Before the Open (Oct 7-11)

Good morning. Happy Friday.

The Asian/Pacific markets were mixed. Taiwan, New Zealand and Indonesia did well; China and the Philippines were weak. Europe, Africa and the Middle East lean to the upside. Denmark, Poland, Turkey, South Africa and Portugal are leading. Index futures in the States point to a flat open for the cash market.

————— VIDEO: Old School Large Caps are Leading the Market —————

The dollar is down. Oil is up; copper is up. Gold and silver are up. Bonds are down.

Stories/News from Seeking Alpha…

Disinflation stalling?

Is the disinflation trend stalling? The latest Consumer Price Index reading, which came in hotter than expected, and last week’s blowout jobs report have cemented bets that the Federal Reserve will go for a 25-basis-point interest rate cut next month. Some even expect the central bank to pause.

The latest: The headline CPI rose +0.2% in September from the prior month, stronger than the +0.1% expected and flat with August’s +0.2%, according to Bureau of Labor Statistics data released on Thursday. Shelter and food contributed the most to the overall increase, while gasoline prices fell substantially. Core CPI, which excludes food and energy, also stalled, rising +0.3% M/M vs. +0.2% expected and +0.3% prior. Separately, weekly jobless claims jumped more than expected, signaling some weakness in the labor market.

SA commentary: “Though it was a slightly disappointing report, to say September inflation marks a resurgence is likely an overstatement,” said Seeking Alpha analyst Mike Zaccardi. “Rising food prices remain a sore point, and with prices continuing to increase globally, it’s unlikely this trend will reverse course any time soon,” said Justin Purohit. But he noted the promising moderation in the shelter category, which has been one of the stickiest categories of inflation over the past several years.

Fed outlook: Atlanta Fed President Raphael Bostic is “definitely open” to holding rates steady next month. “I think we have the ability to wait and let things play out a little longer… There are elements of the [CPI] report which I think validate that view,” he said. “Given the strong labor market report, and two consecutive 0.3% core CPI prints, the Fed is likely to pause the easing campaign in November, which is not good news for the stock market,” said SA analyst Damir Tokic. (108 comments)

What else is happening…

Banks kick off Q3 earnings season, outlook will take the spotlight.

Tesla (TSLA) unveils Cybercab, robovan and next-gen Optimus.

Advancing AI: AMD (AMD) dips after unveiling new chip, CPU.

Boeing accuses union of bad faith bargaining, misleading public.

Stellantis CEO to retire in 2026, Jeep boss to lead N.A. operations.

Tilray (TLRY) sees better days for cannabis amid U.S. election.

Celsius (CELH), Monster Beverage (MNST) gain after trade show.

Amazon’s (AMZN) Prime Big Deal Days event sets new record.

Will Pfizer (PFE) transform in response to Starboard’s activism?

Why is Wall Street powering to new highs despite geopolitical risk?

Today’s Economic Calendar
8:30 AM Producer Price Index
9:45 AM Fed’s Goolsbee: “Community Banking: Navigating a Change Landscape”
10:00 AM Consumer Sentiment
10:45 AM Fed’s Logan Speech
1:00 PM Baker Hughes Rig Count
1:10 PM Fed’s Bowman: “Community Banking: Navigating a Change Landscape”

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Good morning. Happy Thursday.

The Asian/Pacific markets leaned up. China, Hong Kong and Thailand led the way. Europe, Africa and the Middle East are mixed and quiet. Norway and Saudi Arabia are up; Finland, Spain and Sweden are down. Index futures in the States point to a moderate down open for the cash market.

————— VIDEO: State of the Market —————

The dollar is down. Oil is up; copper is flat. Gold and silver are up. Bonds are down.

Stories/News from Seeking Alpha…

Place your bets

It’s finally here. Tesla (TSLA) will hold its ‘We Robot’ event tonight at 10 pm Eastern time at Warner Bros’ Hollywood studio near Los Angeles. The event was delayed from August 8, which raised expectations that Tesla will show a working prototype and lay out an aggressive autonomous driving plan. Some are hoping the event will be a significant catalyst for TSLA shares, but a majority of Wall Street Breakfast subs expect only a slight gain or dip.

