The Morning Call
10/16/26
The
Market
Technical
Thursday in the
charts.
Note: the S&P
bounced off its 50 DMA---clearly good news. But its advance was much less
dramatic than the DJIA, keeping alive the notion that the rest of the Market is
starting to catch up with the Mag 7. I nibbled at NOBL (dividend aristocrats)
ETF and a TIPS ETF on the thought that (1) the aforementioned catch up would
progress and (2) the term premium was at a level too attractive to pass up.
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
AI unwinds.
Five ominous
charts.
https://talkmarkets.com/article/crash-alert-five-ominous-charts
On the other
hand---the latest from Citadel.
Friday morning
setup. US futures are higher, and small caps are leading, as the crowded-trade
unwind that hammered chips, momentum and AI baskets all week takes a breather:
Fed Chair Kevin Warsh said nothing about rates at the IMF gathering in
Bangkok overnight (traders took the silence as a dovish gift, cutting October
hike odds to 14% from 26%), Tesla jumped 5% after Musk unveiled his
"flying" Roadster, and oil slipped after Trump said Iran had asked
for a halt to US attacks but then it rebounded when the market realized Trump
is just lying; as a result haven demand faded and the global bond rally
stalled, with 10Y yields rising 6bps to 5.12%. As of 8:00am ET, S&P futures
are 0.1% higher at 7,800, Nasdaq futures are down -0.2% and Dow futures are
-0.2%; Russell 2000 contracts are up 0.5%. Yesterday the S&P rose
0.3% and closed within 1% of its record high after Jensen Huang rode to
CoreWeave's rescue, even as the SOX fell for a 7th straight day and the Nasdaq
barely eked out a gain. Premarket, all Mag 7 names except Amazon are higher led
by Tesla, while CoreWeave (-3.9%), Strategy (-2.9%) and Netflix (-2.5%) lag and
the AI baskets (semis and memory) remain in the red per JPM. The day's
driver is Warsh (or rather what he didn't say): with the blackout starting
Saturday, the Fed chair declined to push back on rate expectations and instead
talked up a "massive investment surge" from AI. In rates, Treasuries
slide with a mild bear steepening (2s flat, 10s +4bps, 30s +3bps per JPM) as
the rebound in global stocks clips the haven bid; bunds and gilts are also
lower by about 15 ticks with UK banks in focus after reports Chancellor Healey
will raise their taxes. In FX, the Bloomberg Dollar Spot Index drops 0.4%, down
a second day, with the kiwi and Aussie leading G10 and the euro set to end a
five-week losing run. In commodities, WTI is down 1% near $97 and Brent trades
around $105 but is still headed for a second weekly gain; gold is up 0.3% at
$4,184, silver gains 0.8% and copper rises 1% in London. Crypto is mixed:
Bitcoin is little changed around $82,000 while Ether bounces. US economic data
slate includes September import/export prices (8:30am), industrial production
and capacity utilization (9:15am), the federal budget balance (2pm) and August
TIC flows (4pm); Fed speaker slate includes Goolsbee on Bloomberg TV at 6pm,
the last word before the blackout. There are no coupon auctions, but Treasury's
primary dealer questionnaire (noon ET) ahead of the Nov. 4 refunding is worth
watching.
Fundamental
Headlines
The
Economy
US
International
The
August EU trade balance was -E16.1 billion versus estimates of +E14.7 billion; September CPI was
+0.6%, in line.
Other
Retail
sales are another plus for the economy.
https://bonddad.blogspot.com/2026/10/retail-sales-continue-this-years.html
Monetary
Policy
With everything
else going on yesterday, I failed to mention the release of the September FOMC
minutes.
https://assets.realclear.com/files/2026/10/2947_fed_watcher_-_oct_14.pdf
Fiscal
Policy
American free enterprise is under attack.
https://www.cato.org/restoring-free-enterprise/american-free-enterprise-under-attack
What the Iran war has cost America---so far.
https://www.zerohedge.com/political/iran-war-has-cost-nearly-2000-us-household-moodys-top-economist
AI
Nvidia will blink first.
A
fourth crack.
Investing
Outlook for October
S&P dividends.
https://politicalcalculations.blogspot.com/2026/10/the-outlook-for-s-500-dividends-in.html
When do
fundamentals matter?
https://behaviouralinvestment.com/2026/10/13/when-do-fundamentals-matter/
Opportunities in
bonds?
Inflation concerns
push yields further above fair value.
https://www.capitalspectator.com/inflation-concerns-push-10-year-yield-further-above-fair-value/
Bitcoin will
become less volatile.
News on Stocks in Our Portfolios
What
I am reading today
Non state alliances
are reshaping the global order.
https://www.nakedcapitalism.com/2026/10/how-non-state-alliances-are-reshaping-the-global-order.html
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