The Morning Call---The AI junk bond blast radius

 

The Morning Call

 

11/6/26

 

The Market

         

    Technical

 

            Thursday in the charts.

https://www.zerohedge.com/markets/fireworks-day-stocks-fawked-aitech-wrecked-bonds-bullion-bid?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTMxMTY2Iiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MzkxNDE4MiwiZXhwIjoxNzk2NTA2MTgyLCJhdWQiOiJ6aC1naWZ0In0.cXStxZuBCvewadrZF7p1od-KoxgXbXzeEHWeOgYQWf4

 

            Thursday in the technical stats.

            https://www.barchart.com/stocks/momentum

            https://www.barchart.com/stocks/market-performance

            https://www.barchart.com/stocks/sectors/rankings

            https://www.barchart.com/stocks/signals/new-recommendations

 

Note: the good news (that’s a joke) is that the S&P closed Wednesday’s gap up open. The bad news is that the fecal matter hit the rotating blades. The index blasted decisively back through its 100 DMA and the lower boundary of the trading range dating back to August and is poised to challenge its 200 DMA (~7318). Were that challenge to be successful, the next visible support level is the lower boundary of its short term trading range (~6642). So the bottom line for the day is---let’s hope the 200 DMA holds.

 

            The NASDAQ is crashing.

https://www.zerohedge.com/the-market-ear/nasdaq-crashing-getting-ugly?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTMxMTYzIiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MzkxNDgzNSwiZXhwIjoxNzk2NTA2ODM1LCJhdWQiOiJ6aC1naWZ0In0.9EyWURPIaMxEtwagTCtJddLnVbmbjb33Qqz1pG7d45k

 

            $47 billion in levered ETF selling.

https://www.zerohedge.com/markets/mcelligott-47bn-levered-etf-selling-61bn-vol-control-best-trade-year-implodes?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTMxMTk5Iiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MzkxMjYxNiwiZXhwIjoxNzk2NTA0NjE2LCJhdWQiOiJ6aC1naWZ0In0.6Cgg2GJONfzcvz4TouI7jaOmRsgXXZrJ31WPc8XTPVk

 

                        The latest from Goldman’s desk.

https://www.zerohedge.com/markets/1998-or-2000-goldmans-delta-one-head-bets-ltcm-not-petscom-after-nasdaqs-worst-day-covid?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTMxMjUxIiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5Mzk3MzQ3MSwiZXhwIjoxNzk2NTY1NDcxLCJhdWQiOiJ6aC1naWZ0In0.AJMv_f080O_Ubh-8lTVtL1xrfa45BUL0t-AxQEnSIYM

 

 

Friday morning setup: US futures are higher, led by a sharp rebound in semis and memory names, as dip buyers emerge after Thursday's AI bloodbath which saw the Nasdaq 100 suffer its worst day since March 2020, while traders brace for the October jobs report; at the same time the dollar is up against every G10 currency and oil reversed an early jump above $100 after Qatar's Emir and Trump discussed de-escalating the Iran war, leaving the 10Y yield fractionally higher at 4.86% as the "sell everything" day gives way to a "buy what got hit hardest" morning. As of 8:05am ET, S&P futures are 0.1% higher at 7,390 while Nasdaq futures are up 1.3% at 27,100 and Dow futures are down 1.1%, as the rotation out of tech and into everything else reverses. On Thursday, the S&P 500 tumbled 4.4%, its worst day since April 2025, the Nasdaq 100 plunged 6.4% and the Philly semis index crashed 12%, wiping out $2.3 trillion in tech market value (and tech hedge funds' entire 2026 gain), as the Democratic midterm sweep stoked fears of a regulatory crackdown on the AI buildout. In premarket trading, chip and memory stocks are retracing roughly 30-40% of yesterday's losses according to JPM: Micron +7.8%, AMD +7.1%, Intel +4.7%, Broadcom +4.4% and Nvidia +4.3%, while Lam Research jumps 10% after unveiling a $25 billion buyback; outside of AI, Cloudflare and Airbnb soar on strong guidance while DraftKings and Atlassian tumble. The day's driver is AI (again): having been the market's biggest tailwind for three years, the AI capex trade is now its fulcrum, and the only question that matters this morning is whether Thursday's six-standard-deviation puke in semis was capitulation or, as we asked last night, just the opening act. Treasuries are slightly weaker after a two-day haven rally, with yields 2-3bps cheaper across the curve and the 10Y around 4.86%, near the session high, while swaps now price about 72% odds of a December Fed hike, down from near 80% on Tuesday. The Bloomberg Dollar Spot Index is up 0.2% at a one-week high, with the Aussie sliding to a seven-month low and cable suffering its biggest drop since mid-October. In commodities, Brent briefly topped $100 as Iran claimed two tankers hit mines in the Strait of Hormuz, before sliding to as low as $98 after the Qatar call, WTI is up 0.5% at $90.94, and gold drops 0.5% to about $4,069/oz. Bitcoin trades just above $76,000. US economic data slate includes the October jobs report (8:30am), the November preliminary University of Michigan sentiment (10am) and September consumer credit (3pm). Fed speaker slate includes Musalem (9:10am), Bowman (12:15pm) and Daly (1pm).

