The Morning Call
10/14/26
The
Market
Technical
Tuesday in the
charts.
Tuesday 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
Sprinting to stand
still.
Positioning is
changing.
Memory meltdown.
Wednesday morning setup:
US futures are higher, with small caps leading and tech lagging, as traders
brace for what is expected to be the hottest monthly CPI print since the
spring, digest more escalation in the Gulf after Yemen's Houthis hit Saudi
Aramco's Dhahran headquarters and vowed more strikes on Saudi airports and oil
facilities, and countdown to Anthropic's pre-IPO investor day which one
strategist warns "will move the entire market"; as a result oil is
grinding higher while the bond rout takes another breather with the 10Y sliding
to 5.20%. As of 8:15am ET, S&P futures are 0.2% higher at 7,872 while
Nasdaq futures are down 0.1% and Dow futures are up 0.4%; Russell 2000
contracts are up 0.3%. On Tuesday, the S&P closed fractionally lower
(-0.02%) as the Philly semi index posted a fifth straight drop - its longest
losing streak since July - and the KBW Banks index slid 1.4% with all 24
members lower on day one of bank earnings. In premarket trading, Mag 7 names
are mostly higher led by Alphabet, BlackRock jumps after pulling in $205
billion in new money, while Bank of America slips after a $1.21 billion
money-laundering fine (as
we reported yesterday) and an equities trading miss; memory names are again
under pressure (MU -1.4%, SNDK -2.3%), extending the memory
meltdown, even as ASML's beat-and-raise sparked a modest rally in
Europe. The day's driver is CPI: consensus expects headline
to jump 0.6% M/M and 3.6% Y/Y - the biggest monthly advance in five months on
the back of surging gasoline prices - with core seen at 0.2%, while swaps price
roughly 24% odds of a quarter-point hike at the Oct. 28 FOMC, meaning that the
print "mostly decides December". Treasuries are
slightly richer, with yields down about 1bp across the front-end and belly and
the 10Y at 5.20%, dragged lower by a rally in gilts after BoE Chief Economist
Huw Pill cast doubt on market pricing of four hikes by next summer and the FT
reported Chancellor Healey will fund budget giveaways with taxes or spending
cuts rather than more borrowing. The Bloomberg dollar index is little changed,
while the Aussie is the best G-10 performer after blowout Chinese trade data.
In commodities, WTI has swung between gains and losses and was last up around
1.6% as traders weigh the latest Middle East hostilities, after the IEA warned
diesel supplies will remain constrained well into 2027 and OECD government oil
stocks hit the lowest since 1989; gold slips 0.4% to $4,144 and silver drops
over 1% to its lowest since August, while copper is firmer. Bitcoin is flat
around $83,000. US economic data slate includes MBA mortgage applications
(already out: -2.7%) and September CPI (8:30am); the Fed releases its Beige
Book at 2pm. Fed speaker slate includes Barkin (1:30pm), Goolsbee (3pm) and
Bowman (10:55pm). The Treasury sells $75 billion in 17-week bills at 11:30am.
Fundamental
Headlines
The
Economy
US
Weekly mortgage applications
fell 2.7% while purchase applications were down 0.4%.
Month to date
retail chain store sales were up 10.4% versus 8.6% in the prior week.
September
existing home sales rose 1.5% versus consensus of -0.3%.
https://bonddad.blogspot.com/2026/10/the-subpar-equilibrium-in-existing-home.html
International
September Chinese
CPI rose 0.2% versus predictions of +0.3%; September YoY PPI was up 5.0% versus
+4.5%; the September trade balance was +$133.5 billion versus +$118.5 billion.
September
German PPI was up 1.9% versus estimates of +0.7%.
Other
Overnight News
Iran is deploying
new tactics to target ships sailing through the Strait of Hormuz as it seeks to
keep oil prices high and influence the US midterm elections, two senior Iranian
officials told Reuters.
Oil edged higher
as attacks on Saudi Aramco's headquarters added to a flare-up in the Middle
East conflict, increasing uncertainty over a recovery in Persian Gulf energy
flows.
Yemeni Army
Spokesperson said operations towards Saudi airports and oil facilities will
continue in the coming days and warned for global shipping companies, civilians
and workers to evacuate such airports and firms, as they are legitimate
targets.
Fiscal Policy
The
burden is ours, not our grandchildren’s.
AI
The huge lurking leverage in AI.
https://giftarticle.ft.com/giftarticle/actions/redeem/9981aaea-42af-480e-a783-ea7976c2b0f5
The 11% AI chip loan the big banks refused to
underwrite.
One more problem for the hyperscalers.
https://www.zerohedge.com/energy/big-tech-pushes-back-paying-grid-was-crumbling-long-ai
Tariffs
Manufacturing surged when tariffs were lifted.
https://thedailyeconomy.org/article/manufacturing-surged-when-tariffs-were-lifted/
Investing
Paul Tudor Jones versus Goldman on the 2027
market outlook.
Stocks keep
climbing but leadership may be changing.
https://www.capitalspectator.com/stocks-keep-climbing-but-market-leadership-may-be-shifting/
Will bonds blow
up?
https://trendlabs.com/will-bonds-blow-up/
The starting yield
on a bond largely dictates your future return.
https://bondvigilantes.com/blog/2026/10/bonds-have-their-mojo-back/
The latest from
Morgan Stanley.
News on Stocks in Our Portfolios
What
I am reading today
New
era of investment for the defense industry.
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