Investing for Survival

https://www.barchart.com/stocks/signals/new-recommendations

Barry Ritholtz’s thoughts on the sell off.

https://ritholtz.com/2026/11/thoughts-on-the-selloff/

Lance Roberts near term outlook for the Markets.

https://talkmarkets.com/article/midterm-election-goes-blue-what-happens-with-markets-now

Dirt cheap AI.

https://www.zerohedge.com/the-market-ear/dirt-cheap-ai-opportunity-nobody-wants-touch?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTMxNzE3Iiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5NDMxOTQwOSwiZXhwIjoxNzk2OTExNDA5LCJhdWQiOiJ6aC1naWZ0In0.fTf3FzSKUDIBNJWD49wDzxmgt4jO4Iav7i8jT7bc_A4

Outlook for gold.

https://talkmarkets.com/article/why-gold-miners-rose-on-golds-down-day

Tuesday morning setup: US futures are flat as a Waller hawkish curveball, hours before the October CPI report, took the air out of Wall Street's best session in six months, while oil extended its slide on US-Iran diplomacy hopes and the Claude-maker Anthropic lined up what could be the biggest IPO ever; as a result the 2Y yield jumped 5bps to 4.61% and a December rate hike is now fully priced. As of 6:25am ET, S&P futures are up 0.1% at around 7,578 while Nasdaq futures are down 0.2% and Dow futures rise 0.4%. That follows a session in which the S&P soared 2.35% to 7,550, its best day since the April Iran ceasefire, the Nasdaq 100 jumped 3.4% and the SOX exploded 6.85% even as Nvidia slid 4.3%, the only decliner in the chip index. In premarket trading, the Mag 7 is mixed: Nvidia is up 0.6% and Alphabet gains 1% even as the Megaspeed scandal widens, confirming our article from yesterday, while memory, semis and software are lower; Sanmina and Aaon soar about 20% on strong guidance, while Groupon tumbles 20% and Rocket Lab drops 6% on a wider loss. The day's driver is the Fed (again): Governor Waller said he backs a December hike and would consider a half-point move if core CPI prints around 0.3% or higher, which pushed odds of a 25bp hike from just over 80% to above 99%. Treasuries fell to session lows on the comments, with the 2Y up 5bps at 4.61% and the 10Y little changed around 4.86%, twisting the curve flatter, while bunds and gilts held onto early gains as energy prices slid. The dollar erased an early drop after Waller, with risk-sensitive currencies such as the krone and Aussie lagging. In commodities, Brent briefly slipped below $90 for the first time since August after Trump said further strikes on Iran would not be necessary, gold is down 1.5% to about $4,077, silver drops 1.9% and copper is softer. Bitcoin is down about 1%, trading near $74,000. US economic data slate includes October CPI (8:30am; no year-on-year figures this time due to the 2025 shutdown) and weekly ADP employment (8:15am); NFIB small business optimism already printed at 97.8, below the 98.2 estimate. Fed speaker slate includes Logan (10:50am), Schmid (1:30pm), Bowman (3:30pm) and Paulson (6:30pm). The Treasury sells $42 billion of 10-year notes at 1pm; the US bond market is closed on Wednesday for Veterans Day.

https://cms.zerohedge.com/sites/default/files/inline-images/ZH_Wrap_-_Markets_at_a_Glance_-_10_Nov_2026_1794316081499.jpg

Fundamental

Headlines

The Economy

The October small business optimism index came in at 97.8 versus estimates of 97.7.

October CPI was +0.4% versus predictions of +0.3%; core CPI was +0.3% versus +0.2%.

https://www.zerohedge.com/markets/cpi-prints-hotter-expected-rate-hike-odds-soar-waller-sparks-hawkish-panic

International

September Japanese household spending fell 2.8% versus consensus of +0.3%.

The October Chinese trade balance was +$105.3 billion versus expectations of +$125.8 billion.

Other

Q4 nowcasts look strong.

https://www.capitalspectator.com/gdp-nowcasts-signal-strong-finish-to-2026/

Labor’s share of output.

https://wolfstreet.com/2026/11/09/labors-share-of-output-structural-shifts-in-the-us-economy-driven-by-technology/

Fiscal Policy

The inexorable growth in national debt.

https://www.advisorperspectives.com/commentaries/2026/11/09/debt-not-proud

Stocks are crashing but earnings aren’t.

https://www.zerohedge.com/the-market-ear/ai-crash-has-problem-earnings-arent-crashing?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTMxNTUxIiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5NDIzNTg5MSwiZXhwIjoxNzk2ODI3ODkxLCJhdWQiOiJ6aC1naWZ0In0.NvEqPHS_kYQ22y72tjAK-56HgsnH2ZQu5f6GuTGyFMw

Is this the end of the AI trade?

https://www.riskhedge.com

Can AI withstand vertical integration?

https://giftarticle.ft.com/giftarticle/actions/redeem/0e7b4775-a511-46b6-a1fa-2532a11b7131

The Financial System

Private credit poses risks to the financial system and personal savings.

https://www.americanprogress.org/article/private-credit-poses-risks-to-americans-savings-and-the-financial-system/

Investing

A word of caution on crypto.

https://quoththeraven.substack.com/p/watch-crypto-for-the-next-black-swan?r=1ng8jx&utm_campaign=post-expanded-share&utm_medium=web

The trend in equities held by households.

https://econbrowser.com/archives/2026/11/equities-held-by-households-2000-and-now

Secular bull and bear market trends.

https://www.advisorperspectives.com/dshort/updates/2026/11/06/secular-bull-and-bear-market-trends-october-2026

Which is the better investment, your house or the stock market?

https://www.wsj.com/finance/investing/home-vs-stock-market-investment-6783607f?st=cfygtc&reflink=desktopwebshare_permalink

Which is the better investment, an index fund or an actively managed fund?

https://www.morningstar.com/funds/trick-or-treat-index-funds-beat-their-benchmarks-more-often-than-active-funds-over-past-decade?utm_medium=referral&utm_campaign=linkshare&utm_source=link

News on Stocks in Our Portfolios

What I am reading today

Visit Investing for Survival’s website (http://investingforsurvival.com/home) to learn more about our Investment Strategy, Prices Disciplines and Subscriber Service.

2026-11-09T06:09:34.482-08:00

The Morning Call

11/9/26

Today kicks off my annual fund raising drive that helps keep me working for you. Just go to the Donate button and enter the amount. I know many websites are free but most include a premium membership that requires a subscription to access to the most informative articles. Subscriptions that I pay and provide my readers the content for free. Any monies will be appreciated---even as little as a dollar a week or a month will help.

The Market

Technical

The S&P took a beating last week as the blue wave and the uncertainty it created over the AI buildout took its toll. It now hovers over its 200 DMA, having blasted through its 50 and 100 DMAs plus the lower boundary of the August to November trading range. Friday’s pin action halted Thursday plunge but only modestly. Certainly not enough to assume that the worst is over. So the big technical question is, is the sell off over? Given (1) Friday’s tepid rebound and (2) more importantly the huge unknown hanging over the Market, i.e., what will be the ultimate impact on the AI given that the dems now control the statehouses of some of the major AI construction projects?, my guess is no. And, of course, none of this takes into account the war in the Middle East. Clearly, I could be wrong, but the Market is going to have to prove me wrong before I get off the sidelines.

A new test for tech stocks.

https://www.capitalspectator.com/ai-meets-politics-a-new-test-for-tech-stocks/

The last man standing has fallen.

https://www.zerohedge.com/the-market-ear/last-man-standing-has-fallen?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTMxMjg4Iiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5Mzk5ODAxMywiZXhwIjoxNzk2NTkwMDEzLCJhdWQiOiJ6aC1naWZ0In0.IA4XJ6cjv9b9oDOd7-4zZZdyYTti6qv3cR2HgLHMDA0

The bond market was up slightly on the week. And it certainly did not suggest a flight to safety, though the lower rated credit spreads did widen some. TLT continues to trade down across all timeframes and is below its 100 and 200 DMAs. So there’s nothing to get jiggy about. That said, I continue to hold a small trading position in a TIPS ETF.

GLD managed a modest rally, reflecting increased economic and AI buildout fears. In the process, it managed to close back above the lower boundary of its short term trading range. However, it remains below all three DMAs. On the other hand, GDX broke out of a downtrend dating back to early August and closed above its 100 DMA. So there is a flicker of promise. Still too soon to act.

Goldman cuts gold target.

https://www.zerohedge.com/precious-metals/long-term-constructive-just-not-today-goldman-cuts-gold-target-again-warsh-kills?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTMxNDA4Iiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5NDE0Nzc4MiwiZXhwIjoxNzk2NzM5NzgyLCJhdWQiOiJ6aC1naWZ0In0.QyGi_3r73Uian_i4jVMcSdi-XQPpdR4d3Eo9ZVYko-4

The dollar took Thursday’s equity drubbing in stride but rallied big time of Friday, perhaps on the strong payroll number. It remains on a pretty steep upward trajectory and above all three DMAs. And while it has made a nice series of higher lows and higher highs and seems likely to continue to do so, it remains in about the middle of a wide short term trading range.

Friday in the charts.

https://www.zerohedge.com/markets/blue-nami-hangover-chips-bounce-breadth-doesnt-hot-payrolls-put-december-hike-back-table?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTMxMzI0Iiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5NDAwMTAzOCwiZXhwIjoxNzk2NTkzMDM4LCJhdWQiOiJ6aC1naWZ0In0.XJB3uuF4XunfKW4FuKOA2kJ_RA0-odeo-6zXN7YzllU

Friday 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

Friday’s week from hell.

https://www.zerohedge.com/the-market-ear/wall-streets-week-hell-panic-liquidations-and-next-big-trade?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTMxMzE4Iiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5NDAwMDI2NiwiZXhwIjoxNzk2NTkyMjY2LCJhdWQiOiJ6aC1naWZ0In0.xEipOPU4Nl-17jNsMqwIh1wmMZT07INq5cavfcDPRh4

Monday morning setup: US futures are higher as dip buyers return after the S&P's worst week since April 2025, oil extends its biggest weekly drop since April 2020 on Iran diplomacy hopes, and the market decides that Jensen Huang's affair with a suspected Chinese spy is an Nvidia problem rather than an AI problem, at least until the open; as a result, Treasuries are little changed with the 10Y at 4.86%. As of 8:15am ET, S&P futures are 0.9% higher while Nasdaq futures gain 0.8% and Dow futures rise 1.1%, the latter a good read of where the money is going. Cash stocks closed Friday with the S&P up 0.31% and the Nasdaq 100 up 1.4%, but that barely dented a week in which the S&P lost 2.7% and the Philly semi index fell 12%. In premarket trading the Mag 7 ex-Nvidia is green, with Nvidia down between 4.4% and 4.9% after the board launched an independent probe, while KKR, IFF and Barrick are higher and Dole slides. The day's driver is oil (again): WTI is down 3.5% to $87.66 and Brent is down 3.8% to $94.59 after Trump told CNN that further strikes on Iran are highly unlikely if talks progress, with a further leg lower on an unconfirmed report that Iran softened its Hormuz demands. Treasuries are mixed and the curve is twist-flattening, with the 2Y around 4.53% as markets price roughly a 79% chance of a December Fed hike; bunds are slightly weaker. The Bloomberg dollar index is down 0.4%, with the kiwi leading G-10 after New Zealand's incumbent National Party emerged from the election with a path back to power. In commodities, gold is up 0.6% around $4,097, silver gains 1.3% near $52.60 and copper is firmer; bitcoin holds around $74,000. US economic data slate includes September final wholesale inventories (10am) and the NY Fed one-year inflation expectations (11am). Fed speaker slate includes Bowman (8:40am), Goolsbee (10am) and Barkin (12:15pm). The Treasury sells $58 billion in 3-year notes at 1pm; US bond markets are shut Wednesday for Veterans Day.

https://cms.zerohedge.com/sites/default/files/inline-images/Market_Snapshot_-_2026-11-09_1794230273408.jpg

Fundamental

Headlines

The Economy

The stats last week were upbeat as were the primary indicators (three plus, one minus) with no inflation numbers. Overseas, the data was negative with one neutral and one bad price measure.

While these reports generally support both my forecasts for growth (muddle through) and inflation (good as it is going to get but not any worse), both issues were under intense debate following the election.

First, the dem’s sweep was much larger than expected. That in itself shouldn’t have been that great a surprise and even if it was, so what? The senate was not veto-proof and Markets (count me in) love divided government. Generally, because the succeeding two years is an agenda fight that usually ends in some compromise that limits government growth. What’s not to like?

Another positive is that Trump’s loss is a gain for Fed independence. That is not to accuse the Fed of being political but removing the potential pressure from a sitting president backed by a partisan congress at least gives the Fed some psychological relief from White House harangues. Mind you, not that the Fed will end up doing the right thing anyway, as history would suggest. But, at least, it will be free of one potential negative influence.

https://www.nytimes.com/2026/11/06/business/economy/stable-labor-market-to-keep-fed-on-track-to-raise-rates-gradually.html?unlocked_article_code=1.OVE.syno.Pk0K6i2vnw6R&smid=url-share

To be clear---in my opinion, (1) a democrat controlled congress is a plus. Not because of their policy objectives but because we are likely to see a hamstrung fiscal policy that at least won’t make current fiscal policy any worse and (2) not having Trump pressuring the Fed doesn’t necessarily mean that it will make any better decisions. As I frequently point out, at critical junctions, these ivory tower yahoos haven’t ever gotten policy decisions right.

What the election did change was the assessment of the future economics of the AI buildout. The sweeping change in the state governors’ mansions of states that are centers of the AI datacenter construction was a stunner. Given the less AI friendly democrat attitude to the industry, economists and Wall Street are now reassessing whether the current projected growth in the AI buildout can be sustained given the more restrictive policy statements from those winning democratic governors.

If barriers are raised that impede or, worse, halt construction, what happens to the projected growth of the buildout and more importantly, the financing, both on and off balance sheet that is already in place, to fund that projected dynamic growth? Everyone is trying to figure that out right now---and, as yet, we don’t have an answer. But most agree that whatever the outcome, it will be less positive than previously thought.

Twilight in the markets.

https://giftarticle.ft.com/giftarticle/actions/redeem/ce7d2c7a-9b47-4dfa-910b-7370f04cee37

And that carries both good news and bad news. The bad news is that the projected growth rate of the AI buildout (and hence the economy) will be less than expected. How much less. Too soon to determine. But clearly that will overhang the economic projections as well as the Market until the answer become clearer.

The good news is that less demand coupled with a less irresponsible fiscal policy (I hope) would reduce inflationary pressures. Add in the democrats’ other objectives to (1) reduce tariff s and (2) wind down the Middle East war and we could see meaningful progress against inflation---assuming the Fed doesn’t f**k it up. Again, how this all works out is currently unclear. So we can’t get too jiggy until more on known.

The bottom line here is that economic projections from any quarter have become a lot more iffy. There is both good and bad potential news that will play on growth and inflation. Until we have a better handle on the outcome of the various aforementioned developments, a level of uncertainty will prevail which clearly includes my own forecasts.

International

The September Japanese leading economic indicators came in at 116.4 versus consensus of 116.7.

The September German trade balance was E15.6 billion versus projections of E19.2 billion.

The October Chinese CPI was 0.0%, in line.

Other

Record profit margins are about to get squeezed.

https://talkmarkets.com/article/ppi-vs-cpi-are-record-profit-margins-about-to-get-squeezed

A deep dive into the employment numbers.

https://wolfstreet.com/2026/11/06/signs-pile-up-of-a-solid-and-tightening-labor-market/

Unhired or unfired?

https://open.substack.com/pub/dror/p/unhired-or-unfired?utm_campaign=post-expanded-share&utm_medium=web

Iran

Overnight news:

Trump says further Iran strikes are "highly unlikely" if negotiations progress, while Rubio calls Tehran's demands unacceptable.

US and Iran are quietly negotiating a deal to avert a return to all-out war, though Washington is tempering hopes:

Fiscal Policy

The looming issues facing the new class of senators.

https://open.substack.com/pub/polymathinvestor/p/how-to-spot-a-market-bubble?utm_campaign=post-expanded-share&utm_medium=web

Credit crunch imminent.

https://www.zerohedge.com/markets/credit-crunch-imminent-hyperscalers-blow-past-full-year-debt-forecast-ai-bond-concessions?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTMxNDA1Iiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5NDE0NzYzNiwiZXhwIjoxNzk2NzM5NjM2LCJhdWQiOiJ6aC1naWZ0In0.IvpUX_Xztw2T2LQfAyinlPJRMs2w1nzUQlOb89vL5b4

Microsoft pulls the plug on Oracle.

https://www.zerohedge.com/markets/microsoft-pulls-plug-oracle-ai-rental-post-election-data-center-fallout-spreads

Jensen Huang had a ‘relationship’ with an alleged Chinese spy.

https://www.zerohedge.com/ai/jensen-huang-had-romantic-relationship-alleged-chinese-spy-reports

Follow up.

https://www.zerohedge.com/markets/detonator-set-right-cue-why-washington-seized-jensen-huang-scandal-draw-its-sword

Investing

Another wave of bad news will be coming.

https://quoththeraven.substack.com/p/after-the-crash-another-wave-of-bad?r=1ng8jx&utm_campaign=post-expanded-share&utm_medium=web

The latest from BofA.

https://www.zerohedge.com/markets/dem-fatale-hartnett-says-blue-wave-marked-peak-ai-every-wall-street-bull-conviction-dies?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTMxNDI0Iiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5NDE1NjcyNiwiZXhwIjoxNzk2NzQ4NzI2LCJhdWQiOiJ6aC1naWZ0In0.-CFoe18goOomr5rgZOGZ-l3kRV6weJTbjV3__8HpVu0

Why this analyst is buying the AI dip.

https://investorplace.com/hypergrowthinvesting/2026/11/why-im-buying-the-ai-selloff-my-top-picks-for-2027/

Sticking to your playbook in the face wildly gyrating headlines and Markets.

https://www.wsj.com/finance/investing/how-to-keep-these-wild-market-moves-from-hijacking-your-financial-future-71ecb216?st=zNS7ZG

How to spot a Market bubble.

https://open.substack.com/pub/polymathinvestor/p/how-to-spot-a-market-bubble?utm_campaign=post-expanded-share&utm_medium=web

Update on valuations.

https://www.advisorperspectives.com/dshort/updates/2026/11/06/regression-to-trend-s-p-composite-213-above-trend-in-october

Three risks that bolster the case for defensive stocks.

https://www.advisorperspectives.com/commentaries/2026/11/06/three-market-risks-bolster-case-defensive-equities

News (but not a Buy recommendation) on Stocks in Our Portfolios

What I am reading today

Consider this.

A Couple of Rants - by Arnold Kling - In My Tribe

Visit Investing for Survival’s website (http://investingforsurvival.com/home) to learn more about our Investment Strategy, Prices Disciplines and Subscriber Service.

The Morning Call---The AI junk bond blast radius

2026-11-06T06:11:51.735-08:00

The Morning Call

11/6/26

The Market

Technical

Thursday in the charts.

https://www.zerohedge.com/markets/fireworks-day-stocks-fawked-aitech-wrecked-bonds-bullion-bid?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTMxMTY2Iiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MzkxNDE4MiwiZXhwIjoxNzk2NTA2MTgyLCJhdWQiOiJ6aC1naWZ0In0.cXStxZuBCvewadrZF7p1od-KoxgXbXzeEHWeOgYQWf4

Thursday in the technical stats.

https://www.barchart.com/stocks/signals/new-recommendations

Note: the good news (that’s a joke) is that the S&P closed Wednesday’s gap up open. The bad news is that the fecal matter hit the rotating blades. The index blasted decisively back through its 100 DMA and the lower boundary of the trading range dating back to August and is poised to challenge its 200 DMA (~7318). Were that challenge to be successful, the next visible support level is the lower boundary of its short term trading range (~6642). So the bottom line for the day is---let’s hope the 200 DMA holds.

The NASDAQ is crashing.

https://www.zerohedge.com/the-market-ear/nasdaq-crashing-getting-ugly?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTMxMTYzIiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MzkxNDgzNSwiZXhwIjoxNzk2NTA2ODM1LCJhdWQiOiJ6aC1naWZ0In0.9EyWURPIaMxEtwagTCtJddLnVbmbjb33Qqz1pG7d45k

$47 billion in levered ETF selling.

https://www.zerohedge.com/markets/mcelligott-47bn-levered-etf-selling-61bn-vol-control-best-trade-year-implodes?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTMxMTk5Iiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MzkxMjYxNiwiZXhwIjoxNzk2NTA0NjE2LCJhdWQiOiJ6aC1naWZ0In0.6Cgg2GJONfzcvz4TouI7jaOmRsgXXZrJ31WPc8XTPVk

The latest from Goldman’s desk.

https://www.zerohedge.com/markets/1998-or-2000-goldmans-delta-one-head-bets-ltcm-not-petscom-after-nasdaqs-worst-day-covid?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTMxMjUxIiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5Mzk3MzQ3MSwiZXhwIjoxNzk2NTY1NDcxLCJhdWQiOiJ6aC1naWZ0In0.AJMv_f080O_Ubh-8lTVtL1xrfa45BUL0t-AxQEnSIYM

Friday morning setup: US futures are higher, led by a sharp rebound in semis and memory names, as dip buyers emerge after Thursday's AI bloodbath which saw the Nasdaq 100 suffer its worst day since March 2020, while traders brace for the October jobs report; at the same time the dollar is up against every G10 currency and oil reversed an early jump above $100 after Qatar's Emir and Trump discussed de-escalating the Iran war, leaving the 10Y yield fractionally higher at 4.86% as the "sell everything" day gives way to a "buy what got hit hardest" morning. As of 8:05am ET, S&P futures are 0.1% higher at 7,390 while Nasdaq futures are up 1.3% at 27,100 and Dow futures are down 1.1%, as the rotation out of tech and into everything else reverses. On Thursday, the S&P 500 tumbled 4.4%, its worst day since April 2025, the Nasdaq 100 plunged 6.4% and the Philly semis index crashed 12%, wiping out $2.3 trillion in tech market value (and tech hedge funds' entire 2026 gain), as the Democratic midterm sweep stoked fears of a regulatory crackdown on the AI buildout. In premarket trading, chip and memory stocks are retracing roughly 30-40% of yesterday's losses according to JPM: Micron +7.8%, AMD +7.1%, Intel +4.7%, Broadcom +4.4% and Nvidia +4.3%, while Lam Research jumps 10% after unveiling a $25 billion buyback; outside of AI, Cloudflare and Airbnb soar on strong guidance while DraftKings and Atlassian tumble. The day's driver is AI (again): having been the market's biggest tailwind for three years, the AI capex trade is now its fulcrum, and the only question that matters this morning is whether Thursday's six-standard-deviation puke in semis was capitulation or, as we asked last night, just the opening act. Treasuries are slightly weaker after a two-day haven rally, with yields 2-3bps cheaper across the curve and the 10Y around 4.86%, near the session high, while swaps now price about 72% odds of a December Fed hike, down from near 80% on Tuesday. The Bloomberg Dollar Spot Index is up 0.2% at a one-week high, with the Aussie sliding to a seven-month low and cable suffering its biggest drop since mid-October. In commodities, Brent briefly topped $100 as Iran claimed two tankers hit mines in the Strait of Hormuz, before sliding to as low as $98 after the Qatar call, WTI is up 0.5% at $90.94, and gold drops 0.5% to about $4,069/oz. Bitcoin trades just above $76,000. US economic data slate includes the October jobs report (8:30am), the November preliminary University of Michigan sentiment (10am) and September consumer credit (3pm). Fed speaker slate includes Musalem (9:10am), Bowman (12:15pm) and Daly (1pm).

https://cms.zerohedge.com/sites/default/files/inline-images/image_0.jpeg

Fundamental

Headlines

The Economy

October nonfarm payrolls rose by 165,000 versus estimates of 65,000; the unemployment rate was 4.1% versus 4.2%; average hourly earnings were up 0.4% versus +0.3%.

https://www.zerohedge.com/markets/us-jobs-soar-165k-blowing-away-estimates-unemployment-rate-drops-putting-dec-rate-hike-back

International

September Japanese YoY average earnings were up 4.6% versus expectations of up 3.8%.

September German industrial production was up 0.7% versus consensus of 0.0%.

September EU retail sales fell 0.7% versus projections of down 0.1%.

Other

What happens to the dollar as US equities go down?

https://mrzepczynski.blogspot.com/2026/11/the-profit-dollar-period-is-here.html

Three signs of a cash strapped consumer.

https://crr.bc.edu/3-signs-cash-strapped-consumers-are-nearing-a-spend-pocalypse-that-would-hurt-the-economy/

Update on new home affordability.

https://politicalcalculations.blogspot.com/2026/11/new-homes-hovering-just-below-upper.html

Is 7% the no-go zone for home mortgages?

https://wolfstreet.com/2026/11/04/despite-lower-mortgage-rates-demand-for-mortgages-to-purchase-a-home-dips-clings-to-rock-bottom-7-the-no-go-zone/

Analysis of the November ISM numbers.

https://bonddad.blogspot.com/2026/11/the-economically-weighted-ism-averages.html

Iran

Overnight news,

https://www.zerohedge.com/geopolitical/trump-says-us-locked-and-loaded-renewed-strikes-against-iran

Monetary Policy

The Bank of England raises rates.

https://www.nytimes.com/2026/11/05/business/bank-of-england-interest-rates-inflation.html?unlocked_article_code=1.OFE.eWtU.21NbADp2KXwJ&smid=url-share

Midterm election results takes pressure off the Fed.

https://www.bloomberg.com/news/articles/2026-11-05/trump-s-trouncing-gives-warsh-more-room-for-maneuver-on-rates?utm_source=website&utm_medium=share&utm_campaign=copy

The AI junk bond blast radius.

https://www.zerohedge.com/markets/blast-radius-these-are-ai-junk-bonds-set-crater-democrats-freeze-buildout?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTMxMTYyIiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MzkxMTY1MiwiZXhwIjoxNzk2NTAzNjUyLCJhdWQiOiJ6aC1naWZ0In0.6ULxJvhi_cwomwR2tQGQ_x84wrett77mjzh9KjSv0gs

Investing

The yield curve has a nasty surprise for the AI trade.

https://www.zerohedge.com/markets/yield-curve-has-nasty-surprise-ai-trade?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTMxMTgyIiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MzkxMzEzMywiZXhwIjoxNzk2NTA1MTMzLCJhdWQiOiJ6aC1naWZ0In0.MebTeuEZH1ji_GaQXp7kPbSksnEEeAQJJAVRKxfHwuI

Real estate in a 5% world.

https://acrobat.adobe.com/id/urn:aaid:sc:VA6C2:521609fa-6ba2-401b-a010-5b4096a2d390?x_api_client_id=chrome_extension_viewer&x_api_client_location=share&locale=en-US&theme=light&page_theme=light&show_copied_toast=true

What the midterm elections mean for your money.

https://www.bloomberg.com/news/articles/2026-11-05/midterm-election-results-what-they-mean-for-your-money-and-the-economy?utm_source=website&utm_medium=share&utm_campaign=copy

Q3 earnings scorecard.

https://talkmarkets.com/article/q3-earnings-scorecard-solid-beats-upward-revisions-and-ai-drivers

Central bank gold purchases were highest of the year.

https://talkmarkets.com/article/september-central-bank-gold-buying-hit-highest-monthly-total-of-the-year

News on Stocks in Our Portfolios

What I am reading today

Surrendering the ability to think.

https://www.safalniveshak.com/deskilling-the-investors-mind/

Visit Investing for Survival’s website (http://investingforsurvival.com/home) to learn more about our Investment Strategy, Prices Disciplines and Subscriber Service.