What to expect: While Tesla has kept the design of the robotaxi a secret, sources told Bloomberg that the Cybercab has two front seats and two doors that open upward like butterfly wings. There has also been plenty of speculation that Tesla will show off a new cheaper model, a robovan capable of carrying up to 12 people, a new version of the Optimus humanoid robot, plans for an autonomous semi, and other AI use cases.

Word on the Street: Wedbush analyst Dan Ives expects Tesla to unveil game-changing autonomous technology, adding that it is a powerful robotics/AI play in the future rather than just an electric vehicle maker. Of course, there is the risk that Tesla underwhelms investors. “If they show something that doesn’t actually demonstrate the technology, a prototype of a vehicle that doesn’t move, that’s going to go over like a lead balloon,” warned Deepwater Asset Management’s Gene Munster.

SA commentary: “I believe the robotaxi event is priced into shares and any movement post-event will be the result of tactical and momentum trading,” said Seeking Alpha analyst Michael Del Monte. Luca Socci prefers to profit from TSLA’s recent surge and redeploy gains elsewhere. But PropNotes is more bullish, forecasting shares to be worth $250-$350 by next week, after exploring three potential outcomes from the event.

What else is happening…

September CPI report: Tame inflation or unexpected comeback?

Some FOMC members backed 25-bp rate cut – meeting minutes.

Hurricane Milton puts $30B of Florida municipal debt at risk.

… and may be the costliest hurricane in terms of insured losses.

Report: OpenAI projections suggest no annual profits till 2029.

Peter Todd denies claims of being bitcoin’s mysterious creator.

Stellantis (STLA) expected to make some management changes.

Bayer (OTCPK:BAYZF) sinks as court to review Monsanto case.

TD Bank (TD) faces $3B penalties, asset cap in U.S. settlement.

Weight-loss drugs: Should investors worry about side effects?

Today’s Economic Calendar
8:30 AM Initial Jobless Claims
8:30 AM Consumer Price Index
9:15 AM Fed’s Cook: “Entrepreneurship and Innovation”
10:30 AM EIA Natural Gas Inventory
10:30 AM Fed’s Barkin: “2025 Economic Outlook and Beyond”
11:00 AM Fed’s Williams: Economic Outlook and Monetary Policy
1:00 PM Results of $22B, 30-Year Bond Auction
2:00 PM Treasury Statement
4:30 PM Fed Balance Sheet

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Good morning. Happy Wednesday.

The Asian/Pacific markets leaned down. Japan and New Zealand did well; China, Hong Kong, Indonesia and the Philippines were weak. Europe, Africa and the Middle East are mixed and quiet. Poland and Israel are up; Turkey, South Africa, Spain and Saudi Arabia are down. Index futures in the States point to a down open for the cash market.

————— VIDEO: State of the Market —————

The dollar is up. Oil is down slightly; copper is down. Gold is flat; silver is up. Bonds are down.

Stories/News from Seeking Alpha…

Bracing for Milton

Hurricane Milton, which quickly strengthened to a Category 5 storm, is forecast to be among the most destructive to hit the Gulf Coast of Florida. More than 1M people have been ordered to evacuate, while companies across sectors are pausing operations.

Landfall soon: The storm is projected to make landfall in the densely populated Tampa Bay area Wednesday night, and will likely weaken to a Category 3 hurricane by then. But it’s still expected to cause major destruction. Around 2.8% of U.S. GDP is in the direct path of Milton, Ryan Sweet, chief economist at Oxford Economics, wrote on Tuesday. AccuWeather warned that economic losses from the storm could exceed $200B.

Air travel disrupted: Orlando International and Tampa International airports have suspended operations, with over 1,000 flights canceled as of today. Delta Air (DAL), American Airlines (AAL), Southwest (LUV) and United (UAL) issued waivers for customers who booked flights into or out of Florida airports that ceased operations. Many airlines also added flights to help people evacuating from Florida, but there have been allegations of price gouging. Airlines insist they’ve capped fares.