            https://cms.zerohedge.com/sites/default/files/inline-images/image_0.jpeg

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

October nonfarm payrolls rose by 165,000 versus estimates of 65,000; the unemployment rate was 4.1% versus 4.2%; average hourly earnings were up 0.4% versus +0.3%.

                          https://www.zerohedge.com/markets/us-jobs-soar-165k-blowing-away-estimates-unemployment-rate-drops-putting-dec-rate-hike-back

 

                        International

 

September Japanese YoY average earnings were up 4.6% versus expectations of up 3.8%.

 

September German industrial production was up 0.7% versus consensus of 0.0%.

 

September EU retail sales fell 0.7% versus projections of down 0.1%.

 

                        Other

                       

                          What happens to the dollar as US equities go down?

                          https://mrzepczynski.blogspot.com/2026/11/the-profit-dollar-period-is-here.html

 

                          Three signs of a cash strapped consumer.

                                                  https://crr.bc.edu/3-signs-cash-strapped-consumers-are-nearing-a-spend-pocalypse-that-would-hurt-the-economy/

 

                          Update on new home affordability.

                          https://politicalcalculations.blogspot.com/2026/11/new-homes-hovering-just-below-upper.html

                       

                          Is 7% the no-go zone for home mortgages?

  https://wolfstreet.com/2026/11/04/despite-lower-mortgage-rates-demand-for-mortgages-to-purchase-a-home-dips-clings-to-rock-bottom-7-the-no-go-zone/

 

                                                   Analysis of the November ISM numbers.

                          https://bonddad.blogspot.com/2026/11/the-economically-weighted-ism-averages.html

 

                        Iran

 

              Overnight news,

              https://www.zerohedge.com/geopolitical/trump-says-us-locked-and-loaded-renewed-strikes-against-iran

 

            Monetary Policy

 

              The Bank of England raises rates.

  https://www.nytimes.com/2026/11/05/business/bank-of-england-interest-rates-inflation.html?unlocked_article_code=1.OFE.eWtU.21NbADp2KXwJ&smid=url-share

 

              Midterm election results takes pressure off the Fed.

  https://www.bloomberg.com/news/articles/2026-11-05/trump-s-trouncing-gives-warsh-more-room-for-maneuver-on-rates?utm_source=website&utm_medium=share&utm_campaign=copy

 

            AI

 

              The AI junk bond blast radius.

https://www.zerohedge.com/markets/blast-radius-these-are-ai-junk-bonds-set-crater-democrats-freeze-buildout?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTMxMTYyIiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MzkxMTY1MiwiZXhwIjoxNzk2NTAzNjUyLCJhdWQiOiJ6aC1naWZ0In0.6ULxJvhi_cwomwR2tQGQ_x84wrett77mjzh9KjSv0gs

 

 

     Investing

 

            The yield curve has a nasty surprise for the AI trade.

https://www.zerohedge.com/markets/yield-curve-has-nasty-surprise-ai-trade?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTMxMTgyIiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MzkxMzEzMywiZXhwIjoxNzk2NTA1MTMzLCJhdWQiOiJ6aC1naWZ0In0.MebTeuEZH1ji_GaQXp7kPbSksnEEeAQJJAVRKxfHwuI

