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What is going on with the stock market? It just keeps rising. To understand where the markets are going and how they are being influenced by some major macro-economic trends — like tariffs and interest rates, BBTW editor Peter Green spoke with Mike Reynolds, vice-president of investment strategy at Glenmede, an investment manager and private wealth adviser with $47 billion in assets under management.

Mike Reynolds: Part of the Fed’s mandate is to monitor financial stability. It didn’t sound like he was overly worried to the point where it’s going to influence monetary policy near term. We have really full valuations in pockets of the market in the U.S., particularly large-cap growth stocks. That’s the portion of the market that gets a lot of headlines, your Mag-7*, your NASDAQs, your growth stocks. When we look beyond that, we’re actually seeing more fair valuations in the value corners, especially in small-cap, on a relative basis.

* The Magnificent Seven tech stocks are Alphabet$GOOGL ( ▼ 0.8% ) , Tesla$TSLA ( ▼ 4.29% ) , Apple$AAPL ( ▲ 1.86% ) , Nvidia$NVDA ( ▲ 0.35% ) , Meta$META ( ▼ 1.51% ) , Amazon$AMZN ( ▼ 0.85% ) , and Microsoft$MSFT ( ▼ 0.64% ) .

We don’t think so. We monitor sentiment very closely. If you were looking at investor surveys and levels of investor positioning like margin debt, options volumes, around the tech bubble [in 2000], you would have seen truly irrational exuberance. We’re not seeing that in the data yet. Sure, there’s a lot of optimism floating around in this market. But is it like pop-the-bubble sort of optimism at this point? I think that’s kind of a stretch.

The upside there is a lot more limited than it has been over the past few months. If you are expecting material returns going forward, you have to have a thesis that the earnings are really going to be driving that. This year has been remarkably resilient from a profit perspective, especially for the S&P 500. It’s encouraging. You’re seeing smaller caps like the Russell 2,000 are starting to join that party, too, and Q2 is really turning a corner. That’s a part of the market where actually, we think we can see both profit growth as well as valuation expansion as a tailwind for small caps in particular. Looking at large caps, the valuations are looking pretty rich there, so you really have to see the earnings come through to justify those valuations.

The thematic trade around AI has gotten a lot of traction. We see that the top seven companies in the S&P are now more capex-intensive than the top seven have ever been for that index. A hallmark of these companies just a couple of years ago was just how asset-light they were, free cash flow generating machines. The question now is whether you actually get a commensurate return on investment from that capex. And a lot of the demand projections for AI seem really rosy from our perspective. Those valuations aren’t priced for disappointment at this time.

It very well could be a winner-take-all outcome when it comes to AI and adjacent industries. But one of the things we caution our investors about is that even if a technology seems obvious that it’s going to be disruptive, it’s not always obvious who the winner of that race is going to be.

The more obvious opportunity from our perspective is what we’re seeing in small caps right now. There’s three factors behind that. One is the valuations are at fair value from a historical perspective. The second piece is that earnings are finally turning a corner for small cap. Point three, policy is ramping up to be supportive for small caps. A large portion of the Big Beautiful Bill should disproportionately benefit small caps. For example, R&D expensing is a big benefit for small-cap companies. Enhanced interest deductibility is another one. And the other piece is Fed rate cuts. Small caps are a big beneficiary there because more of their debt is floating rate. So there’s still opportunity in that corner.

This interview has been edited and condensed for brevity and clarity.

