MOVE Index: An AI Bubble Burst Indicator to Watch

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What’s in Today’s Report:

  • MOVE Index:  An AI Bubble Burst Indicator to Watch

Futures are little changed following a mostly quiet night of news.

There were no notable geopolitical events overnight and all three conflicts (Russia/Ukraine, Iran/U.S., Saudi/Houthis) remain status quo (tensions and fighting across all three).

Economically, data in Europe ran “hot” as German PPI and the UK Labour Market Report were stronger than expected.

Today the economic calendar is quiet with Housing Starts (1.305M) and Pending Home Sales (E: 0.1%) the only notable reports (and they shouldn’t move markets).

On earnings, the season really starts to heat up today and markets will be looking for good results and optimistic guidance. Reports to watch today include: GE ($2.02), NFLX ($0.82), RTX ($1.78), ISRG ($2.13), COF ($5.45), MMM ($2.41), GM ($3.55), NOC ($7.22).

How Big of a Problem is AI for this Market?

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What’s in Today’s Report:

  • How Big of a Problem is AI for this Market?
  • Understanding Why Treasury Yields Dropped Last Week (Important)
  • Weekly Market Preview: Can Tech Earnings stabilize AI Sentiment?
  • Weekly Economic Cheat Sheet: Flash PMIs the Key This Week

Futures are modestly higher as tech stocks bounce from Friday’s declines while oil prices dropped 1% overnight on hopes of diplomatic progress between Russia and Ukraine.

Tech stocks are seeing an oversold bounce ahead of some important tech sector earnings reports this week (SPCX & META) but nothing materially “positive” occurred overnight.

Geopolitically, Russia has apparently proposed a Putin/Xi/Trump summit to negotiate a Ukraine deal that would ultimately produce a ceasefire.

Today there is only one notable economic report, Housing Market Index (E:31), and that shouldn’t move markets so focus will stay on geopolitics and any diplomatic progress on any of the three wars will be a positive for markets.

On earnings, tech earnings ramp up later this week.  Some reports we’re watching today include FITB ($1.09), STLD ($5.42), WRB ($1.14), CCK ($2.25).

 

New ETFs for Your Watchlist

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What’s in Today’s Report:

  • New ETFs for Your Watchlist

Futures are pointing higher as investors take comfort in Fed Chair Warsh’s flexible stance on rates.

Warsh avoided signaling whether the Fed will hold or raise rates later this year, and markets viewed his comments as less hawkish than feared following two days of hotter-than-expected inflation data.

Economically, Eurozone HICP met expectations at 3.8% y/y, while Core HICP also met estimates at 2.5% y/y.

Today, focus will be on Import & Export Prices (E: 0.6% m/m, 0.9% m/m) and Industrial Production (E: 0.4%). Markets will be looking for signs that price pressures are not broadening further.

Finally, there are no Fed speakers scheduled today, while earnings include TRV ($7.01), TFC ($1.17), MTB ($4.98), CFG ($1.38), and RF ($0.67.

 

Understanding the Biggest AI Risk (for This Market)

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What’s in Today’s Report:

  • Understanding the Biggest AI Risk (for This Market)

Futures are modestly higher on strong tech earnings and despite further escalation between Saudi Arabia and the Houthis.

Semiconductor company ASML posted much better than expected quarterly results and order backlog and that’s helping the entire AI infrastructure sector to rally this morning.

The Houthis attacked Saudi Aramco headquarters and threatened to target energy infrastructure, sending oil 1% higher.

Today focus will be on CPI (E: 0.6% m/m, 3.6% y/y) and, more importantly, Core CPI (E: 0.2% m/m, 2.5% y/y).  Put simply, we need to see in-line or better than expected numbers to further pressure Treasury yields and if we get that, stocks should rally.  Conversely, if inflation metrics run hot, look for October rate hike odds (and yields) to rise again, likely pressuring stocks.  Away from CPI we also have two Fed speakers, Barkin (1:30 p.m. ET) and Bowman (10:55 p.m. ET), but they shouldn’t move markets.

On earnings, they continue to roll on with a focus on the banks and notable reports today include BAC ($1.11), MS ($2.83) and BLK ($14.01).  Additionally, Anthropic will release some revenue information to investors this afternoon and that will likely become public. If that revenue information is better than expected it could be a late day boost for tech/markets (and if it’s weak, a late day negative).

 

How Three Global Conflicts Are Impacting Markets

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What’s in Today’s Report:

  • How Three Global Conflicts Are Impacting Markets

Futures are little changed following a generally quiet night of news as investors await major bank earnings today and CPI tomorrow.

Oil prices are down close to 2% on reports the U.S. and Iran are still negotiating over a Hormuz transit agreement.

Economically, the only notable report was German CPI, which met expectations (0.6% m/m and 3.3% y/y).

Today focus will be mainly on earnings and, as usual, any AI or geopolitical headlines. That said, there is one notable economic report today, Existing Home Sales (E: 3.965 million) and two Fed speakers: Barkin (1:00 p.m. ET), Collins (4:00 p.m. ET).