 

            Real estate in a 5% world.

https://acrobat.adobe.com/id/urn:aaid:sc:VA6C2:521609fa-6ba2-401b-a010-5b4096a2d390?x_api_client_id=chrome_extension_viewer&x_api_client_location=share&locale=en-US&theme=light&page_theme=light&show_copied_toast=true

 

                        What the midterm elections mean for your money.

https://www.bloomberg.com/news/articles/2026-11-05/midterm-election-results-what-they-mean-for-your-money-and-the-economy?utm_source=website&utm_medium=share&utm_campaign=copy

 

            Q3 earnings scorecard.

                https://talkmarkets.com/article/q3-earnings-scorecard-solid-beats-upward-revisions-and-ai-drivers

 

            Central bank gold purchases were highest of the year.

            https://talkmarkets.com/article/september-central-bank-gold-buying-hit-highest-monthly-total-of-the-year

 

    News on Stocks in Our Portfolios

 

 

 

What I am reading today

 

            Surrendering the ability to think.

            https://www.safalniveshak.com/deskilling-the-investors-mind/

 

Visit Investing for Survival’s website (http://investingforsurvival.com/home) to learn more about our Investment Strategy, Prices Disciplines and Subscriber Service.

 

 

 

Markets are puking

https://www.zerohedge.com/markets/hedges-monetized-vol-smoked-semis-gutted-goldmans-derivs-desk-says-buy-tails-now-nobody?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTMxMTQwIiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5Mzg5NTM1NCwiZXhwIjoxNzk2NDg3MzU0LCJhdWQiOiJ6aC1naWZ0In0.WlZBMj2P33w2WjnIdKhTgm1eRygQWALvYIwgOA9B3vw

The Morning Call--What is next for data centers?

 

The Morning Call

 

11/5/26

 

The Market

         

    Technical

 

            Wednesday in the charts.

            https://www.zerohedge.com/markets/crude-crashes-blue-nami-sparks-market-chaos-bullion-bitcoin-bonds-bid

 

Note: the good news is that the S&P (1) bounced off the lower boundary of the trading range from August, (2) closed above its 100 DMA, reestablishing it as support and (3) closed that overhead gap down open. The bad news is that it (1) created a gap up open and (2) challenged its 50 DMA and failed. I know lots of analysts sound jiggy and believe yesterday’s pin action opens the door for the year end rally. But failing at the 50 DMA and not yet making a new higher high (within the current trading range) remains a problem. I need more follow through. If we get it, I will likely add to my dividend growth ETF trade,

 

            Wednesday in the technical stats.

            https://www.barchart.com/stocks/momentum

            https://www.barchart.com/stocks/market-performance

            https://www.barchart.com/stocks/sectors/rankings

            https://www.barchart.com/stocks/signals/new-recommendations

 

            The AI trade is breaking apart.

https://www.zerohedge.com/the-market-ear/ai-trade-breaking-apart?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTMxMDM5Iiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MzgyODA1MiwiZXhwIjoxNzk2NDIwMDUyLCJhdWQiOiJ6aC1naWZ0In0.Jyzk3SxcOiyTPeThrXs6-5ZKpgIGyXkE_LGU9v1fjnc

 

 

            We have never seen this before.

            https://www.bespokepremium.com/interactive/posts/think-big-blog/youve-never-seen-this-before

 

