U.S. Futures & World Markets

Happy Soul Train Friday! RIP Freddie Jackson https://mcore.hopp.to/youtube390 — here's a slow jam from Freddie if you want to ease into the day https://mcore.hopp.to/youtube391

Falling oil prices have stocks in a better mood as we head into Friday's trading. The AI trade is also getting a boost from OpenAI's latest revenue projections above $70 billion — directly contradicting the FT report suggesting the figure could be closer to $50 billion. In an AI-driven tape, those kinds of numbers matter. Investors are desperate to see that all of the hyperscaler spending is turning into actual revenue and profit.

Next week starts the unofficial kickoff to Q3 earnings season. Big banks are first on the list with JPM, Citi, GS, BAC, WFC and others set to report. The big question now is whether earnings season can help broaden this rally — or if the same handful of stocks will keep doing all the heavy lifting.

S&P Futures vs. Fair Value: +34.00  |  10-Year Yield: 5.25%

CORE Headlines

Charts & Data

Both initial and continuing jobless claims continue to point to a resilient labor market. Daily Chartbook.

Debt spiral: higher yields raise interest costs, widen deficits, require more borrowing, and push yields higher still. Higher yields also increase the risk of causing a recession, which would exacerbate any debt crisis. Ed Yardeni via Daily Chartbook.

Asset manager positioning in VIX futures is at its most short in at least 10 years. Contra-indicator? Goldman via Daily Chartbook.

The AAII bull-bear spread crept into positive territory last week for the first time since early September — sentiment remains depressed. Good news to see incremental buyers remain. AAII via Daily Chartbook.

Active manager exposure to US equities rose over the past week, undoing most of the previous week's decline. NAAIM via Daily Chartbook.

Sector positioning is narrow — Media, Communications, Gaming, and Technology are the only sectors with overweight investor positioning. Outside of these, positioning remains broadly subdued. Deutsche Bank via Daily Chartbook.

Corporate insider buying has cooled lately, EXCEPT in the Healthcare sector, where insiders continue to load up. @jaykaeppel via Daily Chartbook.

The S&P 500 has risen in 21 of the last 23 midterm election cycles over the period from one month before the election to two months after. With the midterms now less than a month away, we entered that sweet spot this week. The median return over this three-month window is 7%. Jim Reid, Deutsche Bank via Daily Chartbook.

Correlations have been moving back towards the long run mean at 0.60 — a healthy shift back to a rational rather than an excessively rose-colored view of market conditions. Nick Colas, DataTrek Research via Daily Chartbook.

Despite a new 52-week high in the S&P 500, more than 75% of stocks are down double digits, and over 37% are down 20% or more. Andrew Thrasher, Thrasher Analytics via Daily Chartbook: the most striking breadth stat of the week.

One of the main reasons so many breadth indicators are off the charts: the top 5 stocks in the S&P 500 are equal to the bottom 434. @michaelbatnick via Daily Chartbook.

AI-related stocks now make up 49% of the S&P 500. Those same 41 companies account for about two-thirds of the S&P 500's year-to-date market cap change. @alexmalitas via Daily Chartbook.

Markets are strongest when leadership broadens. Earnings growth is now spreading across every sector — a sign that market leadership may be expanding and the rally becoming more durable. @blakemillardcfa via Daily Chartbook.

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