Markets are puking

2026-11-05T08:18:52.508-08:00

https://www.zerohedge.com/markets/hedges-monetized-vol-smoked-semis-gutted-goldmans-derivs-desk-says-buy-tails-now-nobody?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTMxMTQwIiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5Mzg5NTM1NCwiZXhwIjoxNzk2NDg3MzU0LCJhdWQiOiJ6aC1naWZ0In0.WlZBMj2P33w2WjnIdKhTgm1eRygQWALvYIwgOA9B3vw

The Morning Call--What is next for data centers?

2026-11-05T06:12:28.438-08:00

The Morning Call

11/5/26

The Market

Technical

Wednesday in the charts.

https://www.zerohedge.com/markets/crude-crashes-blue-nami-sparks-market-chaos-bullion-bitcoin-bonds-bid

Note: the good news is that the S&P (1) bounced off the lower boundary of the trading range from August, (2) closed above its 100 DMA, reestablishing it as support and (3) closed that overhead gap down open. The bad news is that it (1) created a gap up open and (2) challenged its 50 DMA and failed. I know lots of analysts sound jiggy and believe yesterday’s pin action opens the door for the year end rally. But failing at the 50 DMA and not yet making a new higher high (within the current trading range) remains a problem. I need more follow through. If we get it, I will likely add to my dividend growth ETF trade,

Wednesday in the technical stats.

https://www.barchart.com/stocks/signals/new-recommendations

The AI trade is breaking apart.

https://www.zerohedge.com/the-market-ear/ai-trade-breaking-apart?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTMxMDM5Iiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MzgyODA1MiwiZXhwIjoxNzk2NDIwMDUyLCJhdWQiOiJ6aC1naWZ0In0.Jyzk3SxcOiyTPeThrXs6-5ZKpgIGyXkE_LGU9v1fjnc

We have never seen this before.

https://www.bespokepremium.com/interactive/posts/think-big-blog/youve-never-seen-this-before

Thursday morning setup: US futures are mixed, with the Nasdaq lagging as the post-midterm rotation out of chipmakers and the AI complex enters a second day, after the Democratic sweep raised fears of a data center backlash, Qualcomm tumbled on a weak forecast and the Kospi crashed almost 6%, while oil rebounded modestly from Wednesday's plunge and the BoE hiked rates for the first time in three years; as a result the 10Y yield touched 4.83%, the lowest since Sept. 10. As of 6:20am ET, S&P futures are 0.1% higher while Nasdaq futures are down 0.5%, Russell 2000 futures add 0.4% and Dow futures are [x%]; this follows Wednesday's session when the S&P jumped 1.6% for its best day since August and the Dow soared 3%. In premarket trading, semis are again getting hit (the SOXX ETF was down 2% premarket per Bloomberg) with Qualcomm sliding 10% after a lackluster forecast, continuing the hyperscalers vs semis split we flagged yesterday, while the Mag 7 is mixed with Amazon and Meta higher and Tesla and Nvidia lower; AppLovin soars 16% on blowout guidance. The day's driver is the blue wave (again): with Democrats set to control both chambers, traders are pricing tighter regulation of data centers (Goldman's Alec Phillips sees moratoria potentially hitting about 45% of planned US data centre capacity expansion), a quicker end to the Iran war and less fiscal largesse, which is why hyperscalers that own compute are bid and everything that builds, powers or supplies it is offered. Treasuries are extending their rally, with the 10Y at 4.87% after earlier touching 4.83%, as the midterm result fuels expectations that the administration's tax and spending plans will be contained and after the Treasury's refunding hinted at less long-end issuance. The dollar is flat after its worst day in two months, cable erased losses after the BoE hiked 25bps to 4% in an 8-1 vote (Mann wanted 50bps) and Bailey warned it was unlikely to be the last hike unless the Iran war is resolved. In commodities, Brent rebounds 1.6% to $96.15 after crashing almost 9% on Wednesday, as Iran claims tankers hit mines near Hormuz and Ukraine struck Russia's Ryazan refinery; gold extends its post-midterm rally above $4,100 and silver trades around $52.7. Bitcoin is little changed. US economic data slate includes Challenger job cuts (already out: 43,994 in October, down 71.3% y/y), initial jobless claims, Q3 nonfarm productivity and unit labor costs (all 8:30am ET). Fed speaker slate includes Hammack (8:50am), Barkin (9:10am) and Logan (7:00pm). The Treasury sells $115bn of 4-week and $110bn of 8-week bills at 11:30am.

https://cms.zerohedge.com/sites/default/files/inline-images/Market_Snapshot_-_2026-11-05_1793883142545.jpg

Fundamental

Headlines

The Economy

Weekly jobless claims totaled 189,000 versus estimates of 196,000.

https://www.zerohedge.com/personal-finance/low-hire-low-fire-low-inspire-claims-hit-57-year-lows-sentiment-still-sucks-and

Q3 nonfarm productivity rose 3.6% versus projections of +2.8%; unit labor costs fell 0.7% versus +0.6%.

The September trade balance was -$105 billion versus consensus of -$108 billion.

The October services PMI came in at 56.1 versus expectations of 57.9; the October composite PMI was 55.9 versus 57.6.

October light vehicle sales totaled 15.5 million units versus forecasts of 15.9 million.

The latest Atlanta Fed Q4 GDP nowcast was growth of 3.4%.

International

September German factory orders were up 4.4% versus predictions of 4.8%.

The September EU PPI was up 2.5%, in line.

The October EU construction PMI was 42.5 versus estimates of 44.0; the October German construction PMI was 41.6 versus 44.0; the October UK construction PMI was 43.6 versus 46.1.

Other

Interest rates---higher for longer.

https://www.apollo.com/wealth/insights-news/insights/daily-spark/10-percent-nominal-gdp-growth-coming

The Election

What changes (and doesn’t)?

https://www.wsj.com/articles/what-changes-or-doesnt-now-ec1724d1?st=tYJ4GM&reflink=desktopwebshare_permalink

What the dem’s win means for the Markets.

https://www.capitalspectator.com/what-democrats-midterm-win-means-for-markets/

What is next for data centers?

https://www.zerohedge.com/markets/whats-next-data-centers-after-blue-tsunami-goldman-sees-moratoria-freezing-45-capacity?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTMxMDA5Iiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MzgyNjE4NCwiZXhwIjoxNzk2NDE4MTg0LCJhdWQiOiJ6aC1naWZ0In0.QGh7ffrZlSrwvTppRhr5SKrvYVomBoRscG32zM8H68Y

Tariffs

Undoing Trump’s tariff fiasco.

https://www.project-syndicate.org/commentary/failure-of-trump-trade-agenda-could-pave-way-for-retreat-from-protectionism-by-anne-o-krueger-2026-11

Tech accounts for 2/3rds of the US trade deficit.

https://talkmarkets.com/article/tech-now-accounts-for-two-thirds-of-the-us-trade-deficit

Investing

Reviewing Q3 earnings.

https://www.carsongroup.com/insights/blog/earnings-check-in-following-the-money/

How to turn your cash into wealth.

https://www.realclearmarkets.com/articles/2026/11/04/how_to_turn_your_cash_into_wealth_automatically_1215034.html

Record fixed income inflows.

https://www.advisorperspectives.com/commentaries/2026/11/04/record-74-billion-fixed-income-etfs-surge

What credit spreads are telling us.

https://talkmarkets.com/article/credit-spreads-calm-on-the-surface-concern-at-the-bottom

The value of having a ‘stop loss’ discipline. The theme of the article is right on. However, in deciding on whether to have an actual stop loss versus a mental one consider this. The market maker sees your order as well as everyone else’s. If a stock is declining and the market maker sees a number of stop loss orders and feels like those orders are near a trading low, he can manipulate the ‘at the market’ sell orders down to a level that triggers your stop loss. Then he buys the stock for his own book and sells it at a higher price. So, my recommendation is to have a mental stop and the balls to stick with it.

https://talkmarkets.com/article/are-you-your-own-worst-enemy

News on Stocks in Our Portfolios

What I am reading today

Visit Investing for Survival’s website (http://investingforsurvival.com/home) to learn more about our Investment Strategy, Prices Disciplines and Subscriber Service.

The Morning Call---Capitulation?

2026-11-04T06:09:13.627-08:00

The Morning Call

11/4/26

The Market

Technical

Tuesday in the charts.

https://www.zerohedge.com/markets/stocks-shrug-aapl-angst-dollar-bonds-down-dem-sweep-midterms?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTMwODcyIiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5Mzc0MjExMCwiZXhwIjoxNzk2MzM0MTEwLCJhdWQiOiJ6aC1naWZ0In0.yBTwVEkPR4BXXmVDQ4izj1le9kGq3YXaMsJNTbMFj80

Capitulation?

https://www.zerohedge.com/the-market-ear/capitulation-setup-violent-market-squeeze?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTMwOTM1Iiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MzgwMDg5NSwiZXhwIjoxNzk2MzkyODk1LCJhdWQiOiJ6aC1naWZ0In0.irzuxIAHhYaWT4m0Gjvrj1BcWLmM6ejNCWgyIFIsSKo

Tuesday in the technical stats.

https://www.barchart.com/stocks/signals/new-recommendations

The AI boom is hiding something very ugly.

https://www.zerohedge.com/the-market-ear/ai-boom-hiding-something-very-ugly?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTMwODg2Iiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MzczNTcyNywiZXhwIjoxNzk2MzI3NzI3LCJhdWQiOiJ6aC1naWZ0In0.b4S-JpHE89bpEo42EobzE9kCJI9CLj5kxVC6SY5B68U

Debt limits are real and binding.

https://www.zerohedge.com/markets/debt-market-limits-are-real-and-binding-top-goldman-trader-says-market-pricing-2027-ai-peak?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTMwODU5Iiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MzczNjU3MCwiZXhwIjoxNzk2MzI4NTcwLCJhdWQiOiJ6aC1naWZ0In0.dYrzf6qJdfAnaSF7A3ge3O3zEXuE07NuWdZqHr-rWsY

Wall Street’s most hated stocks are faring better than its favorites.

https://www.marketwatch.com/story/wall-streets-most-hated-stocks-are-faring-far-better-than-its-favorites-4c1d6c68?st=jkuMhk

Wednesday morning setup; US futures are higher as dip buyers turned an overnight "blue tsunami" puke into a broad rally: Democrats swept both chambers of Congress, initially sending Nasdaq 100 futures down as much as 2.4% on fears of tighter AI regulation and a Texas data center freeze, before President Trump's conciliatory tone (he said Democrats did "a good job" and that he can work with them), AMD's blowout guide and the monetization of a pile of election hedges flipped futures solidly green; as a result the dollar is heading for its worst day since early September while gold blasts back above $4,000. As of 8:15am ET, S&P futures are 0.9% higher at 7,665 while Nasdaq futures are down 0.2%, Russell 2000 futures jump 1.3% and Dow futures are up roughly 1.7%, or about 870 points, as VIX tumbles 12.8% to 18.16. Stocks rose on Tuesday ahead of the vote, with the S&P 500 snapping a three-day losing streak and semis rebounding 2.6% after an 11.6% three-session plunge. In premarket trading, the Mag 7 is mostly higher led by Amazon, while Musk's Tesla and SpaceX bear the brunt of the blue wave; AMD (+6.3%), Super Micro (+9.2%) and Arista (+10.9%) lead chips higher after earnings, confirming our article from last night, while solar names soar and defense stocks slide. The day's driver is politics (finally): Democrats flipped Senate seats in Texas, Ohio, Kansas, South Carolina, North Carolina, Iowa and Maine, won the governorships of Texas, Ohio and Georgia, and are on track for at least 54 Senate seats; as we explained overnight, Texas turned blue and futures turned green as the market concluded the AI fallout would mean regulation rather than cessation. Treasuries are bid with yields 3-5bps lower and the 10Y at about 4.915% as divided government curbs the fiscal outlook and the curve flattens ahead of the 8:30am refunding announcement. The Bloomberg dollar index slides 0.5% to the lowest since Sept. 30, with the kiwi leading G10 gains and EUR/USD up 0.6%. In commodities, WTI is down about 1% near $95 as Trump played down the prospect of imminent strikes on Iran, while gold jumps 3% and silver surges almost 5%; copper is flat. Bitcoin rises about 1% to $78,480. US economic data slate includes October ADP employment change (8:15am), September trade balance (8:30am), October final S&P Global services and composite PMIs (9:45am) and ISM services (10am). There are no Fed speakers scheduled. The Treasury publishes its quarterly refunding announcement at 8:30am and sells $75 billion of 17-week bills at 11:30am.

https://cms.zerohedge.com/sites/default/files/inline-images/Market_Snapshot_-_2026-11-04_1793797465390.jpg

Fundamental

Headlines

The Economy

Weekly mortgage applications declined 1.2% while purchase applications were down 2.0%.

Month to date retail chain store sales rose 10.4% versus + 9.3% in the prior week.

September job openings (JOLTS) totaled 7.52 million versus forecasts of 7.0 million.

https://bonddad.blogspot.com/2026/11/september-jolts-report-another.html

September factory orders were up 1.8% versus predictions of +1.2%; ex transportation, they were up 1.3% versus +0.9%.

The October ADP employment report showed job increases of 86,000 versus consensus of 69,000.

https://www.zerohedge.com/markets/adp-employment-report-signals-strong-labor-market-across-board-wage-growth-accelerates

International

The October Chinese services PMI was 50.8 versus expectations of 51.5; the composite PMI was 52.0 versus 52.2; the October German services PMI was 52.5 versus 51.7; the composite PMI was 53.4 versus 52.8; the October EU services PMI was 51.4 versus 51.7; the composite PMI was 51.7 versus 51.9; the October UK services PMI was 51.4 versus 51.7; the composite PMI was 52.9 versus 53.1.

The October EU CPI was up 0.4% versus estimates of +0.3%.

Other

September median household income.

https://politicalcalculations.blogspot.com/2026/11/median-household-income-in-september.html

Data center construction sends shock wave through the industrial economy; costs experience a second wave of inflation.

https://wolfstreet.com/2026/11/02/no-inflection-point-yet-near-exponential-data-center-boom-sends-shockwaves-to-industrial-economy-construction-hit-by-2nd-wave-of-inflation/

Monetary Policy

How high would the Fed Funds rate need to be to bring inflation back to 2%?

https://www.apollo.com/wealth/insights-news/insights/daily-spark/how-high-would-the-fed-funds-rate-need-to-rise-to-bring-inflation-back-to-2-percent

Fiscal Policy

Bankrupting America. (To be fair, it is not just Trump. It is the entire ruling class.)

https://open.substack.com/pub/ieainsider/p/donald-trump-is-bankrupting-america?utm_campaign=post-expanded-share&utm_medium=web

Inflation

The inflation election.

https://www.washingtonpost.com/opinions/2026/11/02/inflation-is-why-voters-are-sour-economy-despite-gdp-growth/

What millions of data points reveal about inflation.

https://www.bloomberg.com/graphics/2026-inflation-price-index/?accessToken=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJzb3VyY2UiOiJTdWJzY3JpYmVyR2lmdGVkQXJ0aWNsZSIsImlhdCI6MTc5MzczMjU5MywiZXhwIjoxNzk0MzM3MzkzLCJhcnRpY2xlSWQiOiJUTldBR1ZLSUpIOFowMCIsImJjb25uZWN0SWQiOiJCMzFCNTRDQTI3MTE0NjAxOUQxMURCN0IxRUM4NTE2MyJ9.VpIn7E6PG06UAyi2G-gvdntFRdcWBuGb_vWpV0HW_08

AI’s third big bang is here.

https://www.riskhedge.com/outplacement/ai-is-third-big-bang-is-here

The Election

Wall Street reaction.

https://www.zerohedge.com/markets/texas-turns-blue-futures-turn-green-why-wall-street-bought-biggest-democrat-wave-1993?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTMwOTQ2Iiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5Mzc5OTM2MCwiZXhwIjoxNzk2MzkxMzYwLCJhdWQiOiJ6aC1naWZ0In0.qe7YTiIDwZGrr131Y40ekYRfg0xH5-zvPOvZclRPU7Y

The Financial System

More proof that the commercial real estate market is cracking.

https://quoththeraven.substack.com/p/even-more-proof-that-commercial-real?r=1ng8jx&utm_campaign=post-expanded-share&utm_medium=web

Investing

Finding growth without froth.

https://www.advisorperspectives.com/commentaries/2026/11/03/case-garp-finding-growth-without-froth

Short term Market moves won’t give us the answers to AI.

https://behaviouralinvestment.com/2026/11/03/short-term-market-moves-wont-give-us-the-answers-on-ai/

Central banks accelerated gold buying in third quarter.

https://www.wsj.com/finance/commodities-futures/central-banks-accelerated-gold-buying-in-third-quarter-eba253ff?st=XGEvXo&reflink=desktopwebshare_permalink

Total return forecasts for major asset classes.

https://www.capitalspectator.com/total-return-forecasts-major-asset-classes-3-november-2026/

Was that the top?

https://talkmarkets.com/article/was-that-the-top-analyzing-techs-2026-correction

Downside Breakdowns (Range Support Break)

Short-Term Returns: Breaking below the lower boundary of an extended trading range or key moving average (like the 200-day moving average) carries a weaker immediate profile. Historical instances of breaking below established support thresholds show an average short-term loss (e.g., -0.29% over the next month) with lower win rates (~57% positive). [1]
Continuation Risk: When downside breaks coincide with macro shocks or loss of major structural support (such as the 200-day moving average), historical precedents show that declines can extend significantly (ranging from 10% to 25% or more in broader bear or correction phases), unless a fast policy or geopolitical catalyst triggers a mean-reverting bounce. [1, 2]
Mean Reversion: Severe single-day or sharp panic breakdowns below a range often trigger short-term oversold bounces or mean-reverting rallies within a few weeks, though these sharp snaps do not always dictate the longer-term primary trend. [1]

News on Stocks in Our Portfolios

What I am reading today

Wednesday morning humor.

https://thebabylonbee.substack.com/p/we-asked-15-californians-why-they?r=1ng8jx&utm_campaign=post-expanded-share&utm_medium=web

This is a choice? I try to avoid politics; but this crystalizes my sentiment.

https://reason.com/2026/10/31/for-libertarians-election-day-is-the-cruelest-day-of-the-year/

Visit Investing for Survival’s website (http://investingforsurvival.com/home) to learn more about our Investment Strategy, Prices Disciplines and Subscriber Service.

The Morning Call---AI's last man standing just fell

2026-11-03T06:05:00.608-08:00

The Morning Call

11/3/26

The Market

Technical

Monday in the charts.

https://www.zerohedge.com/markets/crude-carnage-macro-malaise-sparks-bond-bid-gold-jumps-tech-pumpsndumps?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTMwNzM3Iiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MzY1NDE0OSwiZXhwIjoxNzk2MjQ2MTQ5LCJhdWQiOiJ6aC1naWZ0In0.IHvXafAdqBWc2jR-_7LW1GAsUjn7HoWSEvQZpvhlBOg

Note: the S&P reset it 50 DMA to resistance and closed below the lower boundary of the trading range going back to early August. Clearly, not a good sign for the S&P. However, our portfolios were up on the day, signifying the continuing divergence of the S&P (dominated by the tech stocks) the rest of the Market. So the underlying technical picture is not as bad as the S&P indicates. Still there is no reason to buy, in my opinion; and it is likely too late to sell the techs.

Monday in the technical stats.

https://www.barchart.com/stocks/signals/new-recommendations

The flush hasn’t even started.

https://www.zerohedge.com/markets/were-not-kansas-anymore-staples-soar-most-dot-com-peak-and-btig-says-flush-hasnt-even?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTMwNzIxIiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MzY1NTUxOSwiZXhwIjoxNzk2MjQ3NTE5LCJhdWQiOiJ6aC1naWZ0In0.hca7Ws10pOMIkT1i59LQ9-6y4AHPRrEqwb4iAcPo2vY

AI’s last man standing just fell.

https://www.zerohedge.com/the-market-ear/ais-last-man-standing-just-fell?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTMwODI2Iiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MzcxNDI5NywiZXhwIjoxNzk2MzA2Mjk3LCJhdWQiOiJ6aC1naWZ0In0.gTiHXGlAky2OTeRyl0f1nBQqbHhSUrboUdicyABLCmI

Tuesday morning setup: US futures are down but off session lows, with Nasdaq contracts edging higher, as America heads to the polls for the midterms, chips rebound even as Apple slides on a gross margin warning and Palantir tumbles on a soft outlook, and oil bounces off Monday's 8% plunge after the US struck Iran's Qeshm Island in what officials called a "small-scale" and "defensive" attack; as a result the oil-driven bond rally takes a breather with the 10Y yield edging up to 4.93%. As of 8:00am ET, S&P futures are down 0.1% at 7,564 while Nasdaq futures are up 0.3% and Dow futures are down 0.6% some 300 points to 51,826. On Monday the S&P reversed a 1% gain to close down 0.5% at 7,541 and the Nasdaq 100 slid 1.4% into a correction, 10% below its October 6 peak, even as the equal-weight S&P rose 0.7% and the Dow added 0.4%. In premarket trading, semis and memory names are bid again while software lags, with Shopify plunging 19% and Dynatrace 15%; Apple drops about 4%, after the stock initially traded flat in the immediate aftermath of the report as we noted last night, while Nvidia rises 1.5% (Apple closed Monday as the world's most valuable company, only narrowly ahead of Nvidia, so that title is in play). The day's driver is the vote (with Iran in the background, again): Polymarket assigns a 94% chance of a Dem House and a 78% chance of a Dem Senate, an outcome which markets fear means more AI regulation and more hurdles for the data center buildout, with the Texas governor race seen as the one to watch for the AI trade; meanwhile US-Iran headlines swing between mediator proposals and Tehran declaring it is "now in a state of war" after the Qeshm strike. Treasuries are broadly flat and outperform European bonds, which slide as oil and Dutch gas rebound and ECB speakers sound hawkish. The Bloomberg Dollar Spot Index is up 0.1%, the Aussie lags after the RBA's split 6-3 hike was read as dovish, and the onshore yuan snapped its longest winning streak in three decades after the PBOC raised FX reserve requirements. In commodities, WTI rises 2% to about $98.45 and Brent trades above $105, gold drops 0.9% and silver slides below $50, while copper slips under $14,000; Bitcoin dipped to $76,240 before rebounding above $77,000. US economic data slate includes September JOLTS job openings, factory orders and final durable goods (all at 10am); there are no scheduled Fed speakers, and the Treasury sells $100 billion of 6-week bills at 11:30am. Polls start closing at 6pm ET.

https://cms.zerohedge.com/sites/default/files/inline-images/Market_Snapshot_-_2026-11-03_1793711392171.jpg

Fundamental

Headlines

The Economy

September construction spending fell 1.9% versus estimates of +0.4%.

The October manufacturing PMI was 54.9 versus projections of 56.0.

https://bonddad.blogspot.com/2026/11/in-goods-producing-sector-ai-continues.html

The October ISM manufacturing index was 55.5 versus consensus of 54.6.

The November small business optimism index came in at 48.5 versus expectations of 46.2.

International

Other

The economy is less K-shaped than you think.

https://www.apollo.com/wealth/insights-news/insights/daily-spark/the-economy-is-less-k-shaped-than-you-think

Iran

Overnight news.

https://www.zerohedge.com/energy/brent-wti-futs-tumble-trump-may-give-diplomacy-chance-iran-floats-two-day-hormuz-reopening

Early morning update.

https://www.zerohedge.com/energy/irgc-claims-3-more-tankers-blown-naval-mines-hormuz

Monetary Policy

Interrogating confusion at the Fed.

https://stayathomemacro.substack.com/p/interrogating-confusion-at-the-fed?utm_campaign=post-expanded-share&utm_medium=web

When a credit default swap isn’t about credit.

https://www.advisorperspectives.com/commentaries/2026/11/02/when-credit-default-swap-isnt-about-credit

Doubts about Silicon Vally’s AI bet.

https://www.bloomberg.com/opinion/articles/2026-11-02/anthropic-ipo-silicon-valley-s-ai-bets-are-built-on-hype-hope-and-hubris?accessToken=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJzb3VyY2UiOiJTdWJzY3JpYmVyR2lmdGVkQXJ0aWNsZSIsImlhdCI6MTc5MzY0NjA1MSwiZXhwIjoxNzk0MjUwODUxLCJhcnRpY2xlSWQiOiJUTlVaODdLSUpIOUcwMCIsImJjb25uZWN0SWQiOiJCMzFCNTRDQTI3MTE0NjAxOUQxMURCN0IxRUM4NTE2MyJ9.gWb_WOPikJ7R1DQ_3_CvBszYlyZcXnK3Og9eM6LdUd4

The Election

Three potential outcomes and how they might move the Markets.

