supply chain strategy.

5. With shares down 57% this year, it’s the second-worst performer in the S&P 500 — and a real lemon in portfolios everywhere.

Got a guess? Tap here for the answer → 

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