The Morning Call
10/29/26
The
Market
Technical
Wednesday in the
charts.
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
Ten
charts for your Thursday morning viewing pleasure.
Volatility
paradox.
Thursday morning
setup: US futures are lower, with Nasdaq contracts sliding as Alphabet's
ugly search miss revived the "is AI capex paying off" debate,
while Microsoft's Azure beat and lighter capex, a roughly 1% drop in oil on
fresh US-Iran diplomacy chatter and news that Christine Lagarde will quit the
ECB nine months early round out the morning's drivers; as a result small caps
outperform while the 10Y yield hovers just around 5%. As of 7:30am ET, S&P
futures are 0.3% lower at 7,768 while Nasdaq futures are down about 1% and Dow
futures are flat; Russell 2000 futures are up 0.5%. Yesterday the S&P 500
rose 0.28% to 7,744, closing within 1% of its record high after the Fed's
on-hold decision, while the Philly semi index gained 1.75% led by an 11% surge
in Oracle. In premarket trading, Mag 7 names are mixed: Alphabet plunges 10%
after search and advertising sales missed, confirming
our article from last night, while Microsoft rises about 3% after its Azure
beat; software is down 3% (per JPM) after ServiceNow (-18%) and Fortinet
(-26%) disappointed. The day's driver is (again) AI, only this time in
reverse: JPM's desk says the market is trading with a defensive bias, with
the AI theme being sold and Discretionary and Financials bid, "pointing to
the broadening / ex-AI trade." Treasuries extend Wednesday's post-Fed
gains, with yields 1-2bps lower (the 2Y touched 4.67% overnight), as traders
trimmed bets on the pace of Fed hikes after Kevin Warsh's press conference
(December hike odds are now about 80%); gilts and bunds also rise (though lag
Treasuries) as European energy prices retreat. The Bloomberg dollar index is up
0.1%, paring the bulk of its Fed-induced losses, while EUR/USD lingers just
above its year-to-date low into the ECB decision. In commodities, Brent briefly
slipped to a $113 handle after Semafor reported the US is involved in talks on
a temporary peace deal with Iran, even as Iran's IRGC claimed three tankers hit
mines in Hormuz; gold falls 1% but holds above $4,000, silver slides 2.6% and
copper is softer. Bitcoin is down 1.4% after dipping below $80,000. US economic
data slate includes initial jobless claims, Q3 GDP, September personal income,
spending and PCE (all 8:30am). The Fed is in its post-meeting quiet period with
no speakers scheduled; Treasury auctions $44 billion of 7-year notes at 1pm.
Fundamental
Headlines
The
Economy
US
Weekly initial jobless claims totaled 194,000
versus consensus of 199,000.
September personal
income rose 0.2% versus predictions of +0.3%; personal spending was up 0.5%
versus +0.6%.
Q3 (initial estimate)
of GDP growth was +3.4% versus estimates of +3.2%; the PCE price index was
+2.5% versus +2.4%.
The September PCE
index was up 0.5%, in line; the core PCE index was up 0.3%, also in line,
International
The October
Japanese consumer confidence index came in at 35.0 versus expectations of 35.1.
The October EU
economic sentiment index was 96.9 versus forecasts of 97.5; the October industrial
sentiment index was -3.4 versus -3.8; the October services sentiment index was
5.3 versus 5.9; the October consumer confidence index was -17.9, in line.
Other
The inflationary expansion continues.
https://bonddad.blogspot.com/2026/10/the-ai-data-center-driven-manufacturing.html
Iran
Overnight news.
Monetary
Policy
As the universe
knows, the FOMC concluded its October meeting---and surprise, surprise, it left
the Fed Funds rate unchanged.
https://www.zerohedge.com/markets/fomc-42
The case for not raising
rates. (note the curious argument that the threat of a Fed rate hike is causing
long rates to rise versus Warsh’s position that the long rates help determine
the Fed rate.)
https://talkmarkets.com/article/the-fed-risks-policy-error-fighting-oil-prices
Warsh wants the Fed to be quiet. Instead, it
is as noisy as ever.
Fiscal
Policy
Democratic
economists are already rolling out post elections tax increase proposals. (of
course, dems need enough votes to override a Trump veto)
AI
The bull case for AI Armageddon.
Wall Street’s AI debt machine is starting to
choke on supply.
Summary: Yields are soaring into the double
digits on bonds and loans funding the AI infrastructure buildout, making it
more difficult for bankers to offload risk to insurers and other investors. The
cost of insuring against losses on the debt of companies from Broadcom to
SpaceX and Oracle has spiked, reaching levels more typical of junk-rated
borrowers, as the market for credit default swaps reflects growing concerns
about the potential economic fallout. Citadel Securities is cautioning clients
that even the biggest names in tech could get ensnared as they put their
balance sheets behind scores of projects critical to their AI ambitions, with a
growing disconnect between what Silicon Valley's top executives believe can be
raised and what financiers say they can deliver.
And this doesn’t take
into account debt maturing from loans made in 2020-2023 that needs to be
refinanced.
Investing
A reliable warning light is flashing red.
In high yield,
shorter maybe smarter (Google---high yield, short duration ETF for candidates)
https://www.advisorperspectives.com/commentaries/2026/10/28/high-yield-shorter-may-smarter
News on Stocks in Our Portfolios
What
I am reading today
From
1215 to 2026.
https://lawliberty.org/from-1215-to-2026/
Visit Investing
for Survival’s website (http://investingforsurvival.com/home)
to learn more about our Investment Strategy, Prices Disciplines and Subscriber
Service.