3 Midterm Outcomes & How They’d Move Stocks

The midterm election paradoxes.

https://amgreatness.com/2026/11/02/midterm-election-incoherences-misadventures-and-paradoxes/

Sectors bracing for a pivot following midterm elections.

https://www.reuters.com/business/finance/sectors-bracing-pivot-us-midterm-elections-loom-2026-11-02/

The S&P’s midterm record faces stiff test.

https://giftarticle.ft.com/giftarticle/actions/redeem/38d230c8-551a-49cc-92fc-080c31a61d1c

Investing

Ever thought of buying a warrant?

https://www.riskhedge.com

Why the next decade will likely be different.

https://talkmarkets.com/article/above-average-returns-why-the-next-decade-differs

But near term, you can’t ignore the strong earnings momentum.

https://talkmarkets.com/article/strong-growth-momentum-and-rising-revisions-fuel-bright-earnings-outlook

News on Stocks in Our Portfolios

What I am reading today

Visit Investing for Survival’s website (http://investingforsurvival.com/home) to learn more about our Investment Strategy, Prices Disciplines and Subscriber Service.

Monday Morning Chartology

2026-11-02T06:12:07.630-08:00

The Morning Call

11/2/26

The Market

Technical

The S&P really took it on the snoot on Friday, closing below its 50 DMA (if it remains there through the close on Monday, it will revert to resistance), its the 100 DMA (if it remains there through the close on Tuesday, it will revert to resistance) and is sitting on the lower boundary of a trading range dating back to early August. The $64,000 question is, was this just another one of the sporadic one day plunges that it has experienced over that time frame or is this the beginning of a new down move? Technically speaking, it is too soon to assume that a downtrend is in the making. Plus, Friday’s huge gap down open suggests the potential for some recovery. Further, the plunge is largely confined to the tech sector (our Portfolios were only down fractionally on the day), so this could be following a number of patterns that I suggested earlier---(1) high flying tech sells off while the rest of the Market holds firm or even advances, (2) the two Market sectors continue to oscillate or (3) both decline (rise) the bulk of which is in tech (the rest of the Market).

Of course, fundamentally, I can name a number of reasons to assume the worst: (1) turmoil in AI, (2) fears of renewed fighting in the Middle East, (3) a cowardly Fed, (4) an out of control fiscal policy and (5) the elections.

Bottom line: while the aforementioned combination of conflicting factors increases my level of uncertainty, I think it too soon to get beared up. But clearly, Friday could be a warning shot. Follow through and prudence.

The setup for a bounce.

https://www.zerohedge.com/the-market-ear/monday-set-binky-bounce-sell-rip-buy-dip-just-15-trading-days?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTMwNDczIiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MzQ1MDUyMiwiZXhwIjoxNzk2MDQyNTIyLCJhdWQiOiJ6aC1naWZ0In0.8ngf5DrhpmR2QePX65zEevXCwEnVc4uDkMmAk4OyqTs

The bond market was basically flat on the week. While TLT was up on Friday, its pin action certainly did not suggest a flight to safety. In addition, TLT continues to trade down across all timeframes and is below its 100 and 200 DMAs. As you know, I bought a small position in a TIPS ETF two weeks ago. But I am waiting for more information from both the stock and bond markets before increasing that holding.

Somewhat surprisingly, GLD followed stocks down in spite of the fairly neutral performance from bonds and the dollar---which historically it is more (inversely) correlated to than stocks. However, like the S&P it made a gap down open and pushed through a critical technical support level (the lower boundary of its short term trading range; if it remains there though the close on Monday, it will reset to a downtrend). And it remains below all three DMAs. It seems to be telling us that higher yields and a strong dollar are in the offing, though neither is acting that way. Color me confused and on the sideline.

https://www.zerohedge.com/precious-metals/fear-sovereign-liquidity-management-goldman-spots-who-dumped-195-billion-gold?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTMwNTAzIiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MzU1MDMzNiwiZXhwIjoxNzk2MTQyMzM2LCJhdWQiOiJ6aC1naWZ0In0.y_9c49pvRu869OkSSoTKn451i9IPl1SrR1k8nTsdPxQ

The dollar roller coastered the week, first advancing then closing basically unchanged. Nonetheless, it remains on a pretty steep upward trajectory and above all three DMAs. And while it has made a nice series of higher lows and higher highs and seems likely to continue to do so, it remains in about the middle of a wide short term trading range.

Friday in the charts.

https://www.zerohedge.com/markets/lula-shock-ai-block-new-smoking-barrels-october-spooks-bond-vigilantes-midterms?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTMwMzc5Iiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MzM5ODY0NywiZXhwIjoxNzk1OTkwNjQ3LCJhdWQiOiJ6aC1naWZ0In0.AwBtZMMp2_c4AKV9uCPh106BodcYvxxKOdP6T1a8ehU

Friday 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

Monday morning setup: US futures are higher as a slide in oil, a tentative tech rebound and some old-fashioned seasonality lift sentiment on the eve of the midterms: crude tumbled more than 4% after Axios reported that Trump told Netanyahu he wants to give diplomacy with Iran more time before resuming strikes, chips bounced after Friday's 7.2% SOX puke, and Chinese stocks jumped as Beijing convened yet another market rescue meeting; as a result Nasdaq futures are up almost 1% and WTI is back below $100. As of 8:00am ET, S&P futures are 0.3% higher at 7,638, well off session highs, while Nasdaq futures rise 0.6% to 28,758 and Dow futures are 0.4% higher. On Friday, the S&P fell 1.8% and the Nasdaq 100 tumbled 3.5%, the worst day for both since June, capping a month in which the Nasdaq 100 lost 6.7% while the equal-weight S&P gained 5%. In premarket trading, Mag 7 names are mostly higher led by Nvidia and Alphabet, which opened the books on a seven-part bond offering spanning two to 19 years; Apple dips ahead of its earnings after the close. Semis and memory names rebound, while energy names slide with crude. The day's driver is oil (again): Brent dropped as much as 4.4% to around $108.40 and WTI to $99.59 after the Axios report, and despite Goldman raising its year-end Brent forecast to $105 from $90; Iran's FM said Qatar-mediated talks are making progress while Supreme Leader Mojtaba Khamenei ordered commanders to prepare for renewed confrontation, so the post-midterm strike window remains very much open. Treasuries are mixed with the curve pivoting flatter: long-end yields are about 2bp lower on the oil slump while the 10Y is little changed near 4.92%; gilts outperform, with the 10Y yield down about 5bp to 5.23%, the lowest since Sept. 23, on lower oil and gas prices, while OATs edge higher despite Fitch cutting France's outlook to negative in an unscheduled move. The Bloomberg Dollar Spot Index drops 0.2% to a one-week low and the euro jumps 0.5% to 1.1214, its biggest gain in more than two weeks. In commodities, gold rises about 0.6% toward $3,900 and silver climbs back above $50, while LME copper gains 0.8%. Bitcoin trades just below $78,000 as Binance customers pull almost $5 billion after the exchange reopened following last week's record hack. US economic data slate includes the October final S&P Global manufacturing PMI (9:45am), ISM manufacturing and September construction spending (10am) and the Fed's Senior Loan Officer survey (2pm); Fed speaker slate includes Chicago's Goolsbee (11:15am). Treasury sells $95 billion of 13-week and $82 billion of 26-week bills at 11:30am. Apple and Palantir report after the close.

https://cms.zerohedge.com/sites/default/files/inline-images/Market_Snapshot_-_2026-11-02_1793624127966.jpg

Fundamental

Headlines

The Economy

In volume, the stats last week were very upbeat. However, the primary indicators’ score was one positive, one neutral and two negative while the inflation data was one plus and three neutral. Overseas, the statistics were quite plentiful and slightly tilted to the negative with one bad price measure.

While these reports generally support both my forecasts for growth (muddle through) and inflation (good as it is going to get but not any worse), both issues were up for debate among the economic/investor set. For the moment, I am sticking with my forecast; although I have the feeling that change is in the wind.

https://bonddad.blogspot.com/2026/10/a-mixed-bag-of-long-leading-indicators.html

On the growth side, to date, the AI buildout has served as an economic accelerant. However, the debate over the sustainability of AI buildout has become a hot topic with a growing chorus of skeptics. The primary causes for the increased uncertainty were disappointing earnings reports from some of the major players as well as hiccups in financing the buildout.

https://wolfstreet.com/2026/10/29/tech-makes-a-mess-as-wrinkle-start-to-show-markets-are-edgy-now-arent-they/

The AI balance sheet time bomb.

https://www.zerohedge.com/markets/balance-sheet-time-bomb-inside-ai-hits-41-trillion-1-trillion-90-days?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTMwNTEwIiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MzU1MDQ1NywiZXhwIjoxNzk2MTQyNDU3LCJhdWQiOiJ6aC1naWZ0In0.7wP_nqhqSsaSq_fWOWhlqL52chYA_tiUogDokbUDVlI

This is not to say that the future of AI isn’t bright; but that it follows the pattern of prior major technological innovations in the economy---massive over investment followed by painful consolidation and then the emergence of the ultimate beneficiaries. I give a lot of credence to that view which clearly suggests some slowdown in economic growth if not an outright recession. I am going to hold off on that call for the moment; but if history repeats itself, one may very likely be in our future.

What if…

https://quoththeraven.substack.com/p/the-world-will-end-if-nvidia-misses?r=1ng8jx&utm_campaign=post-expanded-share&utm_medium=web

On the inflation side, at least short term, things are not much better. The Fed is doing its usual ‘one the one hand, on the other hand’ routine---meaning that it is doing nothing to quell inflationary forces. Given that the Fed’s virtually spotless record of instituting the wrong policy at every critical economic junction, I can’t really be positive about the potential outcome. My guess is, again based on the Fed’s historical record, it will err on the side of policy weakness, meaning higher inflation in the short term; followed by an overtightening that leads to lower inflation but lower growth {recession?}

The Fed is fiddling while the economy runs hot.

https://www.carsongroup.com/insights/blog/the-feds-fiddling-waiting-for-information-while-things-run-hot/

Speaking of inflation (and I wish that I weren’t), turmoil in Ukraine and the Middle East has kept oil prices elevated. I have gone over the supply shortages/temporary inflation argument ad nauseum. But the longer prices stay high and the longer the warring parties continue to destroy production and refining infrastructure, the further embedded in the economy higher prices become especially if there is no sensible resolutions to the aforementioned conflicts whereby shortages remain and transit/insurance fees stay high.

https://www.capitalspectator.com/the-rise-in-inflation-expectations-is-becoming-hard-to-ignore/

Further, a totally irresponsible fiscal policy---the government reported a $2 trillion deficit for FY2026--- is not likely to be cured anytime in the near future. God only knows what the Iran war is costing the citizenry. And the dems who seem certain to control congress have already laid out their plans for increased spending and taxes. None of this is a plus regarding inflationary pressures. Add in tariffs and it is clear that inflation is about more than oil prices

My bottom line remains unchanged though my doubts on the trajectory of the economy/inflation/AI buildout are increasing.

International

The October Japanese manufacturing PMI was 53.3, in line; the Chinese manufacturing PMI was 52.0 versus 51.6; the German manufacturing PMI was 54.2, in line; the EU manufacturing PMI was 52.7 versus 52.4; the UK manufacturing PMI was 52.8, in line.

Other

Update on the business cycle indicators.

https://econbrowser.com/archives/2026/10/business-cycle-indicators-gdp-personal-income-mfg-trade-sales-consumption

Iran

Trump gives peace a chance.

https://www.zerohedge.com/energy/brent-wti-futs-tumble-trump-may-give-diplomacy-chance-iran-floats-two-day-hormuz-reopening

Fiscal Policy

The five tricks in policy debates.

https://www.thefreedomfrequency.org/p/beware-of-five-tricks-in-policy-debates

The AI CDS market and how to trade it.

https://www.zerohedge.com/markets/hottest-trade-wall-street-gets-field-manual-barclays-maps-ai-cds-market-and-how-trade-it?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTMwNDM4Iiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MzQ1MTg1NSwiZXhwIjoxNzk2MDQzODU1LCJhdWQiOiJ6aC1naWZ0In0.Ik8LiklOpC2OYEsHFfFNDCz52RR5vBUHKcAeWHHl9mU

Investing

Timing is everything.

https://www.marketwatch.com/story/you-cant-rely-on-the-s-p-500-as-much-as-you-may-think-a3ac0cb7?st=TitSFk

Don’t ignore dividend growth stocks.

https://www.advisorperspectives.com/commentaries/2026/10/30/opposite-narrow-breadth-yield-everywhere

Why consumer stocks feel it first.

https://talkmarkets.com/article/real-wages-2026-why-consumer-stocks-feel-it-first

The Market owes you nothing.

https://www.safalniveshak.com/the-market-owes-you-nothing/

Tech isn’t the only problem.

https://quoththeraven.substack.com/p/tech-isnt-the-only-problem?r=1ng8jx&utm_campaign=post-expanded-share&utm_medium=web

The latest from BofA.

https://www.zerohedge.com/markets/year-after-saying-short-hyperscaler-bonds-hartnett-now-says-buy-them?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTMwNjAzIiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MzYyNzMwMiwiZXhwIjoxNzk2MjE5MzAyLCJhdWQiOiJ6aC1naWZ0In0.RXIxiYLAByM3lRJX-RhvyZzgCo3JRi2WHnGrO3E6Vyc

News (but not a Buy recommendation) on Stocks in Our Portfolios

What I am reading today

Visit Investing for Survival’s website (http://investingforsurvival.com/home) to learn more about our Investment Strategy, Prices Disciplines and Subscriber Service.

The Morning Call---Dueling Market scenarios

2026-10-30T06:12:42.932-07:00

The Morning Call

10/30/26

The Market

Technical

Thursday in the charts.

https://www.zerohedge.com/markets/ad-mageddon-slams-tech-rates-reprice-after-fed-fallout-macro-maelstrom?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTMwMjY2Iiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MzMwNDc3MSwiZXhwIjoxNzk1ODk2NzcxLCJhdWQiOiJ6aC1naWZ0In0.Z06RDeYEfNi68_GAmjBCZ64wgnrMI9VDsgxZ6LTH_1A

Thursday in the technical stats.

https://www.barchart.com/stocks/signals/new-recommendations

The great tech unwind.

https://www.zerohedge.com/the-market-ear/great-tech-unwind-nasdaq-hits-make-or-break-levels?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTMwMzQ5Iiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MzM2NTQyMSwiZXhwIjoxNzk1OTU3NDIxLCJhdWQiOiJ6aC1naWZ0In0.jIxq8FlHFUeMVv77BI3nPluECXrfQUmqdGeEYV2Wiq0

Dueling Market scenarios.

https://www.zerohedge.com/markets/santa-rally-or-sox-crash-which-1999-are-we?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTMwMTkxIiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MzMwNDIxNSwiZXhwIjoxNzk1ODk2MjE1LCJhdWQiOiJ6aC1naWZ0In0.RQTw9SAi-i380hb9R9gW_lyXAQVwY4-RmCcIq9TTOAM

Hedge fund shorting is amplifying risk.

https://www.zerohedge.com/markets/hedge-fund-shorting-now-amplifying-risk?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTMwMjQ0Iiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MzMwMzQzNSwiZXhwIjoxNzk1ODk1NDM1LCJhdWQiOiJ6aC1naWZ0In0.-J0bJYqNiyaaKqXVY0NLm3Fq06JS3R-8iEeCufOwEB0

The dollar’s $20 trillion problem,

https://www.zerohedge.com/the-market-ear/dollars-20-trillion-ai-problem?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTMwMzM3Iiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MzM2NDk1OSwiZXhwIjoxNzk1OTU2OTU5LCJhdWQiOiJ6aC1naWZ0In0.N18t_YLP5WTlcR_iq0wDOFDa31K_qv37wSgHYlDsSqo

Friday morning setup: US futures slide with Nasdaq futures tumbling more than 2%, as the AI reckoning that started with Alphabet's record plunge claims two more megacaps: Amazon slides after a capex shock and the slowest e-commerce growth in three years, while Intel craters 26% after a guide that was "much weaker than expected"; meanwhile oil keeps climbing on signs the US may resume strikes against Iran and on an Iranian claim that two oil tankers were hit and stopped in Hormuz; as a result, the Nasdaq 100 is now tracking its biggest monthly underperformance against the equal-weighted S&P since 2002, with its members having wiped out more than $1.2 trillion in market cap this month. As of 7:30am ET, S&P futures are 1.1% lower at 7,672 while Nasdaq futures drop about 2.2% (28,970.75 in the Markets at a Glance snapshot) and Dow futures are up 0.1% at 52,575; Russell 2000 futures are down a more modest 0.5%. The losses come after a session in which the S&P fell 0.3% (and the Nasdaq 1.4%) even as 406 S&P members rose and the equal-weight index hit its highest since August, a reminder that the market is rotating rather than running for the exits. In premarket trading, all Mag 7 names are lower, led by Amazon (-7.3%), while AI infrastructure stocks tumble after Amazon and Intel and crypto-linked names slide after Binance suffered the industry's biggest-ever hack; Amazon's slump confirms our post from last night. Defensives and the non-AI parts of the market are bid, with Mondelez, Gilead and Colgate higher. The day's driver is oil (again): Brent rose as much as 2.5% to around $117.76 as reports keep pointing to US strikes on Iran after Tuesday's midterms and the Houthis claimed attacks on Saudi oil facilities, while Exxon and Chevron both posted record refining profits. Treasuries are higher with the 10Y yield down 3bps to 4.91%, near the lowest in six weeks, as the tech rout spurs haven demand; bunds and gilts edge higher while French OATs lag after hotter than expected French inflation. The Bloomberg dollar index falls 0.3%, its third straight decline, the Swiss franc outperforms on haven demand and the pound hit the highest since Sept. 16. In commodities, WTI is up 1.7% at about $103.50, gold slipped below $4,000 and silver drops 2.6%. Bitcoin is down 1.6% near $77,800 after the Binance hack. US economic data slate includes 3Q employment cost index (8:30am, est. 0.8%, prior 0.9%) and October MNI Chicago PMI (9:45am, est. 56, prior 58.8). Fed speaker slate includes Barkin (9:30am), Daly (12pm) and Musalem (12:30pm).

https://cms.zerohedge.com/sites/default/files/inline-images/Market_Snapshot_-_2026-10-30_1793362170491.jpg

Fundamental

Headlines

The Economy

International

The Q3 German flash GDP grew 0.2% versus forecasts of +0.1%; the October unemployment rate was 6.4%, in line.

The Q3 EU flash GDP grew 0.4% versus expectations of +0.2%: the September unemployment rate was 6.5% versus +6.4%.

The September Japanese unemployment rate was 2.4% versus 2.5%; September preliminary industrial production was up 2.2% versus +1.3%; September retail sales fell 0.7% versus +0.6%; September YoY housing starts were down 2.7% versus +2.9%; September YoY construction orders were down 11.1% versus -3.0%; October YoY CPI was +2.8% versus +1.3%; YoY core CPI was up 2.6% versus +2.5%.

Other

More analysis on yesterday’s personal income and spending reports.

https://bonddad.blogspot.com/2026/10/a-somewhat-negative-personal-income-and.html

Overnight News

Ukraine shatters strike pause.

https://www.zerohedge.com/energy/ukraine-shatters-strike-pause-major-drone-attack-russian-oil-refinery-defying-trump

Monetary Policy

The Taylor Rule and the FOMC rate decision.

https://econbrowser.com/archives/2026/10/taylor-rule-and-dissents

The Fed risks falling behind in its inflation fight.

https://www.nytimes.com/2026/10/29/business/economy/federal-reserve-interest-rates.html?unlocked_article_code=1.MVE.CfWK.ofy-yqPWUGfR&smid=url-share

And probably already has.

https://www.capitalspectator.com/will-the-feds-pause-complicate-the-inflation-fight/

Fiscal Policy

The $2 trillion gap.

https://www.advisorperspectives.com/commentaries/2026/10/29/mind-2-trillion-gap

The case for a government stake in the ownership of US companies. (I totally disagree with this proposition. First, tell me that the ruling class won’t try to exert force on company decisions. The US’s whole history is a shining example of political/bureaucratic encroachment on the economy and industry. Second, it provides yet another means for the ruling class to enrich itself via insider trading. The author points to the bailouts of the banks and auto companies as an example of the benefits of government intervention. I would take issue with that. The government should have let those companies go into Chapter 11. That doesn’t mean the company ceases to exist. It means that it is reorganized on a more profitable basis---if that is indeed possible. Old management---the ones whose lousy business decisions resulted in the bankruptcy itself are canned, instead of being rewarded with a new lease on life. The inefficiencies/poor decisions are corrected. And the stock and bond holder suffer the consequences of a bad investment decision---just like you and I do every day of our lives. No one bails us out.)

https://www.realclearmarkets.com/articles/2026/10/29/a_case_for_trumps_stakes_in_us_corporations_1214047.html

For example:

https://behaviouralinvestment.com/2026/10/27/the-power-and-the-glory-400-years-of-bad-decisions/

Here is the counter argument for increased government imposing itself into the economy. (it is a bit long).

https://aier.org/article/the-errors-of-economic-nationalism/ems

The midterms offer a choice between two brands of socialism.

https://reason.com/2026/10/28/the-midterms-offer-a-choice-between-two-brands-of-socialism/

Anthropic’s IPO just strengthened the case for AI stocks (This is not a Buy recommendation.)

https://investorplace.com/hypergrowthinvesting/2026/10/anthropics-ipo-filing-just-strengthened-the-case-for-ai-stocks/

Counterpoint.

https://quoththeraven.substack.com/p/very-intentional-steve-eisman-thinks?r=1ng8jx&utm_campaign=post-expanded-share&utm_medium=web

Anthropic showed AI can make money, but the buildout has to prove it.

Anthropic Showed AI Can Make Money, but the Buildout Has To Prove It - Wealth Management - Carson Group

Tariffs

All about tariffs.

https://talkmarkets.com/article/all-about-tariffs

The Financial System

The commercial real estate problem is far from over.

https://quoththeraven.substack.com/p/the-commercial-real-estate-crisis?r=1ng8jx&utm_campaign=post-expanded-share&utm_medium=web

Investing

News on Stocks in Our Portfolios

What I am reading today

Visit Investing for Survival’s website (http://investingforsurvival.com/home) to learn more about our Investment Strategy, Prices Disciplines and Subscriber Service.

The Morning Call---Wall Street's debt machine is choking on supply

2026-10-29T06:08:34.081-07:00

The Morning Call

10/29/26

The Market

Technical

Wednesday in the charts.

https://www.zerohedge.com/markets/fed-markets-await-megacaps-warshs-waffling-waves-higher-oil?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTMwMTMxIiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MzIxODY0NiwiZXhwIjoxNzk1ODEwNjQ2LCJhdWQiOiJ6aC1naWZ0In0.M4AjppXvQ9DEHUCRexi9wR6QXdpO8B8G8NrsfXEKZtc

Wednesday in the technical stats.

https://www.barchart.com/stocks/signals/new-recommendations

Ten charts for your Thursday morning viewing pleasure.

https://www.zerohedge.com/the-market-ear/how-low-can-you-go-2?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTMwMTczIiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MzI3ODU4OSwiZXhwIjoxNzk1ODcwNTg5LCJhdWQiOiJ6aC1naWZ0In0.xMwj7mbgdLV5TBFC9caNLa_eWsmEl5f4444ROV3cpxo

Volatility paradox.

https://www.zerohedge.com/the-market-ear/volatility-paradox-cheap-mag-7-expensive-tech-and-market-edge?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTMwMTMyIiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MzIxOTQxOSwiZXhwIjoxNzk1ODExNDE5LCJhdWQiOiJ6aC1naWZ0In0.gbUJvMRspDzCwEkMlE6J496bZxhJTS1PZ0K9fd-r3wg

Thursday morning setup: US futures are lower, with Nasdaq contracts sliding as Alphabet's ugly search miss revived the "is AI capex paying off" debate, while Microsoft's Azure beat and lighter capex, a roughly 1% drop in oil on fresh US-Iran diplomacy chatter and news that Christine Lagarde will quit the ECB nine months early round out the morning's drivers; as a result small caps outperform while the 10Y yield hovers just around 5%. As of 7:30am ET, S&P futures are 0.3% lower at 7,768 while Nasdaq futures are down about 1% and Dow futures are flat; Russell 2000 futures are up 0.5%. Yesterday the S&P 500 rose 0.28% to 7,744, closing within 1% of its record high after the Fed's on-hold decision, while the Philly semi index gained 1.75% led by an 11% surge in Oracle. In premarket trading, Mag 7 names are mixed: Alphabet plunges 10% after search and advertising sales missed, confirming our article from last night, while Microsoft rises about 3% after its Azure beat; software is down 3% (per JPM) after ServiceNow (-18%) and Fortinet (-26%) disappointed. The day's driver is (again) AI, only this time in reverse: JPM's desk says the market is trading with a defensive bias, with the AI theme being sold and Discretionary and Financials bid, "pointing to the broadening / ex-AI trade." Treasuries extend Wednesday's post-Fed gains, with yields 1-2bps lower (the 2Y touched 4.67% overnight), as traders trimmed bets on the pace of Fed hikes after Kevin Warsh's press conference (December hike odds are now about 80%); gilts and bunds also rise (though lag Treasuries) as European energy prices retreat. The Bloomberg dollar index is up 0.1%, paring the bulk of its Fed-induced losses, while EUR/USD lingers just above its year-to-date low into the ECB decision. In commodities, Brent briefly slipped to a $113 handle after Semafor reported the US is involved in talks on a temporary peace deal with Iran, even as Iran's IRGC claimed three tankers hit mines in Hormuz; gold falls 1% but holds above $4,000, silver slides 2.6% and copper is softer. Bitcoin is down 1.4% after dipping below $80,000. US economic data slate includes initial jobless claims, Q3 GDP, September personal income, spending and PCE (all 8:30am). The Fed is in its post-meeting quiet period with no speakers scheduled; Treasury auctions $44 billion of 7-year notes at 1pm.

https://cms.zerohedge.com/sites/default/files/inline-images/Market_Snapshot_-_2026-10-29_1793275794404.jpg

Fundamental

Headlines

The Economy

Weekly initial jobless claims totaled 194,000 versus consensus of 199,000.