—Peter S. Green

• Nvidia Nvests in OpenAI: Chipmaker Nvidia $NVDA, now worth about $4.5 trillion, says it will invest about $100 billion in OpenAI, which the artificial intelligence company will use to buy Nvidia chips for an expanding roster of massive data centers. Despite the vast promise of AI, including a promise earlier this month to lease $300 billion worth of data center capacity from Oracle $ORCL, OpenAI is strapped for cash. Its most recent funding round values the company at $300 billion, so it needs to see massive revenue gains to meet its capital expenditures. “Nvidia invests $100 billion in OpenAI, which then OpenAI turns back and gives back to Nvidia,” Bryn Talkington, managing partner at Requisite Capital Management, said on CNBC after the announcement. “This is going to be very virtuous for [CEO Jensen Huang].”
• LMGTFY: After emerging largely unscathed from a Federal Trade Commission lawsuit seeking to break up Google $GOOG over what a federal judge ruled was its illegal monopoly on internet search, Alphabet’s Google now faces a new threat of breakup, in a trial before a different federal judge. Judge Leonie Binkema ruled that Google holds an illegal monopoly on web advertising, and now she’s hearing testimony on how best to end that monopoly. The Justice Dept. wants her to order Google to sell the advertising exchange that links buyers to sellers. While the search decision was affected by the rapid rise of AI-powered responses to online queries, the ad industry hasn’t been as affected by AI.
• Of course, it was a conspiracy: The Federal Trade Commission and seven states are alleging what as every single sports fan and concert-goer in America suspects, that Ticketmaster and its parent LiveNation $LYV conspired with ticket brokers to scoop up vast numbers of tickets to live events and then sell them at significant markup. In March, President Trump actually signed an executive order promising to crack down on ticket scalping. Ticketmaster’s “business model and bottom line benefit from brokers preventing ordinary Americans from purchasing tickets to the shows they want to see at the prices artists set,” the FTC said in a lawsuit filed in California. It’s asking for billions in refunds for overcharged ticket buyers.
• The TikTok ticker: Deal? No Deal? Even after Donald Trump said he spoke with Chinese leader Xi Jinping on Friday about a U.S.-controlled firm taking over the Chinese short video app, it’s not clear if there is a deal. Trump said last week a deal was sealed, but he just needed Xi’s approval. Xi countered that China is “glad to see business negotiations in line with market rules.” Well, one thing is clear: the expected winners.They include nepo-mogul Lachlan Murdoch’s News Corp $NWSA and $FOX, and emergent media mogul and nepo-daddy Larry Ellison, the 81-year old CEO of IT titan Oracle $ORCL . Oh yeah, and the U.S. Treasury. “The United States is getting a tremendous fee-plus—I call it a fee-plus—just for making the deal,” Trump said.

• Heeeeere’s Jimmy! Jimmy Kimmel was back on the air Tuesday night, less than a week after Disney’s $DIS ABC unit yanked his show from the air following a veiled threat by Federal Communications Commission Chair Brendan Carr. Carr suggested he’d intervene in the proposed acquisition of a group of ABC affiliate stations. It’s not clear what prompted Disney’s reversal, and Nexstar, the company whose $6.2 billion acquisition was threatened by Carr, says its 32 ABC affiliates won’t air Kimmel’s show. But with internet streaming steadily eating away at linear broadcast and cable markets, Disney may no longer care as much about affiliates carrying its shows. In fact, the one statement Kimmel said network execs asked him to make was to read the instructions for resubscribing to the Disney+ and Hulu streaming networks.
• Thrown out: Trump’s $15 billion lawsuit against The New York Times $NYT got thrown out of court for being “improper and impermissible,” by Judge Steven Merryday. The 85-page complaint alleging the Times disparaged Trump’s reputation as a successful businessman was just a litany of grievances, and didn’t even lay out the formal allegations until page 80, said Merryday. Trump has a month to re-file a much shorter version of the suit.
• New mogul in town: Oracle $ORCL co-founder Larry Ellison, a friend and admirer of Trump, is close to becoming one of the mightiest media moguls in the U.S. Through his son David, he’s acquired Paramount and its CBS news organization. He’s tipped to be a shareholder in a U.S.-run TikTok, and with Paramount’s disclosure that it’s bidding for the flailing Warner Bros Discovery $WBD, he could soon be in control of CNN.
• Tylenol’s headache: There’s one CEO no one wants to be this week, and that’s Kirk Perry, the interim boss of Kenvue $KVUE E, the Johnson&Johnson $JNJ spinoff that owns Tylenol. On Monday, President Trump repeated false claims made by Robert F. Kennedy, Jr., linking autism to the use of acetaminophen, Tylenol’s active ingredient, during pregnancy. Numerous scientific studies found no link at all. Still, Kenvue’s share price crashed by about 8% before recovering about 6% the next day as analysts realized there was no new evidence to support Trump’s claims.
• Flyby: Bankrupt Spirit Airlines $FLYYQ says it’s going to lay off 1,800 of its 5,200 flight attendants as the beleaguered discount carrier scrambles to stay afloat. Spirit is in the middle of its second bankruptcy in less than a year, and says it will shrink capacity by 25% in November, as it seeks to cut $100 million a year from its labor contracts. The airline is beset by high-cost leases on its planes and tough competition from other airlines.