On earnings, the “season” really kicks off today with big bank and healthcare earnings and key reports to watch include: JPM ($5.94), JNJ ($2.53), UNH ($4.12), GS ($12.90), WFC ($1.85).  From the banks, positive commentary on the consumer is key and if management is upbeat on consumer spending, it’ll be a general market positive.

 

More Proof of How Vulnerable This Market is to AI Disappointment

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What’s in Today’s Report:

  • More Proof of How Vulnerable This Market is to AI Disappointment
  • Weekly Market Preview: Can Yields Continue to Move Lower?
  • Weekly Economic Cheat Sheet: Inflation in Focus This Week (CPI Wednesday)

Futures are slightly higher following mixed geopolitical news over the weekend.

Fighting between the Saudis and Houthis escalated substantially over the weekend following Houthi attacks on the Riyadh airport and the increased tensions are pushing oil prices higher (Brent up 0.75% this morning).

In Russia/Ukraine, President Trump announced an “energy ceasefire” between Russia and Ukraine that would push prices lower if it holds, although the market is rightly skeptical that it will.

Today there are no notable economic reports and just one Fed speaker, Hammack (12:10 p.m. ET), so focus will remain on geopolitics and AI (as it’s been for the last week).

 

Where to Still Get High Dividends in this Market

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What’s in Today’s Report:

  • Where to Still Get High Dividends in this Market

Futures are higher, led by tech, as OpenAI’s upbeat revenue outlook helps ease concerns about the AI trade.

Oil prices are retreating from Thursday’s spike after President Trump ruled out military strikes on Iran before the November midterms.

Economically, there were no noteworthy economic reports overnight.

Today, focus will be on Consumer Confidence (E: 48.0) at 10:00 a.m. ET. Markets will be looking for a stable reading and contained inflation expectations amid elevated oil prices.

Finally, Delta Air Lines (E: $1.93) reports earnings before the open, while Fed Governor Collins is scheduled to speak at 4:00 p.m. ET.

 

Understanding Why Rates Are Rising – France and AI

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What’s in Today’s Report:

  • Understanding Why Rates Are Rising – France and AI

Futures are sharply lower as rising oil prices and Treasury yields are pressuring stocks.

Oil prices are surging as escalating attacks on tankers near the Strait of Hormuz and in the Middle East raise concerns about sustained supply disruptions.

Economically, there were no noteworthy economic reports overnight.

Today focus will be on Jobless Claims (E: 200K), followed by 4- & 8-Week Bill auctions at 11:30 a.m. ET and the 30-Yr Bond auction at 1:00 p.m. ET. Stable claims and solid auction demand would be supportive for stocks.

Finally, there are two Fed speakers today Kashkari (10:40 a.m. ET) and Musalem (1:40 p.m. ET), while earnings today include PEP ($2.29), NG ($-0.08), and HELE ($0.32).

 

Market Multiple Table: Explaining the Current Market Dynamic

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What’s in Today’s Report:

  • October Market Multiple Table: Explaining the Current Market Dynamic

Futures are modestly lower following a quiet night of news as both Treasury yields and oil rallied overnight.

French bond yields are 10 bps higher and erasing Tuesday’s declines as student protests sweep the nation. The rise in French yields are pulling global yields (including U.S. Treasury yields) higher.

Economically, German Industrial Production beat estimates, rising 2.0% vs. (E) 0.5% and underscoring solid economic activity in the EU.

Today focus will be on the FOMC Minutes (2:00 p.m. ET) and investors will be looking for insight into just how hawkish the committee was back in September (the less hawkish, the better as that will pressure yields and help support stocks).  We also get Consumer Credit (E: $15.0B) this afternoon, although that’s unlikely to move markets.

 

Your Window to Send a Q3 Client Letter Is Closing

Q4 is already underway. If you haven’t sent clients a Q3 update yet, you’re not too late. But this is the week to get it done.

Clients are hearing about renewed Fed hikes, 5% Treasury yields, $100 oil, inflation, geopolitics, and AI. They don’t need more headlines. They need your perspective on what it all means.

The good news: We already did the hard part.

The Q3 Sevens Report Quarterly Letter is finished and available as a fully editable Word document. We researched the quarter, identified what mattered, and wrote the client-ready letter. You customize it, send it through compliance, and get it to clients.

The window is still open. But it won’t be for much longer.

Get the Q3 Quarterly Letter Here

 

If Rates Are Higher for Longer, What Outperforms?

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What’s in Today’s Report:

  • If Rates Are Higher for Longer, What Outperforms? (Hint:  Secular Growth Strategies)

Futures are modestly higher on a decline in oil prices and global bond yields, following positive news for both markets.

European bond yields are lower after Marine Le Pen, the favorite to become the next French President, unveiled a more fiscally responsible budget, easing some fiscal concerns.

Oil prices are lower after Yemeni forces recaptured critical coastal cities from the Houthis, reducing the threat to the Bab el-Mandeb Strait.

Today there are no notable economic reports but there are several Fed speakers including Williams (9:05 a.m. ET), Bowman (10:45 a.m. ET), Schmid (1:15 p.m. ET), and Logan (7:00 p.m. ET).  Williams is again the most important of them (he’s the Vice Chair) and if he reiterates there’s “no rush” in hiking rates that should put more downward pressure on yields, which will be positive for stocks.