September personal income rose 0.2% versus predictions of +0.3%; personal spending was up 0.5% versus +0.6%.

https://www.zerohedge.com/markets/feds-favorite-inflation-indicator-surges-september-soaring-energy-drags-americans-savings

Q3 (initial estimate) of GDP growth was +3.4% versus estimates of +3.2%; the PCE price index was +2.5% versus +2.4%.

The September PCE index was up 0.5%, in line; the core PCE index was up 0.3%, also in line,

International

The October Japanese consumer confidence index came in at 35.0 versus expectations of 35.1.

The October EU economic sentiment index was 96.9 versus forecasts of 97.5; the October industrial sentiment index was -3.4 versus -3.8; the October services sentiment index was 5.3 versus 5.9; the October consumer confidence index was -17.9, in line.

Other

The inflationary expansion continues.

https://bonddad.blogspot.com/2026/10/the-ai-data-center-driven-manufacturing.html

Iran

Overnight news.

https://www.zerohedge.com/geopolitical/irgc-says-3-tankers-fire-hormuz-challenges-us-narrative-strait-demined

Monetary Policy

As the universe knows, the FOMC concluded its October meeting---and surprise, surprise, it left the Fed Funds rate unchanged.

https://www.zerohedge.com/markets/fomc-42

The case for not raising rates. (note the curious argument that the threat of a Fed rate hike is causing long rates to rise versus Warsh’s position that the long rates help determine the Fed rate.)

https://talkmarkets.com/article/the-fed-risks-policy-error-fighting-oil-prices

Warsh wants the Fed to be quiet. Instead, it is as noisy as ever.

https://www.wsj.com/economy/central-banking/kevin-warsh-wanted-the-fed-to-be-quiet-instead-its-as-noisy-as-ever-b2346ca2?st=D71S4w&reflink=desktopwebshare_permalink

Fiscal Policy

Democratic economists are already rolling out post elections tax increase proposals. (of course, dems need enough votes to override a Trump veto)

https://www.realclearmarkets.com/articles/2026/10/28/democratic_economists_are_already_rolling_post-election_tax_hikes_1213844.html

The bull case for AI Armageddon.

https://www.wsj.com/tech/ai/the-bull-case-for-ai-armageddon-673521f4?st=BuPpg2&reflink=desktopwebshare_permalink

Wall Street’s AI debt machine is starting to choke on supply.

https://www.bloomberg.com/news/articles/2026-10-28/wall-street-s-ai-debt-machine-is-starting-to-choke-on-supply?srnd=homepage-americas

Summary: Yields are soaring into the double digits on bonds and loans funding the AI infrastructure buildout, making it more difficult for bankers to offload risk to insurers and other investors. The cost of insuring against losses on the debt of companies from Broadcom to SpaceX and Oracle has spiked, reaching levels more typical of junk-rated borrowers, as the market for credit default swaps reflects growing concerns about the potential economic fallout. Citadel Securities is cautioning clients that even the biggest names in tech could get ensnared as they put their balance sheets behind scores of projects critical to their AI ambitions, with a growing disconnect between what Silicon Valley's top executives believe can be raised and what financiers say they can deliver.

And this doesn’t take into account debt maturing from loans made in 2020-2023 that needs to be refinanced.

https://www.wsj.com/finance/investing/a-300-billion-debt-wall-is-looming-over-private-equity-backed-companies-d6359497?st=2VSbyq&reflink=desktopwebshare_permalink

Investing

A reliable warning light is flashing red.

https://www.realclearmarkets.com/articles/2026/10/28/the_markets_most_reliable_warning_light_is_flashing_red_1213848.html

In high yield, shorter maybe smarter (Google---high yield, short duration ETF for candidates)

https://www.advisorperspectives.com/commentaries/2026/10/28/high-yield-shorter-may-smarter

News on Stocks in Our Portfolios

What I am reading today

From 1215 to 2026.

https://lawliberty.org/from-1215-to-2026/

Visit Investing for Survival’s website (http://investingforsurvival.com/home) to learn more about our Investment Strategy, Prices Disciplines and Subscriber Service.

The Morning Call---BofA says defendive froth is a feature of a bubble market

2026-10-28T06:11:16.473-07:00

The Morning Call

10/28/26

The Market

Technical

Tuesday in the charts.

https://www.zerohedge.com/markets/buy-all-things-except-oil-buying-spree-spreads-ahead-fed?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTI5OTYxIiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MzEzOTE3MiwiZXhwIjoxNzk1NzMxMTcyLCJhdWQiOiJ6aC1naWZ0In0.cbvbBI7UnPq0K9bu1vbaVTCzivcKtmMKSfSqYb2pOQ4

Tuesday in the technical stats.

https://www.barchart.com/stocks/signals/new-recommendations

Improving breadth could be a Market negative.

https://www.carsongroup.com/insights/blog/you-want-market-breadth-you-got-it-but-be-careful-what-you-wish-for/

BofA says defensive froth is a feature of a bubble market.

https://www.zerohedge.com/markets/partying-its-1999-coca-cola-bofa-says-defensive-froth-feature-bubble-markets?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTI5OTc4Iiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MzE5MjA5MywiZXhwIjoxNzk1Nzg0MDkzLCJhdWQiOiJ6aC1naWZ0In0.yJD6SnnZXbA2YNoUuptk3eevYXpA4PjdtXvNOo4uVQ0

Wednesday morning setup: US futures are higher, if only in Nasdaq terms, as a memory-chip frenzy sparked by SK Hynix's blowout results revives the AI trade ahead of today's Fed decision and tonight's Alphabet and Microsoft earnings, while oil jumps after the WSJ reported the US told Gulf allies to prepare for a short, intense military campaign against Iran after the midterms; as a result the 10Y yield is back above 5%. As of 8:00am ET, S&P futures are up 0.2% while Nasdaq futures rise 0.6% and Dow futures slip 0.1%, a day after the S&P closed 0.6% higher at 7,723 and the Nasdaq 100 jumped 1.3% for its best day in over a month (even if roughly 60% of S&P names closed lower). In premarket trading memory names lead the way, with Micron and Sandisk both up about 4%, while Alphabet tops the Mag 7 after a report that OpenAI intends to buy Google's AI chips; on the other side, Robinhood, NXP and Enphase tumble after disappointing earnings. The day's driver is the Fed (and then the hyperscalers): a hold at 3.75%-4.00% is all but certain, so the focus is on the vote split and how hawkish Chair Warsh sounds with a December hike nearly fully priced, while the AI rebound gets its real test after the close. Treasuries are slightly cheaper with yields within a basis point of Tuesday's close as rising oil puts upward pressure on yields; the 2Y is at 4.74%, up for a fourth day. The Bloomberg dollar index is up 0.1%, edging toward a 17-month high, the euro sits near a 17-month low around 1.1125 and the kiwi tumbles after the RBNZ unexpectedly held rates. Brent rises toward $115.6 and WTI trades near $102, European gas hovers near a four-year high, gold slips 0.7% to about $4,030 and copper dips. Bitcoin is up 0.9% and back above $81,000. US economic data slate includes advance goods trade balance, wholesale and retail inventories (8:30am) and the FOMC rate decision (2pm), followed by Chair Warsh's press conference (2:30pm); the Bank of Canada decides at 9:45am, and Treasury sells $30 billion of 2-year FRNs and $75 billion of 17-week bills at 11:30am.

https://cms.zerohedge.com/sites/default/files/inline-images/Market%20Snapshot%20-%202026-10-28.jpg

Fundamental

Headlines

The Economy

Weekly mortgage applications were up 3.4% while purchase applications were up 3.8%.

Month to date retail chain store sales were up 9.5% versus +9.0% in the prior week.

The August home price index was up 0.3% versus estimates of +0.2%; the August Case Shiller home price index was down 0.4% versus -0.1%.

September new home sales fell 0.6% versus expectations of -3.5%.

https://bonddad.blogspot.com/2026/10/new-home-sales-and-repeat-home-prices.html

The Q3 Atlanta Fed GDP nowcast was revised from +3,5% to +3.4%.

The October consumer confidence index came in at 91.7 versus consensus of 81.0.

The October Richmond Fed manufacturing index was -2 versus predictions of 0.

International

The November German consumer confidence index was reported at -30.8 versus forecasts of -30.9.

Other

Iran

Overnight news:

The U.S. has told several Gulf Arab countries to be prepared for a short, intense military campaign after the U.S. midterm elections, people briefed on the conversations said.

Qatari mediators presented Iran with a new draft deal on Sunday to end the war, which Tehran is considering and expected to send a response to by the end of the week, an official briefed on the negotiations says.

A senior Iranian official later said Qatar has not presented a new proposal to end hostilities between Iran and the US and that Tehran's policy of showing no flexibility over the nuclear issue remains unchanged.

The US told ships to avoid unnecessary transits through the Strait of Hormuz.

The United Nations nuclear watchdog said it hasn’t detected any efforts by Iran to rebuild nuclear facilities damaged in US and Israeli strikes over the past two years, even as Tehran continues to block inspectors’ access to most of its atomic sites.

Monetary Policy

To raise or not to raise?

https://www.capitalspectator.com/warshs-hawkish-rhetoric-meets-an-inflation-reality-check/

Fiscal Policy

The cruelty of government consumption.

https://www.realclearmarkets.com/articles/2026/10/27/the_cruelty_of_government_consumption_is_felt_by_us_all_now_1213580.html

No signs of an AI payoff outside of the tech sector.

https://www.apollo.com/wealth/insights-news/insights/daily-spark/no-signs-of-ai-payoff-outside-the-tech-sector

With Anthropic IPO, the devil is in the details.

https://www.marketwatch.com/story/with-the-anthropic-ipo-the-devil-is-in-the-details-239d571d?st=dmUhvj

The biggest takeaways from Anthropic’s IPO.

https://www.wsj.com/tech/ai/anthropic-ipo-s1-report-takeaways-6eebd721?st=za7U4D&reflink=desktopwebshare_permalink

Some lenders are getting cold feet.

https://www.zerohedge.com/markets/some-were-getting-cold-feet-hock-tan-pays-guarantees-loss-get-anthropics-63-billion-chip?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTI5OTI0Iiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MzEyOTEzMSwiZXhwIjoxNzk1NzIxMTMxLCJhdWQiOiJ6aC1naWZ0In0.MZdCLK93tMdm4VboNHMk3yObMPEcCs7dswThYjox3C0

Who is afraid of AI?

https://quoththeraven.substack.com/p/whos-afraid-of-ai?r=1ng8jx&utm_campaign=post-expanded-share&utm_medium=web

Your job may survive AI, but your salary may not.

https://newsletter.drorpoleg.com/p/ai-doesnt-have-to-replace-you-to

Tariffs

Another example of Trump’s misguided tariff regime.

https://www.wsj.com/business/aluminum-tariff-canada-trump-f2555b38?st=dZNRQL&reflink=desktopwebshare_permalink

Investing

Managing a bubble.

https://www.advisorperspectives.com/commentaries/2026/10/27/griffin-right-about-ai-timing-could-very-wrong

Short termism and stock price discovery.

https://www.albertbridgecapital.com/post/ai-peaks-and-valleys-short-termism-and-stock-price-discovery

Five myths about investing in the stock market.

https://open.substack.com/pub/samro/p/stock-market-investing-myths-and-misunderstandings?utm_campaign=post-expanded-share&utm_medium=web

The path to lower interest rates.

https://www.morningstar.com/economy/there-are-three-paths-forward-ai-boom-two-them-lead-lower-interest-rates?utm_medium=referral&utm_campaign=linkshare&utm_source=link

The life insurers most exposed to the AI debt binge.

https://www.zerohedge.com/markets/widows-and-orphans-20-barclays-maps-which-life-insurers-are-most-exposed-ai-debt-binge-says?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTI5OTEzIiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MzE5MjM0MiwiZXhwIjoxNzk1Nzg0MzQyLCJhdWQiOiJ6aC1naWZ0In0.HuCUTqUYwYC8WSBmNkR9TvFm2FCwn6B_k4a-lOx9hjg

News on Stocks in Our Portfolios

What I am reading today

How the Egyptians built the pyramids.

Rethinking how the Egyptians built the pyramids | National Geographic

It is not a prank; you are an a**hole.

https://quoththeraven.substack.com/p/its-not-a-prank-youre-just-an-asshole?r=1ng8jx&utm_campaign=post-expanded-share&utm_medium=web

Visit Investing for Survival’s website (http://investingforsurvival.com/home) to learn more about our Investment Strategy, Prices Disciplines and Subscriber Service.

The Morning Call---Little margin for error

2026-10-27T06:11:01.566-07:00

The Morning Call

10/27/26

The Market

Technical

Monday in the charts.

https://www.zerohedge.com/markets/lula-shock-batters-brazil-anthropic-s-1-revives-ai-trade-oil-dips-fed-week?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTI5ODE5Iiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MzA0NjcxOCwiZXhwIjoxNzk1NjM4NzE4LCJhdWQiOiJ6aC1naWZ0In0.9wS4QNzxbVdgnnr2j0owy-MaaTEZaKvuGNxnF2ZESM0

Monday in the technical stats.

https://www.barchart.com/stocks/signals/new-recommendations

Buy the dip or brace for more.

https://www.zerohedge.com/the-market-ear/after-tech-bloodbath-buy-dip-or-brace-more?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTI5ODU4Iiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MzA1MzQwNCwiZXhwIjoxNzk1NjQ1NDA0LCJhdWQiOiJ6aC1naWZ0In0.iuyWJReKR_iGRNl-HXaFPHc7Jce6Yzt5M29EzwUXzlk

Market performance following the mid-terms.

https://www.riskhedge.com/the-jolt/they-mocked-me-on-live-tv-2

Gold’s next move?

https://www.zerohedge.com/markets/4082-question-ubs-maps-golds-next-move-fast-money-gets-stopped-out-and-beijing-steps?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTI5ODU5Iiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MzEwNDkzNywiZXhwIjoxNzk1Njk2OTM3LCJhdWQiOiJ6aC1naWZ0In0.vaaVh_U5adZ8hPSg-VnjD-d_o7clhjzEoZPX2TSidf0

Tuesday morning setup: US futures are higher as hopes for a diplomatic end to the Iran war got a fresh boost after Monday's Mecca Pact talks in Tehran, with Supreme Leader Mojtaba Khamenei calling for pursuing the conditions set out by Iranian officials to end the war and an Iranian ambassador floating a seven-day plan to reopen Hormuz, which more than offset a Houthi missile attack on Saudi Arabia's Ras Tanura refinery; as a result oil slid and Treasuries rallied, with the 10Y yield slipping to 4.97% ahead of today's $70BN 5Y auction. As of 8:15am ET, S&P futures are 0.4% higher while Nasdaq futures gain 0.7% and Dow futures rise 0.3%, having spent most of the overnight session flat as the Anthropic IPO euphoria which sparked Monday's tech-led rally (S&P +0.70%, Nasdaq +0.82%) faded just as the bills for AI resume getting bigger: Meta upsized its equity raise to $25BN in common stock (part of a package of up to $97.5BN) while Broadcom arranged a $63BN deal to finance chips for Anthropic. In premarket trading, Tesla leads the Mag 7 while Microsoft lags; memory names are the standout (JPM's DRAM basket +2.1%), Broadcom gains 2.4% on a D.A. Davidson upgrade tied to Anthropic, UPS rises 2% after raising guidance and Whirlpool slides 7.9% after its third guidance cut of the year. The day's driver is Iran (again): oil, which jumped in early European trading on the Ras Tanura reports, reversed lower once the Khamenei headlines hit, with WTI down about 1% near session lows after trading in a $100.60-102.82 range. Treasuries are 2-3bps richer in the front end and belly, steepening the curve, while bunds and gilts outperform; French OATs underperform, with the OAT-Bund spread back above 160bps after French consumer confidence crashed to the lowest since 2013. The Bloomberg Dollar Spot index halved its earlier 0.2% gain as oil dropped, though EUR/USD still hit a two-week low around 1.1143. Gold is back below $4,000 (-0.5%), silver drops 1.5% and copper is up 0.9%; bitcoin slipped under $80,000. US economic data slate includes ADP weekly employment (8:15am), durable goods (8:30am), FHFA and Case-Shiller house prices (9am), Conference Board consumer confidence, Richmond Fed manufacturing and new home sales (10am) and Dallas Fed services (10:30am). The Fed is in its pre-FOMC blackout, so there are no Fed speakers; there are $54BN 52-week and $95BN 6-week bill sales at 11:30am and the $70BN 5Y note auction at 1pm.

Fundamental

Headlines

The Economy

September building permits fell 0.4% versus forecasts of -0.2%.

September durable goods orders rose 1.8% versus projections of +1.5%; ex transportation, they were up 0.5% versus +0.6%.

https://www.zerohedge.com/markets/core-durable-goods-orders-rise-18th-straight-month-ai-spend-proxy-dips

The October Dallas Fed manufacturing index came it at 13.4 versus consensus of 7.0.

International

Other

Iran

Iran signals flexibility (ya, right)

https://www.zerohedge.com/geopolitical/mecca-pact-officials-tehran-last-ditch-diplomacy-us-prepares-96-hour-strike-window

Monetary Policy

Warsh tells traders to watch the data; but they still watch the Fed.

https://www.bloomberg.com/news/articles/2026-10-25/warsh-tells-traders-to-watch-the-data-they-still-follow-the-fed?utm_source=website&utm_medium=share&utm_campaign=copy

Summary: TD Securities' Gennadiy Goldberg recommended betting against a Federal Reserve interest-rate hike after a report on US inflation was released, but the data came in hot and traders quickly ramped up bets on a hike. The market move was later erased, with several market cross-currents at play, including a stock selloff and increasing tensions in France, as well as a stream of Fedspeak signaling a pause in October. Investors are in a precarious position heading into the policy meeting, with odds of an October move now standing at less than 15%, and traders acknowledging that the inflation data might have spurred them to wager on a hike if not for the Fedspeak.

Inflation

Four reasons to think inflation has peaked.

https://www.morningstar.com/economy/4-reasons-think-us-inflation-will-come-back-down?utm_medium=referral&utm_campaign=linkshare&utm_source=link

Winners and losers if the AI buildout is delayed.

https://www.apollo.com/wealth/insights-news/insights/daily-spark/winners-and-losers-if-the-data-center-buildout-is-delayed

The 2028 reality crisis.

https://hub.tslombard.com/the-perkini-report

The debt window slams shut.

https://www.zerohedge.com/markets/debt-window-slams-shut-meta-taps-shareholders-95-billion-its-own-chip-suppliers-buying?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTI5NzY2Iiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MzA0ODI1NiwiZXhwIjoxNzk1NjQwMjU2LCJhdWQiOiJ6aC1naWZ0In0.LCiAnMUk0XoHaQrpcgYooKq-2mgCviN9JcvY06-PQBg

Little margin for error.

https://www.zerohedge.com/markets/citadel-securities-sees-precious-little-margin-error-ai-trade-unravels-just-other-risks?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTI5ODQ5Iiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MzEwNjIzNCwiZXhwIjoxNzk1Njk4MjM0LCJhdWQiOiJ6aC1naWZ0In0.w1HW3a_6dtVWCGHZlGa43n9ndboW-uRdAuGyJBIT9Xs

Investing

The most important factors determining a stock’s price.

https://www.marketwatch.com/story/why-economic-health-no-longer-dictates-stock-market-returns-c44b88f2?st=hKLQYe

Individual stock performance versus the indices.

https://www.carsongroup.com/insights/blog/is-the-index-hiding-something/

Investors should temper their enthusiasm.

https://files.constantcontact.com/8b610944601/13951012-86e9-4517-99a6-afb76fd90052.pdf

The search for a sure thing beyond cash and bonds.

https://www.bloomberg.com/news/articles/2026-10-26/clo-etfs-how-to-invest-as-rising-interest-rates-hurt-bonds?utm_source=website&utm_medium=share&utm_campaign=copy

Summary: Rising interest rates are difficult for investors because when rates go up, bonds that were bought at lower rates are instantly worth less. Investors are seeking refuge in cash, often in the form of money-market mutual funds, and ultra-short-term bond ETFs, which have attracted about $75 billion in October. Collateralized loan obligations, which behave a bit like bonds, may have some upside right now, with CLO ETFs exhibiting almost no volatility and very little interest-rate risk.

The rate of change and the change in the rate of change.

https://talkmarkets.com/article/weekly-market-pulse-where-the-puck-will-be

News on Stocks in Our Portfolios

What I am reading today

The road to serfdom runs through both parties.

The Road to Serfdom Runs Through Both Parties

John Stuart Mills on liberty, tyranny and the role of government.

https://economicaffairs.co.uk/p/john-stuart-mill-on-liberty-tyranny

Second order chaotic systems, polling and the election.

https://bonddad.blogspot.com/2026/10/second-order-chaotic-systems-polling.html

Visit Investing for Survival’s website (http://investingforsurvival.com/home) to learn more about our Investment Strategy, Prices Disciplines and Subscriber Service.

Monday Morning Chartology

2026-10-26T06:10:03.065-07:00

The Morning Call

10/26/26

The Market

Technical

The S&P had an up (early) and down (later) week. It reset its 50 DMA to support, then immediately reversed itself and appears ready to challenge its 100 DMA. Most of the decline was on the back of (1) a growing number of concerns over the economic viability of the AI buildout and (2) the fear of a renewal of armed conflict in the Middle East. On a longer term basis, (1) while the index has been stuck in an elevated trading range [its upper boundary is marked by its all-time high], (2) it remains in uptrends across all timeframes and is above its 100 and 200 DMAs, (3) earnings and the economy remained strong and (4) historically, we are in the most positive time of the year and election cycle for stocks. Plus another factor has come into play---beneath the surface, a battle has developed over investor preference for the Mag 7 versus the rest of the Market with each one highlighting a single day’s pin action only to be reversed the following day. For me, this combination of conflicting trends only increases my level of uncertainty. Bottom line, while I think it too soon to get beared up, I think it would pay to examine one’s tech holdings carefully if you are overweight this sector. On the other hand, I think prudence is the watchword on any purchases.

The latest from Goldman.

https://www.zerohedge.com/markets/saddest-day-year-goldmans-charts-end-week-when-momentum-round-tripped-zero-and-capital?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTI5NTc4Iiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5Mjg0ODUzMywiZXhwIjoxNzk1NDQwNTMzLCJhdWQiOiJ6aC1naWZ0In0.rG-Qg0-qx-mFEIBKo-WItCV4WpXKcD3kC-rkpaKHFNw

The bond market continued its rally last week, managing to reset its 50 DMA to support. That suggests to me a retreat to safety with the bonds boys worried about the credit health of the AI sector as well as the odds a ramp up in kinetic warfare. On the other hand, TLT continues to trade down across all timeframes and is below its 100 and 200 DMAs. While the foregoing is not a huge endorsement for owning bonds, I am nervous enough that a opened a small position in a TIPS ETF.

GLD resumed its downward journey and appears ready to challenge the lower boundary of its short term trading range. It remains below all three DMAs. In light of all the turmoil last week, I am a bit confused as to why gold didn’t perform better. So until there is some clarity and/or it can break the current string of lower highs and lower lows, I am on the sideline.

While the dollar sort of marched in place last week, it remains on a pretty steep upward trajectory. While it has made a nice series of higher lows and higher highs, it remains in about the middle of a wide short term trading range,

Friday in the charts.

https://www.zerohedge.com/markets/pain-trade-was-long-ai-short-bonds-how-neocloud-burst-turned-hottest-inflation-week-year?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTI4NjgwIiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MjI0NDg5NiwiZXhwIjoxNzk0ODM2ODk2LCJhdWQiOiJ6aC1naWZ0In0.eNwd_vpwauC_L8Ws3DbcJBz5mYRrLnL1IPJFk91YFAI

Friday 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

Monday morning setup: US futures are higher as oil slides on hopes that a regional delegation in Tehran can breathe some life into US-Iran peace talks, and as Meta jumps after finally unveiling how it plans to pay for its AI capex binge, offsetting a stunning comeback win by Lula in Brazil's runoff which has sent Brazilian ADRs crashing as much as 30-50% premarket, while traders brace for a week packed with megacap earnings and central bank decisions; as a result 10Y yields are flat at 4.99% and the dollar is barely changed. As of 8:15am ET, S&P futures are 0.4% higher at 7,665.75 while Nasdaq futures are up 0.7% and Dow futures rise 0.4% (+186 points) to 52,580. On Friday, the S&P slipped 0.5% to cap a second weekly drop and close below its 50DMA, as the AI funding angst which has hammered tech names spread to credit. Premarket, Mag 7 names are mostly higher led by Meta (+2.4%), which is seeking up to $95 billion in equity: a $35 billion offering ($22.5 billion of Class A common stock plus $12.5 billion of mandatory convertible preferred) launched this morning, followed by an at-the-market program to sell up to $60 billion of new non-voting Class C shares starting in 2027, with Nvidia, AMD and Broadcom indicating interest in buying up to $5 billion of the offering (some circular AI financing never hurts). That the stock is rising on a potential $95 billion equity raise tells you how much the market feared the alternative was even more debt. The day's driver is Brazil: Lula's 51.8%-48.2% victory over market favorite Flávio Bolsonaro, who is now calling for the vote to be annulled, has sent the Brazil ETF (EWZ) down 27% premarket, with names like XP (-48%), StoneCo (-35%), PicPay (-34%) and Nubank (-23%) all crashing. In rates, Treasuries are narrowly mixed with the long end outperforming and the curve flattening by about 2bp, while French bonds rally after Moody's unexpectedly kept France at Aa3, narrowing the OAT-bund spread to around 158bps. The Bloomberg dollar index is up 0.1% with the yen the weakest G-10 currency, while the Brazilian real is expected to gap 5-7% lower at the open. In commodities, WTI is down about 2.1% near $101 and Brent drops toward $114 as Saudi, Turkish and Pakistani officials travel to Iran; European natgas is up 3% near a post-2022 high, while gold rises 0.5% back above $4,000 and Bitcoin hovers around $80,400. US economic data slate includes September Chicago Fed national activity index (8:30am) and October Dallas Fed manufacturing activity (10:30am); the Fed is in its blackout period ahead of Wednesday's FOMC, and the Treasury sells $69 billion in 2-year notes at 1pm.