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• Sorority girls go viral: After the NCAA’s new Name, Image and Likeness rules let college athletes cash in on their fame, up next are sorority sisters. Videos by college sororities aimed at recruiting new members are going viral, earning cash and freebies for the dancers, turning some into influencers who can pay their college tuition with the royalties. For brands, sorority members become long-term loyal customers, and some sorority chapters have appointed members to be brand coordinators, soliciting and managing deals, the Wall Street Journal reports.
• Pfizer’s track back: Pfizer’s $PFE agreement Monday to buy weight-loss drugmaker Metsera $MTSR for $7.3 billion could be the long-suffering pharma company’s path to salvation. Metsera’s once-a-month injectable GLP-1 could grab massive market share from Novo Nordisk’s $NVO Wegovy and Eli Lilly’s $LLY Zepbound, which require weekly shots. Pfizer in April stopped work on its obesity pill, danuglipron, after signs it could cause liver damage. With an unpromising pipeline of new drugs, Pfizer shares are down 60% since peaking in late 2021.
• Screwed? The 50% tariffs that President Trump put on steel and aluminum imports are wreaking havoc on screw-making factories in Taiwan, the largest source of screws, nuts, and bolts for U.S. manufacturers. Some of the fasteners are specialty products used in high-speed trains and exhaust fans in data centers. Others are house-brand wood screws for companies like Home Depot. Tariffs have cut orders at one major factory by 20%, the New York Times reports.
• The Bergdorf billion: Department store owner Saks Global said it’s selling a minority stake in ultra-luxe retailer Bergdorf Goodman to pay down debt. Saks Global acquired Bergdorf when it bought rival Nieman-Marcus last year for $2.6 billion. The Wall Street Journal, citing sources close to the deal, said Saks is selling a 49% stake for about $1 billion, and potential buyers include a Middle East sovereign wealth fund.

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• It’s gonna cost ya: Tech firms and hospitals hoping to hire expert programmers or hematologists from abroad to staff their growing companies will now have to pay the Trump Administration $100,000 for each new H1-B visa, according to new rules. Or they can skip the line by forking over a cool $1 million for a so-called Gold Card. The move, orchestrated by Commerce Secretary Howard Lutnick and intended to promote U.S. workers getting hired first, has upset tech firms, which rely on the visas to staff their companies. Last year 71% of H1-B holders were from India and 12% from China, and Amazon $AMZN was the top employer with 10,000 H1-B holders. President Trump sees this as a money spinner: “We’ll be taking in hundreds of billions of dollars,” he said. But with only 400,000 H1-B visa holders, that adds up to a max of $40 billion based on current numbers. Still, it could help the treasury’s bottom line: Goldman Sachs warned this week that companies evading the new Trump Tariffs could cost the Treasury $40 billion a year.
• Who’s worse for capitalism, Donald Trump or New York City’s likely next mayor, Democratic Socialist Zohran Mamdani? According to Wall Street Journal readers, Trump is a bigger threat to free markets. In the latest intervention in free markets, the Trump Administration’s commerce secretary, Howard Lutnick, told U.S. Steel owner Nippon Steel of Japan $NPSCY, to keep running a long-idled plant in Granite City, Illinois. Otherwise, Lutnick said, he’d invoke the Administration’s golden share and overrule the closure directly. The Journal’s editorial page said Trump’s tariffs are hurting U.S. manufacturing, with U.S. steel prices now twice the world average.

