The Morning Call
10/7/26
The
Market
Technical
Tuesday in the
charts.
Note: the S&P
hit a new all-time high yesterday. If it remains there through the close on
Friday, it will mark the resumption of upward momentum. Meantime, it has two
small gap up opens to contend with. Confusing the situation is the radically different
pin action in bonds versus stocks (see below). I am waiting until at least
Friday’s close before getting too jiggy.
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
Tech just broke out.
Stocks and bonds are pricing in
fundamentally different scenarios.
The above in the charts.
Time to buy
bitcoin?
Wednesday morning
setup: US equity futures are sliding from Tuesday's record close as oil climbs
back above $100, global bond yields resume their ascent and the AI bubble
debate makes an unwelcome comeback. As of 8:00am ET, S&P futures are 0.4%
lower, trading around 7,844, while Nasdaq 100 and Dow futures drop 0.6%; small
caps are also under pressure with Russell 2000 futures down 0.3-0.4% as usual.
On Tuesday, the S&P 500 rose 0.6% to close at a record high for the first
time since August 13, its fourth consecutive advance and longest winning streak
in about two months, with the Nasdaq 100 also closing at an all-time high.
Premarket, the Mag 7 are mixed (Apple +0.4%, Tesla -0.8%) while Memory, Semis
and Software are all lower as the AI theme sees some profit-taking following a
slide in Korea's Kospi; Constellation Brands slides 4.7% after the Corona
brewer reaffirmed guidance, Neogen jumps 11% on an earnings beat, and SpaceX
falls 2% on a report it is seeking
to raise $40 billion in a chip-backed SPV to buy Nvidia chips. The day's
driver is once again oil: Iran has increased the pace of attacks on tankers in
the Strait of Hormuz just as shipments through the chokepoint approach prewar
levels, sending Brent up 1.4% to $101.94 and WTI up 0.7% to $90.02. That has
pushed Treasuries lower, with the long end leading: the 30-year yield climbed
5bps to 5.70%, the highest since 2002, while the 10Y trades around 5.335%, up
5bps, and 2s10s is 4bps steeper. The Bloomberg Dollar Spot Index rose 0.3%,
approaching its highest levels since June, as the euro slid to a 16-month low
against the pound amid renewed French fiscal angst, with the OAT-Bund spread
back out to 138bps. Gold dropped 1% to around $4,121 and silver fell 1.9% to
$60.21, while copper is flat with Chinese buyers still away for Golden Week.
Bitcoin is down 2.4% near $83,600. US economic data slate includes MBA mortgage
applications (7am, -4.2%), September NY Fed 1-year inflation expectations
(11am), FOMC minutes from the September 16 meeting (2pm) and August consumer credit
(3pm). The Treasury sells $39 billion of 10-year notes in a reopening at 1pm.
Fundamental
Headlines
The
Economy
US
Weekly mortgage
applications declined 4.2% while purchase applications were down 2.1%.
Month to date
retail chain store sales were up 8.6% versus up 8.2% in the prior week.
The August trade
balance was -$105.6 billion versus forecasts of -$102 billion.
The latest Atlanta
Fed Q3 GDP growth nowcast was 3.7%, in line with its previous calculation.
The October small
business optimism index was reported at 46.8 versus predictions of 48.5.
International
August Japanese
average earnings were up 3.8% versus consensus of +3.7%; the August preliminary
leading economic indicators index came in at 118.0 versus 118.1.
August
German industrial production was up 1.0% versus expectations of +0.5%.
Other
Leading
indicators from the September employment report continue positive trends
https://bonddad.blogspot.com/2026/10/leading-indicators-from-setpember.html
The mighty American consumer.
Iran
Hormuz work arounds.
https://www.zerohedge.com/energy/standard-chartered-says-hormuz-oil-flows-are-far-normal
AI
The rising real price of capital.
The application phase of AI is here.
What
history tells about the AI debate.
No signs of AI in the productivity data.
New Innovation Is Required to Fund AI’s $6 Trillion Buildout
Wall
Street banks launch record $60bn chip deal for Broadcom and Anthropic.
https://giftarticle.ft.com/giftarticle/actions/redeem/41bb2a07-3aca-4c38-83a7-0313ef558395
Oracle takes another blow.
The
Financial System
Office
CMBS Delinquency Rate Re-Spikes to 12.2%, Far Worse than Financial Crisis Peak.
The bond vigilantes find new reasons to
worry.
https://www.capitalspectator.com/bond-vigilantes-find-new-reasons-to-worry/
Investing
What is driving earnings higher?
What is driving
rates higher?
https://ritholtz.com/2026/10/what-is-driving-rates-higher-and-bonds-lower/
News on Stocks in Our Portfolios
What
I am reading today
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