Fundamental

Headlines

The Economy

Last week was another slow one for the volume of US stats. In total, they were negative with the primary indicators balanced (one plus, one minus). Overseas, the data was much more plentiful and tilted to the positive side with two positive and two negative inflation points.

These reports directionally support both my forecasts for growth (muddle through) and inflation (good as it is going to get but not any worse). They did not confirm a growing consensus notion of stronger growth and higher inflation---which were apparent in the prior week’s numbers, and which seems to have reversed itself last week as worries about the AI buildout and its effect on economic growth gained some traction. I will stay neutral on either proposition pending more data.

I continue to fret over Fed policy. The FOMC meets this week and consensus, at the moment, is for no rate hike. Still the odds of an increase bounced around last week---the result of alternating fears about higher oil prices and a slowdown in the AI buildout---the latter having won the day on Friday.

As you know, I have continuously dwelled on the issue of whether a rate hike is a necessity when a [significant?] portion of inflationary pressures are the result of supply shortages [primarily oil] versus demand pull---because supply shortages cure themselves as the shortages are reconciled.

Part of the problem is determining just how significant supply shortages are as a force behind inflationary pressures. Clearly other factors are in play: [a] the destruction of oil production and refining infrastructure as well as the ultimate disposition of tanker transit fees out of the Persian Gulf and the Red Sea, [b] irresponsible global fiscal policies and easy monetary policies, [c] the AI buildout stimulating demand and [d] tariffs.

Two of those elements were front and center last week. {i} the war in the Middle East heated up, in particular the rhetoric regarding the potential for a resumption of US bombing Iran.---which clearly had an impact on oil prices and future oil supplies and {ii} rising doubts about the growth of the AI spending and, hence, the overall rate of US economic growth. The problem being that these two forces are pulling inflationary pressures in opposite directions.

https://www.capitalspectator.com/bond-market-tests-the-inflation-narrative-as-yields-tumble/

In short, the dynamics playing on inflation have made the problem of determining the proper monetary policy more difficult. And given that the Fed’s virtually spotless record of instituting the wrong policy at every critical economic junction, I can’t really be positive about the potential outcome. My guess is, again based on the Fed’s historical record, it will err on the side of policy weakness, meaning higher inflation in the short term; followed by an overtightening that leads to lower inflation but lower growth {recession?}

Lance Roberts thinks that monetary policy is already too tight. Could that be the Fed error this time?

https://talkmarkets.com/article/fed-over-tightening-how-much-runway-is-left-before-it-bites

My bottom line remains unchanged: my doubts on the trajectory of the economy/inflation/AI buildout are increasing. As a result, I have reduced my exposure to the AI tech sector, reinvested the proceeds in a dividend growth ETF and bought a TIPS ETF.

From late Friday:

The October consumer sentiment index came in at 48.0 versus estimates of 46.3.

The September Chicago Fed national activity index was +0.07 versus predictions of -0.1.

International

The August Japanese leading economic indicators were reported at 118.0, in line.

The October German business climate index was 90.2 versus consensus of 90.0; the October current conditions index was 88.8 versus 89.9.

Other

No reason to worry about the recent lower weekly real earnings report.

https://bonddad.blogspot.com/2026/10/no-we-are-not-dooomed-real-usual-weekly.html

Inflation

What inflation means.

https://www.realclearmarkets.com/articles/2026/10/23/as_inflation_continues_to_lose_its_meaning_liberty_is_lost_1212703.html

What needs to happen to turn the AI wobble into a bust.

https://www.zerohedge.com/markets/what-needs-happen-ai-wobble-turn-bust?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTI5NzIyIiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MzAxODkyNCwiZXhwIjoxNzk1NjEwOTI0LCJhdWQiOiJ6aC1naWZ0In0.gR2SGf7EqkWSoHXHbvRjKQlM__I06TIw5CWQPSAI1XE

Investing

The latest from BofA.

https://www.zerohedge.com/markets/enter-dragon-hartnett-says-china-now-biggest-risk-global-earnings-it-floods-world-exported?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTI5Njc4Iiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5Mjk0NTMwOCwiZXhwIjoxNzk1NTM3MzA4LCJhdWQiOiJ6aC1naWZ0In0.294mAhnkTYu442ZR2lHkvkyKp-a3ToAQrIr_Y1l7WcM

Bond derangement syndrome.

5 Signs You May Be Suffering From Bond Derangement Syndrome - Wealth Management - Carson Group

The economics are abysmal.

“The Economics Are Abysmal”: Harris Kupperman Warns The Crash Is Here

What higher inflation means for stocks, bonds and your portfolio.

https://www.morningstar.com/portfolios/what-high-inflation-means-stocks-bonds-your-portfolio?utm_medium=referral&utm_campaign=linkshare&utm_source=link

Forward P/E ratios.

https://econbrowser.com/archives/2026/10/forward-price-earnings-ratios

A simple way to benefit from rising rates.

https://www.nytimes.com/2026/10/23/business/interest-rates-money-market-funds-stocks-bonds.html?unlocked_article_code=1.K1E.YD6T.vd0-70pnlDqF&smid=url-share

Market signals are a tax on bad information. Hopefully, this has relevance to the upcoming mid-terms. Polling is indicating a Dem sweep---which, in spite of all the reasons I am critical of Trump’s policies, would likely be worse for the economy. Yet the Market has been yoyoing in a narrow range since early August. With any luck, it indicates a benign outcome to the elections.

https://www.realclearmarkets.com/articles/2026/10/23/market_signals_are_an_essential_tax_on_bad_information_1213083.html

News (but not a Buy recommendation) on Stocks in Our Portfolios

What I am reading today

Visit Investing for Survival’s website (http://investingforsurvival.com/home) to learn more about our Investment Strategy, Prices Disciplines and Subscriber Service.

The Morning Call---Gone: all year-to-date AI stock gains

2026-10-23T06:10:15.019-07:00

The Morning Call

10/23/26

The Market

Technical

Thursday in the charts.

https://www.zerohedge.com/markets/zuckd-tech-wrecks-ai-credit-cracks-widen-bonds-panic-bid-bitcoin-bullion-tumble?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTI5MzkyIiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MjcwMTYyNSwiZXhwIjoxNzk1MjkzNjI1LCJhdWQiOiJ6aC1naWZ0In0.x66I48i41Wc0j1HVP8upoaprO5kMfWSICBrdMXMCc2Q

Note: The S&P retreated back below its 50 DMA, resuming its function as resistance. More importantly, investors seem to be struggling right now with their views on the economy, inflation, and the AI buildout. And they seem unable to make up their minds to whether to buy/sell Tech (Wednesday) or the rest of the Marlet (yesterday). That kind of schizophrenia makes me nervous. At the moment, the most positive spin that I can put on this scenario is that the Market is consolidating at a lofty level. Which for me means that I sit on my hands until it commits itself one way or the other.

Thursday in the technical stats.

https://www.barchart.com/stocks/signals/new-recommendations

AI cracks, volatility explodes.

https://www.zerohedge.com/the-market-ear/nasdaq-edge-ai-cracks-volatility-explodes-skew-goes-haywire?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTI5Mzk1Iiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MjY5OTMyMiwiZXhwIjoxNzk1MjkxMzIyLCJhdWQiOiJ6aC1naWZ0In0.TF615gByT8XPmGhzNdaIDtfSAd89RSELODrItW71Vjo

Gone---all year to date AI stock gains.

https://www.zerohedge.com/the-market-ear/gone-baby-gone-70-ytd-june-now-all-ytd-gains-gone?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTI5NDU5Iiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5Mjc2MDQwMiwiZXhwIjoxNzk1MzUyNDAyLCJhdWQiOiJ6aC1naWZ0In0.eLNdbooGGEC0vLYuZyK_xicgm8Gr10yo3Z_mO3_IsWs

Market now repricing AI growth scare.

https://www.zerohedge.com/markets/bonds-are-working-your-hedge-again-mcelligott-says-market-now-repricing-ai-driven-growth?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTI5MzkzIiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MjY5OTAwOCwiZXhwIjoxNzk1MjkxMDA4LCJhdWQiOiJ6aC1naWZ0In0.BJ3Fu5B6VLHGO5YR5w0_Iptl_ydcBThKQgn9_Kd2k3U

Hedge funds pile into shorts.

https://www.bloomberg.com/news/articles/2026-10-22/hedge-funds-pile-into-shorts-as-goldman-flags-stock-squeeze-risk

Summary: Hedge funds have loaded up on shorts, pushing bearish bets near a five-year high and raising the risk of a sharp squeeze if markets rebound. Short sales have exceeded long purchases by a ratio of roughly five to one across global equities, with short leverage sitting in the 99th percentile over the past five years. Global fundamental long/short funds are down 2.5% in October, with funds focused on technology, media, and telecommunications down 7.4% so far this month.

This is not the start of the feared bear.

https://talkmarkets.com/article/this-is-not-the-start-of-the-feared-bear

Fear explodes; gold implodes.

https://www.zerohedge.com/the-market-ear/great-gold-betrayal-fear-explodes-gold-implodes?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTI5NDYxIiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5Mjc2MDA0MywiZXhwIjoxNzk1MzUyMDQzLCJhdWQiOiJ6aC1naWZ0In0.wjCGpz82cNKbxasEWt7mQM6MUJJwWQLladvnSMsDPFo

Friday morning setup: US futures are lower, erasing a modest overnight bounce, as markets scramble after Thursday's violent AI liquidation while oil rises again: Brent hit the highest level since May after the Houthis fired another missile at Riyadh and an IRGC official declared traffic of "illicit" vessels through Hormuz "completely stopped" (contradicted by a Bloomberg headline just minutes prior), while Thursday's haven bid fades; as a result Treasuries give back part of their biggest rally in more than two years with the 10Y yield rising back to 4.99%. As of 8:00am ET, S&P futures are down 0.2% at 7,687 while Nasdaq futures are down 0.1% at 29,100; Dow futures underperform, sliding 0.6%. That follows Thursday's chaotic session, when the S&P dropped 1.2% and the Nasdaq 100 tumbled almost 3%, its worst day since June, even as two-thirds of the S&P rose and the hedge fund VIP basket suffered its worst day since 2011 (as we detailed last night). In premarket trading, Mag 7 names are mixed with Nvidia (+0.6%) and Tesla (+0.8%) higher while Meta and Microsoft (both -0.7%) lag; tower companies jump and wireless carriers slide after SpaceX was said to be targeting 80,000 or more US cell sites, while Deckers tumbles after cutting its full-year sales guidance. The day's driver is the AI trade (what else): OpenAI is now targeting a $1.25 trillion valuation for its $30 billion raise, $150 billion below last month's ask, and SK Hynix scrapped a US listing of its Solidigm unit, yet chips are modestly higher after the Kospi erased a 4.1% plunge to close up 0.3%; according to Bloomberg, "this looks less like capitulation than a repricing of who pays for the build-out." Bonds are cheaper across the curve in a bear-flattening move, as the tech rout eases and oil climbs further, complicating the inflation outlook; French bonds outperform after the OAT-Bund spread opened at a fresh post-2011 high of 176bps, even as France's flash PMIs collapsed into contraction ahead of tonight's Moody's review. The Bloomberg Dollar Spot Index is up 0.1% and the euro slips 0.2% after the dismal French PMI, while the kiwi outperforms on ANZ calling for three RBNZ hikes. In commodities, WTI rises 1.8% to $101.22 and Brent 1.4% to $114.80; gold is flat near $4,030 and silver slides 1.1%. Bitcoin rises 0.5% to about $81,600. US economic data slate includes the October S&P Global flash PMIs (9:45am), the final October University of Michigan sentiment and inflation expectations (10am) and the Kansas City Fed services survey (11am). The Fed is in its blackout period ahead of next Wednesday's FOMC, so there are no Fed speakers.

Fundamental

Headlines

The Economy

The October Kansas City Fed manufacturing index was reported at 16 versus consensus of 18.

International

September Japanese CPI was unchanged versus projections of up 0.4%.

September UK retail sales fell 0.4% versus estimates of -0.1%.

The October EU flash consumer confidence index was -17.9 versus expectations of -17.0.

The October Japanese flash manufacturing PMI was 53.3 versus forecasts of 54.4; the flash services PMI was 52.0 versus 51.3; the flash composite PMI was 52.3 versus 51.9; the October German flash manufacturing PMI was 54.2 versus 53.5; the flash services PMI was 51.7 versus 52.5; the flash composite PMI was 52.8 versus 53.3; the October EU flash manufacturing PMI was 52.4 versus 52.7; the flash services PMI was 51.7 versus 52.5; the flash composite PMI was 51.9 versus 52.7; the October UK flash manufacturing PMI was 52.8 versus 51.7; the flash services PMI was 53.1 versus 51.8; the flash composite PMI was 53.1 versus 51.8.

Other

Resilient growth, sticky inflation.

https://www.advisorperspectives.com/commentaries/2026/10/22/resilient-growth-sticky-inflation

Geopolitical risks back on the radar.

https://www.capitalspectator.com/oil-signals-geopolitical-risk-is-back-on-the-radar/

Iran

Overnight news.

Iran’s message is stark: If the U.S. and Israel restart their air campaign, Tehran will respond with strikes not only on American bases and warships but on airports, pipelines, and other civilian targets in the neighboring countries of the Persian Gulf.

The US is preparing for a protracted conflict with Iran, even as the Trump administration hopes its bombing campaigns and economic sanctions will force major concessions from the Islamic republic. Mike Waltz, Donald Trump’s ambassador to the UN, acknowledged that a year from now the US could still be mired in a stalemate with Iran, without a deal on Tehran’s nuclear program or a return to prewar shipping through the Strait of Hormuz.

Monetary Policy

Warsh’s quiet Fed.

https://www.realclearmarkets.com/articles/2026/10/22/two_cheers_for_kevin_warshs_quiet_fed_1212913.html

Fiscal Policy

Hidden taxes.

https://politicalcalculations.blogspot.com/2026/10/hidden-taxes.html

War gaming the AI crash.

https://www.zerohedge.com/markets/wargaming-ai-crash-ts-lombard-sees-20-trillion-wipeout-only-mild-recession?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTI5MzgwIiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MjcwMDcxMywiZXhwIjoxNzk1MjkyNzEzLCJhdWQiOiJ6aC1naWZ0In0.ulFgA2XoXHuFgJNFxKGFqeTsOTfSDRDH9PysuQe3pSw

The math of Coreweave’s buildout.

https://www.zerohedge.com/markets/coreweve-got-bills-pay-bernstein-sees-76-billion-funding-hole-imploding-neocloud?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTI5MzgxIiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MjcwMjI5MSwiZXhwIjoxNzk1Mjk0MjkxLCJhdWQiOiJ6aC1naWZ0In0.oaHoB7awpYE1U-xm5u9P5-ci1-Y2_lUK5FaRVW7sgJc

The explosive claim that upended the AI world.

https://www.technologyreview.com/2026/10/19/1147149/we-were-looking-at-it-wrong-the-explosive-claim-thats-upended-the-ai-world/

Is the goal of AI a worthy one?

https://www.nytimes.com/2026/10/18/opinion/ai-bubble-catastrophe-investors-control.html?unlocked_article_code=1.KlE.k5Ef.PILedb2bmZ6p&smid=url-share

Tariffs

The case against protectionism and interventionalism is the same.

https://www.nationalreview.com/2025/08/the-conservative-case-against-protectionism-and-interventionism-is-the-same/

The Financial System

Private credit group says Market fears are divorced from reality.

https://www.bloomberg.com/news/articles/2026-10-22/private-credit-group-says-market-fears-are-divorced-from-reality?srnd=homepage-americas

Summary: Public sentiment about private credit has become “divorced from the market-wide reality,” according to a report from the Alternative Credit Council. The report points to a 17% year-on-year increase in assets under management to $4.1 trillion as a sign of growth, and notes that some credit metrics are continuing to improve. Pressures in the private credit industry remain concentrated rather than indicative of broader market deterioration, with some lenders arguing that stress is particularly concentrated among deals struck during the cheap-money era.

Investing

Bonds reclaim their role.

https://www.advisorperspectives.com/commentaries/2026/10/22/return-income-bonds-reclaim-role

An unusually divided market.

https://www.advisorperspectives.com/commentaries/2026/10/22/rising-index-masks-unusually-divided-market

News on Stocks in Our Portfolios

What I am reading today

Visit Investing for Survival’s website (http://investingforsurvival.com/home) to learn more about our Investment Strategy, Prices Disciplines and Subscriber Service.

The Morning Call---The case for raising rates---or not

2026-10-22T06:09:53.330-07:00

The Morning Call

10/22/26

The Market

Technical

Wednesday in the charts.

https://www.zerohedge.com/markets/kremlin-crushes-crude-sparks-bid-big-tech-bonds-bitcoin?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTI5MjQ1Iiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MjYxMzUyNywiZXhwIjoxNzk1MjA1NTI3LCJhdWQiOiJ6aC1naWZ0In0.RVrYsS2GrwS0JWgriBigjfijUBpSsCEgHpb01zqDSMA

Note: the S&P continued to rally, resetting its 50 DMA to support despite the continuing flow of unfavorable AI/Iran news. That adds credence to my observation yesterday that the bad news is already in the price of stocks. My other comment, not so much, i.e., tech drove much of the yesterday’s rally not the rest of the Market. So, instead of the tech falling behind the rest of the Market, it may be resuming the lead. After only two days of modestly upbeat pin action, this is still speculation on my part. Indeed, the real test of duration comes when the S&P tests its all-time high which it has already unsuccessfully challenged twice. I continue to sit on my hands but with a glimmer of hope.

Wednesday in the technical stats.

https://www.barchart.com/stocks/signals/new-recommendations

Thursday morning setup: US futures are lower as the AI trade discovered that there is no right answer on capex: Meta spent more, Tesla spent less, and the market slammed both (after an initial kneejerk bounce), while a fresh wave of deadly attacks on Saudi Arabia, a US-ordered departure of diplomats from the kingdom and an NYT report that the US and Israel have drawn up plans for renewed strikes on Iran after the midterms sent Brent back above $112; as a result the flight to quality is back on, with 10Y yields sliding 9bps to 5.03% even as oil jumps and French bond yields soar. As of 8:00am ET, S&P futures are 1.0% lower at 7,720.75 while Nasdaq futures are down 1.7% at 29,507.50 and Dow futures are 0.6% lower. Wednesday's session closed near its highs, with the S&P rising 0.6% to 7,757 for a third straight gain and closing within 1% of its record high, as the SpaceX blowout revived the AI trade. In premarket trading, all Mag 7 names are red led by Tesla, which drops 4.4% after cutting its 2026 capex target to about $20 billion from more than $25 billion, while Meta reversed an after-hours gain of as much as 5% to trade down about 1.5% as investors focused on its hedged 2027 spending commentary (as we noted last night, the stock erased most of its gains after the CFO warned "significant investment" will raise serving costs); Lam Research tumbles 8% on a soft forecast, dragging chipmakers including AMD, Broadcom and Intel. The day's driver is oil (again): Brent rose as much as 3.3% to $112.43 and WTI briefly topped $100 after two attacks on an Aramco oil field and an airport in Saudi Arabia's Eastern Province killed at least three people, Aramco told staff to evacuate its Dhahran headquarters, and the IRGC Navy warned US bases could be targeted if Washington keeps "encouraging" ships through the Strait of Hormuz. Treasuries are bid across the curve in a bull steepener as AI doubts and another spike in French yields drive a haven bid; the OAT-Bund spread blew out by as much as 18bps to 177bps, the widest since 2011. The yen and Swiss franc lead G10 FX, with EUR/JPY at the lowest in almost a year, while the Bloomberg dollar index is little changed. Gold is down 1.3% near $4,085 and silver is down more than 3%, refusing to play haven, copper slides with the AI trade, and Bitcoin slipped below $82,000. US economic data slate includes weekly initial jobless claims (8:30am), the September leading index (10am) and the October Kansas City Fed manufacturing index (11am), and Treasury auctions resume with a $26 billion 5-year TIPS new issue (1pm). The Fed is in its blackout period ahead of next Wednesday's decision.

Fundamental

Headlines

The Economy

Weekly initial jobless claims totaled 194,000 versus estimates of 200,000.

https://www.zerohedge.com/markets/jobless-claims-near-60-year-lows-amid-low-hire-low-fire-low-inspire-economy

International

The Q4 UK business optimism index came in at -27 versus expectations of -38; the Q4 industrial trends index was -32 versus -20.

Other

How long can consumers continue to spend?

https://theweek.com/business/economy/how-long-can-us-consumers-continue-their-spending-spree?refid=%7EREFERENCE_ID%7E&utm_medium=email&utm_campaign=afternoon_newsletter_20261020&utm_source=afternoon_newsletter&utm_term=D723AD9C-A5B9-4558-A6C5-198A304A7FF3&lrh=aba02fbf28b85fdd1230048cd31f4e0089b6cd05be4fe96404034c2262d63623

Housing is weak but (so far) its impact on the economy has been muted. (see Counterpoint below)

https://www.capitalspectator.com/housing-is-weak-but-its-impact-on-the-business-cycle-is-muted/

The economy continues to expand, inflation continues to rise; but there are potential warning signs.

https://bonddad.blogspot.com/2026/10/the-inflationary-expansion-is-still.html

Oil slides as Russia is ready to resume Ukraine talks.

https://www.zerohedge.com/geopolitical/russia-willing-resume-trilateral-talks-ukraine-after-productive-witkoff-visit

Iran

Overnight news:

For most of the war, Iran had an invaluable cushion: dozens of oil tankers holding millions of barrels of crude sitting safely in waters in Asia. Tehran steadily sold the oil to China, bringing in billions of much-needed cash. Now that floating storage is gone. By mid-October, the reserves were fully depleted, according to analysts at Kepler, as a U.S. naval blockade prevented Iran from replacing the crude it normally sells to Chinese refineries.

The US ordered some diplomats and their families to leave Saudi Arabia because of the threat from Houthi militants, as the Iran-backed group carried out more strikes from Yemen; four people were killed in two attacks on an Aramco oil field and an airport in Saudi Arabia's Eastern Province.

The US and Israel have drawn up plans for renewed strikes on Iran after the midterm elections, with targets likely to include Iran's energy infrastructure, nuclear facilities and missile and drone arsenals.

Aramco told staff to leave its headquarters in Dhahran and work remotely.

Iran's IRGC threatened US bases in the region if Washington keeps escorting ships through what it calls an “illegal” Hormuz route. BBG

Monetary Policy

The case for raising rates.

https://stayathomemacro.substack.com/p/what-will-it-take-to-be-confident

Counterpoint.

https://quoththeraven.substack.com/p/housing-is-collapsing-wall-street?r=1ng8jx&utm_campaign=post-expanded-share&utm_medium=web

The AI boom is setting the Fed up for a rate see saw.

https://www.bloomberg.com/opinion/articles/2026-10-21/the-ai-boom-is-setting-up-the-fed-for-a-rate-seesaw?utm_source=website&utm_medium=share&utm_campaign=copy

Summary: The artificial-intelligence investment boom is pushing US interest rates up by boosting economic growth and straining the nation's financing capacity, and by lifting household wealth and bolstering consumer spending. The impact of the AI boom on interest rates is likely to be more nuanced in 2027, with less upward pressure from economic growth but more from the pressure on savings. The upward pressure on interest rates will likely reverse in the longer term as the AI investment boom peaks and then declines, causing interest rates to fall as the economy slows and the Fed cuts short-term rates.

Inflation

Inflation can’t solve the national debt problem.

https://www.cato.org/blog/inflation-cant-solve-americas-debt-problem-president-trump

The cost of insurance for hyperscaler debt.

https://econbrowser.com/archives/2026/10/insurance-for-ai-hyperscaler-debt-et-al

Ken Griffin says AI is almost certainly a bubble.

https://www.zerohedge.com/markets/ken-griffin-says-ai-almost-certainly-bubble-corporate-america-opens-its-anthropic-and

AI spending stalling.

https://www.zerohedge.com/ai/1-companies-account-80-openai-and-anthropic-spending-and-it-just-stalled

Music publishers sue Anthropic.

https://www.zerohedge.com/ai/music-publishers-sue-anthropic-copyright-infringement

Investing

Remembering the crash of 1987.

https://www.carsongroup.com/insights/blog/remembering-the-crash-of-1987-2/

Q3 in three charts.

https://chartkidmatt.com/p/q3-in-three-charts

Not an earnings bubble.

https://acrobat.adobe.com/id/urn:aaid:sc:VA6C2:a780f71b-012f-440f-9a3a-1850a24ba24d

US Treasuries: a market in transition.

https://www.advisorperspectives.com/commentaries/2026/10/21/us-treasuries-market-transition

News on Stocks in Our Portfolios

What I am reading today

Visit Investing for Survival’s website (http://investingforsurvival.com/home) to learn more about our Investment Strategy, Prices Disciplines and Subscriber Service.

The Morning Call---Retail traders keep buying

2026-10-21T06:06:17.074-07:00

The Morning Call

10/21/26

The Market

Technical

Tuesday in the charts.

https://www.zerohedge.com/markets/elice-crash-vs-compromise-dash-crude-coreweave-battle-squeezy-tape?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTI5MTA0Iiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MjUyODM0MiwiZXhwIjoxNzk1MTIwMzQyLCJhdWQiOiJ6aC1naWZ0In0.vUrZHBaT4YGgvCUkDXXe011nn9v7F6Etqb1UPOhwAlo

Note: despite some bad fundamental news (AI IPO bomb, poor housing numbers), the S&P was up on the day, pushing and closing above its 50 DMA. The stated reason was another ‘end of the Iran war’ rumor, which though quickly denied held the field for the day. Another possible explanation could be that the aforementioned bad news is already discounted---and when stocks go up on bad news, that is usually a good sign for the Market. Follow through is of the utmost importance; but yesterday’s pin action leaves alive the notion that the Market ex-tech could be setting up for a positive seasonal year end run. Again the operative words are ‘follow through’; so I am not getting jiggy just yet.

