TMTB Morning Wrap

Good morning. Overnight, main macro news focused on Iran (Trump calling for 25% tariffs on any country that trades with Iran…Oil +1%) and reports in Japan that PM Takaichi might call a snap election for the lower house driving Nikkei +3.1% to new ATH. Outside Japan, in Asia saw decent price action: TPX +2.41%, Hang Seng +0.9%, HSCEI +0.71%, SHCOMP -0.64%, Shenzhen -1.42%, Taiwan TAIEX +0.46%, Korea KOSPI +1.47%. Yields up 1-2bps across the curve.

CPI out in a bit this morning.

Lots of good stuff to get to this morning, so let’s get to it…

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AI Semis/AI Power: Trump says microsoft has agreed to change data center power arrangements so their electricity use does not push up u.s. household utility bills, with more big tech deals coming soon

Speculation on what this could be is possibly:

1) MSFT agreeing that new AI data centers won’t push incremental power costs onto residential utility bills by shifting toward self-funded, dedicated power solutions—think behind-the-meter generation like BE, direct power purchase agreements tied to new build capacity, and/or on-site power so local ratepayers aren’t effectively subsidizing data-center load growth

In that context, a real-world analog is the NBIS data center in Vineland, which is BTM and reportedly uses waterless carbon capture—a template that would let MSFT claim the load is ring-fenced from the regulated grid and consumer rate base.

2) Other option could be just for a more typical “for show” Trump announcement: a broader “AI Data Center Power Compact” where Microsoft is the first named participant, laying out a public framework that Big Tech will pay its own way for incremental generation, grid upgrades, and reliability investments, while positioning it politically as keeping households “free and secure” and protecting consumers from bill inflation tied to data center buildouts.

We’ll get more details shortly.

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AI Power: America’s Biggest Power Grid Operator Has an AI Problem—Too Many Data Centers - WSJ

The WSJ reports that the AI boom is pushing PJM, the nation’s largest power-grid operator, to the brink of a supply crisis that threatens rolling blackouts for 67 million people across 13 states. The article notes that insatiable demand from Northern Virginia data centers is driving up consumer rates and overwhelming infrastructure, while tech giants like Amazon and Microsoft resist proposed regulatory interventions. Furthermore, the Journal writes that reliability risks are intensifying as older plants retire faster than new ones can be built, sparking political backlash from governors over rising costs and grid instability.

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AI Semis / AMD / INTC: KeyBanc raises NVDA/AVGO CoWoS estimates and sees CPU Pricing Firming / Upgrades AMD and INTC on CPU refresh/pricing