Thursday morning setup: US futures are mixed, with the Nasdaq lagging as the post-midterm rotation out of chipmakers and the AI complex enters a second day, after the Democratic sweep raised fears of a data center backlash, Qualcomm tumbled on a weak forecast and the Kospi crashed almost 6%, while oil rebounded modestly from Wednesday's plunge and the BoE hiked rates for the first time in three years; as a result the 10Y yield touched 4.83%, the lowest since Sept. 10. As of 6:20am ET, S&P futures are 0.1% higher while Nasdaq futures are down 0.5%, Russell 2000 futures add 0.4% and Dow futures are [x%]; this follows Wednesday's session when the S&P jumped 1.6% for its best day since August and the Dow soared 3%. In premarket trading, semis are again getting hit (the SOXX ETF was down 2% premarket per Bloomberg) with Qualcomm sliding 10% after a lackluster forecast, continuing the hyperscalers vs semis split we flagged yesterday, while the Mag 7 is mixed with Amazon and Meta higher and Tesla and Nvidia lower; AppLovin soars 16% on blowout guidance. The day's driver is the blue wave (again): with Democrats set to control both chambers, traders are pricing tighter regulation of data centers (Goldman's Alec Phillips sees moratoria potentially hitting about 45% of planned US data centre capacity expansion), a quicker end to the Iran war and less fiscal largesse, which is why hyperscalers that own compute are bid and everything that builds, powers or supplies it is offered. Treasuries are extending their rally, with the 10Y at 4.87% after earlier touching 4.83%, as the midterm result fuels expectations that the administration's tax and spending plans will be contained and after the Treasury's refunding hinted at less long-end issuance. The dollar is flat after its worst day in two months, cable erased losses after the BoE hiked 25bps to 4% in an 8-1 vote (Mann wanted 50bps) and Bailey warned it was unlikely to be the last hike unless the Iran war is resolved. In commodities, Brent rebounds 1.6% to $96.15 after crashing almost 9% on Wednesday, as Iran claims tankers hit mines near Hormuz and Ukraine struck Russia's Ryazan refinery; gold extends its post-midterm rally above $4,100 and silver trades around $52.7. Bitcoin is little changed. US economic data slate includes Challenger job cuts (already out: 43,994 in October, down 71.3% y/y), initial jobless claims, Q3 nonfarm productivity and unit labor costs (all 8:30am ET). Fed speaker slate includes Hammack (8:50am), Barkin (9:10am) and Logan (7:00pm). The Treasury sells $115bn of 4-week and $110bn of 8-week bills at 11:30am.

            https://cms.zerohedge.com/sites/default/files/inline-images/Market_Snapshot_-_2026-11-05_1793883142545.jpg

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

                          Weekly jobless claims totaled 189,000 versus estimates of 196,000.

                          https://www.zerohedge.com/personal-finance/low-hire-low-fire-low-inspire-claims-hit-57-year-lows-sentiment-still-sucks-and

 

Q3 nonfarm productivity rose 3.6% versus projections of +2.8%; unit labor costs fell 0.7% versus +0.6%.

 

The September trade balance was -$105 billion versus consensus of -$108 billion.

 

The October services PMI came in at 56.1 versus expectations of 57.9; the October composite PMI was 55.9 versus 57.6.

 

October light vehicle sales totaled 15.5 million units versus forecasts of 15.9 million.

 

The latest Atlanta Fed Q4 GDP nowcast was growth of 3.4%.

 

                        International

 

September German factory orders were up 4.4% versus predictions of 4.8%.

 

                          The September EU PPI was up 2.5%, in line.

 

The October EU construction PMI was 42.5 versus estimates of 44.0; the October German construction PMI was 41.6 versus 44.0; the October UK construction PMI was 43.6 versus 46.1.

 

                        Other

 

                          Interest rates---higher for longer.

                          https://www.apollo.com/wealth/insights-news/insights/daily-spark/10-percent-nominal-gdp-growth-coming

                       

            The Election

 

              What changes (and doesn’t)?

                  https://www.wsj.com/articles/what-changes-or-doesnt-now-ec1724d1?st=tYJ4GM&reflink=desktopwebshare_permalink

 

              What the dem’s win means for the Markets.

              https://www.capitalspectator.com/what-democrats-midterm-win-means-for-markets/

 

            AI

 

              What is next for data centers?

  https://www.zerohedge.com/markets/whats-next-data-centers-after-blue-tsunami-goldman-sees-moratoria-freezing-45-capacity?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTMxMDA5Iiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MzgyNjE4NCwiZXhwIjoxNzk2NDE4MTg0LCJhdWQiOiJ6aC1naWZ0In0.QGh7ffrZlSrwvTppRhr5SKrvYVomBoRscG32zM8H68Y

 

 

            Tariffs

 

              Undoing Trump’s tariff fiasco.

              https://www.project-syndicate.org/commentary/failure-of-trump-trade-agenda-could-pave-way-for-retreat-from-protectionism-by-anne-o-krueger-2026-11

           

              Tech accounts for 2/3rds of the US trade deficit.