If Hollywood loves anything, it’s a remake. Now it’s gotten to the point where they aren’t even waiting for a movie to be released to remake it.

It’s happened with several high profile flicks lately, like “Solo: A Star Wars Story,” “Justice League,” and Pixar’s latest, “Elio.” Work on the picture begins with a certain creative team, then the studio fires them and replaces them with a new bunch of people to remake and ultimately finish the film. It happens when producers want to “save” a movie, but most of the time the films are dead on the operating table.

Instead of paying for one movie, the studio pays for two, albeit without the classic “cash-in” quality of making a sequel. For example, despite “Justice League” making $661 million at the worldwide box office, it was commonly regarded as a flop because it cost upwards of $300 million to make, not including a huge marketing budget of $150 million. If you need to work so hard to market something, there’s an obvious question about whether it might have been more efficient to make a better thing in the first place.

Studios can usually hide behind the fact that general audiences haven’t seen the initial versions, so they can claim the money loss was worth it because the films became better. Thanks to the pandemic, that’s no longer the case.

Desperate for new content, Warner Bros. handed $20 million to Zack Synder — the director they’d already fired once — to complete his version of Justice League for HBO Max since it was a way to get a “new” movie without having to deal with COVID. In other words, he remade his remake as he originally intended. If this all feels a bit postmodern, that’s because it is. What even is an original thing, anyway? Huh?

When the “Synder Cut” was released, critics and audiences agreed that the new edition of the superhero picture was an improvement over the previous version because it wasn’t a Frankenstein’s monster. No matter how “disastrous” a movie’s quality is amidst production, I believe it’s always a worse idea to change the creative team half way through. My advice to Hollywood? Hire the people you want the first time, and have the confidence to stick with your decisionmaking.

WASHINGTON (AP) — The Department of Government Efficiency’s remaking of the federal workforce has battered the Washington job market and put more households in the metropolitan area in financial distress, according to a report released Wednesday.

The number of homes for sale in the District of Columbia, Maryland and Virginia region, also known as the DMV, is up by 64% since June 2024, and the region’s unemployment rate is the highest in the nation, according to the DMV Monitor, a real-time data interactive created by the Brookings Institution with the Metropolitan Washington Council of Governments.

Washington has had the nation’s highest seasonally adjusted unemployment rate for four straight months. The unemployment rate was 5.3% in January and ticked up to 6% in August, compared with the 4.3% national average, according to Bureau of Labor Statistics data.

From the start of President Donald Trump’s second term in January, DOGE, led by his then-adviser Elon Musk, instigated purges of federal agencies with the expressed mission of rooting out fraud, waste and abuse. DOGE led to tens of thousands of job cuts, including layoffs and people who accepted financial incentives to quit. Some people were rehired, a reflection of the haphazard process. Although losses were felt around the country, the Washington area was particularly hard hit.

Scott Kupor, director of the U.S. Office of Personnel Management, said last month that there will be 300,000 fewer federal workers on the payroll nationwide by the end of the year. The government has about 2.5 million workers, including military members.

Contractors have been affected, too. DOGE’s website states that 13,231 federal government contracts have been terminated, totaling $59 billion in savings. In fiscal year 2024, more than 100,000 companies received contracts, totaling roughly $774 billion.

Besides the mass layoffs, the Republican president’s other actions to remake the image of the nation’s capital — including deploying National Guard troops and federalizing the city’s local Metropolitan Police Department — “could shape consumer spending and investment in the local economy,” the report says.

