Oracles, Estimates, and Apples…Oh My!
Welcome to the inaugural Friday Wrap, our weekly survey of the economy, Wall Street, Silicon Valley, and the bureaucrats who pretend they can read the future by staring at spreadsheets. If anyone from the Trump administration is reading this, nothing here qualifies as grounds for a “for cause” removal.
This week, Oracle proved you can shout “AI” and add the GDP of a mid-sized nation to your valuation overnight. We learned that ultra-wealthy tech titans still dream of being media moguls. Apple proved brand loyalty has a price ceiling, and it’s apparently $1,099. The Bureau of Labor Statistics (BLS) proved government statistics are basically astrology with spreadsheets. Inflation has come down with a split personality. And the Federal Reserve‘s independence apparently rests on creative writing by federal district court judges.
Oracle: The Data Is Based
Oracle stock had its best day since 1992, up 36 percent and adding $244 billion in market value after announcing a $300 billion five-year deal with OpenAI. That’s $300 billion — as in the GDP of South Africa, or what Washington spends on interest payments roughly every six weeks. Larry Ellison has now leapfrogged Musk as the richest man alive.
Of course, OpenAI has nowhere near even one hundred billion to spend on Oracle’s Cloud, much less three times that. So far, OpenAI has raised around $60 billion from investors. Last year it took in $3.7 billion in revenue but still made a $5 billion loss. So, the $300 billion spending plan that sent Oracle’s stock soaring is premised on the idea that sometime over the next five years OpenAI will have generated a mountain of cash.
To put it slightly differently, the new valuation of Oracle is based on a speculative projection of OpenAI’s future profitability. To be able to pay for all that Oracle cloud consumption, OpenAI would indeed have to become one of the most profitable businesses ever.
Red Bull Racing Team Principal Christian Horner (center) talks with Larry Ellison (left) and Elon Musk (right) in the Red Bull Racing garage during final practice ahead of the F1 Grand Prix of Miami on May 6, 2023, in Miami, Florida. (Mark Thompson/Getty Images)
We asked ChatGPT, OpenAI’s LLM product, about this. “Your line is accurate: the new valuation reflects a speculative projection that OpenAI will achieve unprecedented profitability, even though right now it is still burning cash.” What could go wrong?
Now that Larry Ellison’s wealth has exceeded Musk’s, he is naturally looking to spend some of it on further acquisitions of media companies. Musk bought X and now David Ellison, Larry’s son, is reportedly eyeing a $40+ billion bid for Warner Bros. Discovery. David’s also throwing around $150 million for Bari Weiss’s Free Press media empire. Which means that we may one day get Weiss running CNN, an outcome that would create a wealth of progressive tears about the state of the media that could rival the wealth OpenAI will need to pay its Oracle bills.
Apple’s $1,099 Form Is Thinner
Apple unveiled the iPhone 17, including the “superthin” iPhone Air. Investors yawned. The stock dropped more than three percent in two days, down nine percent year-to-date. Steve Jobs probably rolled over in his grave as the phone’s camera breaks the sleek line design he helped pioneer. Thinner only counts as innovation when it comes to weight-loss medication, and it certainly isn’t worth the price point of $1,099.
Also, Tim Apple (sorry, Trump nicknames are forever) should probably fire whichever marketing genius thought up the idea of making the price of the new phone match one of the most hated documents in the U.S.: the IRS’s 1099 tax form.
Apple CEO Tim Cook holds a next generation iPhone 17 during an Apple special event on September 9, 2025, in Cupertino, California. (Justin Sullivan/Getty Images)
Speaking of Jobs Turning Over
The Bureau of Labor Statistics admitted it overstated job growth by 911,000 through March — the largest downward revision ever. Last year’s revision erased 600,000 jobs. This year: nearly a million. Two years running, the government told Americans the economy was adding jobs that never existed.
Think about this: the Fed spent two years making interest rate policies based on “hot” job data that was systematically wrong by nearly 1.5 million positions. Jerome “Too Late” Powell kept saying the labor market was tight while employers were apparently hiring ghosts. Every Federal Open Market Committee (FOMC) meeting, every breathless business TV segment about “jobs, jobs, jobs” under Biden was based on numbers that were hallucinations.
