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.

 

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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.

 

Why High Yields Haven’t Caused a Bigger Pullback (Yet)

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What’s in Today’s Report:

  • Why High Yields Haven’t Caused a Bigger Pullback (Yet)
  • Weekly Market Preview: Geopolitics and Fed in Focus (How many rate hikes?)
  • Weekly Economic Cheat Sheet: Can We Get More Goldilocks Data?

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

Starting with the geopolitical positives, there were reports that oil exports from the Middle East surpassed pre-war levels. Negatively, there was another unconfirmed attack on the Saudi East-West pipeline and increased fighting between Saudi Arabia and the Houthis. The net result is Brent Crude is modestly higher (up less than 1%).

Economically, the composite PMIs were solid as the EU PMI met expectations while the UK reading beat (52.0 vs. (E) 51.7.)

Today we get the final of the “Big Three” monthly economic reports via the ISM Services Index (E: 55.0) and the price index here will be key. The smaller the increase (or larger the decrease), the better for stocks as it pushes back on inflation concerns (and should push yields lower).

 

Are Rising Rates Really Bad For Stock Returns?

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What’s in Today’s Report:

  • Are Rising Rates Really Bad For Stock Returns?

Futures are higher as a sharp drop in oil prices and lower Treasury yields are supporting stocks ahead of today’s September jobs report.

Oil prices are falling as reports of potential strategic reserve releases in Europe ease supply concerns.

Economically, Eurozone HICP came in at 3.8% vs. (E) 3.7% y/y, while Core HICP met expectations at 2.5% y/y.

Today, focus will be on the September Employment Situation Report (E: 90K Job-Adds, 4.1% Unemployment Rate, 0.3% Wage Growth), with Factory Orders (E: 0.0%) and Motor Vehicle Sales (E: 16.6 million) also due. A Goldilocks jobs report should help support stocks.

Finally, Fed Governor Logan is scheduled to speak at 10:00 a.m. ET, although the jobs report will remain the primary focus for markets.

 

Jobs Report Preview: One Rate Hike or Two?

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What’s in Today’s Report:

  • Jobs Report Preview: One Rate Hike or Two?

Futures are higher to start Q4 as investors digest higher Treasury yields, Micron’s latest outlook, and upcoming economic data.

Geopolitically, oil prices are higher as there was little progress on U.S.-Iran talks while a Houthi attack targeted the Abqaiq oil facility in Saudi Arabia.

Economically, China’s official Manufacturing PMI rose to 52.1 while Services PMI came in at 51.6.

Today’s focus will be on Jobless Claims (E: 200K), ISM Manufacturing PMI (E: 54.8), and Construction Spending (E: 0.0%) as markets will be looking for solid but not too-strong data. The Treasury will also hold a 4- & 8-Week Bill auction at 11:30 a.m. ET.

Finally, there is a slew of Fed speak today as Waller (10:00 a.m. ET), Jefferson (1:30 p.m. ET), Bowman (3:00 p.m. ET), Williams & Cook 3:30 p.m. ET), Logan (6:45 p.m. ET) are scheduled to deliver comments. Earnings include ACN ($3.19), NKE ($0.45), and MKC ($0.75).

 

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When Do High Yields Become a Bearish Gamechanger? Indicator to Watch

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What’s in Today’s Report:

  • When Do High Yields Become a Bearish Gamechanger?  Indicator to Watch.

Futures are little changed following a generally quiet night of news as investor focus turns towards economic data.

Geopolitically, U.S./Iran negotiations yielded no material progress although increased oil exports from the region are keeping the rise in oil modest (up 1% overnight).

Economically, Chinese September PMIs met expectations.

The important economic data for this week really begins today and continues through Friday and the key for markets is Goldilocks data that implies solid growth but doesn’t raise rate hike expectations.

Today, important reports to watch are (in order of importance): Core PCE Price Index (E: 0.3% m/m, 3.2% y/y), ADP Employment Report (E: 70K) and, to a lessor extend, Final Q2 GDP (E: 1.5%).

Regarding the Fed, the parade of speakers continues this week and the less hawkish they are, the better for stocks.  Speakers today include: Barkin, (1:30 p.m. ET), Cook (3:25 p.m. ET), Goolsbee (5:10 p.m. ET) and Kashkari (6:00 p.m. ET).

Finally, earnings matter today with a key report from Micron (MU ($31.35) and the stronger the demand, the better.

 

Why Gold Fell So Hard on Monday

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What’s in Today’s Report:

  • New ETFs for Your Watchlist (Monthly Update)
  • Why Gold Fell So Hard on Monday

Futures are little changed as markets digest more mixed headlines on U.S./Iran ceasefire talks.

Geopolitically, President Trump denied Monday’s “sanction relief for nuclear concessions” headlines, but negotiations appear on going in some form (which is positive).

Geopolitics will remain the primary market driver today and any positive headlines on a ceasefire should pressure oil and help stocks rebound.

Economically, reports today include the Case-Shiller Home Price Index (E: 2.1%), FHFA House Price Index (E: 2.4%) and Consumer Confidence (E: 90.0) but they’re unlikely to move markets, barring a major surprise.

We do have a lot of Fed speakers today and of them, Williams (2:00 p.m. ET) and Waller (3:00 p.m. ET) are the most important.  Other Fed speakers today include Bowman (11:00 a.m. ET), Barr (12:40 p.m. ET), Goolsbee (1:00 p.m. ET) and Musalem (1:30 p.m. ET).  Bottom line, if the tone from Fed speakers remains hawkish that will help support the dollar and yields.

Finally, there are two consumer-focused companies reporting today, CCL ($1.36) and KMX ($0.68) and the stronger the reports, the better.