Good morning.

Wall Street's Monday rebound didn't make it across the Pacific. South Korea's KOSPI fell 3.73% on Tuesday to close at 5,552.74, and the tech-heavy Kosdaq slipped back below 800, the Seoul Economic Daily reported. SK hynix lost 4.23% and Samsung Electronics 2.98%. Foreign investors and institutions sold about 1.54 trillion won of stock between them, and retail buyers couldn't absorb it. Brokers blamed doubts about whether AI spending will pay off, plus higher global bond yields and oil prices. Lee Kyoung-min of Daishin Securities called it "profit-taking following the previous session's rebound."

One good day in New York, one bad day in Seoul. Twenty-four hours is a long time in the AI trade.

Artificial Intelligence

The AI money race just turned into a relay, and everyone is trying to grab the baton before the S-1 goes public.

OpenAI is trying to lock in about $30 billion of investor commitments before Anthropic's expected stock market debut in mid-November, Reuters reported Monday, according to CTech. The round could value the ChatGPT maker at more than $1.4 trillion, and SoftBank and Abu Dhabi's MGX are reportedly in talks to join. OpenAI was last valued at $852 billion in March.

The urgency is about comparison. Once Anthropic's numbers are public, every private valuation in AI gets measured against a stock price. OpenAI wants its round closed before that happens.

Anthropic, meanwhile, is still buying computing power at full stride. Nscale is in talks to sell it computing capacity in a second deal worth about $45 billion. It would cover a second building at Nscale's Monarch campus in West Virginia: 460 megawatts running Nvidia's Vera Rubin chips, Reuters reported via The Korea Times. That comes on top of the $45 billion rental deal the two signed in August. For Nscale, whose own IPO valuation is under pressure after Microsoft walked away from its UK site, a second anchor order is a valuable answer to its doubters.

Final Lap: Two races are running at the same time. OpenAI wants to set its price before the public market sets one for its rival. Anthropic wants to reach the starting line with its computing supply locked in. Investors who bought AI infrastructure on faith last year are now asking for proof: power that's switched on, contracts that are signed, revenue they can check. Whoever shows those receipts first gets to set the price for everyone else.

Industrials

Steel investors got the short version Monday: prices up, no new stock.

Cleveland-Cliffs (CLF) closed up 16.34% at $14.10 on volume of more than four times its three-month average, per the Motley Fool's market wrap. The trigger was a third quarter that CEO Lourenco Goncalves called the company's "strongest quarter in three years," and a 2027 outlook that would make this year look small.

The surprise was that the company cleared a higher bar than expected. Revenue actually came in a bit light. Investors bought the stock for the margins, the outlook and the balance sheet.

Goncalves calls Cliffs "the largest supplier of automotive steel by a lot," and a big share of its business runs on contracts, so renewal season decides when higher spot prices actually reach the income statement. He said Cliffs has been "very successful in renewing these contracts," and that the company is selling "under the best price environment in three years," according to the earnings call transcript. He also said imports remain about 35% to 40% below where they were before the Section 232 tariffs.

By the numbers: $612 million in adjusted EBITDA, roughly double the prior quarter · $1,177 average selling price per ton · about $715 million in EBITDA guided for the fourth quarter · more than $4 billion in EBITDA expected for 2027, per the company's release · $0.28 in adjusted EPS against a $0.22 forecast, though revenue of $5.6 billion fell short of the $5.71 billion Wall Street expected, Investing.com tallied.

Rival Steel Dynamics (STLD) had a different evening. It reported record shipments of 3.8 million tons and earnings of $5.26 a share, in its own release, but that missed the $5.48 analysts expected, and the shares slid.

Hammer Time: The 2027 number is what the market is pricing now, and it depends on steel prices staying firm. Goncalves at least took dilution off the table: "We are not going to issue stock. We don't need to, full stop." Cliffs still carries about $7.6 billion in long-term debt, and its stated goal is to get leverage under 2.5 times. If prices hold, it deleverages quickly. If imports come back or auto demand cools, the gap between this quarter and next year's target will look much larger.

Tech Policy

The federal government has served its eviction notice, and it covers more than the app.

The Department of Homeland Security has ordered federal civilian agencies to remove DeepSeek technology from their IT systems and stop buying it. The order covers not just DeepSeek's own app and models but also "third-party products and services developed using DeepSeek implementations," The Register reported. The notice was posted to the Federal Register on Monday under the 2018 Federal Acquisition Supply Chain Security Act. It warns that DeepSeek's models present "multiple threat vectors" and could lead to the "transfer of sensitive data to the People's Republic of China," SiliconANGLE reported.

The ban isn't a surprise. Earlier actions by the Pentagon, the Navy and several states had already locked DeepSeek out of plenty of government systems. What's new is that the rule now applies across all federal civilian agencies, and that it reaches the supply chain. CyberScoop reported that Homeland Security Secretary Markwayne Mullin signed the exclusion order on June 26. Agencies that want an exception must apply 60 days ahead and give a "compelling justification," such as being unable to perform a mission-critical function. The order names DeepSeek's parent, Hangzhou DeepSeek Artificial Intelligence. Other Chinese open-weight models, such as Alibaba's Qwen and Moonshot's Kimi, have drawn similar concerns but aren't covered.

The phrase "built on DeepSeek" is where government contractors will feel it. Katie Moussouris, founder and CEO of Luta Security, told The Register that banning DeepSeek's own app and API is "workable," but that applying the rule to third-party products, including US-hosted models, goes too far. The Register also noted that AI gateways which route requests across many models can reach DeepSeek, so an agency could end up using it without meaning to.

Beijing pushed back. Foreign Ministry spokesperson Mao Ning said Tuesday that China opposes Washington's broad use of national security arguments, Daily Sabah reported, and promised to protect Chinese companies' "lawful interests." Separately, DeepSeek is helping Huawei design future AI chips, The Information reported. That partnership could help China build frontier models without Nvidia hardware.

Moving Day: The direct revenue at stake for DeepSeek is probably small. The precedent is bigger. Washington is now treating the model underneath a product as a supply-chain risk, the way it treats a router or a chip. Contractors will need to know which models their products use, and US model makers have just been given a government-certified sales pitch.

Monday was a relief rally with conditions attached. The Nasdaq rose 1.11%, the S&P 500 gained about 0.4%, and the 10-year yield climbed back above 5.1% anyway. Then Seoul sold off. Tonight SpaceX and Netflix report, and tomorrow brings Tesla and Meta, so the AI trade gets checked against real earnings all week.

That's the tape. We'll see you at the open. — AllThingsWallSt