Tuesday in the technical stats.

https://www.barchart.com/stocks/signals/new-recommendations

Retail traders keep buying.

https://www.zerohedge.com/markets/retail-investors-keep-buying-despite-bearish-mood?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTI5MTk2Iiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MjU4Njg3OCwiZXhwIjoxNzk1MTc4ODc4LCJhdWQiOiJ6aC1naWZ0In0.jLkiLRfmmTLzoI8Si1a_QAfriU4BlQDVPckb3iGDPLI

Is gold bottoming?

https://talkmarkets.com/article/if-you-own-silver-or-gold-you-need-to-watch-this-signal-closely

Wednesday morning setup: US futures are higher as blowout results from SpaceX and a monster preannouncement from Super Micro gave the battered AI trade a reason to bounce, while Elon Musk's open endorsement of a SpaceX-Tesla merger added to the buzz; but with more attacks on shipping around the Strait of Hormuz, oil is back on the rise and as a result Brent is again above $110 while French 10Y yields hit 5% for the first time since 2002. As of 8:00am ET, S&P futures are 0.3% higher while Nasdaq futures are up 0.6% and Dow futures are up 0.1%. That follows a session in which the S&P rose 0.3% to 7,712 with 403 advancers, the most since April, as the equal-weight index jumped 1.15% while the Nasdaq slipped 0.02% in yet another rotation day out of AI. In premarket trading, the AI complex is back in demand with SpaceX up 9.1% and Super Micro up 12.4%, confirming our post from last night, and Nvidia leads the Mag 7 with a 1.3% gain, while Netflix tumbles 6.2% on a soft Q4 guide and Intuitive Surgical slides 7.8%. The day's driver is AI (again), and this time it's the bulls' turn: SpaceX revenue of $14.6 billion crushed the $12.8 billion consensus and Super Micro guided fiscal Q1 sales to $18.5-19.5 billion vs its own prior $14.5-15.5 billion guide, reviving the AI trade one day after Korea's Elice IPO faceplant and Ken Griffin's warning that investors are "almost certainly" in an AI bubble. Treasuries are slightly cheaper across the curve, led by the front-end and belly, with the 10Y around 5.12% as stocks climb on better AI sentiment and a leg higher in oil adds to the upside pressure on yields ahead of today's $13 billion 20-year reopening; French bonds are the weak link in Europe, with the OAT-Bund spread widening to 158bps on fiscal worries and $110 crude, while gilts outperform even after UK CPI rose to an 11-month high of 3.5%, cementing a November BOE hike. The Bloomberg dollar index is little changed while the Aussie is the best G10 performer, rising 0.5% to 0.7036, the highest since Sept. 28, after hawkish RBA comments. In commodities, WTI rises 1.4% to about $99 and Brent 1.2% to $110, Dutch TTF gas jumps 4%, gold is flat near $4,120 and silver drops 1%. Bitcoin rises 0.8% to about $83,400. US economic data slate is empty after MBA mortgage applications fell 5.3% last week (7am); the Fed is in its external communications blackout ahead of next week's meeting. The Treasury will sell $75 billion of 17-week bills (11:30am) and $13 billion of 20-year bonds (1pm). Earnings from Meta, Tesla, IBM, Texas Instruments and Lam Research come after the close.

Fundamental

Headlines

The Economy

Weekly mortgage applications declined 5.3% while purchase allocations were down 7.3%.

Month to date retail chain store sales were up 9.0% versus +10.4% in the prior week.

September pending homes sales fell 7.3% versus forecasts of -0.5%.

International

The September Japanese trade balance was -Y531.6 billion versus predictions of -Y181.0 billion.

The September UK CPI was up 0.4% versus consensus of +0.3%; core CPI was up 0.2%, in line; PPI was up 1.5% versus +1.6%.

Other

Charts of the week.

https://www.carsongroup.com/wp-content/uploads/2026/10/ChartsoftheWeekOct12-16.pdf

Wall Street expectations for Treasury yields---higher for longer.

https://econbrowser.com/archives/2026/10/wall-street-expectations-for-treasury-yields-higher

Say goodbye to a housing recovery.

https://bonddad.blogspot.com/2026/10/september-new-housing-construction.html

Overnight News

Anthropic could spend $750 billion on additional computing power in the coming years, the WSJ reported, citing a draft IPO prospectus, while billionaire Ken Griffin said investors are "almost certainly" in the midst of an AI bubble.

Nvidia is in talks to invest hundreds of millions of dollars in Australian AI cloud provider Firmus.

Nasdaq futures rose after SpaceX and Super Micro topped forecasts, reigniting the AI trade. Adding to the buzz, Elon Musk said SpaceX and Tesla are studying a potential merger that would be the biggest ever.

Over the past two weeks, HFs aggressively net sold global Info Tech stocks at the fastest pace in the past decade (-3.3 SDs), driven by long-and-short sales. Net allocation to Global AI stocks now sits in the 38th percentile while aggregate long/short ratio is in the 6th percentile vs. the past year.

Persian Gulf oil exports have surpassed prewar levels, as an improvised shipping system under U.S. protection is helping tankers move oil through one of Iran’s fiercest waves of attacks in the Strait of Hormuz.

Benjamin Netanyahu is pushing to resume large-scale strikes against Iran and had instructed his military to plan for a major new offensive earlier this month, moves that risk plunging the region back into full-scale war.

Iran

Overnight news.

https://www.zerohedge.com/geopolitical/two-tankers-fire-oman-irgc-boasts-naval-mine-warfare

Inflation

Rents are re-accelerating.

https://wolfstreet.com/2026/10/19/single-family-multifamily-rents-in-the-us-and-22-large-us-metros-amid-massive-divergence-rents-are-re-accelerating/

Reality sucks.

https://alhambrapartners.com/weekly-market-pulse-reality-bites/?src=news

Billions in Nvidia chips sitting in Amazon warehouse collecting dust.

https://www.zerohedge.com/markets/billions-nvidia-chips-collecting-dust-amazon-warehouses-ais-paperweight-problem-goes?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTI5MTA2Iiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MjUyNTc0NSwiZXhwIjoxNzk1MTE3NzQ1LCJhdWQiOiJ6aC1naWZ0In0.c1cFte4o1g_NRv1g0oIKqmp6XzuMYdOv13wZZ7ytEgc

Datacenter bloodbath spreads down under.

https://www.zerohedge.com/markets/data-center-bloodbath-spreads-down-under-nextdc-implodes-45-mulls-force-majeure-angry?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTI5MTQ5Iiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MjU4NzQ5OSwiZXhwIjoxNzk1MTc5NDk5LCJhdWQiOiJ6aC1naWZ0In0.Aa6ZYOXXbcdFClvl9yxcF38manYL_HQh5ajmrJhVzc0

The Fed can kill the AI boom.

https://www.wsj.com/finance/investing/yes-the-fed-can-kill-the-ai-boom-3c25da2e?st=gUajHH&reflink=desktopwebshare_permalink

AI debt worries spark surge in default insurance trading.

https://www.ft.com/content/6dd31584-064c-4015-bf5d-e5747799ccd5?syn-25a6b1a6=1

Summary. Investors are racing to buy credit default swaps to protect their portfolios in the event the AI boom unravels, sending trading volumes surging for an instrument that shot to prominence during the global financial crisis. More than $9bn worth of CDS linked to bonds issued by Oracle, SpaceX, Alphabet, Amazon, Meta, Broadcom and Nvidia was traded on average each week in September, up from less than $2bn in July, according to Morgan Stanley Research. In a sign of investors’ increasing unease over the borrowing binge, the cost of buying CDS on many AI-linked companies has hit record highs this month. This so-called spread has in recent days climbed not only for companies that investors judge as riskier, such as AI cloud-computing provider CoreWeave, but also for those such as Microsoft that are seen as relatively safe.

Investing

Sometimes, knives just keep falling.

https://quoththeraven.substack.com/p/sometimes-knives-just-keep-falling?r=1ng8jx&utm_campaign=post-expanded-share&utm_medium=web

Everyone hates this bull market.

https://www.bloomberg.com/opinion/articles/2026-10-20/how-can-there-be-a-stock-bubble-in-such-a-hated-bull-market?utm_source=website&utm_medium=share&utm_campaign=copy

Summary: The current US bull market is the most distrusted rally in several decades, with many people skeptical of a rising market and expecting it to end in tears. The market is often compared to the internet craze of the late 1990s, but the mood is entirely different now, with reservations and warnings instead of excitement and optimism. The AI boom is seen as a threat by many people, and its impact on the market is significant, with AI-related companies dominating the leaderboard and accounting for a large portion of the market's value.

News on Stocks in Our Portfolios

What I am reading today

Reflections on the protests in France.

7 reflections on the situation in France - by Arnold Kling

Visit Investing for Survival’s website (http://investingforsurvival.com/home) to learn more about our Investment Strategy, Prices Disciplines and Subscriber Service.

The Morning Call---Another AI faceplant; housing starts plunge

2026-10-20T06:03:05.765-07:00

The Morning Call

10/20/26

The Market

Technical

Monday in the charts.

https://www.zerohedge.com/markets/dead-cat-bounce-nasdaq-jumps-crwv-creeps-higher-bonds-bullion-dumped?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTI4OTY5Iiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MjQ0MTcwOCwiZXhwIjoxNzk1MDMzNzA4LCJhdWQiOiJ6aC1naWZ0In0.vdR-P9I4PYoMTPG-OKtKtqC5GLAtu3e0wF1CPwM_kBE

Note: the S&P tried to trade back above its 50 DMA but failed. Follow through.

Monday in the technical stats.

https://www.barchart.com/stocks/signals/new-recommendations

Bulls unable to cash in on break out opportunity.

https://talkmarkets.com/article/equity-bulls-inability-last-week-to-cash-in-on-breakout-opportunity-likely-to-al

The best time to buy stocks is right now.

https://trendlabs.com/the-best-time-to-buy-stocks-is-right-now/

The latest from Goldman.

https://www.zerohedge.com/markets/squarely-chin-goldmans-pasquariello-says-record-tech-dump-cleared-decks-year-end-rally?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTI4OTQ3Iiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MjQ0Mjg4OCwiZXhwIjoxNzk1MDM0ODg4LCJhdWQiOiJ6aC1naWZ0In0.q8t-ITGE_luigBHj7k5P9r6RkWSof3ZforWd_YUKdQ0

Something big is brewing in oil.

https://www.zerohedge.com/the-market-ear/oil-above-110-volatility-asleep-something-big-brewing?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTI5MDI4Iiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MjQ5NzE0MSwiZXhwIjoxNzk1MDg5MTQxLCJhdWQiOiJ6aC1naWZ0In0.JcGl6bXflhxPeJQwLsc3MrDpR3UzQbL4THNsMUqdk6c

Tuesday morning setup: US futures are lower, led by the Nasdaq, as Monday's AI relief bounce fizzled overnight after South Korean data-center firm Elice cratered more than 30% in its trading debut, reviving doubts about who exactly will earn a return on the AI capex binge, while OpenAI is reportedly rushing to raise about $30 billion ahead of Anthropic's IPO and French stress returned with a vengeance; as a result the OAT-Bund spread widened to a 151bps peak, swiftly approaching the 152bps high from just after the draft budget was presented. As of 8:00am ET, S&P futures are 0.2% lower while Nasdaq futures are down 0.7%; Dow futures are flat, in a repeat of yesterday's divergence when the S&P rose 0.41% and the Nasdaq jumped 1.11% while the Dow slipped 0.07% and almost two-thirds of S&P components fell (see our wrap of Monday's session). In premarket trading, Mag 7 names are mostly lower (AAPL -0.9%, META -0.4%, NVDA -0.4%), while levered AI names like CoreWeave and Nebius give back some of Monday's gains. The day's driver is AI (again): The spectacular collapse of Korean neocloud Elice, which as we flagged last night plunged 30% minutes after IPOing, hit chip-heavy Asian markets hardest with the Kospi tumbling 3.65% and Hynix slumping, and with the Fed in blackout ahead of the Oct. 28 FOMC, tech earnings are the only game in town this week. Treasuries are marginally firmer with the 10Y yield down 2bps at 5.12%, tracking a haven bid in Bunds even as French OATs underperform and Gilts lag after a hawkish UK jobs report. The dollar is modestly weaker, with the DXY in a 101.74-101.98 range and cable rising after UK unemployment unexpectedly fell to 4.7%. Brent holds above $110/bbl near a five-month high and European gas is back near €90/MWh, gold slips toward the bottom of its $4,116-4,147 range and copper hovers around $14,400/t. Bitcoin is choppy around $81-82k. US economic data slate includes ADP weekly employment (8:15am), September housing starts and building permits and the Philly Fed non-manufacturing survey (8:30am) and September pending home sales (10am). There are no Fed speakers as the Fed is in its blackout period ahead of next week's FOMC.

Fundamental

Headlines

The Economy

September housing starts fell 5.2% versus projections of up 1.9%; September building permits were down 0.2% versus -0.7%.

https://www.zerohedge.com/markets/housing-starts-collapse-near-covid-lows-homebuilder-confidence-crashes

The October housing index came in at 29 versus consensus of 32.

International

The August UK unemployment rate was 4.7% versus expectations of 4.9%; August average earnings (3mo/Y) were up 3.7% versus +3.8%.

August EU YoY construction output was up 1.4% versus estimates of down 2.3%; the October economic sentiment index was 18.5 versus 23.6.

September Grman PPI came in at +1.9% versus predictions of +0.8%; the October economic sentiment index was 28.1 versus 30.0.

Other

Latest 2027 nowcast.

https://econbrowser.com/archives/2026/10/nowcasts-and-weo-wsj-forecasts

Which points to stronger growth and the risk of higher inflation.

https://www.capitalspectator.com/gdp-nowcasts-point-to-faster-growth-as-inflation-risks-mount/

Consumer spending---income versus wealth.

https://talkmarkets.com/article/q3-earnings-season-preview-revenue-beats-lag-multi-sector-momentum-holds

Overnight News

Investors are racing to buy credit default swaps to protect their portfolios in the event the AI boom unravels, sending trading volumes surging for an instrument that shot to prominence during the global financial crisis.

Iran

Overnight news.

https://www.zerohedge.com/geopolitical/two-tankers-fire-oman-irgc-boasts-naval-mine-warfare

Houthis continue to escalate attacks on Saudi Arabia.

https://www.zerohedge.com/geopolitical/houthis-expand-saudi-aramco-airport-targets-us-issues-urgent-warnings-12-mideast

Fiscal Policy

The FY2026 budget deficit was $2 trillion---and no one cares.

https://talkmarkets.com/article/the-fy-2026-deficit-was-2-trillion-and-no-one-cares

America’s debt is coming for your wallet.

https://thehill.com/opinion/finance/6154138-national-debt-impact/

Inflation

The long history of under reporting inflation.

https://ritholtz.com/2026/10/underreporting-inflation/

Another AI faceplant.

https://www.zerohedge.com/markets/another-day-another-data-center-faceplant-koreas-biggest-ipo-year-craters-32-debut?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTI5MDEyIiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MjUwMDYyMywiZXhwIjoxNzk1MDkyNjIzLCJhdWQiOiJ6aC1naWZ0In0.3VuuegCMRVgAFNQX8B8MKU_cZiIhqDjIf-fRE472xwc

AI agents disrupting software.

https://www.riskhedge.com/outplacement/ai-agents-are-already-disrupting-software-stocks

Morgan Stanley raises more concerns.

https://www.zerohedge.com/markets/people-power-and-politics-morgan-stanley-maps-three-ways-ais-16-trillion-capex-plan-can?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTI5MDA5Iiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MjQ5ODg1MSwiZXhwIjoxNzk1MDkwODUxLCJhdWQiOiJ6aC1naWZ0In0.bdDFmH396GFHPRV2bK-m2eRbod_IjkIAKL1qTueE7i4

Investing

Q3 earnings preview.

https://talkmarkets.com/article/q3-earnings-season-preview-revenue-beats-lag-multi-sector-momentum-holds

About next year’s earnings.

https://giftarticle.ft.com/giftarticle/actions/redeem/9ebaf0d9-b9e2-4cca-b879-f35020607064

Bubble warnings, but some aren’t convinced.

https://www.bloomberg.com/news/articles/2026-10-18/billionaires-warn-of-a-bubble-yet-howard-marks-is-unconvinced?utm_source=website&utm_medium=share&utm_campaign=copy

Summary: More professional investors are convinced the stock market is flirting with bubble conditions due to the artificial intelligence trade. Despite concerns, the forward P/Es of benchmark indexes like the S&P 500 and Nasdaq 100 have actually declined this year due to expectations of blockbuster earnings growth. Market pros point to symptoms of frothiness, including sky-high debt levels and unsustainable earnings growth expectations, but some aren't convinced a bubble has formed yet.

AI capex and earnings. What happens when the growth slows?

https://talkmarkets.com/article/ai-capex-and-earnings-what-happens-when-growth-slows

FOMOs roller coaster.

FOMO's Rollercoaster Versus FEMO's Steady Climb

Investors have decided that they don’t need energy.

https://trendlabs.com/investors-have-decided-they-dont-need-energy/

The course of Treasury yields.

https://wolfstreet.com/2026/10/17/long-term-treasury-yields-buffeted-by-hot-inflation-and-cracks-in-ai-mania/

Bond market’s big short gets wake up call.

https://www.bloomberg.com/news/articles/2026-10-18/bond-market-s-big-short-bet-gets-wakeup-call-as-ai-trade-wobbles?accessToken=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJzb3VyY2UiOiJTdWJzY3JpYmVyR2lmdGVkQXJ0aWNsZSIsImlhdCI6MTc5MjQzMTkyMSwiZXhwIjoxNzkzMDM2NzIxLCJhcnRpY2xlSWQiOiJUTVpTNDNLSzNOWTgwMCIsImJjb25uZWN0SWQiOiJCMzFCNTRDQTI3MTE0NjAxOUQxMURCN0IxRUM4NTE2MyJ9.Pue5h1_5_vqGWY3aKrs21zcPAZHWxvwBuKYhVKWRK5E

News on Stocks in Our Portfolios

What I am reading today

Visit Investing for Survival’s website (http://investingforsurvival.com/home) to learn more about our Investment Strategy, Prices Disciplines and Subscriber Service.

Monday Morning Chartology

2026-10-19T06:17:36.932-07:00

The Morning Call

10/19/26

The Market

Technical

I don’t need to tell you that the S&P had a lousy week. It (1) fail to break above its all-time high, (2) broke below a very short term uptrend, (3) reset its 50 DMA to resistance and (4) appears ready to challenge its 100 DMA. Further (1) there remains a minor gap up open at the ~7684 level, (2) breadth remains horrible (3) investors have started to question the viability of some aspects of the AI trade. On the other hand, (1) earnings and the economy remain quite strong, (2) while tech has been whacked, other sectors are starting to perform better and (3) seasonally, this has historically been a Market positive time of the year. Bottom line, I think it too soon to get beared up although I think it would pay to examine one’s tech holdings carefully if you are overweight this sector. On the other hand, I think prudence is the watchword on any purchases. Fiscal policy, monetary policy, war, oil, tariffs and the upcoming election make me very nervous.

Nine charts on the effect of the mid-term elections.

https://www.carsongroup.com/insights/blog/nine-charts-on-midterm-elections/

The bond market continued its rally last week. That suggests to me that the bonds boys are starting to worry about the credit health of the AI sector (retreat to safety). On the other hand, the longer term pin action remains pretty dismal. TLT continues to trade down across all timeframes and is below all three DMAs. So, I need to see some break in longer term downward momentum before attributing the recent price action to anything other than noise.

Despite all the excitement in the stock and bond markets last week, GLD offered no reaction. It remains below all three DMAs and has now reset its short term uptrend to a trading range. There are a number of conflicting forces playing on the price of gold; and until it can break the current string of lower highs and lower lows, I am on the sideline.

While the dollar performed poorly last week, it remains on a pretty steep upward trajectory---likely reflecting the US as the cleanest shirt in a dirty laundry. While it has made a nice series of higher lows and higher highs, it remains in about the middle of a wide short term trading range,

Friday in the charts.

https://www.zerohedge.com/markets/pain-trade-was-long-ai-short-bonds-how-neocloud-burst-turned-hottest-inflation-week-year?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTI4NjgwIiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MjI0NDg5NiwiZXhwIjoxNzk0ODM2ODk2LCJhdWQiOiJ6aC1naWZ0In0.eNwd_vpwauC_L8Ws3DbcJBz5mYRrLnL1IPJFk91YFAI

Friday 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

Everyone is dumping AI.

https://www.zerohedge.com/the-market-ear/everyone-dumping-ai-and-anti-ai-trade-exploding?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTI4NzE0Iiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MjE3MzgyNywiZXhwIjoxNzk0NzY1ODI3LCJhdWQiOiJ6aC1naWZ0In0.kBfViTQuGnV7xxZXNYLlYEEoBJXsqfaJoY1jg9vLXm0

Monday morning setup: US futures are higher - but well off session highs hit before the European open - as dip buyers storm back into chipmakers after the Nasdaq's worst week since the April 2025 tariff turmoil, while oil slides after President Trump waived Russian sanctions to seal a diesel deal and Energy Secretary Chris Wright said Persian Gulf flows have recovered to about 80% of pre-conflict levels; as a result Nasdaq futures are up more than 1% and the Philly semis index is set to snap its longest losing streak in 18 years, even as Europe slides on a weekend of riots in France. As of 8:00am ET, S&P futures were 0.4% higher at 7,741.75 while Nasdaq futures rose 1.1% to 29,705.50 and Dow futures are down 0.2%. That follows a Friday session in which the S&P fell 1.09% to 7,659 (sliding from flat just before the European close), the Nasdaq 100 sank 2.5% and the SOX tumbled 3.8% for an eighth straight loss, capping a week in which the SOX lost 11.4%, the Nasdaq 4.5% and CoreWeave a quarter of its value. In premarket trading, semis lead with Intel up 4.2% on a JPMorgan upgrade and Nvidia up 1.4%, neoclouds and optical names are bid (CoreWeave +6% after a Goldman upgrade from Neutral ($139PT) to Buy ($106PT?!) week in which it became "the market's beta barometer"), Disc Medicine soars 35% ahead of Phase 3 data and Cleveland-Cliffs jumps 13% after an earnings beat. The day's driver is Washington's Russia pivot: Trump signed an executive order waiving Graham Act sanctions, restrictions and duties on Russian energy revenues (Russia will initially supply over 300k tonnes of diesel), Putin proposed a summit with Trump and Xi to negotiate an end to the war, and Zelenskyy accused Trump of pressuring Kyiv to surrender, which has sent Brent down 1.2% to $108.59. Treasuries dip slightly with shorter-dated yields edging higher in a bear flattener as traders keep a muted bid for an October hike, leaving the 10Y at 5.08% after last week's 16.5bp plunge (its biggest weekly drop since August 2025), while French bonds tumble after the riots, with the OAT-Bund spread widening to 146bps. The dollar index is up 0.1% to 101.93, with the euro the G10 laggard below $1.12 and the Aussie leading after strong Chinese data. In commodities, WTI is little changed near $101.30, European gas (Dutch TTF) hit its highest since 2022, gold is up 0.1% at $4,169 and silver adds 0.9% to $57.49. Bitcoin rises 2.5% to about $82,850 after briefly topping $83,000. US economic data slate includes the October NAHB housing market index (10am). The Fed is in its external communications blackout through Oct. 29, so there are no Fed speakers. The Treasury sells $95 billion of 13-week and $82 billion of 26-week bills at 11:30am.

Fundamental

Headlines

The Economy

Last week was another slow one for the volume of US stats. In total, they were balanced. However, they did reflect a growing consensus among economists/investors---an expanding economy (three positive primary indicators, no negatives) and hotter inflation (two negative price measures, no positives). Overseas, the data was more plentiful and also balanced with two positive, two neutral and two negative inflation points.

These reports directionally support both my forecasts for growth (muddle through) and inflation (good as it is going to get but not any worse). But they hint at growth being stronger and inflation perhaps being higher than I thought. Of course, this is only a single week worth of data. So it is too soon to alter my forecast. But as I noted above, it is a theme that gained momentum last week.

The economic issues that I continue to fret over are:

(1) Fed policy. If inflationary pressures are accelerating, how much weight should the Fed give to the fact that some of that pressure is the result of supply shortages [primarily oil] versus demand pull?

On its face, it suggests a Fed reticent to raise rates because the problem [inflation] will cure itself as supply shortages are reconciled. But, as I pointed out last week, there are a number of problems with that notion.

[a] the conflicts in Ukraine and Iran are destroying infrastructure [production facilities, refining capacity, pipelines] and depleting global oil reserves to such an extent that supply shortages are not going to be alleviated when, as and if those conflicts end. Indeed, depending on the ultimate disposition of tanker transit out of the Persian Gulf and the Red Sea, a new permanent cost [transit fees] could be added to the price of oil.

[b] the longer inflation remains elevated, the more likely the mind set of consumers and businesses will view it as more permanent, increasing the need for Fed action.

[c] not all inflationary pressures are the result of supply shortages. The egregious national deficit and the enormous AI buildout spend are juicing economic growth with the former clearly an unnecessary accelerant. Plus, Trump’s tariffs flow directly into the price of goods.

https://cafehayek.com/2026/10/inescapable-tariffs-raise-prices.html

[d] the risks from poor monetary policy and the level of interest rates are not confined to the US. Europe and Japan are also having their issues which could potentially compound our own.