              https://talkmarkets.com/article/tech-now-accounts-for-two-thirds-of-the-us-trade-deficit

 

     Investing

 

            Reviewing Q3 earnings.

            https://www.carsongroup.com/insights/blog/earnings-check-in-following-the-money/

 

            How to turn your cash into wealth.

                https://www.realclearmarkets.com/articles/2026/11/04/how_to_turn_your_cash_into_wealth_automatically_1215034.html

 

            Record fixed income inflows.

            https://www.advisorperspectives.com/commentaries/2026/11/04/record-74-billion-fixed-income-etfs-surge

 

            What credit spreads are telling us.

            https://talkmarkets.com/article/credit-spreads-calm-on-the-surface-concern-at-the-bottom

 

The value of having a ‘stop loss’ discipline. The theme of the article is right on. However, in deciding on whether to have an actual stop loss versus a mental one consider this. The market maker sees your order as well as everyone else’s. If a stock is declining and the market maker sees a number of stop loss orders and feels like those orders are near a trading low, he can manipulate the ‘at the market’ sell orders down to a level that triggers your stop loss. Then he buys the stock for his own book and sells it at a higher price. So, my recommendation is to have a mental stop and the balls to stick with it.

https://talkmarkets.com/article/are-you-your-own-worst-enemy

 

    News on Stocks in Our Portfolios

 

 

 

What I am reading today

 

           

 

Visit Investing for Survival’s website (http://investingforsurvival.com/home) to learn more about our Investment Strategy, Prices Disciplines and Subscriber Service.

 

 

 

The Morning Call---Capitulation?

 

The Morning Call

 

11/4/26

 

The Market

         

    Technical

 

            Tuesday in the charts.

https://www.zerohedge.com/markets/stocks-shrug-aapl-angst-dollar-bonds-down-dem-sweep-midterms?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTMwODcyIiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5Mzc0MjExMCwiZXhwIjoxNzk2MzM0MTEwLCJhdWQiOiJ6aC1naWZ0In0.yBTwVEkPR4BXXmVDQ4izj1le9kGq3YXaMsJNTbMFj80

 

Capitulation?

https://www.zerohedge.com/the-market-ear/capitulation-setup-violent-market-squeeze?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTMwOTM1Iiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MzgwMDg5NSwiZXhwIjoxNzk2MzkyODk1LCJhdWQiOiJ6aC1naWZ0In0.irzuxIAHhYaWT4m0Gjvrj1BcWLmM6ejNCWgyIFIsSKo

 

            Tuesday in the technical stats.

            https://www.barchart.com/stocks/momentum

            https://www.barchart.com/stocks/market-performance

            https://www.barchart.com/stocks/sectors/rankings

            https://www.barchart.com/stocks/signals/new-recommendations

 

            The AI boom is hiding something very ugly.

https://www.zerohedge.com/the-market-ear/ai-boom-hiding-something-very-ugly?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTMwODg2Iiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MzczNTcyNywiZXhwIjoxNzk2MzI3NzI3LCJhdWQiOiJ6aC1naWZ0In0.b4S-JpHE89bpEo42EobzE9kCJI9CLj5kxVC6SY5B68U

 

            Debt limits are real and binding.

https://www.zerohedge.com/markets/debt-market-limits-are-real-and-binding-top-goldman-trader-says-market-pricing-2027-ai-peak?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTMwODU5Iiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MzczNjU3MCwiZXhwIjoxNzk2MzI4NTcwLCJhdWQiOiJ6aC1naWZ0In0.dYrzf6qJdfAnaSF7A3ge3O3zEXuE07NuWdZqHr-rWsY

 

            Wall Street’s most hated stocks are faring better than its favorites.

            https://www.marketwatch.com/story/wall-streets-most-hated-stocks-are-faring-far-better-than-its-favorites-4c1d6c68?st=jkuMhk

 

