Baker Hughes reports that higher interest rates have failed to slow investment in major energy projects. The company watched borrowing costs climb and waited for someone to care. Nobody cared.
Turns out AI data centers need power. LNG demand keeps rising because ChatGPT requires the same infrastructure as a small nation. Your nephew asked his phone to write a poem about his feelings and Baker Hughes just booked another quarter of industrial equipment sales. The circle of life.
Energy executives looked at 7% borrowing costs and shrugged. They looked at their LNG export terminals and shrugged harder. The Federal Reserve raised rates to slow down the economy and accidentally created a boom in liquefied natural gas because tech companies need electricity to power the machines that generate corporate emails nobody reads.
This is the same market where retail traders spent three years convinced rate hikes would crater every stock with a ticker symbol. They read the headlines. They learned the terms. They watched CNBC with the intensity of film students analyzing Kubrick. Then Baker Hughes said projects are moving forward anyway and those same traders checked their portfolios to find they sold energy stocks in 2023 to buy more Tesla calls.
The technical analysis here is clean. Higher rates mean higher costs. Higher costs mean lower investment. Lower investment means Baker Hughes suffers. Except none of that happened because AI labs needed to consume entire power grids to teach computers how to argue with teenagers on the internet.
The Fed tried to tap the brakes and accidentally hit the gas on the one sector that doesn't give a f*ck about monetary policy.
Photo by Julia Taubitz on Unsplash
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