Latest / Finance TL;DR Daily / Inflation Cools to 3.4%, Wall Street Rips to Records on AI Earnings
Transcript
- Inflation Cools to 3.4%, Wall Street Rips to Records on AI Earnings 2026-08-12 Alex: Welcome to Finance TL;DR Daily, the podcast where we break down the biggest stories in finance. Alex: It's Wednesday, August twelfth. And today it's the good kind of numbers day — inflation cooled, stocks hit records, and the AI trade just keeps compounding. Riley: Here's what's moving today. Riley: Let's start with the inflation print, because it's really the thing everything else today is hanging off of. What did the July CPI actually show? Alex: So the Bureau of Labor Statistics put the headline number at 3.4% year-over-year, down from 3.5% in June. Month-over-month it was just 0.1%. Core inflation, which strips out food and energy, came in at 2.5% annually, also a tick down from 2.6%. Riley: And the energy story is a bit odd, isn't it — up 14.7% over the year but actually down 1.5% just in July. Alex: Right, that's mostly base effects washing out, plus energy prices easing month to month. Food was tame too — up just 0.1% on the month, 3% over the year. Nothing screaming out of that report. Riley: Which is exactly why it matters. A boring inflation report is a good inflation report right now. Alex: Boring is the goal. And the read-through is straightforward — with price pressures moderating, there's less urgency for the Fed to lean hawkish. That's the phrase you keep hearing, less urgency, not a green light to cut aggressively. Riley: Worth flagging the index level too — 333.918 against that 1982-to-84 base of one hundred. It's a reminder of just how much cumulative ground prices have covered even while the annual rate cools. Alex: Fair point, the direction is encouraging but we're not exactly back to what anyone would call cheap. Riley: No argument there. But markets clearly didn't need cheap, they just needed cooler than feared. Alex: And that takes us straight into the market reaction. Riley: It really does. Wall Street didn't just tick up on this, it ripped. The S&P 500 jumped one and a half percent and finished just a tenth of a percent off its all-time record. Alex: What's actually doing the heavy lifting there — is it the CPI number alone, or is there more to it? Riley: It's two engines running together. One is the inflation relief we just talked about. The other is a genuinely strong corporate earnings season, particularly out of anything touching AI. Palantir is the headline example — shares surged nearly thirty percent after the CEO described the quarter as, quote, otherworldly, with revenue up ninety-three percent. Alex: Ninety-three percent revenue growth is not a typo? Riley: Not a typo. And it's backed by real spending — capital expenditure from the big tech firms is on track to hit nearly eight hundred billion dollars this year. That's the fuel behind a lot of these earnings beats. Alex: There was also something about falling oil prices helping the mood. Riley: Yes, cheaper oil takes a bit more inflation anxiety off the table, which loops back to easing pressure on the Fed. So you've got earnings strength and a friendlier rate outlook reinforcing each other. Alex: Is there a risk that the market's leaning a bit too hard on one sector carrying the index? Riley: That's the fair caveat — a huge amount of this record-chasing is concentrated in AI-linked names. It's strong, but it's not evenly spread strength. Alex: Which is a nice bridge into the AI infrastructure names themselves, because this is where the real fireworks were yesterday. Riley: Go on then, walk us through CoreWeave. Alex: CoreWeave shares surged in extended trading after second-quarter results beat expectations across the board — revenue of two point five eight billion dollars, up 112% year-over-year, against estimates of two point five six billion. The loss per share was also smaller than expected. Riley: And the backlog numbers are the part that jumped out at me. Alex: They should — the company announced a twenty-one billion dollar additional spending commitment from Meta and a six billion dollar commitment from Jane Street. That pushes their total revenue backlog to one hundred and four billion dollars. Riley: A hundred and four billion in backlog is an extraordinary number for a company this size. Does that change how you'd read the raised guidance? Alex: It supports it. They lifted full-year revenue guidance to between twelve point four and thirteen point two billion, with third-quarter revenue projected at three point four to three point six billion. Management's own line was that demand, pricing and margin are all expanding at once, even with more competitors piling in. Riley: Nebius rode the same wave, up over five percent, and Piper Sandler initiated coverage on both companies, naming CoreWeave a top pick with a hundred and fifty-one dollar price target. Alex: What's your read on the framing that this is shifting from a GPU scramble to what people are calling a power war? Riley: I think that's the real story underneath the stock moves. It's not just about who can get chips anymore, it's about who can secure the actual electricity and megawatts to run them. That's a much slower, more capital-intensive fight, and it's why these backlog numbers stretch out for years rather than quarters. Alex: So less a sprint, more infrastructure-building in the old-fashioned sense. Riley: Exactly that, just with GPUs instead of railway track. Alex: Last one today brings it back down to something that actually touches ordinary households — mortgage rates. Riley: This one's a quieter story but it matters to anyone house-hunting. Following the cooler inflation report, mortgage rates paused their climb rather than falling outright. The average thirty-year conventional rate came in at 6.92%, down just two basis points from the week before. Alex: Two basis points isn't much to celebrate. Riley: No, but the direction of travel around it is telling. Rate traders pulled back their expectations for a Fed hike sharply — the CME's FedWatch tool showed 88% odds of no change at the July meeting, up from 58% just a day earlier. Alex: That's a big swing in sentiment for one data point. Riley: It is, and it reflects how strung out the housing market's been. The Mortgage Bankers Association's Bob Broeksmit noted rates had climbed to nearly a year-high, weighing on both refinancing and purchase activity — mortgage applications fell 6.4% just last week. Alex: So does a pause actually bring buyers back, or is 6.92% still too high to matter? Riley: That's the open question. A pause removes the fear of rates climbing further while you're shopping for a house, which on its own can nudge sidelined buyers back in. But at just under seven percent, it's not exactly a discount — it's more relief than reward. Alex: So today in one sentence — cooler prices are giving the Fed room to breathe, and markets are spending that room on AI infrastructure. Riley: And the housing market's watching all of it hoping the relief eventually trickles down to an actual mortgage rate worth talking about. Alex: This has been Finance TL;DR Daily. We'll see you tomorrow.