In short, I think that the Fed has a very narrow window in which to tighten policy enough to curb inflationary forces without stymying economic growth. Indeed, it may already be too late. Even if it is not, the Fed’s historical record of instituting the wrong policy at virtually every critical junction is spotless. So, it would be remiss not to factor in the likelihood of another policy mistake. And again if history repeats itself, the Fed will err on the side of policy weakness. Meaning economic growth with higher inflation in the short term; followed by an overtightening that leads to lower inflation but lower growth {recession?}

https://www.axios.com/2026/10/15/fed-inflation-ppi-warsh

The case for another rate hike is growing.

https://www.capitalspectator.com/the-case-for-another-rate-hike-is-growing-stronger/

Lance Roberts disagrees.

https://talkmarkets.com/article/bad-inflation-cures-itself-good-inflation-doesnt

(2) the health of the AI buildout. Last week, we potentially got the first signs that all the problems I have been concerned about---[a] the accounting of the buildout---enormous off balance sheet financing, [b] as well as the sheer magnitude of the financings [c] the level of future revenue needed to provide a sufficient return on investment and [d] the lack of any evidence showing increased productivity of the AI providers---were manifesting themselves: [a] Goldman and Morgan’s unwillingness to underwrite the Volta offering, [b]the CoreWeave revenue short fall, [c] the OpenAI revenue shortfall and [d] hints that investors will lower Anthropic’s valuation in its upcoming offering. It is too soon to know the impact on AI valuations, but it is clearly a warning.

https://www.gartner.com/en/newsroom/press-releases/2026-10-14-gartner-says-over-us-dollars-three-and-a-half-trillion-of-artificial-intelligence-infrastructure-spending-could-be-exposed-to-impairment-by-the-end-of-2030

I want to emphasize two things.

[a] if the boom in the railroads, the electricity infrastructure, radio, and the internet are any guide, then this technology will almost surely prove its economic value but only after initial excessive overbuilding and the failure of multiple companies. Who those winners are, I haven’t a clue and likely neither does anyone else. As I have noted before, I continue to hold positions in both the chip manufacturers and the hyperscalers---although their performances has been such that I have Sold Half of virtually every stock. That said, I have my finger on the trigger for several holdings. And should the negative case appear the more likely outcome, I will take some more money off the table. Friday, I sold my entire position in Oracle.

[b] I continue to be focused on the economics of the AI buildout not the doomsday ‘we will all be dead in ten years’ variety. I made clear …. that I am quite cynical about the motivations of the doomsayers whether they are from the industry (who want the government to impose regulations that would squash potential competition) or government (who never lets a crisis go to waste in order to impose further on our collective liberties)

My bottom line remains unchanged: my doubts on the trajectory of the economy/inflation/AI buildout are increasing. Enough so that I have taken steps toward a (1) stronger growth, higher inflation, (2) AI consolidation scenario by nibbling at both a dividend growth and a TIPS ETF as well as reducing my exposure to the AI tech sector.

https://doubleline.com/wp-content/uploads/DoubleLine_Diversifying-Equity-Exposure_October-2026.pdf

Treasuries rally against turbulence in AI.

https://giftarticle.ft.com/giftarticle/actions/redeem/9be4ddc8-7d9d-4d0b-ac46-733e7043c93a

From late Friday:

September industrial production rose 0.7% versus consensus of +0.4%.

https://bonddad.blogspot.com/2026/10/insutrial-production-primarily-powered.html

International

Q3 YoY Chinese GDP grew 4.5% versus forecasts of +4.4%; September YoY industrial production was up 5.5% versus +5.4%; September YoY retail sales were up 1.1% versus +0.5%; the September unemployment rate was 5.2% versus 5.3%.

Other

Why rates keep rising.

https://www.apollo.com/wealth/insights-news/insights/daily-spark/why-rates-keep-rising-expected-ai-returns-exceed-the-fed-funds-rate

Inflation

The cost of living and wages.

https://econbrowser.com/archives/2026/10/the-cost-of-living-and-wages

The incomplete story about data center electricity use.

https://www.realclearmarkets.com/articles/2026/10/16/americans_are_being_fed_an_incomplete_story_about_data_centers_1211672.html

The potential AI air pocket.

https://www.zerohedge.com/ai/we-could-hit-ai-air-pocket-deutsche-prices-superintelligence-900-billion-training-run

Memory meltdown.

https://www.zerohedge.com/the-market-ear/memory-meltdown-unstoppable-uninvestable?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTI4NzExIiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MjE3NTMwOSwiZXhwIjoxNzk0NzY3MzA5LCJhdWQiOiJ6aC1naWZ0In0.edeiUVpQlJIxJuzasIb0YIMFc-jXMuOxlYlQskA1UBc

The AI unwind has entered phase two.

https://www.zerohedge.com/markets/it-was-gross-goldman-says-ai-unwind-has-entered-phase-two-106-billion-debt-bill-comes-due?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTI4NjkyIiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MjE3NjE4OCwiZXhwIjoxNzk0NzY4MTg4LCJhdWQiOiJ6aC1naWZ0In0.-XdQNyLpawNxR7DlVDf3zFLU0CClJ1zSMwUJKa_zQ3s

Neocloud nightmare.

https://www.zerohedge.com/markets/neocloud-nightmare-spreads-nscale-microsoft-walks-uk-deal-ipo-investors-slash-30-billion?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTI4ODcxIiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MjQxNDUwOCwiZXhwIjoxNzk1MDA2NTA4LCJhdWQiOiJ6aC1naWZ0In0.Fi7csepD0micScQLt2-MlhxKgGoqutowCGFKoawXHs4

Goldman upgrades CoreWeave.

https://www.zerohedge.com/markets/wall-st-goes-defense-crwv-rallies-after-goldman-says-buy-jpm-upgrades-intc?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTI4OTMyIiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MjQxNDk0MiwiZXhwIjoxNzk1MDA2OTQyLCJhdWQiOiJ6aC1naWZ0In0.3pRXYluRAy5t7QkF3rFkhhMeT0qJyTrTsrY6vH6NKWA

Investing

Boring is starting to look good.

https://quoththeraven.substack.com/p/going-old-school-with-boring-blue?r=1ng8jx&utm_campaign=post-expanded-share&utm_medium=web

Have rates tipped the scales toward value investing?

https://www.advisorperspectives.com/commentaries/2026/10/16/rate-hikes-tipped-scales-value-equities

Why bad news for the bond market may be good news for investors.

https://www.nytimes.com/2026/10/16/business/bonds-investors-interest-rates.html?unlocked_article_code=1.JFE.YaFq.8ygwTcEnjyRO&smid=url-share

The latest from BofA.

https://www.zerohedge.com/markets/hartnett-sell-signal-over-now-watch-chip-prices?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTI4ODE4Iiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MjM2MDEyMywiZXhwIjoxNzk0OTUyMTIzLCJhdWQiOiJ6aC1naWZ0In0.iQU_W1NgD0Kjg9YA-QUIVPEavG0Sv0hlRByv2XpFgo0

News (but not a Buy recommendation) on Stocks in Our Portfolios

Hershey.

https://www.zerohedge.com/markets/cocoa-grindings-crush-estimates-chocolate-stocks-rise-hershey-buy

What I am reading today

Visit Investing for Survival’s website (http://investingforsurvival.com/home) to learn more about our Investment Strategy, Prices Disciplines and Subscriber Service.

The Morning Call---A fourth crack

2026-10-16T06:09:10.902-07:00

The Morning Call

10/16/26

The Market

Technical

Thursday in the charts.

https://www.zerohedge.com/markets/ai-jesus-saves-world-again-market-breaks-bond-yields-tumble-oil-spikes?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTI4NTg5Iiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MjA5NjE3OSwiZXhwIjoxNzk0Njg4MTc5LCJhdWQiOiJ6aC1naWZ0In0.z58w9gdEw4t2xXibEV8YER9T0NLz_YWd7r_vITGW-LQ

Note: the S&P bounced off its 50 DMA---clearly good news. But its advance was much less dramatic than the DJIA, keeping alive the notion that the rest of the Market is starting to catch up with the Mag 7. I nibbled at NOBL (dividend aristocrats) ETF and a TIPS ETF on the thought that (1) the aforementioned catch up would progress and (2) the term premium was at a level too attractive to pass up.

Thursday in the technical stats.

https://www.barchart.com/stocks/signals/new-recommendations

AI unwinds.

https://www.zerohedge.com/markets/ai-unwinds-hedge-funds-just-dumped-ai-stocks-2nd-fastest-pace-year-net-leverage-slides-6th?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTI4NTgwIiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MjA4OTAzOCwiZXhwIjoxNzk0NjgxMDM4LCJhdWQiOiJ6aC1naWZ0In0.QH5V5X1aKmG_vPm9T_ZnLBze85J_NXHcyRADRthbdw4

Five ominous charts.

https://talkmarkets.com/article/crash-alert-five-ominous-charts

On the other hand---the latest from Citadel.

https://www.zerohedge.com/markets/brace-much-more-meaningful-test-fundamental-backdrop-citadel-securities-chief-equity?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTI4NTQ5Iiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MjA5NTAwOSwiZXhwIjoxNzk0Njg3MDA5LCJhdWQiOiJ6aC1naWZ0In0.SypVW16XFqW7UJesP3u25-I51es0oKrpnsfvEMcv1K0

Friday morning setup. US futures are higher, and small caps are leading, as the crowded-trade unwind that hammered chips, momentum and AI baskets all week takes a breather: Fed Chair Kevin Warsh said nothing about rates at the IMF gathering in Bangkok overnight (traders took the silence as a dovish gift, cutting October hike odds to 14% from 26%), Tesla jumped 5% after Musk unveiled his "flying" Roadster, and oil slipped after Trump said Iran had asked for a halt to US attacks but then it rebounded when the market realized Trump is just lying; as a result haven demand faded and the global bond rally stalled, with 10Y yields rising 6bps to 5.12%. As of 8:00am ET, S&P futures are 0.1% higher at 7,800, Nasdaq futures are down -0.2% and Dow futures are -0.2%; Russell 2000 contracts are up 0.5%. Yesterday the S&P rose 0.3% and closed within 1% of its record high after Jensen Huang rode to CoreWeave's rescue, even as the SOX fell for a 7th straight day and the Nasdaq barely eked out a gain. Premarket, all Mag 7 names except Amazon are higher led by Tesla, while CoreWeave (-3.9%), Strategy (-2.9%) and Netflix (-2.5%) lag and the AI baskets (semis and memory) remain in the red per JPM. The day's driver is Warsh (or rather what he didn't say): with the blackout starting Saturday, the Fed chair declined to push back on rate expectations and instead talked up a "massive investment surge" from AI. In rates, Treasuries slide with a mild bear steepening (2s flat, 10s +4bps, 30s +3bps per JPM) as the rebound in global stocks clips the haven bid; bunds and gilts are also lower by about 15 ticks with UK banks in focus after reports Chancellor Healey will raise their taxes. In FX, the Bloomberg Dollar Spot Index drops 0.4%, down a second day, with the kiwi and Aussie leading G10 and the euro set to end a five-week losing run. In commodities, WTI is down 1% near $97 and Brent trades around $105 but is still headed for a second weekly gain; gold is up 0.3% at $4,184, silver gains 0.8% and copper rises 1% in London. Crypto is mixed: Bitcoin is little changed around $82,000 while Ether bounces. US economic data slate includes September import/export prices (8:30am), industrial production and capacity utilization (9:15am), the federal budget balance (2pm) and August TIC flows (4pm); Fed speaker slate includes Goolsbee on Bloomberg TV at 6pm, the last word before the blackout. There are no coupon auctions, but Treasury's primary dealer questionnaire (noon ET) ahead of the Nov. 4 refunding is worth watching.

Fundamental

Headlines

The Economy

International

The August EU trade balance was -E16.1 billion versus estimates of +E14.7 billion; September CPI was +0.6%, in line.

Other

Retail sales are another plus for the economy.

https://bonddad.blogspot.com/2026/10/retail-sales-continue-this-years.html

Monetary Policy

With everything else going on yesterday, I failed to mention the release of the September FOMC minutes.

https://assets.realclear.com/files/2026/10/2947_fed_watcher_-_oct_14.pdf

Fiscal Policy

American free enterprise is under attack.

https://www.cato.org/restoring-free-enterprise/american-free-enterprise-under-attack

What the Iran war has cost America---so far.

https://www.zerohedge.com/political/iran-war-has-cost-nearly-2000-us-household-moodys-top-economist

Nvidia will blink first.

https://quoththeraven.substack.com/p/jensen-will-blink-first?r=1ng8jx&utm_campaign=post-expanded-share&utm_medium=web

A fourth crack.

https://www.zerohedge.com/markets/aftershock-anthropic-ipo-investors-mark-valuation-down-15-trillion-growth-slowdown-sinks?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTI4NjIwIiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MjE1NTcxNSwiZXhwIjoxNzk0NzQ3NzE1LCJhdWQiOiJ6aC1naWZ0In0.89JNxu0zcNRZxIMpQYrkEXO_OPYSPtbjmz2IS5DGsG8

Investing

Outlook for October S&P dividends.

https://politicalcalculations.blogspot.com/2026/10/the-outlook-for-s-500-dividends-in.html

When do fundamentals matter?

https://behaviouralinvestment.com/2026/10/13/when-do-fundamentals-matter/

Opportunities in bonds?

https://www.advisorperspectives.com/commentaries/2026/10/15/yields-soaring-elevating-investor-opportunities

Inflation concerns push yields further above fair value.

https://www.capitalspectator.com/inflation-concerns-push-10-year-yield-further-above-fair-value/

Bitcoin will become less volatile.

https://www.zerohedge.com/crypto/bitcoin-will-become-less-volatile-and-larger-gold-bitcoin-standard-author

News on Stocks in Our Portfolios

What I am reading today

Non state alliances are reshaping the global order.

https://www.nakedcapitalism.com/2026/10/how-non-state-alliances-are-reshaping-the-global-order.html

Visit Investing for Survival’s website (http://investingforsurvival.com/home) to learn more about our Investment Strategy, Prices Disciplines and Subscriber Service.

The Morning Call---Cracks in the AI story.

2026-10-15T06:17:07.777-07:00

The Morning Call

10/15/26

The Market

Technical

Wednesday in the charts.

https://www.zerohedge.com/markets/hawks-circle-soaring-cpi-lifts-dollar-hammers-everything-else?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTI4NDIwIiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MjAwOTUxMSwiZXhwIjoxNzk0NjAxNTExLCJhdWQiOiJ6aC1naWZ0In0.PhP-JYllp8vkBvGWSs1Per7tcvqC-2HpDTVUy9rR0f0

Note: for a second time in a row, the S&P failed to successfully challenge its former high. It is now sitting on its 50 DMA (i.e., support). Let’s see how it handles that. That said, the rest of the Market held its own. Our portfolios were up on the day, as everything else offset the decline in the AI related stocks. So this may not be a sign that the Market is headed lower---just the big tech names. It is too early to tell, but I am planning at strategy based on that assumption.

Wednesday in the technical stats.

https://www.barchart.com/stocks/signals/new-recommendations

King dollar is crushing everything.

https://www.zerohedge.com/the-market-ear/king-dollar-crushing-everything?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTI4NDE1Iiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MjAwNzQyMSwiZXhwIjoxNzk0NTk5NDIxLCJhdWQiOiJ6aC1naWZ0In0.RtEWXB5mwBWZmbNSZabv8B81w2Cnkp-wVeL78x4Gvy8

Thursday morning setup: US futures are lower as the AI unwind goes global - Korea's Kospi crashed into a bear market and tripped circuit breakers, CoreWeave bonds sank deeper into distress and Anthropic's still-blistering but slowing growth failed to impress - while yesterday's hot CPI scare has morphed into a growth scare; as a result Treasuries are ripping higher with 10Y yields tumbling 10bps to 5.08%, the lowest since Sept. 23. As of 6:20am ET, S&P futures are 0.3% lower at 7,749 while Nasdaq futures slide 1.1% to 29,857 and Dow futures are up 0.2%; small caps are the odd man out with Russell 2000 futures up 0.3%. Yesterday the S&P 500 fell 1.1% to its worst day since July, the Nasdaq 100 lost 2% and the SOX dropped for a sixth straight session. Premarket, Mag-7 and AI baskets are all lower with Apple the only Mag 7 name in the green; chipmakers, memory, neoclouds and AI infrastructure names are all sliding, with CoreWeave down another 6-7% after imploding 15% yesterday as its bonds traded at distressed levels. The day's driver is AI financing (again): Anthropic's $16.8 billion Q3 revenue implies slowing growth, and a Gartner report that $3,5 trillion of AI infrtastructure spending could be exposed to impairment by 2030 is making the rounds. Bonds rally across the curve in a bull flattener with yields down 7-11bps, as the AI selloff pushes investors into havens and odds of an October Fed hike slide back to around 30% from a post-CPI intraday peak of 58%; bunds and gilts also rally about 10bps, helped by the pullback in energy. The dollar is lower, with the Bloomberg Dollar Spot Index down 0.3%-0.4% and the Swiss franc leading G-10 gains while the Aussie slumps after a weak jobs report. In commodities, Brent drops almost 2% to $104 on the risk-off tone and talk of the US easing shadow fleet sanctions, gold jumps 1.3% to $4,158 and silver is up 2.1%, while copper slides. Bitcoin is down 0.6% near $81,200. US economic data slate includes September retail sales, PPI, October Empire manufacturing and Philly Fed, and weekly jobless claims (all 8:30am) and August business inventories (10am). Fed speaker slate includes Goolsbee (10am), Hammack (4:30pm) and Chair Warsh, who has a fireside chat with the IMF's Georgieva in Bangkok at 11:30pm ET before the blackout. Treasury sells $110 billion of 4-week and $105 billion of 8-week bills at 11:30am.

Fundamental

Headlines

The Economy

Weekly jobless claims totaled 199,000 versus projections of 200,000.

September CPI was up 0.6%, in line; the core CPI was up 0.3% versus +0.2%.

https://www.zerohedge.com/markets/rate-hike-odds-bond-yields-explode-higher-after-hotter-expected-cpi

More analysis.

https://bonddad.blogspot.com/2026/10/september-cpi-shows-widespread-movement.html

September PPI was up 1.3% versus consensus of +0.5%; core PPI was up 0.7% versus +0.3%.

https://www.zerohedge.com/markets/inflation-broadening-out-producer-prices-soar-most-4-years

September retail sales rose 0.8% versus estimates of +0.3%; ex autos they were up 0.9% versus +0.5%.

The October New Your Fed manufacturing index came in at 25.5 versus expectations of 10.3; the October Philadelphia Fed manufacturing index was 20.9 versus 28.4.

International

August Japanese machinery orders were up 5.2% versus forecasts of +3.0; final August industrial production fell 2.4% versus -1.7%.

August UK GDP grew 0.1% versus predictions of -0.1%; August industrial production was up 0.8% versus -0.1%; the August trade balance was -L920 million versus -L3.1 billion; August YoY construction output declined 1.8% versus -1.6%.

August EU industrial production declined 0.5% versus consensus of 0.0%.

Other

Home buying slump hits six weeks.

https://www.bloomberg.com/news/articles/2026-10-14/us-mortgage-rates-hit-7-5-extending-slump-in-purchase-activity?accessToken=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJzb3VyY2UiOiJTdWJzY3JpYmVyR2lmdGVkQXJ0aWNsZSIsImlhdCI6MTc5MTk5MTU3NiwiZXhwIjoxNzkyNTk2Mzc2LCJhcnRpY2xlSWQiOiJUTVVZOE9UOTZPU0kwMCIsImJjb25uZWN0SWQiOiJCMzFCNTRDQTI3MTE0NjAxOUQxMURCN0IxRUM4NTE2MyJ9.-P02mqZ3R2OAyzrobYTnnZrZzCMFOTrcTZayY_mHftQ

Fiscal Policy

There is no winning the AI race without global workers.

https://www.realclearmarkets.com/articles/2026/10/14/theres_no_ai_victory_for_the_us_without_the_worlds_workers_1210968.html

A second crack?

https://quoththeraven.substack.com/p/coreweave-dont-say-i-didnt-warn-you?r=1ng8jx&utm_campaign=post-expanded-share&utm_medium=web

A third crack?

https://www.zerohedge.com/markets/anthropic-says-q3-revenue-jumped-168-billion-and-turned-adjusted-profitable-run-rate-math?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTI4NDcxIiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MjA2ODk0OCwiZXhwIjoxNzk0NjYwOTQ4LCJhdWQiOiJ6aC1naWZ0In0.-X7zW5yd336EA2nA2qZfWsxJ4i9v5J-KMrFZPA8RqLE

Investment bubbles are a feature of capitalism.

https://www.zerohedge.com/markets/dowd-investment-bubbles-are-feature-capitalism-not-bug

Investing

Proceed with caution.

Continue To Proceed With Caution

Dispelling two bull market worries.

https://www.marketwatch.com/story/investors-worry-the-bull-market-is-getting-old-but-history-shows-it-can-continue-to-age-gracefully-0402e69c?st=yypMDV

That pesky ‘term premium’.

https://www.nytimes.com/2026/10/13/business/term-premium-bond-yields.html

Investors locking in higher yields.

https://giftarticle.ft.com/giftarticle/actions/redeem/7afe1319-c9c0-40e5-83f2-4d08b1304b39

How much money is enough?

https://open.substack.com/pub/spilledcoffee/p/how-much-is-enough?utm_campaign=post-expanded-share&utm_medium=web

The nightmare scenario.

https://www.zerohedge.com/markets/nightmare-scenario-move-creator-bassman-warns-6-20y-could-unleash-convexity-vortex?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTI4MzEyIiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MTk5MDMwMSwiZXhwIjoxNzk0NTgyMzAxLCJhdWQiOiJ6aC1naWZ0In0.8KAqXXefrBMtuI5bB3blDV0Vi-Ulyt4IkNxKkAnTRsU

Note: Cheapest to Deliver (CTD) is the specific bond from a basket of eligible government or Treasury securities that a short position holder (the seller) chooses to deliver when settling a bond futures contract, because it costs them the least amount of money to acquire and deliver.

AI rains on the tech parade.

https://talkmarkets.com/article/openai-rains-on-the-tech-parade

Where the gold market is headed.

https://talkmarkets.com/article/5-charts-revealing-where-the-gold-market-is-headed-next

News on Stocks in Our Portfolios

BlackRock

https://talkmarkets.com/article/blackrock-stock-jumps-3-after-earnings-beat-as-assets-climb-to-155-trillion

What I am reading today

The social security COLA for 2027.

https://wolfstreet.com/2026/10/14/the-social-security-cola-for-2027-will-be-largest-since-2023/

Visit Investing for Survival’s website (http://investingforsurvival.com/home) to learn more about our Investment Strategy, Prices Disciplines and Subscriber Service.

The Morning Call---Paul Tudor Jones' 2027 outlook

2026-10-14T06:09:22.327-07:00

The Morning Call

10/14/26

The Market

Technical

Tuesday in the charts.

https://www.zerohedge.com/markets/tech-wrecked-again-ai-credit-cracks-widen-bonds-bullion-black-gold-chop?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTI4MjcxIiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MTkyMzkwNiwiZXhwIjoxNzk0NTE1OTA2LCJhdWQiOiJ6aC1naWZ0In0.EKQPtfB8z-ELlgCBzUcJTLLKj36rh8qYAWbFGFHQ4cY

Tuesday in the technical stats.

https://www.barchart.com/stocks/signals/new-recommendations

Sprinting to stand still.

https://www.zerohedge.com/markets/sprinting-stand-still-goldmans-molavi-spots-two-three-capex-peak-signals-already-flashing?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTI4MTY5Iiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MTg5ODEyNCwiZXhwIjoxNzk0NDkwMTI0LCJhdWQiOiJ6aC1naWZ0In0.jygeBM3bMX_tPY4HHsNPFcre1bzHmAEWvyJfi6gQTFo

Positioning is changing.

https://www.zerohedge.com/the-market-ear/tech-bonds-next-big-positioning-shock-taking-shape?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTI4Mjk5Iiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MTkyNDk3OSwiZXhwIjoxNzk0NTE2OTc5LCJhdWQiOiJ6aC1naWZ0In0.cuzqtUmMfSGD2UpPPDnz24z242Q4gcije486Ep4wDmg

Memory meltdown.

https://www.zerohedge.com/markets/memory-meltdown-goldman-finds-fast-money-piled-nasdaq-top-and-asset-managers-havent-blinked?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTI4MzAxIiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MTk4Mjg3NCwiZXhwIjoxNzk0NTc0ODc0LCJhdWQiOiJ6aC1naWZ0In0.ZoKb2z3kXKp2gRSSymBm2tg4yVZgwW1vqkXkWdUC1-k

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

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.

https://www.realclearmarkets.com/articles/2026/10/13/were_burdening_the_children_is_an_abjectly_keynesian_fatuity_1210908.html

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.

https://www.zerohedge.com/ai/when-goldman-jpm-wont-hold-it-should-you-11-ai-chip-loan-banks-refused-underwrite?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTI4MjEzIiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MTkyMDgxNywiZXhwIjoxNzk0NTEyODE3LCJhdWQiOiJ6aC1naWZ0In0.vYlKzg3GwpoBcsWK4G4mBD0QPDLm-czFT9DAhlBVxZs

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.

https://www.zerohedge.com/markets/ill-be-short-whole-year-paul-tudor-jones-warns-looming-dot-com-style-equity-supply-tsnuami

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.

https://www.zerohedge.com/markets/feds-unpaid-intern-ms-wilson-says-tighter-financial-conditions-are-already-doing-warshs-job?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTI4MjU5Iiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MTkyMjc0OCwiZXhwIjoxNzk0NTE0NzQ4LCJhdWQiOiJ6aC1naWZ0In0.eSeAaInacXpDKTYleDqvU7x5FRTfS5LutZ-H-Tu2iS8

News on Stocks in Our Portfolios

What I am reading today

New era of investment for the defense industry.

https://www.realclearmarkets.com/articles/2026/10/13/a_new_era_of_investment_for_the_defense_sector_1211123.html

Visit Investing for Survival’s website (http://investingforsurvival.com/home) to learn more about our Investment Strategy, Prices Disciplines and Subscriber Service.