The revisions also contain an important lesson. When the official statistics appear to be divorced from popular sentiment, it’s not safe to assume the statistics are right and the people are simply down with a case of bad vibes. As it turns out, the vibecession was closer to reality than the jobs numbers.
Trump Defeats Greedflation
The government’s inflation data delivered a case study in economic schizophrenia. The Consumer Price Index (CPI) rose 0.4 percent in August after a 0.2 percent increase in July, with the annual rate hitting 2.9 percent. The headline month-over-month number surprised to the upside, but the year-over-year and core figures were in line with expectations, so Wall Street read this as a benign report. Meanwhile, the Producer Price Index (PPI) surprised economists by declining 0.1 percent in August, when Wall Street expected a 0.3 percent increase. Core PPI also fell 0.1 percent, defying expectations for a 0.3 percent rise PPI inflation.
The biggest surprise in PPI was the massive contraction of “trade services” — the government measure of the difference between what retailers and wholesalers pay for goods and what they sell them for. The idea is that this is the price of the services provided by shops and retail outfits. The August decline suggests that businesses are eating a large portion of any cost increases related to tariffs, something the enemies of tariffs swore businesses would never, ever, ever do.
The folks who ascribed all the inflation under Joe Biden to corporate greed should be sending thank you cards to Donald Trump. If they were right about prices being a function of greed, the margin contraction implies the election of Trump and the implementation of tariffs has caused the plague of greed brought on by Biden to finally lift from the land.
On the other hand, both PPI and CPI are produced by the Bureau of Labor Statistics — you know, the folks who produce the jobs data. So, maybe it’s all just more hallucination. Maybe they should just ask AI to tell them how prices are doing.
Fed Governor Lisa Cook Gets a Creative Reprieve
A federal judge temporarily blocked the Trump administration’s attempt to fire Fed Governor Lisa Cook, delivering a predictable legal setback to the Trump administration. The administration argued that the allegations of mortgage fraud against Cook met the statutory “for cause” threshold for removing a Fed governor, but the court disagreed.
The weakest part of the opinion from Federal District Judge Jia Cobb — who happens to have belonged to the same national sorority as Cook — was her ruling that even if the mortgage fraud allegations were true, they wouldn’t count as sufficient cause for removal because the loans were taken out prior to Cook’s arrival at the Fed. This required her to read into the Federal Reserve Act (FRA) a limitation found in other statutes, where the standard is often something like inefficiency, neglect of duty, or malfeasance in office. But this limitation is conspicuously absent in the FRA, so Cobb is basically rewriting the law to fit what she thinks it should say. That kind of wishcraft legal reasoning is unlikely to hold up before the Supreme Court.
The administration is appealing; but for next week’s meeting, Cook gets to vote. She’s generally considered dovish and recently seemed open to rate cuts, so her presence won’t change the outcome.
The Fed’s Rate Cut Theater
Markets are betting Powell will cut rates by 25 points next week. Powell made it clear in Jackson Hole that he thinks the Fed has held out long enough and that the risks have tilted away from resurgent inflation and toward a weakening labor market. Any doubts about the prospects of a cut were thoroughly erased by the weak jobs numbers for August, the revision that sent June’s figure into negative territory, and that benchmark revision that has some saying we may have been in a “jobs recession” for most of Biden’s final year.
The Fed’s composition drama adds another layer of complexity. Stephen Miran’s nomination appears headed for confirmation just in time for next week’s meeting, where he may favor a 50 basis point cut over the consensus 25. A big question is whether Fed Governor Christopher Waller or Michelle Bowman—who dissented at the last meeting—will join him.
As far as we can tell, a dissent from Miran would break new ground: it doesn’t appear that any Fed governor has ever dissented at his very first meeting.
The real action, however, will likely not be in the cut the Fed announces but the ones it projects. In the last set of projections, the median forecast was for 50 basis points of cuts this year and just 25 next year. The market, however, now sees three cuts coming this year and likely two more next year. So, will the Fed catch up to the market? Or will the market have to trim back its expectations?
Back next week—unless Ellison buys Breitbart just to shut down our negative nabbobing.
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