The Morning Call
10/15/26
The
Market
Technical
Wednesday in the
charts.
Note: for a second
time in a row, the S&P failed to successfully challenge its former high. It
is now sitting on its 50 DMA (i.e., support). Let’s see how it handles that. That
said, the rest of the Market held its own. Our portfolios were up on the day, as
everything else offset the decline in the AI related stocks. So this may not be
a sign that the Market is headed lower---just the big tech names. It is too
early to tell, but I am planning at strategy based on that assumption.
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
King dollar is
crushing everything.
Thursday morning
setup: US futures are lower as the AI unwind goes global - Korea's Kospi
crashed into a bear market and tripped circuit breakers, CoreWeave bonds sank
deeper into distress and Anthropic's still-blistering but slowing growth failed
to impress - while yesterday's hot CPI scare has morphed into a growth scare;
as a result Treasuries are ripping higher with 10Y yields tumbling 10bps to
5.08%, the lowest since Sept. 23. As of 6:20am ET, S&P futures are 0.3%
lower at 7,749 while Nasdaq futures slide 1.1% to 29,857 and Dow futures are up
0.2%; small caps are the odd man out with Russell 2000 futures up 0.3%.
Yesterday the S&P 500 fell 1.1% to its worst
day since July, the Nasdaq 100 lost 2% and the SOX dropped for a sixth
straight session. Premarket, Mag-7 and AI baskets are all lower with Apple the
only Mag 7 name in the green; chipmakers, memory, neoclouds and AI
infrastructure names are all sliding, with CoreWeave down another 6-7% after imploding
15% yesterday as its bonds traded at distressed levels. The day's driver
is AI financing (again): Anthropic's $16.8 billion Q3 revenue implies
slowing growth, and a Gartner report that $3,5
trillion of AI infrtastructure spending could be exposed to impairment by
2030 is making the rounds. Bonds rally across the curve in a
bull flattener with yields down 7-11bps, as the AI selloff pushes investors
into havens and odds of an October Fed hike slide back to around 30% from a
post-CPI intraday peak of 58%; bunds and gilts also rally about 10bps, helped
by the pullback in energy. The dollar is lower, with the Bloomberg Dollar Spot
Index down 0.3%-0.4% and the Swiss franc leading G-10 gains while the Aussie
slumps after a weak jobs report. In commodities, Brent drops almost 2% to $104
on the risk-off tone and talk of the US easing shadow fleet sanctions, gold
jumps 1.3% to $4,158 and silver is up 2.1%, while copper slides. Bitcoin is
down 0.6% near $81,200. US economic data slate includes September retail sales,
PPI, October Empire manufacturing and Philly Fed, and weekly jobless claims
(all 8:30am) and August business inventories (10am). Fed speaker slate includes
Goolsbee (10am), Hammack (4:30pm) and Chair Warsh, who has a fireside chat with
the IMF's Georgieva in Bangkok at 11:30pm ET before the blackout. Treasury
sells $110 billion of 4-week and $105 billion of 8-week bills at 11:30am.
Fundamental
Headlines
The
Economy
US
Weekly jobless claims totaled 199,000 versus
projections of 200,000.
September CPI was
up 0.6%, in line; the core CPI was up 0.3% versus +0.2%.
More
analysis.
https://bonddad.blogspot.com/2026/10/september-cpi-shows-widespread-movement.html
September
PPI was up 1.3% versus consensus of +0.5%; core PPI was up 0.7% versus +0.3%.
https://www.zerohedge.com/markets/inflation-broadening-out-producer-prices-soar-most-4-years
September
retail sales rose 0.8% versus estimates of +0.3%; ex autos they were up 0.9%
versus +0.5%.
The October
New Your Fed manufacturing index came in at 25.5 versus expectations of 10.3; the October Philadelphia Fed manufacturing index was 20.9
versus 28.4.
International
August Japanese
machinery orders were up 5.2% versus forecasts of +3.0; final August industrial
production fell 2.4% versus -1.7%.
August
UK GDP grew 0.1% versus predictions of -0.1%; August industrial production was
up 0.8% versus -0.1%; the August trade balance was -L920 million versus -L3.1
billion;
August YoY construction output declined 1.8% versus -1.6%.
August EU
industrial production declined 0.5% versus consensus of 0.0%.
Other
Home buying slump hits six weeks.
Fiscal
Policy
There is no winning the AI race without
global workers.
AI
A second crack?
A
third crack?
Investment bubbles are a feature of
capitalism.
https://www.zerohedge.com/markets/dowd-investment-bubbles-are-feature-capitalism-not-bug
Investing
Proceed with caution.
Continue
To Proceed With Caution
Dispelling two
bull market worries.
That pesky ‘term
premium’.
https://www.nytimes.com/2026/10/13/business/term-premium-bond-yields.html
Investors locking
in higher yields.
https://giftarticle.ft.com/giftarticle/actions/redeem/7afe1319-c9c0-40e5-83f2-4d08b1304b39
How much money is enough?
The nightmare
scenario.
Note: Cheapest to Deliver (CTD) is the specific bond from
a basket of eligible government or Treasury securities that a short position
holder (the seller) chooses to deliver when settling a bond futures contract,
because it costs them the least amount of money to acquire and deliver.
AI rains on the tech parade.
https://talkmarkets.com/article/openai-rains-on-the-tech-parade
Where the gold market is headed.
https://talkmarkets.com/article/5-charts-revealing-where-the-gold-market-is-headed-next
News on Stocks in Our Portfolios
BlackRock
What
I am reading today
The
social security COLA for 2027.
https://wolfstreet.com/2026/10/14/the-social-security-cola-for-2027-will-be-largest-since-2023/
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