Wednesday morning setup; US futures are higher as dip buyers turned an overnight "blue tsunami" puke into a broad rally: Democrats swept both chambers of Congress, initially sending Nasdaq 100 futures down as much as 2.4% on fears of tighter AI regulation and a Texas data center freeze, before President Trump's conciliatory tone (he said Democrats did "a good job" and that he can work with them), AMD's blowout guide and the monetization of a pile of election hedges flipped futures solidly green; as a result the dollar is heading for its worst day since early September while gold blasts back above $4,000. As of 8:15am ET, S&P futures are 0.9% higher at 7,665 while Nasdaq futures are down 0.2%, Russell 2000 futures jump 1.3% and Dow futures are up roughly 1.7%, or about 870 points, as VIX tumbles 12.8% to 18.16. Stocks rose on Tuesday ahead of the vote, with the S&P 500 snapping a three-day losing streak and semis rebounding 2.6% after an 11.6% three-session plunge. In premarket trading, the Mag 7 is mostly higher led by Amazon, while Musk's Tesla and SpaceX bear the brunt of the blue wave; AMD (+6.3%), Super Micro (+9.2%) and Arista (+10.9%) lead chips higher after earnings, confirming our article from last night, while solar names soar and defense stocks slide. The day's driver is politics (finally): Democrats flipped Senate seats in Texas, Ohio, Kansas, South Carolina, North Carolina, Iowa and Maine, won the governorships of Texas, Ohio and Georgia, and are on track for at least 54 Senate seats; as we explained overnight, Texas turned blue and futures turned green as the market concluded the AI fallout would mean regulation rather than cessation. Treasuries are bid with yields 3-5bps lower and the 10Y at about 4.915% as divided government curbs the fiscal outlook and the curve flattens ahead of the 8:30am refunding announcement. The Bloomberg dollar index slides 0.5% to the lowest since Sept. 30, with the kiwi leading G10 gains and EUR/USD up 0.6%. In commodities, WTI is down about 1% near $95 as Trump played down the prospect of imminent strikes on Iran, while gold jumps 3% and silver surges almost 5%; copper is flat. Bitcoin rises about 1% to $78,480. US economic data slate includes October ADP employment change (8:15am), September trade balance (8:30am), October final S&P Global services and composite PMIs (9:45am) and ISM services (10am). There are no Fed speakers scheduled. The Treasury publishes its quarterly refunding announcement at 8:30am and sells $75 billion of 17-week bills at 11:30am.

            https://cms.zerohedge.com/sites/default/files/inline-images/Market_Snapshot_-_2026-11-04_1793797465390.jpg

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

Weekly mortgage applications declined 1.2% while purchase applications were down 2.0%.

 

Month to date retail chain store sales rose 10.4% versus + 9.3% in the prior week.

 

September job openings (JOLTS) totaled 7.52 million versus forecasts of 7.0 million.

https://bonddad.blogspot.com/2026/11/september-jolts-report-another.html

 

September factory orders were up 1.8% versus predictions of +1.2%; ex transportation, they were up 1.3% versus +0.9%.

 

The October ADP employment report showed job increases of 86,000 versus consensus of 69,000.

                                                  https://www.zerohedge.com/markets/adp-employment-report-signals-strong-labor-market-across-board-wage-growth-accelerates

 

                        International

 

The October Chinese services PMI was 50.8 versus expectations of 51.5; the composite PMI was 52.0 versus 52.2; the October German services PMI was 52.5 versus 51.7; the composite PMI was 53.4 versus 52.8; the October EU services PMI was 51.4 versus 51.7; the composite PMI was 51.7 versus 51.9; the October UK services PMI was 51.4 versus 51.7; the composite PMI was 52.9 versus 53.1.

 

The October EU CPI was up 0.4% versus estimates of +0.3%.

 

                        Other

 

                          September median household income.

                          https://politicalcalculations.blogspot.com/2026/11/median-household-income-in-september.html

 

Data center construction sends shock wave through the industrial economy; costs experience a second wave of inflation.

https://wolfstreet.com/2026/11/02/no-inflection-point-yet-near-exponential-data-center-boom-sends-shockwaves-to-industrial-economy-construction-hit-by-2nd-wave-of-inflation/

 

            Monetary Policy

 

              How high would the Fed Funds rate need to be to bring inflation back to 2%?

              https://www.apollo.com/wealth/insights-news/insights/daily-spark/how-high-would-the-fed-funds-rate-need-to-rise-to-bring-inflation-back-to-2-percent

 

            Fiscal Policy

 

              Bankrupting America. (To be fair, it is not just Trump. It is the entire ruling class.)