Other sectors: Kinder Morgan (KMI) shut its Tampa area terminals and pipelines. Several fuel terminals in the area shut off supply, and gas stations have run out of fuel as people evacuate in droves. Disney (DIS) announced theme park closures starting Wednesday, with its earnings expected to be impacted by up to $200M. Universal Orlando Resort and SeaWorld Orlando will also be closed, while cruise operators Royal Caribbean (RCL) and Carnival (CCL) adjusted certain schedules. Retailers such as Target (TGT) and Kohl’s (KSS) temporarily closed stores in the storm’s path.

What else is happening…

DOJ mulls Google (GOOG, GOOGL) breakup to end monopoly.

Boeing (BA) withdraws contract offer; FAA flags issue in 737s.

Next AI phase: Nvidia (NVDA) unveils real life sci-fi at summit.

Cerebras (CBRS) may delay IPO amid national security review.

CBO: Federal government’s FY2024 deficit estimated at $1.8T.

Medicare coverage of obesity drugs seen raising federal spending.

Harris proposes Medicare funding for in-home senior care plan.

Rio Tinto (RIO) to be major lithium producer with Arcadium deal.

GM: EV unit to turn profitable by Q4, no plans of China pullback.

The Las Vegas Strip says goodbye to the iconic Tropicana property.

Today’s Economic Calendar
7:00 AM MBA Mortgage Applications
8:00 AM Fed’s Bostic Speech
9:15 AM Fed’s Logan Speech
10:00 AM Wholesale Inventories (Preliminary)
10:30 AM EIA Petroleum Inventories
10:30 AM Fed’s Goolsbee Speech
12:15 PM Fed’s Barkin Speech
12:30 PM Fed’s Jefferson: “The Discount Window, 1990-Present”
1:00 PM Results of $39B, 10-Year Note Auction
2:00 PM FOMC Minutes
5:30 PM Fed’s Collins Speech
6:00 PM Fed’s Daly: Economic Outlook and Monetary Policy

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Good morning. Happy Tuesday.

The Asian/Pacific markets were mixed. China was up big, while Hong Kong posted huge losses. India and Indonesia did well, and Japan was weak. Europe, Africa and the Middle East are mixed. Turkey, the UAE and Saudi Arabia are up; the UK, South Africa and Finland are down. Index futures in the States point to a moderate gap up open for the cash market.

————— VIDEO: State of the Market —————

The dollar is down. Oil and copper are down. Gold is up; silver is down. Bonds are down.

Stories/News from Seeking Alpha…

Behind the curve

Samsung Electronics (OTCPK:SSNLF) has issued a rare apology after warning of weaker-than-expected Q3 profit, as the South Korean tech giant struggles to keep up with rivals in the artificial-intelligence chip race. The world’s biggest memory chipmaker’s preliminary estimate for Q3 operating profit is 9.1T won ($6.74B), down 12.8% from Q2. Sales are expected to rise 6.7% sequentially to 79T won ($58.57B).

What went wrong: “Despite strong HBM/server demand, the Memory Business recorded a decrease in results due to inventory adjustments by some mobile customers and an increase in supply of legacy products from memory companies in China,” Samsung said in a statement. “One-off expenses and currency effects also impacted performance.” It added that the delivery of HBM3E chips to a major unnamed customer was delayed.

Falling behind: The high-bandwidth memory chips were reportedly cleared for use in Nvidia’s (NVDA) AI processors in August. To note, South Korea’s SK hynix (OTCPK:HXSCF) and U.S. chipmaker Micron Technology (MU) also produce HBM3E chips with higher bandwidth that’s key for AI memory. SK hynix, which has been speeding ahead with HBM3E development, recently began mass production of the world’s first 12-layer HBM3E product with the largest capacity of existing HBM. A Bank of America analyst recently said HBM is a “two horse race” between Micron and SK hynix.

Taking accountability: Jun Young-hyun, head of Samsung’s device solutions, said management takes full responsibility for the disappointing performance that “raised concerns about the fundamental technological competitiveness and the future of the company.” Samsung pledged to restore its competitiveness, prepare for the future more thoroughly, and fix any organizational culture issues. Samsung will report its financial results on October 31. (2 comments)

What else is happening…

WSB survey results: Expectations for Tesla’s ‘We, Robot’ priced in.

