The Wall Street Skinny

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NVIDIA just agreed to buy Hugging Face, and the deal won't add a cent to its earnings per share. So why do it? In this episode we dig into what NVIDIA really gets from owning the home of open-weight AI, and whether this is a threat to OpenAI and Anthropic that the market hasn't priced in yet. What's the actual difference between open source and open weight, and why does almost everyone (yes, even us included) mix them up? If Amazon, Google, and the frontier labs are all building their own inference chips, where does NVIDIA's next wave of customers come from? And if the free "Temu version" of AI gets good enough for most people, who keeps paying for the Prada bag?

Then we bring on Michelle Weaver, Head of US Thematic Equity Research at Morgan Stanley, to ask the questions everyone in finance is worried about. Which companies are actually seeing AI show up in their margins, and which are just burning tokens so they can say "AI" on the earnings call? Is AI already showing up in the jobs data for young workers? What happens to the traditional Wall Street analyst class if the org chart stops being a pyramid? Does the Jevons Paradox of economic theory help or hurt the frontier model companies? And why are American companies nervous about building on Chinese open-weight models?

We also get into the growing fight over AI data centers. Why has this become one of the few issues uniting voters on both the left and the right? What do power bills, water use, and old brownfield sites have to do with it? How big is a 57-gigawatt power shortfall, really? And what does Oracle declaring force majeure on its New Mexico Stargate site tell us about where the AI build-out is headed?

00:00 Intro: Revisiting our early episodes
03:00 Life updates: Flying, dogs & kids
06:10 Our Yahoo Finance Market Hang recap
07:50 Why NVIDIA bought Hugging Face
11:10 Training vs. inference: Where AI compute is headed
14:15 CUDA and NVIDIA's software moat
15:50 Open source vs. open weight, explained
19:20 Is NVIDIA a threat to OpenAI & Anthropic?
21:25 Meta's Muse and why easy AI wins
25:00 Why companies struggle with AI adoption
27:20 Oracle's Stargate force majeure (Ground News)
28:45 Michelle Weaver joins: What is thematic research?
30:15 AI enablers vs. AI adopters
35:05 Open vs. closed models and Jevons paradox
37:25 The risks of Chinese open-weight models
39:45 Pricing security risk in AI adoption
42:15 Token budgets and the end of token maxing
44:00 Is AI already costing jobs?
46:55 What AI means for Wall Street analysts
49:25 Data centers: People, power & politics
53:00 Tax breaks, brownfields & state moratoriums
55:35 The 57-gigawatt power shortfall
57:35 US vs. China: Chips, power & the AI race
59:20 Where to find Michelle's research

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The first Fed rate hike since the summer of 2023 hit today, and we went LIVE from New York City to cover it. Minutes after Chairman Warsh wrapped his press conference, we brought on Wellington's macro strategist Mike Medeiros to make sense of the 25bp hike, the unanimous vote, and a statement that leaned unmistakably hawkish.

We asked Mike everything we've been dying to know: Was this hike a nod to the political pressure campaign coming from President Trump, or would cutting in this environment have been, in his words, "clinically insane"? Are Warsh and Treasury Secretary Bessent working together or against each other, with the Fed pushing financial conditions tighter while Treasury intervenes in the long end? How does Treasury actually fund those interventions next year — bills, buybacks, or the TGA — and does the debt ceiling take one of those off the table? We also dug into what the hike means for the coming wave of corporate issuance financing the AI buildout, whether the midterms change the policy calculus, where positioning is most offsides, his S&P target for year-end, and what the death of forward guidance means for volatility in the front end of the curve. Plus: what nickname does Trump give "No Cut Kevin" now?

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Everyone in the financial media is telling you the same story: Scott Bessent's surprise Treasury buyback announcement is a thumb on the scale of the bond market, and it's making Kevin Warsh's job at the Fed harder. But what if the headlines have it exactly backwards? What if the Treasury Secretary is actually running interference for the one thing the Fed Chair can't do himself? Fresh off asking Bessent this question face-to-face at the Charlotte Economic Club, Jen breaks down why she thinks there's a stealth rate hike hiding inside what looks like yield suppression, and why the best way to understand it is a three-act magic trick straight out of The Prestige.

To get there, we have to answer the questions most coverage skips entirely. What actually happens at a quarterly refunding, and why does the Treasury auction schedule matter more than almost anyone realizes? What's the difference between an on-the-run and off-the-run bond, and why are aged long bonds from the COVID era trading below 50 cents on the dollar? When the Treasury buys back 30-year paper and funds it with T-bills and short-dated notes, is that QE, or is it something closer to the opposite? And why would Bessent make this move right before the AI hyperscalers flood the corporate bond market in September?

Then things get weirder. Why did the US just participate in the biggest coordinated yen intervention in decades, and what does it have to do with Japan's Treasury holdings? How do stablecoins, a resurgent crypto market, and a shaky dollar all fit into the same trade? And what do Bessent and Warsh, supposedly at war, have in common through their shared mentor Stan Druckenmiller, whose AI-generated op-ed became its own scandal?

The LA Lakers --- a prestigious basketball franchise that didn't change hands for 46 years --- just sold twice in ten months, the second time for $2.5 billion more than the first. The seller is Mark Walter, CEO of Guggenheim, owner of the Dodgers and part of Chelsea FC, and the man whose laptop and phone the FBI seized off his private jet just as the Lakers deal was coming together. Since then, one of the insurance companies in his orbit has revised its reported related-party investments from $1.4 billion to $17 billion. Quite the rounding error.

In this episode, we get into the questions everyone on the Street is suddenly asking. Why would anyone sell the crown jewel of American sports a year after fighting to buy it? What do a bunch of boring life insurance companies most people have never heard of have to do with the trophy assets of the billionaire class? Why do private equity and private credit firms keep buying insurers in the first place — and what happens to that entire model when the disclosures around "related parties" turn out to be, let's say, incomplete? And why did Josh Kushner and Bob Iger, who spent months chasing a Las Vegas expansion team, pivot to the Lakers over a single weekend?

The bigger question hanging over all of it: this structure — asset managers selling their own loans to insurance companies they control — underpins a massive share of the boom in private credit. If regulators start pulling on this thread, how many other portfolios look like this one?

By way of disclaimer, no charges have been filed and no wrongdoing has been established nor is implied here; our research merely summarizes reporting from Bloomberg, the FT, the WSJ, and the LA Times.

We got to sit down with John Quinn — the "Quinn" of Quinn Emanuel — one of the most powerful litigators in the world, and the man whose firm is defending OpenAI right now. What does someone at the very top of the legal food chain see coming that the rest of us don't? And why does he think one of the oldest concepts in law is about to become the most valuable weapon in tech?

Here's what pulled us down this rabbit hole. The most valuable companies on earth are pouring hundreds of billions into inventions almost none of them can legally protect. So how do you build a moat around something you're not allowed to own? Why are Apple and OpenAI trying to destroy each other in one courtroom and sitting on the same side in another? And what does any of this have to do with a viral park bench kiss that blew up one of the big law talent poaching deals?

We get into all of it: why the patent wars fell by the wayside, what actually replaced them, and why every giant pay package in tech, finance, and now law is really a fight over the one thing no company can lock in a vault. Then John tells us where he thinks this is all headed — for the AI giants, for the lawyers, and for anyone thinking about the profession at all.