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Good morning and happy Friday.
Protect your mot de passe! France got a taste of the most basic and refined forms of cyberattack this week. To kick things off, a still-unidentified party took control of thousands of supermarket freezers by using default passwords, turned up the temperatures and spoiled millions worth of food in one of the most rudimentary breaches in recent memory.
Then, on Thursday, tech firm Ledger, which makes USB sticks for securely storing digital token passwords offline, said it was the victim of “one of the most sophisticated attacks” in crypto history. An organized criminal network bought up some of its devices,fitted them with “custom-built hidden components” to capture information, resealed them, and put them back into distribution through resellers in southeast Asia. “They were patient, they spent millions, and they struck in one coordinated operation,” Ledger said, adding the attackers stole $90 million from crypto wallets last week. At least the French should be able to appreciate the two breaches’ contrasting sophistication and crudeness: From Tournedos Rossini and Molière to choucroute garnie and Jerry Lewis, they love their culture high and low.
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MARKETS
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*Stock data as of market close on October 15, 2026.
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Photo via Jimin Kim/ZUMAPRESS/Newscom
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Here’s three words that nobody likes to see connected to bad news: credit default swaps.
The financial derivatives at the heart of 2008’s housing market meltdown that allow investors to transfer credit risk to another party are back in the news again thanks to CoreWeave, a former crypto miner turned “neocloud” compute provider. Yields on portions of the company’s massive pile of junk-rated bonds have risen to a stunning 15%, and its credit swaps were priced at a nerve-rattling 60% chance of default on Thursday, according to ICE Data Services. Shares of the company have plummeted some 16% in the past week, dragging down much of the AI-and-chips trade with it.
A $5 Trillion Gap
The timing and scale of the AI build-out boom has left many neoclouds crushed between the rising prices for GPUs and the rising cost of capital. Since its pivot into cloud computing in 2019, CoreWeave has leaned hard into debt-heavy financing structures (including many massive loans backed by its own chips), resulting in some $50 billion in debt and other liabilities en route to bringing 51 data centers online.
The company must now convince credit investors it can earn enough cash to meet its costly obligation, and its most recent quarterly results highlight its bind: revenue increased 112% year over year to nearly $2.6 billion, though its net loss widened by 115% to $626 million in large part due to ballooning interest expenses. The spending is far from over, too: Analysts expect about $50 billion in annual capex from CoreWeave from 2027 through the end of the decade. Still, the company has some big names in its corner that suggest some level of stability, even if its current woes are indicative of the, let’s just say unfavorable, arithmetic faced by the neocloud industry writ large:
- In April, Meta agreed to expand its contract commitments with CoreWeave to $35 billion through 2032, while OpenAI has committed to around $22 billion in total across various contracts that run through the next few years, and the company reportedly has major deals with both Microsoft and Anthropic. Meanwhile Nvidia, which backed CoreWeave in fundraising rounds, has agreed to buy any excess compute through April 2032; Nvidia CEO Jensen Huang said Thursday he is “optimistic” that the neocloud player will not need backstopping.
- Analysts at Gartner have a slightly more apocalyptic outlook, writing in a report published Wednesday that data center operators will need $8.5 trillion to cover their costs through 2030, while total enterprise and consumer AI revenue will only reach $3.6 trillion over the same period. That will “force over 80% of neocloud providers to cease independent operations,” the analysts wrote.
  Glass Quarter Full: Not helping soothe anxieties are leaks out of Anthropic’s recent IPO pitch meetings with investors, which revealed revenue of “only” $16.8 billion in the third quarter. That equates to a growth rate of “only” 45% from the previous quarter, a massive slowdown from the 140% growth seen in Q2. That begs the questions: Which quarter was the outlier, and do either warrant a $2 trillion valuation?
Written by Brian Boyle
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Photo via Tesla
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Tesla’s newest Roadster briefly hovered (yes, hovered) three times in a demo last night — in one instance, it launched over a handful of Tesla vehicles, flipped and touched back down. CEO Elon Musk said the car was created as a collab with SpaceX, hence its vapor-spewing thrusters.
Just don’t expect to see hordes of Teslas leapfrogging gridlock anytime soon. Tesla said the flying “Rocket” trim of the Roadster will be available on an invite-only basis, though reservations for two ground-bound trims of the electric sports car are now open to anyone with $50,000 and $250,000 lying around, respectively. Its arrival (still technically TBD, though production kicks off in 2028) is a long time coming; last night’s demo comes almost exactly nine years after Tesla started accepting deposits of $50,000 and up for the long-delayed vehicle.
The first-generation Roadster was Tesla’s first-ever car, and now Musk said the second-generation will be the last human-driven vehicle it makes as the company moves its focus to robotaxis and robots. While even Musk doesn’t expect the Roadster to have a large impact on Tesla’s revenue, it could be a symbolic stop on the company’s journey.