                          https://open.substack.com/pub/ieainsider/p/donald-trump-is-bankrupting-america?utm_campaign=post-expanded-share&utm_medium=web

 

            Inflation

 

              The inflation election.

              https://www.washingtonpost.com/opinions/2026/11/02/inflation-is-why-voters-are-sour-economy-despite-gdp-growth/

 

              What millions of data points reveal about inflation.

  https://www.bloomberg.com/graphics/2026-inflation-price-index/?accessToken=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJzb3VyY2UiOiJTdWJzY3JpYmVyR2lmdGVkQXJ0aWNsZSIsImlhdCI6MTc5MzczMjU5MywiZXhwIjoxNzk0MzM3MzkzLCJhcnRpY2xlSWQiOiJUTldBR1ZLSUpIOFowMCIsImJjb25uZWN0SWQiOiJCMzFCNTRDQTI3MTE0NjAxOUQxMURCN0IxRUM4NTE2MyJ9.VpIn7E6PG06UAyi2G-gvdntFRdcWBuGb_vWpV0HW_08

 

 

            AI

 

              AI’s third big bang is here.

              https://www.riskhedge.com/outplacement/ai-is-third-big-bang-is-here

 

            The Election

 

              Wall Street reaction.

  https://www.zerohedge.com/markets/texas-turns-blue-futures-turn-green-why-wall-street-bought-biggest-democrat-wave-1993?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTMwOTQ2Iiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5Mzc5OTM2MCwiZXhwIjoxNzk2MzkxMzYwLCJhdWQiOiJ6aC1naWZ0In0.qe7YTiIDwZGrr131Y40ekYRfg0xH5-zvPOvZclRPU7Y

 

           

            The Financial System

 

              More proof that the commercial real estate market is cracking.

              https://quoththeraven.substack.com/p/even-more-proof-that-commercial-real?r=1ng8jx&utm_campaign=post-expanded-share&utm_medium=web

 

     Investing

 

            Finding growth without froth.

            https://www.advisorperspectives.com/commentaries/2026/11/03/case-garp-finding-growth-without-froth

 

            Short term Market moves won’t give us the answers to AI.

            https://behaviouralinvestment.com/2026/11/03/short-term-market-moves-wont-give-us-the-answers-on-ai/

 

            Central banks accelerated gold buying in third quarter.

https://www.wsj.com/finance/commodities-futures/central-banks-accelerated-gold-buying-in-third-quarter-eba253ff?st=XGEvXo&reflink=desktopwebshare_permalink

 

            Total return forecasts for major asset classes.

            https://www.capitalspectator.com/total-return-forecasts-major-asset-classes-3-november-2026/

 

            Was that the top?

            https://talkmarkets.com/article/was-that-the-top-analyzing-techs-2026-correction

 

            Downside Breakdowns (Range Support Break)

• Short-Term Returns: Breaking below the lower boundary of an extended trading range or key moving average (like the 200-day moving average) carries a weaker immediate profile. Historical instances of breaking below established support thresholds show an average short-term loss (e.g., -0.29% over the next month) with lower win rates (~57% positive). [1]
• Continuation Risk: When downside breaks coincide with macro shocks or loss of major structural support (such as the 200-day moving average), historical precedents show that declines can extend significantly (ranging from 10% to 25% or more in broader bear or correction phases), unless a fast policy or geopolitical catalyst triggers a mean-reverting bounce. [1, 2]
• Mean Reversion: Severe single-day or sharp panic breakdowns below a range often trigger short-term oversold bounces or mean-reverting rallies within a few weeks, though these sharp snaps do not always dictate the longer-term primary trend. [1]

 

    News on Stocks in Our Portfolios

 

 

 

What I am reading today

 

            Wednesday morning humor.

                        https://thebabylonbee.substack.com/p/we-asked-15-californians-why-they?r=1ng8jx&utm_campaign=post-expanded-share&utm_medium=web

 

            This is a choice? I try to avoid politics; but this crystalizes my sentiment.

            https://reason.com/2026/10/31/for-libertarians-election-day-is-the-cruelest-day-of-the-year/

 

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