The report also says private-sector job growth is stagnating, “with many new jobs not aligned with the skills and experiences of most laid-off federal workers.”

“As a result,” it says, “job postings were not as robust as they were in peer regions, which is concerning when unemployment has soared, especially in the suburbs.”

Taylor Rogers, a White House spokeswoman, said D.C. “has often had the highest unemployment rate in the nation, even during Joe Biden’s federal hiring frenzy.” D.C.’s unemployment rate hit 11.3% at the height of the COVID-19 pandemic and fell to 5.3% at the end of Biden’s presidency. “This longstanding problem is due to an overreliance on federal bloat and sky-high crime, two problems that President Trump is quickly and successfully fixing by cracking down on crime in the Nation’s capital and implementing supply-side reforms that have already created over half a million private-sector jobs for American-born workers,” Rogers said.

The DMV region is home to the most college graduates of any major U.S. metropolitan area, and one-fifth of federal workers are concentrated in the area.

In July, the Supreme Court cleared the way for Trump’s Republican administration to downsize the federal workforce further, despite warnings that critical government services would be lost. The ruling does not apply to every agency, and other legal challenges to federal worker firings continue.

Additionally, hundreds of federal employees who lost their jobs in Musk’s cost-cutting blitz are being asked to return to work.

“The DMV region’s economy has grown even weaker than the nation in many categories due to the Trump administration’s seismic actions to shrink the federal government,” the report reads.

And given proposed additional cuts in the future, the DC Fiscal Policy Institute predicts it’s likely more Washington residents and others from around the region who work in Washington will lose their federal jobs over the coming months and years.

The latest Washington Office of Revenue Analysis figures show that initial unemployment insurance claims have jumped by 33.7% compared with this time last year.

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ABILENE, Texas (AP) — The afternoon sun was so hot that OpenAI CEO Sam Altman traded his usual crewneck sweater for a T-shirt on the last legs of a Tuesday visit to the massive Stargate artificial intelligence data center complex that will power the future of ChatGPT.

OpenAI announced Tuesday that its flagship AI data center in Texas will be joined by five others around the U.S. as the ChatGPT maker aims to make good on the $500 billion infrastructure investment promoted by President Donald Trump earlier this year.

Stargate, a joint venture between OpenAI, Oracle and Softbank, said it is building two more data center complexes in Texas, one in New Mexico, one in Ohio and another in a Midwest location it hasn’t yet disclosed.

But it’s the project in Abilene, Texas, that promised to be the biggest of them all, transforming what the city’s mayor called an old railroad town.

Oracle executives visiting the eight-building complex said it is already on track to be the world’s largest AI supercluster once fully built, a reference to its network of hundreds of thousands of AI computer chips that will be running in its H-shaped buildings.

Altman said, “When you hit that button on ChatGPT, you really don’t — I don’t, at least” — think about what happens inside the data halls used to build and operate the chatbot.

He and Oracle’s new co-CEO Clay Magouyrk also sought to emphasize the steps they’ve taken to reduce the energy-hungry complex’s environmental effects on a drought-prone region of West Texas, where temperatures hit 97 degrees Fahrenheit (36 degrees Celsius) on Tuesday.

“We’re burning gas to run this data center,” said Altman, but added that “in the long trajectory of Stargate” the hope is to rely on many other power sources.

The complex will require about 900 megawatts of electricity to power the eight buildings.

One is already operating, and a second that Altman and Magouyrk visited Tuesday is nearly complete. Each server rack in those buildings holds 72 of Nvidia’s GB200 chips, which are specially designed for the most intensive AI workloads. Each building is expected to have about 60,000 of them.

More than 6,000 workers now commute to the massive construction project each day, in what Mayor Weldon Hurt described as a significant boost to the local economy. The campus and nearby expansion will provide nearly 1,700 jobs onsite when fully operational, Oracle said, with “thousands more indirect jobs” predicted to be created.