The Morning Call---Broadcom CEO says investors are gambling in a casino

2026-10-13T06:06:04.656-07:00

The Morning Call

10/13/26

The Market

Technical

Monday in the charts.

https://www.zerohedge.com/markets/crude-continues-crash-credit-closed-tech-tumbles-breadth-bounces?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTI4MTQyIiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MTgzNjkwMywiZXhwIjoxNzk0NDI4OTAzLCJhdWQiOiJ6aC1naWZ0In0.QdOMYMGmH2sY4u5iMqZcXP5gYO88dA26I-JJGSSDSR8

Monday in the technical stats.

https://www.barchart.com/stocks/signals/new-recommendations

No offense is being played.

https://www.zerohedge.com/markets/no-offense-being-played-hedge-funds-add-gross-cut-nets-ctas-hit-target-and-buybacks-go-dark?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTI4MTQ5Iiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MTgzODQ0MiwiZXhwIjoxNzk0NDMwNDQyLCJhdWQiOiJ6aC1naWZ0In0.N8kiDjUJmyg1F9flfgALacFORxBlz3b6Q_AE4Hk138s

Bond shorts are sitting on a powder keg.

https://www.zerohedge.com/the-market-ear/bond-shorts-are-sitting-powder-keg?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTI4MjE5Iiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MTg5NjE3MSwiZXhwIjoxNzk0NDg4MTcxLCJhdWQiOiJ6aC1naWZ0In0.tZIm_oakWLDXIO4hrHh8NqXmBW_vr06vVSXf9zwhDBE

Gold tumbles as oil shock fuels dollar rally.

https://talkmarkets.com/article/gold-tumbles-as-oil-shock-fuels-us-dollar-rally-and-fed-hike-bets

Tuesday morning setup: US futures are mixed with the Nasdaq lagging as the AI rout that started on Wall Street on Monday ricocheted through Asia, where the Kospi crashed as much as 7% after Broadcom's Hock Tan likened AI investing to a casino and China's CXMT touted a denser memory chip design, while Q3 bank earnings kicked off with a FICC trading miss at JPMorgan; as a result, a flight to safety sent 10Y yields 5bps lower to 5.19% as cash Treasuries reopened after the holiday, while Brent slid back toward $105. As of 8:00am ET, S&P futures are down 0.1% around 7,850 while Nasdaq futures slide 0.7%, Dow futures are up 0.7% and Russell 2000 futures rise 0.3%. That follows a session in which the S&P dipped 0.1% and the Nasdaq 100 fell 0.7% on what was the lowest volume session in 23 years, with the SOX down 2.7% for its fourth straight decline even as two-thirds of S&P members rose. In premarket trading, memory names are getting hammered again (Western Digital -4.5%, Seagate -4.1%, Sandisk -3.7%, Micron -2.8%) and Nvidia is the worst of the Mag 7, down 0.9%, while JPMorgan is flat after FICC revenue of $5.37BN missed the $6BN estimate but the company guided NII higher; UnitedHealth rises 2.8% after raising its guidance. The day's driver is AI angst (again): Hock Tan's warning that financing the buildout, not chip supply, is the problem (as we discussed yesterday) was the spark, while CXMT's progress on new DRAM architecture did the rest in Seoul, where Samsung and SK Hynix lost around 8% and 10%. Treasuries rallied, with yields down 2-5bps led by the 10Y, after Fed Governor Waller said the surge in long-term yields is doing some of the work of tighter policy, while bunds and gilts gained as lower energy prices eased inflation worries. The BBG dollar index is down 0.2%, snapping a four-session winning streak, and the yen leads G10 after a report that the BOJ is leaning against a back-to-back hike in October. In commodities, WTI is down about 1.5% near $92.3 and Brent is 1.7% lower to $104.6; gold rises 0.3% to around $4,190, silver is up 0.4% near $60.5 and copper is flat. Bitcoin regains $83,000. US economic data slate includes September NFIB small business optimism (already out: 97.9 vs est. 98.2), ADP weekly employment change (8:15am), September existing home sales (10am) and the September federal budget balance (2pm). Fed speaker slate includes Goolsbee (7am and 10am), Barkin (1pm) and Collins (4pm). The Treasury sells $95BN of 13-week and $82BN of 26-week bills at 11:30am and $95BN of 6-week bills at 1pm.

Fundamental

Headlines

The Economy

The September small business optimism index came in at 97.9 versus estimates of 98.0.

International

September Japanese PPI was down 0.3% versus projections of +0.5%.

September German CPI was +0.6%, in line.

Other

World’s energy order being tested again.

https://www.nytimes.com/2026/10/12/business/middle-east-oil-exports-houthi-saudi.html?unlocked_article_code=1.IFE.ajsv.FwxO345i4bvj&smid=url-share

A super El Nino is looking more likely.

https://www.bloomberg.com/news/articles/2026-10-12/what-is-a-super-el-nino-how-it-affects-weather-and-food-production?accessToken=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJzb3VyY2UiOiJTdWJzY3JpYmVyR2lmdGVkQXJ0aWNsZSIsImlhdCI6MTc5MTgyOTM5MCwiZXhwIjoxNzkyNDM0MTkwLCJhcnRpY2xlSWQiOiJUTU44RjBUOU5KTFkwMCIsImJjb25uZWN0SWQiOiJCMzFCNTRDQTI3MTE0NjAxOUQxMURCN0IxRUM4NTE2MyJ9.Z1dHmh9t7HuA7sX6kTSxKSx_6Pj6jiEqRgRw_NRVlV8

A wealth boom and price shock collide.

https://www.reuters.com/business/finance/us-a-wealth-boom-price-shock-collide-2026-10-12/

Overnight News

Iran is fortifying its defenses, rallying loyalists, and hinting that their forces could conduct land incursions into neighboring countries as it threatens a wider, harsher response against the U.S. and its Gulf allies as it prepares for potential American attacks after the midterms and seeks to deter them.

JPMorgan and Goldman Sachs have taken a rare move to limit exposure on a $5 billion loan sale for AI startup Volta Infrastructure as investors demand higher yields for risky debt tied to the AI boom.

Monetary Policy

Rising bond yields are no excuse for central bank inertia.

https://www.bloomberg.com/opinion/articles/2026-10-12/rising-bond-yields-are-no-substitute-for-tighter-monetary-policy?accessToken=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJzb3VyY2UiOiJTdWJzY3JpYmVyR2lmdGVkQXJ0aWNsZSIsImlhdCI6MTc5MTgyOTg2OCwiZXhwIjoxNzkyNDM0NjY4LCJhcnRpY2xlSWQiOiJUTVNFQzFOM04wOTUwMCIsImJjb25uZWN0SWQiOiJCMzFCNTRDQTI3MTE0NjAxOUQxMURCN0IxRUM4NTE2MyJ9._EDniFJ0PZx3K_9VvWnuOsPs6U7Ft2Kz4ra1e6jCGEM

Fiscal Policy

Rising concerns over government debt.

https://giftarticle.ft.com/giftarticle/actions/redeem/4b06e5f6-793c-4c24-a347-f5a0cf194558

Inflation

The Houthi escalation raises the risk of higher inflation.

https://www.capitalspectator.com/a-new-middle-east-flashpoint-raises-the-stakes-for-inflation/

Broadcom CEO says investors are gambling in a casino.

https://www.zerohedge.com/markets/hock-tan-warns-ai-investors-are-gambling-casino-whose-chips-his-own-credit-paying

Microsoft slashes token costs

https://www.realclearmarkets.com/articles/2026/10/12/microsofts_slash_of_ai_token_costs_should_have_ai_investors_fearful_1210780.html

How the AI boom ends.

https://www.wsj.com/opinion/how-the-ai-boom-ends-0d9d47e7?st=HHggsp&reflink=desktopwebshare_permalink

Investing

The Market’s margin of error has narrowed.

https://www.briefing.com/todays-free-feature

Why stocks are rising despite higher interest rates.

https://www.carsongroup.com/insights/blog/heres-why-the-sp-500-just-hit-a-new-all-time-high-despite-rising-interest-rates/

How long can above average returns last?

https://growordieinvesting.substack.com/p/how-long-can-above-average-returns?utm_campaign=post-expanded-share&utm_medium=web

Is the ten year Treasury finally a buy?

https://talkmarkets.com/article/bonds-at-5-is-the-10-year-treasury-finally-a-buy

Why is China stacking gold?

https://talkmarkets.com/article/why-is-china-stacking-gold

AI is no longer a brain in a jar.

https://www.riskhedge.com

The stock market is not the economy.

https://open.substack.com/pub/samro/p/the-stock-market-is-not-the-economy-2026?utm_campaign=post-expanded-share&utm_medium=web

Counterpoint.

https://talkmarkets.com/article/monthly-macro-monitor-the-stock-market-is-the-economy

Five steps to take right now (in your portfolio).

https://ritholtz.com/2026/10/5-steps-to-take-right-now/

News on Stocks in Our Portfolios

What I am reading today

The gambling epidemic.

https://www.advisorperspectives.com/commentaries/2026/10/12/gen-z-bets-against-future

Visit Investing for Survival’s website (http://investingforsurvival.com/home) to learn more about our Investment Strategy, Prices Disciplines and Subscriber Service.

Monday Morning Chartology

2026-10-12T06:05:16.781-07:00

The Morning Call

10/12/26

The Market

Technical

The S&P had a see saw week, closing above its all-time high on Tuesday, then falling back below it on Wednesday (negating the break), then back above it again on Friday. If it remains there through the close on Wednesday, the challenge will have been successful. The rest of the technicals suggest success: it remains above all DMAs and in uptrends across all time frames. Still, there are some minor negatives. (1) a minor gap up open at the ~7684 level, (2) breadth remains horrible and (3) the bond Market is not being particularly supportive. At the moment, I see no reason to get beared up. On the other hand, the bond market’s pin action makes me nervous as do the fundamentals (fiscal policy, monetary policy, war, oil, tariffs). So until I see more convincing upside momentum, I will continue to sit on my hands.

While the bond market rallied last week, the longer term pin action remains pretty dismal. TLT continues to trade down across all timeframes and is below all three DMAs. That suggest that the bond boys are much less sanguine than stock investors about inflation, interest rates, the course of oil prices, the federal deficit and the financials of the AI buildout. I don’t see anything that would suggest a reversal in either the aforementioned numbers or bond market sentiment… for the long bond to rise enough to even challenge the upper boundary of its very short term downtrend is going to take a series of very positive developments.

https://www.bloomberg.com/news/articles/2026-10-09/wall-street-sees-an-ominous-sign-in-bond-market-s-latest-selloff?utm_source=website&utm_medium=share&utm_campaign=copy

Gold was on the same roller coaster ride as stock and bonds. While it finished up on the week, it remains below all three DMAs and has now reset its short term uptrend to a trading range. There are a number of conflicting forces playing on the price of gold; and until it can break the current string of lower highs and lower lows, I am on the sideline.

https://talkmarkets.com/article/gold-reclaims-4200-as-weak-us-sentiment-revives-bullion-demand

Death of the old playbook.

https://www.zerohedge.com/the-market-ear/gold-diggers-and-death-old-playbook?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTI3OTYwIiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MTczNzk5NSwiZXhwIjoxNzk0MzI5OTk1LCJhdWQiOiJ6aC1naWZ0In0.5W2R9dxnQ65pcZfE2EJioGBLiZMpPxDJLEhAKkXHs5E

The dollar’s pin action is improving---making a nice series of higher lows and higher highs. It is now in about the middle of a wide short term trading range, So, very short term the bias is up---which will likely continue as long as rates are rising and the rest of the world is having fiscal/interest rate problems---while longer term it is neutral.

Friday in the charts.

https://www.zerohedge.com/markets/hormuz-hurricanes-hikes-hiccups-ais-accounting-trump-puts-war-election-timer-junk-quietly?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTI3ODI2Iiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MTU3NzI0NSwiZXhwIjoxNzk0MTY5MjQ1LCJhdWQiOiJ6aC1naWZ0In0.G4ziRPn4o7ohxRfBY-gash_swaFC2qwv-tjWIqcKFJQ

Friday in the technical stats.

https://www.barchart.com/stocks/signals/new-recommendations

The latest from Goldman.

https://www.zerohedge.com/markets/higher-probability-vix-25-spx-2-hedge-funds-dump-tech-goldman-finds-records-everywhere?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTI4MDM4Iiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MTgwOTgzOSwiZXhwIjoxNzk0NDAxODM5LCJhdWQiOiJ6aC1naWZ0In0.O4WjkcKLMy5Sx2LJtQ_0uYT-t2AtNuVsssI67JJ-UCU

Monday morning setup: US futures are flat, with S&P contracts clinging to small gains and the Nasdaq slipping into the red as memory stocks slide, after a weekend of contradictory geopolitical headlines whipsawed oil (see below). As of 8:00am ET, S&P futures were 0.1% higher at 7,865 while Nasdaq futures were down 0.1%. Dow futures are up about 0.1%. That follows a Friday session in which the S&P rose 0.6% to cap a 1.2% weekly gain (after a record close on Wednesday) and the Dow jumped 0.8%. In premarket trading, Meta leads the Mag 7 higher (+1.8%) while memory names slide, with Micron down 2.1% after Samsung and SK Hynix tumbled more than 4% in Seoul with buyback quotas now largely completed; T-Mobile rebounded 1.1% on a Raymond James upgrade after Friday's SpaceX-spectrum puke, CCC Intelligent jumps 8.3% on buyout talks with GTCR and Elliott and IREN rises 5% on a reported cloud deal with Anthropic. The day's driver is oil (again), and the market can't decide which war to price: WTI is up 1.2% at $93.00 and Brent is at session highs, above $106 having traded in a $102.33-$106.17 range, as Iran insists Hormuz stays shut until all seven of its conditions are met and Trump mulls joining Saudi strikes on the Houthis. There is no cash Treasury trading today for the Columbus Day holiday; Treasury futures drift lower led by the ultras, implying slight bear steepening, while bunds and gilts are higher (10Y gilt yield down 4bps to 5.41%, bund down 2bps to 3.46%) as diesel prices fall following US efforts to release Russian fuel to the market. The Bloomberg dollar index is steady with the Swiss franc the weakest G10 currency and the pound outperforming ahead of PM Burnham's speech on EU ties, while India's rupee jumped more than 1% after the RBI's strongest support measures since the 2013 taper tantrum. In commodities, spot gold slipped to a $4,168 low, silver is near $60.70, copper extends Friday's rebound as Chinese buyers return from Golden Week, Dutch TTF is firmer at up to €82.90/MWh and US natgas is down 2.5% to $3.14. Bitcoin reversed from a peak of $84,260 to trade near $83,300. There is no US economic data today; Fed speaker slate includes Hammack (12:10pm). The US cash bond market is closed for Columbus Day; stock markets are open.

Fundamental

Headlines

The Economy

Last week was a slow one for US stats. What there was, was slightly negative with no primary or inflation numbers. Overseas, the data was more plentiful but also slightly downbeat with one neutral price measure. These reports keep both my forecasts for growth (muddle through) and inflation (good as it is going to get but not any worse) on track.

The economic issues that I continue to fret over are:

(1) what is the appropriate monetary policy given that a good deal of the upward inflation pressure is the result of supply shortages [primarily oil] versus demand pull?

On its face, it suggests a Fed reticent to raise rates because the problem [inflation] will cure itself as supply shortages are reconciled. The problem number one is that the conflicts in Ukraine and Iran are destroying infrastructure [production facilities, refining capacity, pipelines] and depleting global oil reserves to such an extent that supply shortages are not going to be alleviated when, as and if those conflicts end. Indeed, depending on the ultimate disposition of tanker transit out of the Persian Gulf and the Red Sea, a new permanent cost [transit fees] could be added to the price of oil.

Second, as these conflicts drag on, at some point, the mind set of consumers and businesses becomes attuned to the oil shortage induced inflation and view it as more permanent, increasing the need for Fed action.

Oil reserves hit rock bottom.

https://www.zerohedge.com/markets/nothing-left-drain-goldman-finds-near-record-22-oil-risk-premium-global-stocks-hit-rock?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTI3OTMzIiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MTczOTA3NSwiZXhwIjoxNzk0MzMxMDc1LCJhdWQiOiJ6aC1naWZ0In0.jxAtUSQX3JdcwBXa-wwu5LtIyEzQuU3d81dV2P5zaz0

Third, not all inflationary pressures are the result of supply shortages. The egregious national deficit and the enormous AI buildout spend are juicing economic growth with the former clearly an unnecessary accelerant.

Fourth, Trump’s tariffs flow directly into the price of goods.

https://www.cnbc.com/2026/10/08/inflation-tariffs-trump-fed-consumer-goods.html

Finally, the risks from poor monetary policy and the level of interest rates are not confined to the US. Europe and Japan are also having their issues which could potentially compound our own---increasing the odds of a stumble in the global fixed income market.

In short, I think that the Fed has a very tight rope on which to walk. And given its historical record of instituting the wrong policy at virtually every junction, I would be remiss if I didn’t factor in the likelihood of another policy mistake.

Interest rates and the demand for money.

https://scottgrannis.blogspot.com/2026/10/thinking-about-higher-interest-rates.html

(2) the health of the AI buildout. In this letter, I have noted numerous potential problems: [a] the accounting of the buildout---enormous off balance sheet financing, [b] as well as the sheer magnitude of the financings [c] the level of future revenue needed to provide a sufficed return on investment and [d] the lack of any evidence showing increased productivity of the AI providers. At this moment, I am not smart enough to know whether any of the concerns will prove valid. But I believe that until there is some visibility to the resolution of these issues, some caution is necessary---both from the macro point of view as well as the company specific. My position remains unchanged: I continue to hold positions in both the chip manufacturers and the hyperscalers---although their performances has been such that I have Sold Half of virtually every stock. That said, I have my finger on the trigger for several holdings. And should the negative case appear the more likely outcome, I will take some more money off the table.

Massive capital destruction.

https://www.zerohedge.com/ai/ais-2008-moment-jefferies-sees-massive-capital-destruction-two-cash-burning-labs-owe-half-23?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTI3OTUxIiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MTczNzc2NywiZXhwIjoxNzk0MzI5NzY3LCJhdWQiOiJ6aC1naWZ0In0.nPQWa9VWwTBQH_GZpz03eW_GKYn3LE0J5-7AsUfEn38

I want to emphasize that the issue that I am focused on is the economics of the AI buildout not the doomsday ‘we will all be dead in ten years’ variety. I made clear …. that I am quite cynical about the motivations of the doomsayers whether they are from the industry (who want the government to impose regulations that would squash potential competition) or government (who never lets a crisis go to waste in order to impose further on our collective liberties)

https://thehill.com/opinion/technology/6131723-ai-online-scam-losses/

My bottom line remains unchanged: my doubts on the trajectory of the economy/inflation/AI buildout are increasing. That said, there are always risks/potential economic/Market valuation worries and, to date, none have become openly manifest. So, as long as earnings growth remains strong and the economy continues to grow, I can’t see a recession or a major Market sell off. Higher inflation and the Fed’s response to it is another matter.

https://www.capitalspectator.com/us-economic-growth-expected-to-strengthen-in-q3-gdp-report/

From late Friday:

The October preliminary consumer sentiment index was 46.3 versus forecasts of 47.6.

https://mishtalk.com/economics/consumer-sentiment-current-conditions-index-drop-to-record-low/

International

Other

The US economy: AI and everything else.

https://bonddad.blogspot.com/2026/10/the-us-economy-right-now-ai-vs.html

Iran

Overnight news

https://www.zerohedge.com/geopolitical/saudis-vow-retaliation-after-deadly-airport-strike-houthi-threat-puts-gulf-edge

Fiscal Policy

Repeated Treasury interventions risk erosion of credibility.

https://giftarticle.ft.com/giftarticle/actions/redeem/f8eaf61e-0a2b-450b-b886-f23bd3652b42

It is a depressing time to care about free markets.

https://www.advisorperspectives.com/articles/2026/10/08/depressing-time-care-free-markets

The Financial System

Can anyone trust private credit valuations?

https://www.semafor.com/article/10/06/2026/the-worry-hanging-over-private-credit-can-anyone-trust-the-numbers

The status of commercial real estate debt.

https://wolfstreet.com/2026/10/08/status-of-the-commercial-real-estate-debt-and-who-owns-it-in-2026/

Investing

The worse borrowers in America.

https://trendlabs.com/the-worst-borrowers-in-america/

Update on valuations.

https://www.advisorperspectives.com/dshort/updates/2026/10/08/market-valuation-is-the-market-still-overvalued

The equity premium has vanished.

https://www.zerohedge.com/markets/equity-risk-premium-has-vanished-and-stocks-arent-cheap

The latest from BofA.

https://www.zerohedge.com/markets/hartnett-most-bullish-thing-fed-can-do-now-hike?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTI3OTgxIiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MTgwNzU3MywiZXhwIjoxNzk0Mzk5NTczLCJhdWQiOiJ6aC1naWZ0In0.0xSs6HweUtXGWESuWDovjgk56VBstoOJFRvVpLTZsbk

News (but not a Buy recommendation) on Stocks in Our Portfolios

What I am reading today

Visit Investing for Survival’s website (http://investingforsurvival.com/home) to learn more about our Investment Strategy, Prices Disciplines and Subscriber Service.

The Morning Call--the crowding out effecr is immense

2026-10-09T06:12:38.108-07:00

The Morning Call

10/9/26

The Market

Technical

Thursday in the charts.

https://www.zerohedge.com/markets/headline-roulette-back-ai-angst-mideast-missiles-spark-chaos-capital-markets?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTI3NzA0Iiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MTQ5MDYxOCwiZXhwIjoxNzk0MDgyNjE4LCJhdWQiOiJ6aC1naWZ0In0.ayfK8qEQhcClsOPka6anBRsurvqTd_sZHg675POIrs8

Note: the S&P failed the break to new highs, meaning Tuesday’s spike had no follow through momentum. So, we are still stuck in a trading range albeit at a very high level. The thing that I am watching now is whether the index makes a second higher low (good news) or not.

Thursday in the technical stats.

https://www.barchart.com/stocks/signals/new-recommendations

The room at the top is crowded.

https://talkmarkets.com/article/the-room-at-the-top-of-the-sp500-has-become-twice-as-crowded

A decade of bad breadth.

https://talkmarkets.com/article/decade-of-bad-breadth

Dealing with narrowing breadth.

https://talkmarkets.com/article/a-bull-market-party-with-a-very-small-guest-list

Friday morning setup: US futures are higher as a trifecta of AI relief, easing geopolitical tensions and fading energy prices has lifted sentiment into the final trading day of the week: OpenAI walked back Thursday's FT-sparked revenue scare by telling people it expects to reach or exceed $70 billion in annualized revenue by year-end, while President Trump said the US would not attack Iran before the November midterms; as a result Nasdaq futures are up 0.8% and Brent has slipped back toward $102 after nearly touching $106 on Thursday. As of 7:15am ET, S&P futures are 0.4% higher at 7,850 while Nasdaq futures are up 0.8% and Dow futures rise 0.2%. That follows a session in which the S&P fell 0.47% to 7,765 and the SOX tumbled 3.4% after the FT reported OpenAI's annualized revenue was about $50 billion, even as two thirds of S&P members finished higher. In premarket trading, tech leads with Nvidia up 2% and the SOXX ETF up 1.9%, while Apple is the notable Mag 7 laggard, down 2% on a report it cut iPhone 18 Pro component orders, confirming our article from yesterday; telecoms are getting crushed (AT&T, Verizon and T-Mobile all down 6-7%) after SpaceX bought a nationwide low-band spectrum portfolio, tower stocks jump and Humana soars 15% on better Medicare Advantage ratings. The day's driver is oil (again), but this time on the way down: WTI is down 0.9% to $90.67 and Brent is down 1.3% to $102.92 even as Hurricane Isaias has shut in some 1.3 million b/d, or 63%, of Gulf of Mexico crude output. Treasuries are the exception to the global bond relief rally: yields are 1-2bps cheaper across the curve, led by the front-end, with the 10Y around 5.245% after Thursday's 6bp bull-flattening rally, while bunds and gilts outperform after Christine Lagarde told finance ministers the ECB has tools for disorderly spread moves. The Bloomberg dollar index is down 0.1%, with the yen the only G10 currency lagging. In commodities, gold is up about 1.3% and has climbed as high as $4,208, silver is up 2% to above $60, US natgas is down 1.5% to $3.12 and copper is firmer. Bitcoin adds about 1%, trading near $82,500. US economic data slate includes the October preliminary University of Michigan sentiment and inflation expectations (10am). Fed speaker slate includes Collins (4pm). The US bond market is closed on Monday.

Fundamental

Headlines

The Economy

International

August Japanese household spending rose 0.1% versus consensus of +0.5%; September YoY machine tool orders were up 60.4% versus +61.0%.

Other

Hurricane Isaias causes partial shutdown of Gulf oil production.

https://www.zerohedge.com/weather/25-us-offshore-gulf-oil-output-shut-hurricane-isaias-nears-threatens-refineries

Edging toward a fiscal crisis.

https://www.axios.com/2026/10/07/france-global-bond-markets

Taxes have consequences.

https://www.powerlineblog.com/archives/2026/10/taxes-have-consequences.php

The correlation of new jobless claims to future recession.

https://bonddad.blogspot.com/2026/10/new-jobless-claims-continue-near.html

Iran

Overnight news.

https://www.zerohedge.com/geopolitical/iran-expands-tanker-assault-beyond-narrow-confines-hormuz-rare-escalation

Monetary Policy

The ECB QT continues---and to what effect?

https://wolfstreet.com/2026/10/08/still-qt-plus-renewed-rate-hikes-at-the-ecb-despite-surging-bond-yields-in-the-euro-area/

The Morning Call---A debate on how the bubble bursts

2026-10-08T06:12:55.368-07:00

The Morning Call

10/8/26

The Market

Technical

Wednesday in the charts.

https://www.zerohedge.com/markets/stocks-slide-all-time-high-amid-rising-turmoil-just-below-surface?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTI3NTc0Iiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MTQwNDA2OSwiZXhwIjoxNzkzOTk2MDY5LCJhdWQiOiJ6aC1naWZ0In0.DPn2TP-SUMaN6n4tf3g0aR5efQfgui8ZcbjcFK4g8eY

Note: the S&P ended the day right on its former all-time high, closing one of the two gap up opens I mentioned yesterday. For this current break to be successful, the index clearly has to close today right on or higher than the former high in order to not negate this break.

Wednesday in the technical stats.