Market Overview
AI infrastructure is reshaping global capital flows and corporate earnings, but the job market is cooling and inflation risks from the spending spree could force the Fed to hold rates higher than markets hope.
Companies added just 98,000 workers last month, down from 122,000 in May and below the expected 110,000—a signal that the job market is cooling (ADP, CNBC). Healthcare led the way with 48,000 of the new positions, while leisure and hospitality, typically a barometer of consumer health, added only 2,000 jobs. The slowdown matters because a weaker jobs report could give the Federal Reserve cover to cut interest rates later this year, which would be good news for borrowers but bad news for savers.
Meta is building a cloud business to sell spare computing power to other AI companies, a move that Wall Street loves because it could offset the company's staggering $145 billion annual spending on data centers and chips (CNBC). Think of it like a landlord renting out unused office space to pay the mortgage—Meta has bought enormous amounts of computing power to train its own AI models, but it doesn't use all of it all the time. This is competitive: Amazon, Microsoft, and Google already dominate the cloud market, so Meta is essentially trying to convert its massive infrastructure bet into revenue before investors lose patience.
Cleveland Federal Reserve President Beth Hammack said Tuesday that the insatiable demand for AI infrastructure—hyperscalers will pay almost any price for chips and power—could push inflation higher and force the Fed to raise interest rates instead of cutting them (CNBC). This contradicts Fed Chair Kevin Warsh, who believes AI will eventually make things cheaper by boosting productivity, like how assembly lines made cars affordable. The tension matters enormously: if Hammack is right, anyone with a mortgage or credit card faces higher borrowing costs; if Warsh is right, we all benefit from cheaper goods and services down the road.