The Morning Call
10/20/26
The
Market
Technical
Monday in the
charts.
Note: the S&P tried to trade back above
its 50 DMA but failed. Follow through.
Monday 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
Bulls unable to
cash in on break out opportunity.
The best time to
buy stocks is right now.
https://trendlabs.com/the-best-time-to-buy-stocks-is-right-now/
The latest from Goldman.
Something big is
brewing in oil.
Tuesday morning
setup: US futures are lower, led by the Nasdaq, as Monday's AI relief bounce
fizzled overnight after South Korean data-center firm Elice cratered more than
30% in its trading debut, reviving doubts about who exactly will earn a return
on the AI capex binge, while OpenAI is reportedly rushing to raise about $30
billion ahead of Anthropic's IPO and French stress returned with a vengeance;
as a result the OAT-Bund spread widened to a 151bps peak, swiftly approaching
the 152bps high from just after the draft budget was presented. As of 8:00am
ET, S&P futures are 0.2% lower while Nasdaq futures are down 0.7%; Dow
futures are flat, in a repeat of yesterday's divergence when the S&P rose
0.41% and the Nasdaq jumped 1.11% while the Dow slipped 0.07% and almost
two-thirds of S&P components fell (see our
wrap of Monday's session). In premarket trading, Mag 7 names are mostly
lower (AAPL -0.9%, META -0.4%, NVDA -0.4%), while levered AI names like
CoreWeave and Nebius give back some of Monday's gains. The day's driver is
AI (again): The spectacular collapse of Korean neocloud Elice, which
as we flagged last night plunged 30% minutes after IPOing, hit
chip-heavy Asian markets hardest with the Kospi tumbling 3.65% and Hynix
slumping, and with the Fed in blackout ahead of the Oct. 28 FOMC, tech
earnings are the only game in town this week. Treasuries are marginally
firmer with the 10Y yield down 2bps at 5.12%, tracking a haven bid in Bunds
even as French OATs underperform and Gilts lag after a hawkish UK jobs report.
The dollar is modestly weaker, with the DXY in a 101.74-101.98 range and cable
rising after UK unemployment unexpectedly fell to 4.7%. Brent holds above
$110/bbl near a five-month high and European gas is back near €90/MWh, gold
slips toward the bottom of its $4,116-4,147 range and copper hovers around
$14,400/t. Bitcoin is choppy around $81-82k. US economic data slate includes
ADP weekly employment (8:15am), September housing starts and building permits
and the Philly Fed non-manufacturing survey (8:30am) and September pending home
sales (10am). There are no Fed speakers as the Fed is in its blackout period
ahead of next week's FOMC.
Fundamental
Headlines
The
Economy
US
September housing starts fell 5.2% versus projections of up 1.9%; September
building permits were down 0.2% versus -0.7%.
The October housing index came in at 29 versus
consensus of 32.
International
The August UK
unemployment rate was 4.7% versus expectations of 4.9%; August average earnings
(3mo/Y) were up 3.7% versus +3.8%.
August
EU YoY construction output was up 1.4% versus estimates of down 2.3%; the October economic sentiment index was 18.5 versus
23.6.
September
Grman PPI came in at +1.9% versus predictions of +0.8%; the October
economic sentiment index was 28.1 versus 30.0.
Other
Latest 2027 nowcast.
https://econbrowser.com/archives/2026/10/nowcasts-and-weo-wsj-forecasts
Which points to stronger growth and the risk
of higher inflation.
https://www.capitalspectator.com/gdp-nowcasts-point-to-faster-growth-as-inflation-risks-mount/
Consumer spending---income versus wealth.
Overnight
News
Investors are
racing to buy credit default swaps to protect their portfolios in the event the
AI boom unravels, sending trading volumes surging for an instrument that shot
to prominence during the global financial crisis.
Iran
Overnight news.
https://www.zerohedge.com/geopolitical/two-tankers-fire-oman-irgc-boasts-naval-mine-warfare
Houthis continue to escalate attacks on Saudi
Arabia.
Fiscal
Policy
The
FY2026 budget deficit was $2 trillion---and no one cares.
https://talkmarkets.com/article/the-fy-2026-deficit-was-2-trillion-and-no-one-cares
America’s debt is coming for your wallet.
https://thehill.com/opinion/finance/6154138-national-debt-impact/
Inflation
The
long history of under reporting inflation.
https://ritholtz.com/2026/10/underreporting-inflation/
AI
Another AI faceplant.
AI agents disrupting software.
https://www.riskhedge.com/outplacement/ai-agents-are-already-disrupting-software-stocks
Morgan Stanley raises more concerns.
Investing
Q3 earnings
preview.
About next year’s
earnings.
https://giftarticle.ft.com/giftarticle/actions/redeem/9ebaf0d9-b9e2-4cca-b879-f35020607064
Bubble warnings,
but some aren’t convinced.
Summary:
More professional investors are convinced the stock market is flirting with
bubble conditions due to the artificial intelligence trade. Despite concerns,
the forward P/Es of benchmark indexes like the S&P 500 and Nasdaq 100 have
actually declined this year due to expectations of blockbuster earnings growth.
Market pros point to symptoms of frothiness, including sky-high debt levels and
unsustainable earnings growth expectations, but some aren't convinced a bubble
has formed yet.
AI capex and earnings. What happens when the
growth slows?
https://talkmarkets.com/article/ai-capex-and-earnings-what-happens-when-growth-slows
FOMOs roller coaster.
FOMO's
Rollercoaster Versus FEMO's Steady Climb
Investors have
decided that they don’t need energy.
https://trendlabs.com/investors-have-decided-they-dont-need-energy/
The course of Treasury
yields.
Bond market’s big
short gets wake up call.
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.
No comments:
Post a Comment