Hand-made signs lining the roads to the facility advertise “move-in-ready” homes for workers.

“AI WORKERS? HUGE DISCOUNTS” says one promising homes with one to six bedrooms.

But Hurt also acknowledged that residents have mixed feelings about the project due to its water and energy needs.

The city’s chronically stressed reservoirs were at roughly half-capacity this week. Residents must follow a two-day-a-week outdoor watering schedule, trading off based on whether their address numbers are odd or even.

One million gallons of water from the city’s municipal water systems provides an “initial fill” for a closed-loop system that cools the data center’s computers and keeps the water from evaporating. After that initial fill, Oracle expects each of the eight buildings to need another 12,000 gallons per year, which it describes as a “remarkably low figure for a facility of this scale.”

“These data centers are designed to not use water,” Magouyrk said. “All of the data centers that we’re building (in) this part of Stargate are designed to not use water. The reason we do that is because it turns out that’s harmful for the environment and this is a better solution.”

The closed-loop system shows that the developer is “taking its impact on local public water supplies seriously,” but the overall environmental effect is more nuanced because such systems require more electricity, which also means higher indirect water usage through power generation, said Shaolei Ren, a professor at the University of California, Riverside, who has studied AI’s environmental toll.

Indeed, the data center complex includes a new gas-fired power plant, using natural gas turbines similar to those that power warships. The companies say the plant is meant to provide backup power for the data halls and is a better option than traditional diesel generators. Most of the power comes from the local grid, sourced from a mix of natural gas with the sprawling wind and solar farms that dot the windy and sunny region.

Ren said that “even with emission-reduction measures, the health impacts of essentially turning the data center site into a power plant deserve further study for nearby communities.”

Arlene Mendler, a Stargate neighbor, said she wished she had more say in the project that eliminated a vast tract of mesquite shrubland, home to coyotes and roadrunners.

“It has completely changed the way we were living,” said Mendler, who lives across the street. “We moved up here 33 years ago for the peace, quiet, tranquility. After we got home from work, we could ride horses down the road. It was that type of a place.”

Now, she doesn’t know what to do about the constant cacophony of construction sounds or the bright lights that have altered her nighttime views. The project was essentially a done deal once she found out about it.

“They took 1,200 acres and just scraped it to bare dirt,” said her husband, Fred Mendler.

The first time most residents heard of Stargate — at least by that name — was when Trump announced the project shortly after returning to the White House in January. Originally planned as a facility to mine cryptocurrency, developers had pivoted and expanded their designs to tailor the project to the AI boom sparked by ChatGPT.

The partnership said at that time it was investing $100 billion — and eventually up to $500 billion — to build large-scale data centers and the energy generation needed to further AI development. More recently, OpenAI signed a $300 billion deal to buy computing capacity from Oracle. It’s a huge bet for the San Francisco-based AI startup, which was founded as a nonprofit.

OpenAI and Oracle invited media and politicians, including U.S. Sen. Ted Cruz, a Texas Republican, to tour the site for the first time Tuesday.

Cruz called Texas “ground zero for AI” because if “you’re building a data center, what do you want? No. 1, you want abundant, low-cost energy.”

Of the other five Stargate data center projects announced Tuesday, Oracle is working with OpenAI to build one just northeast of Abilene, in Shackelford County, Texas, and another in New Mexico’s Doña Ana County. It also said it is working to build one in the Midwest.

Softbank said it has broken ground on two more in Lordstown, Ohio, and in Milam County, Texas.

The projects offer OpenAI a way to break out from its longtime partnership with Microsoft, which until recently was the startup’s exclusive computing partner. Altman told The Associated Press his company has been “severely limited for the value we can offer to people.”

“ChatGPT is slow. It’s not as smart as we’d like to be. Many users can’t use it as much as they would like,” Altman said. ”We have many other ideas and products we want to build.”

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The Associated Press and OpenAI have a licensing and technology agreement that allows OpenAI access to part of AP’s text archives.