U.S. Futures & World Markets
Crude is up about 4% this morning on reports that tanker traffic through the Strait of Hormuz has dropped after recent attacks from Iran. President Trump has also suggested he may launch a massive bombing campaign. Unsurprisingly, stocks are lower and Treasury yields are higher.
Samsung didn't disappoint after announcing a 783% profit jump. The problem? Expectations are already sky-high. YTD: NVDA +27%, TSM +55%, MU +281%, AMD +201%. When stocks have already run this far, "good" earnings may not be good enough. For now, investors are focused on inflation, energy prices, and Treasury yields. Until we get some clarity, expect the choppy tape to continue.
CORE Headlines
- Trump considering massive bombing of Iranian energy, infrastructure, and nuclear targets — could happen before midterm elections, no final decision made. — Axios
- Saudi Arabia in discussions to offer oil loadings in 2027 outside the Strait of Hormuz. — Bloomberg
- Iran considering targeting U.S. bases in Germany. — Wiwo
- Oracle, SpaceX, and Broadcom seeking large financing deals to pay for AI chips. — WSJ
- The Ellison family invested $17B to complete the Warner Brothers deal. — Bloomberg
- Hurricane Isaias expected to strike near Alabama this weekend.
- Fed minutes suggest another rate hike this year, but no urgency for October action. — WSJ
- Samsung forecast quarterly operating profit exceeding $80B for the first time. — WSJ
- Palantir (PLTR) upgraded to Buy at Goldman Sachs, target $230.
- Royal Caribbean (RCL) upgraded to Buy at Jefferies, target $330.
- CAVA Group (CAVA) upgraded to Buy at Melius Research, target $95.
Charts & Data
Equal-weight S&P 500 underperforming the cap-weighted S&P by the largest margin in more than 24 years. BarChart: a historically extreme divergence.
S&P 500 new highs came despite a negative 10-day A/D line — historically these have tended to be followed by stronger rather than weaker performance. Bespoke via Daily Chartbook.
For the first time since tracking began in 2019, an individual equity did not lead Schwab clients' net-buy list in September — ETFs accounted for five of the top 10 net buys. Daily Chartbook.
US Fundamental L/S nets in the 2nd percentile on a 5-year lookback — ~7400 SPX is the level where clients would meaningfully like to add exposure. Shawn Tuteja, Goldman via Daily Chartbook.
SOX continues to track the 2000 analog remarkably closely — semis now roughly where the sector was around the March 2000 peak. BTIG via Daily Chartbook.
Small cap companies feel higher rates much more than large caps — variable rate debt is 38.9% of small cap debt vs. 10.5% for large caps. That's why the Russell has faltered. DataTrek Research via Daily Chartbook.
Post-Fed hike bear steepening of the yield curve — from 26bps to 53bps since Sep 17. The market is pricing a two-hike mini-cycle AND a higher neutral rate. @warrenpies via Daily Chartbook.
Global bond markets on fire again — epicenter is France, radiating to Italy, UK, and Spain. @robin_j_brooks via Daily Chartbook.
US mortgage market in its biggest recession in history — purchase applications down 58% from the 2021 pandemic peak, back to 1995 levels. Nick Gerli via Daily Chartbook.
YouTube US TV viewing share: 14.2%. Netflix: 7.8%. @patientinvestor: YouTube is eating Netflix's lunch.
S&P 500 profit margin expected to rise from 13.2% in 2025 to 15.7% this year, 16.8% in 2027, and a record 18.1% in 2028. Ed Yardeni via Daily Chartbook.
Interesting Reads
- Your driverless cab is spying on you — Wired
- Why were Victorian elites so effective? — Works In Progress
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