U.S. Futures & World Markets

Another day, another flight on American Airlines. But I figured I'd send the Core out today, even if it is a bit later than usual.

Stocks are lower this morning following disappointing earnings from Tesla and Meta. Meta exceeded earnings and revenue expectations but raised its full-year capex spending guidance. Investors remain concerned about elevated AI spending and when they'll see a return on investment. Adding to the negative mood, crude prices are higher on more geopolitical headlines.

Markets crave certainty, and we're currently juggling bowling pins — or chainsaws if you're a bear — while dancing around banana peels. Add in upcoming mid-term elections, and it's easy to understand why we remain in a choppy tape.

S&P Futures vs. Fair Value: -70.00  |  10-Year Yield: 5.05%

CORE Headlines

Charts & Data

80% of the top 1% of AI spenders are VC-backed, compared with only 13% of the median spender. If the AI payoff is slow to materialize, VC returns would come under pressure, and a pullback in venture funding could in turn weaken demand for compute. Torsten Slok, Apollo via Daily Chartbook.

Total hyperscaler off-balance-sheet debt as of Oct 21: $3.6 trillion (with Meta and SpaceX reporting). Expect this to cross $4 trillion when the rest report. ZeroHedge via Daily Chartbook.

Foreign holdings of US Treasuries jumped +$83B in August to $9.33 trillion — their 6th-highest total on record. The surge was driven by Canada (+$38B) and Belgium (+$20B). Japan cut its holdings by -$36B; China reduced by -$27B to its lowest since August 2008. Foreign holdings are rising despite continued selling in Japan and China. The Kobeissi Letter via Daily Chartbook.

Short sales have outpaced long buying 5:1 month-to-date in the Nasdaq, pushing short leverage close to five-year highs. With 44% of all earnings next week including loads of tech companies, if NDX can hold the range into earnings and we see some surprises, that's a monster amount of fuel for a squeeze. Joe McCann via Daily Chartbook.

Since late 2022, output per worker in the three most AI-intensive industries has grown 5% annually — more than double its historical pace and well above the 1.3% growth recorded across the rest of the private sector. The Daily Shot via Daily Chartbook.

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