GEICO denies withdrawing Tesla (TSLA) Cybertruck coverage.

Stellantis (STLA) files additional lawsuits against labor union.

SA Chart: US10Y-US2Y Treasury yield curve inverts again.

Goldman cuts U.S. recession risk to 15% after jobs report.

White House working on restarting shuttered nuclear plants.

Super Micro (SMCI) surges on positive GPU shipment data.

Insurance stocks drop as Hurricane Milton heads toward Florida.

Price fixing lawsuit: McDonald’s (MCD) sues Big 4 meatpackers.

Activists seek change at Forward Air (FWRD), Air Products (APD).

Today’s Economic Calendar
3:00 AM Fed’s Kugler: “Global Inflation”
6:00 AM NFIB Small Business Optimism Index
8:30 AM International Trade in Goods and Services
12:45 PM Fed’s Bostic: Economic Outlook
1:00 PM Results of $58B, 3-Year Note Auction
4:00 PM Fed’s Collins Speech
7:30 PM Fed’s Jefferson Speech

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Good morning. Happy Monday. Hope you had a good weekend.

The Asian/Pacific markets did well. Japan, Hong Kong, South Korea, Taiwan and the Philippines posted big gains; India was weak. Europe, Africa and the Middle East are mixed with a slight lean to the upside. Denmark, Hungary, Spain, Portugal and Saudi Arabia are leading; Norway is weak. Index futures in the States point to a moderate gap down open for the cash market.

————— VIDEO: Nuclear Energy is Leading the Market —————

The dollar is down. Oil is up; copper is down. Gold is up; silver is down. Bonds are down.

Stories/News from Seeking Alpha…

Energy reshift

BP (BP) is scaling back its energy transition strategy and will drop its ambitious target of cutting oil and gas production by 2030, with plans to raise its output instead, sources with knowledge of the matter told Reuters. This would mark a major shift for the oil giant at a time when its plan to boost renewables has raised concerns over profitability.

Strategy pivot: Back in 2020, BP pledged to cut oil and gas production by 40% by 2030, widely seen as the sector’s most ambitious target. This was scaled back last year to a 25% cut. But now, BP is looking to increase its oil and gas production, eyeing investments in three new projects in Iraq and in re-developing oilfields in Kuwait. It is moving ahead with the development of oilfields in the Gulf of Mexico and is also weighing acquiring assets in the Permian Basin.

Prioritizing profits: BP has paused investment in new offshore wind and biofuel projects in recent months, and reduced the number of low-carbon hydrogen projects to 10 from 30. The move comes as clean energy projects are facing supply chain issues and rising costs amid higher interest rates. Recall that BP is targeting $2B cost savings by 2026-end. While the updated strategy is expected to be unveiled in February, the company has already dropped the 2030 production cut target in practice.

Not alone: Rival Shell (SHEL) has also scaled back its energy transition strategy this year, scrapping several renewable energy projects and exiting power businesses to refocus efforts on oil and gas. In other news, the British energy giant on Monday raised its production guidance for LNG as well as upstream oil and gas. (10 comments)

What else is happening…

Jobs report upshot: Strong labor market, Fed set for 25-bp cut.

SA Asks: Which stocks are best positioned for more rate cuts?

Activist investor Starboard takes $1B stake in Pfizer (PFE).

Regeneron (REGN) co-founder warns of weight-loss drug harms.

Rio Tinto (RIO) eyes takeover of Arcadium Lithium (ALTM).

Report: Big Oil wants Trump to spare some IRA credits if elected.

AI takes aim at Google’s search dominance – see who benefits.

X remains banned in Brazil after paying fines to wrong bank.

Joker Folie à Deux tops box-office sales despite brutal reviews.

Hurricane Milton: Florida braces for biggest evacuation since 2017.

Today’s Economic Calendar
1:50 PM Fed’s Kashkari Speech
3:00 PM Consumer Credit
6:00 PM Fed’s Bostic: “Dynamic Business of Professional Sports”
6:30 PM Fed’s Musalem: U.S. Economy and Monetary Policy

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