The Morning Call---A debate on how the bubble bursts

 

The Morning Call

 

10/8/26

 

The Market

         

    Technical

 

            Wednesday in the charts.

https://www.zerohedge.com/markets/stocks-slide-all-time-high-amid-rising-turmoil-just-below-surface?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTI3NTc0Iiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MTQwNDA2OSwiZXhwIjoxNzkzOTk2MDY5LCJhdWQiOiJ6aC1naWZ0In0.DPn2TP-SUMaN6n4tf3g0aR5efQfgui8ZcbjcFK4g8eY

 

Note: the S&P ended the day right on its former all-time high, closing one of the two gap up opens I mentioned yesterday. For this current break to be successful, the index clearly has to close today right on or higher than the former high in order to not negate this break.

 

            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 asymmetry has shifted.

https://www.zerohedge.com/markets/asymmetry-has-shifted-goldman-vol-trader-steps-ai-train-hedge-funds-most-crowded-mag-7?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTI3NDkwIiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MTQwMjkzNCwiZXhwIjoxNzkzOTk0OTM0LCJhdWQiOiJ6aC1naWZ0In0.jvkfjqo6nWBmET_3_ufdnwJaFCh9dmGECEKyqyQaxVw

 

 

            Q4 equity performance in a mid-term election year.

            https://chartkidmatt.com/p/here-s-your-seasonal-playbook

 

Thursday morning setup: US equity futures are lower, extending Wednesday's decline, with the S&P sliding further from Tuesday's record high as oil spikes on reports that Trump may order fresh strikes on Iran before the midterms, a tanker was hit off Qatar in the first strike deep inside the Persian Gulf in about a month, and an approaching storm has shut some US output; as a result the global bond rout picks up where it left off with 10Y yields hitting 5.35%. As of 8:00 am ET, S&P futures are 0.4% lower at 7,820 and Nasdaq futures are down 0.5%, while Dow and Russell futures are both down 0.8%. This follows a session in which the S&P (-0.2%) slipped from its record, almost three-quarters of the index fell and the Russell 2000 (-1.3%) sank to a 4-month low. In premarket trading, Tesla and Nvidia underperform their Mag 7 peers as chip, growth, and AI-related stocks trend lower, while Microsoft and Apple edge higher; Defensives lead Cyclicals with Energy the bright spot as hurricane Isaias forces Gulf producers to shut in wells. Wolfspeed soars 17% on a $1.5 billion DoD loan commitment and Palantir gains 2.2% on a Goldman upgrade. The day's driver is oil (again): Brent has jumped 5% to above $105 and WTI is up around 5% after The Atlantic reported the White House asked the Pentagon for Iran strike options that could be executed before November, a tanker was hit off Qatar and the Houthis fired a ballistic missile at Riyadh's airport. Treasuries are 5-7bp cheaper across the curve with the belly leading, and the 10Y is near session highs around 5.35%, a whisker from Wednesday's 24-year high of 5.36%, ahead of today's $22BN 30Y reopening. The Bloomberg dollar index is flat near a 3-month high and the DXY trades around 102.36; USDJPY is at 158.2 and EURUSD is stuck near 1.12, its lowest since May 2025. In commodities, Energy is bid while the rest of the complex is weaker: gold is up 0.3% to $4,123, silver is down 1.4% at $58.90, US natgas is up 1% to $3.24 and European TTF gas is above €80/MWh. Bitcoin is down 0.5% at around $83,000. US economic data slate includes initial jobless claims (8:30am, est. 200k) and August wholesale inventories (10am). Fed speaker slate includes Kashkari (10:40am) and Musalem (1:40pm); Waller already spoke at 4:30am. Treasury sells $22BN of 30-year bonds at 1pm.

 

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

                          Weekly initial jobless claims totaled 197,000 versus estimates 0f 200,000.

                           https://www.zerohedge.com/markets/jobless-claims-confirm-low-hire-low-fire-economy

 

                        International

 

The August German trade balance was +E19.5 billion versus expectations of +E19.0 billion.

 

                        Other

 

                          What is driving consumer spending?

                          https://talkmarkets.com/article/worried-consumers-keep-spending-heres-why

 

            Iran

 

              Overnight news.

                  https://www.zerohedge.com/geopolitical/pezeshkian-calls-iranians-ration-electricity-stand-us-negotiations-stalemated

 

            Monetary Policy

 

The Fed released the minutes of September FOMC meeting---which were hawkish in tone.

                          https://www.zerohedge.com/markets/fomc-minutes-show-all-19-fed-officials-supported-rate-hike-most-assess-another-hike-year

 

              The Fed has missed its inflation goal 66 months in a row.

                          https://quoththeraven.substack.com/p/the-fed-has-missed-its-inflation?r=1ng8jx&utm_campaign=post-expanded-share&utm_medium=web

 

            Fiscal Policy

 

              The SEC is watching.

              https://reason.com/2026/10/06/the-sec-is-watching-american-investors-trades-thats-a-privacy-nightmare/

 

            AI

 

              Trusting Mark Zuckerberg.

              https://alhambrapartners.com/weekly-market-pulse-the-new-luddite-revolution/?src=news

           

              Reconciling AI expected revenues to capex.

              https://econbrowser.com/archives/2026/10/reconciling-expected-revenues-to-expenditures

 

              SpaceX credit risk hits new high.

              https://www.zerohedge.com/markets/spacex-credit-risk-hits-new-high-ai-debt-binge-fears-spook-bondholders

 

            The Financial System

 

              Deeply distressed loans rise to the highest levels since the pandemic.

  https://www.bloomberg.com/news/articles/2026-10-06/deeply-distressed-us-loans-rise-to-highest-level-since-pandemic?accessToken=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJzb3VyY2UiOiJTdWJzY3JpYmVyR2lmdGVkQXJ0aWNsZSIsImlhdCI6MTc5MTM5NzI1NiwiZXhwIjoxNzkyMDAyMDU2LCJhcnRpY2xlSWQiOiJUTUhRVUFUM0JaTUwwMCIsImJjb25uZWN0SWQiOiJCMzFCNTRDQTI3MTE0NjAxOUQxMURCN0IxRUM4NTE2MyJ9.LM8INpIH3ZRQWxC8gX6emNgapi4Zuxe7bRPd-cVjSoo

 

              Surging rates causing a problem for commercial real estate industry.

              https://www.wsj.com/real-estate/commercial-real-estate-interest-rates-22d04b1b?st=9GuQG4&reflink=desktopwebshare_permalink

 

     Investing

 

            Getting bonds (and diversification) wrong.

            https://behaviouralinvestment.com/2026/10/06/getting-bonds-and-diversification-wrong/

 

            A debate on how the bubble bursts.

https://www.zerohedge.com/markets/not-spectacular-enough-novogratz-says-ai-biggest-bubble-our-lifetime-and-you-should-buy-it?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTI3NjAwIiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MTQ2MzM0OSwiZXhwIjoxNzk0MDU1MzQ5LCJhdWQiOiJ6aC1naWZ0In0.duu3C0_HlQAGieUPkDKb9eufbf-DAYgC6iRZfvPGo6s

 

 

    News on Stocks in Our Portfolios

 

 

 

What I am reading today

 

           

 

 

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