Morning Note

Trading Observations

• Jobs numbers not likely today

• 6700, 6650, and 6575 support with blue skies above

• Despite market at new highs, NAAIM exposure dropping https://tinyurl.com/45dbmskv [tinyurl.com]

• AI capex concerns? https://tinyurl.com/4j9e2z8w [tinyurl.com]

• Healthcare time? https://tinyurl.com/ycyxskp6 [tinyurl.com]

• Especially small? https://tinyurl.com/4j9e2z8w [tinyurl.com] 

• AI driven, but something to observe https://tinyurl.com/26rdd2df [tinyurl.com]

Futures

DOW +42

S&P +2

Nasdaq +2

Financials / Consumer / Healthcare

Baird on Hotel REITS – Downgrading RLJ to Neutral and calling INN a Bearish Fresh Pick on issues with operating performance.

FISV September Small/Med Business index looks fine to positive. Restaurant accelerated.

GS Large Bank Preview- How does trading and I Banking look (hint, trading is going to be off the charts good)? What does EPS look like with lower rates, and how aggressively will banks return capital are the key questions. We think at these price to book values, mega caps should just pay out massive dividends instead of buybacks.

GS Regional Bank Earnings Preview – Upbeat on regionals given recent underperformance. Mixed on Q3, not expecting surprises. Loan growth looks fine. Everyone trying to figure out winners and losers when rates are much lower a year from now.

GS on Consumer Credit Names – Waiting to hear upbeat credit chatter, especially on autos after KMX, before getting very bullish. AXP, ALLY, and SYF are all top picks.

GME – Down 4% on mixed shelf file.

PYPL: -1% downgraded @ Wolfe - "believes the shares will be range-bound with investors requiring further proof of branded execution before getting more constructive. Questions remain on the timeline of a branded acceleration and when PayPal's new initiatives will impact results"

Technology

Semicaps: group has been on fire .. so course AMAT disclosed that the Commerce Dept on 9/29 expanded existing export restrictions, a move which the company says will further limit its ability to sell certain products and services to China-based customers without a license ... AMAT +9% in two days ... movers: KLIC-5%, AMAT-3.7%, KLAC/LRCX-2.4%, ASML-2%

AI STALL/NVDA: Delays to Trump's U.A.E. chips deal frustrate Jensen (WSJ) .... multibillion-dollar deal to send Nvidia's AI chips to the UAE is stuck in neutral nearly five mos after it was signed, frustrating Jensen + some senior admin officials. Many hoped to see the deal advance quickly to highlight a new US tech strategy focused on exports; see agreements like the UAE deal as key to the U.S. staying ahead of China in the AI race

AAPL: removes ICE tracking apps from the App Store following pressure from the administration (CNBC)

AMZN: 3p data continues to point to a ~19% # for AWS in Q3 .... Goldman: "Ahead of Q3 earnings season and against the current backdrop of investor sentiment, positioning, and debates, we highlight Amazon as a preferred name among our large cap coverage. We see the central investor debate and concerns anchored around AWS; we frame a pathway for AWS to achieve 20%+ topline growth and sustain low-to-mid-30% GAAP EBIT margin across 2H 2025 and 2026"

ANET: alpha laggard Thur .. what picked up: older note recycling Nexthop AI startup competition, some concerns related to long-term risk to Ethernet spine. Cleveland more positive on CSCO, less so Arista

APP/Unity: AppLovin -3% on contd 'sell the news' reactio on 10/1 e-comm self serve rollout everyone had been waiting for; Unity has been soggy as well ... Wedbush EXPERT call today at noon ET

CART: -1% downgraded @ Piper - "move to the sidelines on CART in light of competitive pressures over the last month. We're less concerned about the quarter than an industry dynamic that pits CART against scaled competitors that may be cheaper and fast-growing peers forging new partnerships. At ~10% GTV growth YTD, the topline looks vulnerable and we downgrade to Neutral"

CART - Fox Advisors raised the recommendation on Maplebear Inc. to outperform from equal-weight.

CMCSA/GOOGL: the companies struck a long-term carriage deal that will see NBCUniversal’s full portfolio of content available on YouTube TV (Variety)

GOOGL DC BUILD: Google will invest $4B to build a data center on 1,000+ acres in West Memphis, its first in the state, creating thousands of jobs. It also launched a $25M Energy Impact Fund for local efficiency projects and workforce development

GOOGL: MSci reducing our Q3 Google advertising rev estimate slightly to $72.17B, below our prior outlook of $72.34B; we expect total Google advertising spend in our data to grow 9.0% Y/Y on an FX-neutral basis, ~80bps decelerated from Q2

INTC: +1% in pre; set for 7th weekly gain out of 9. Contd rise from ashes / few companies have this type of sovereign support. Domestic chip production top 2-3 priority for administration

DATA CENTER / PE: Aligned Data Center could be purchased by BlackRock’s Global Infrastructure Partners in a deal worth ~$40B (Bloomberg)

RDDT: Citizens defending ... "saying logged-in U.S. users monetize at 10x+ the rate of logged-out users. He sees SEO noise as less relevant than the strong momentum in Reddit’s ad business, which he expects to drive earnings upside"

Industrials 

TSLA: reported record quarterly deliveries, but fears of expired EV tax credits weigh on the stock (Reuters) ... group of Tesla shareholders and state officials urge shareholders to vote against Musk's $1T pay package at Nov meeting (Reuters)

China EVs: BYD -5.5%, Xiaomi -1.5%, Li Auto -4.5%, Xpeng -5%, Nio -3%, Great Wall -1.5%, Geely -2.5% as sentiment spill over from Tesla hits EV players

Boeing (BA) 777X plane pushed back to 2027.

Corteva (CTVA) Cut to Sector Weight at KeyBanc

Fastenal (FAST) Cut to Strong Sell at CFRA

Hecla Mining (HL) Cut to Sell at Roth Capital Partners; PT $8.75

Knight-Swift (KNX) Raised to Buy at Stifel; PT $45

Schneider National (SNDR) Raised to Buy at Stifel; PT $25

Trimble (TRMB) initiated buy at Berenberg; PT $95

USA Rare Earth (USAR) trading +9% - CEO tells CNBC the company is in "close communication" with the White House.

Woodward (WWD) Raised to Outperform at Wolfe; PT $300

Latest Media

$NVDL (2x Nvidia) 52-wk return = 41%.

$NVDA (Nvidia) 52-wk return = 41%.

How is this possible?