A Road Sign of the Times
Tesla’s first Roadster was a breakout hit that showed legacy carmakers the then-newbie could make a car. The Roadster also convinced customers that electric vehicles could be something to show off, a luxury item to drive along the PCH. Electric vehicles were a niche splurge at the time. When Tesla first teased the Roadster 2 in 2017, there were 15 EVs available in the US, according to Cox Automotive. Now, there are more than 90.
The Roadster 2, which Musk said in 2017 would cost $250,000, is entering a different market than its earlier incarnation. Other high-end sports car brands haven’t seen much demand for what it’ll be selling:
- Porsche’s CEO said the 911 will never be electric and expects two-thirds of its cars in general to still have a combustion engine by 2030. Lamborghini’s CEO meanwhile told Wired this year that high-end electric-car demand is almost zero — the carmaker in February confirmed it had shelved its 2023 plan to make its first electric car, the Lanzador.
- Bentley still plans to make its first electric car, but got creative to make it sound more combustion-like — a live orchestra was tapped to create the sound of its revving engine. Bugatti CEO Mate Rimac, who previously founded an electric car company, told CNBC this year high-end cars will continue having combustion engines for a very long time.
Lift Off: The Roadster could drive hype, if not much revenue, for Tesla and possibly its corporate sibling under Musk, SpaceX. Tesla’s hovering car could be a preamble to the automaker merging with SpaceX, according to Barclays analyst Dan Levy. But the hovering possibilities may not be practical — creating a flying car is one thing, regulating it is another.
Written by Jamie Wilde
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Financial services giant Charles Schwab is a brokerage, bank, wealth manager and capital markets services provider. Without a traditional institutional investment banking unit, it did not have to deal with investor concerns about a possible slowdown in dealmaking that was the talk of bank earnings week.
Schwab had to face a different, AI-driven anxiety when it reported third-quarter results on Thursday. So far, analysts at Morningstar said, it’s passing the test with flying colors.
Disrupting the Disruption Narrative
Shares in Schwab and other major US brokers have been weighed down this year by the thesis that AI agents and tools will majorly disrupt traditional advisor services by automating financial planning. Customers could appoint agents to automatically shift idle money from brokers to higher-yielding options. That would directly impact Schwab, where net interest revenue rely heavily on the massive pool of low-yielding, so-called sweep cash that it’s able to invest in higher-yielding assets like US Treasuries.
When Meta launched its AI agent Muse last month, it prompted a brief sell-off that also hit rivals like LPL Financial and Raymond James. Wall Street is already taking action. JPMorgan announced earlier this week that it’s blocking AI agents like Muse and Instinct from directly accessing accounts. It’s also piloting its own AI tool called Smart Cash. Schwab, which moved to block agents as well on Thursday, is one step ahead: The company began rolling out an AI-powered assistant called Charley this month.
Schwab’s latest earnings showed no wear from the disruption. Its $3 billion in net income, up 23% year over year, beat analysts’ expectations. It posted a modest revenue miss, but the $7.2 billion top-line figure, up 17%, was still a record. “Schwab’s core business is extremely healthy, exhibiting no signs of intensifying competitive pressure that would support the artificial intelligence disruption narrative,” wrote Morningstar analysts Thursday. Results proved robust in key areas:
- Schwab continued to benefit from the ongoing surge in American retail investors. Its daily trade count rose 44% and trading revenue climbed 16% to $1.1 billion.
- Attracting customer money, be it cash, stocks, bonds or mutual funds, remained no problem, as Schwab reported $192.4 billion in net new assets, better than expected and 43% more than last year’s third quarter.
Good Debt: Schwab shares fell 2.7% on Thursday. Morningstar said this was a result of investors reacting to Schwab’s “modest” revenue miss and that its quarterly net interest margin came in short of expectations at 3.04%, with executives saying they expect the margin to come in at the low end of expectations by year’s end. However, they noted that the net margin was impacted by a “prudent” decision by Schwab to add $5.5 billion in “more expensive short-term borrowing and long-term debt” due to “concerns about the impact of unrealized securities losses as long-term interest rates push higher.” The average $121.26 price target of 26 analysts polled by Zacks Investment Research implies Schwab’s stock has a 28% upside.
Written by Sean Craig
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- An Olive Branch from Apple: Meta and Apple, which have battled over privacy and other issues over the years, are teaming up to bring powerful open-weight AI model Muse to Apple’s high-end personal computers.
- Bin Diesel: International Energy Agency members agreed to expedite the release of 100 million barrels of emergency oil stocks, including 20 million of diesel, to offset the “continued tightness in oil markets.”
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