Consumer Confidence Drops Sharply
The Conference Board's September consumer confidence reading came in at 81.9, well below the 89.2 that analysts expected. Last month's figure was revised down to 88.6 from 89.4. The consumer expectations index fell by 5.9 points. This is one of the largest drops seen in a long time. Consumer confidence is now testing and has passed the COVID-19 lows, which makes it a big deal.
The present situation index is also turning lower, though not as badly as in 2022 or 2020. Net views on current business conditions - people calling them good versus bad - declined by 3.4%. Current employment conditions softened during the month too. This matches other weak consumer sentiment data from the past week, including the University of Michigan sentiment survey.
Lower consumer confidence usually comes before lower consumer spending, which feeds into inflation. So the market might have been expected to rally on this news, but equities barely reacted.
Why the Economy and Sentiment Diverge
This is a K-shaped economy. Sentiment surveys capture a broad group of people, but those with money - large companies and wealthier individuals - stay resilient and keep spending in certain parts of the market. Their equity investments give them positive cash flow because stocks are still trading near all-time highs.
Volatility stays low. The VIX sits at 16, implying about a 1% daily move. Credit spreads keep moving higher. That gap - rising credit spreads and higher volatility in yield markets, but low equity volatility - is a major divergence. Divergences like this usually do not last long. One, two, even three days is normal, but this has run about a week and a half.
JOLTS Job Openings
August job openings (JOLTS) came in at 7.079 million, below the 7.23 million expected. July was revised up to 7.335 million from 7.27 million, so the two figures roughly cancel out. The data is a bit stale and lagging. An uptick in job openings over the next couple of months is likely as retailers hire seasonal holiday workers, construction picks up in the second half of the year to finish projects, and back-to-school hiring lingers. Overall, the data was not great, and equities still gave a weak response. It is unclear what more the market needs to ease the yield spike seen over the past month and a half. Some of the reaction may already have been priced in by last week's sentiment data.
Anthropic's Leaked IPO Filing
A leaked Anthropic IPO prospectus reported by Reuters shows a net loss of $42 billion in 2025, with plans to spend $58 billion on obligations over the next few years.
The filing plans to warn potential IPO investors that AI could pose catastrophic or existential risks to humanity - from the same company trying to profit from that technology. Of the 261-page prospectus, about 80 pages cover AI risk versus only 48 pages on the business itself. The existential risks named include self-improving models, models resisting shutdown, concealing information, and even a form of blackmail against users.
Is the warning genuine fear or something else? It looks partly like public relations. Anthropic wants to be heard, especially when building data centers in communities worried about both resource use and potential risk. The company is also likely covering itself legally in case something goes wrong. Some AI incidents from Anthropic or OpenAI over the past weeks would, if done by a human, likely lead to court or jail. The legal status of AI is murky, and the company is trying to get ahead of it.
The situation is similar to Y2K: it could turn out badly, or the technology could prove great for improving efficiency. Anthropic has delivered cutting-edge models and is targeting roughly a $2 trillion market cap at IPO. The offering is expected to hit the market in November and could be the biggest IPO in history. The open question is whether the hype follows through, or whether enough caution in the market makes the IPO less successful than people expected.
