Morning Note

Trading Observations

• Not major news, but yields down stocks up to start

• Still dealing with quarter end rebalance tomorrow (pensions $19B to sell https://tinyurl.com/4mbae6cr [tinyurl.com]

• Shutdown a non-event for market but will get headlines today with Trump meeting

• JOLTS tomorrow, Jobs and ISM Fri

• At this point going to open above 6650 resistance, opening the door to make another run at 6700

• US Money supply rose at fastest pace since July 2022 to $22.2T

• Q3 earnings shaping up to be strong https://tinyurl.com/bxyyfdyn [tinyurl.com]

• GS Positioning: nowhere near euphoria https://tinyurl.com/546ey7fk [tinyurl.com]

• Insider selling picking up https://tinyurl.com/2fswhjd8 [tinyurl.com]

Futures

DOW +201

S&P +36

Nasdaq +175

Charts/Sentiment

Financials / Consumer / Healthcare

Cannabis stocks including Tilray (TLRY +20%), Cronos (CRON +8.4%), and Canopy Growth (CGC +12%) are trading higher in the US premarket session after President Donald Trump posts video on social media Sunday that touts medical benefits of “hemp-derived CBD” for seniors.

CART - INSTACART SHARES FALL 2.5% AS KROGER EXPANDS DOORDASH COLLAB

DUOL: M-sci mixed saying churn up y/y and us gross adds continue under pressure

FI - pact to acquire StoneCastle Cash Management, a company that maximizes FDIC insurance coverage for clients. Terms of the deal were not disclosed.

WMT / AI UTILIZATION TO KEEP LIP ON HEADCOUNT: plans to hold its headcount flat over the next three years despite rising sales as the company aggressively utilizes AI to revamp its entire workforce (WSJ)

NVO – MS downgrades to Underweight, lowers PT to $47 on GLP-1 Growth

Technology

Semi Movers – INTC: -1.5% (+43% last 2 weeks) ... ALAB +4% on 25k shrs (-19% last wk; up 10 out 12 weeks) ... GFS +4% squeeze cont (+8% winner given domestic footprint) .... WDC +3.7% Edgewater positive

AAPL – 0.2% planning to release a revamped, AI-enhanced version of Siri in March, and is utilizing a proprietary ChatGPT-like app to test some of the underlying technology (Bloomberg)

APP – +3% MS hiking PT to $750; bullish init @ Philips Sec - "see as a leader in performance-driven mobile games advertising with impressive oper margin of 76%. It expects the cos ad rev to cont to grow at 55% annually in 2025, led by technology advancement and business expansion"

ASML – are up 1.2% after Mizuho Securities upgraded the semiconductor-manufacturing company to buy from neutral.

AVGO – OpenAI and Broadcom have run into difficulties in the process of developing OpenAI’s own ASIC. The report also mentions that Jensen Huang feels very uncomfortable about OpenAI’s in-house ASIC development (not sure source; have only seen the headline)

GOOGL – Oct 1st - ‘Gemini is coming to Google Home’

EA – Continued from Friday - rise 5.3% on plans to be acquired by an investor consortium comprised of PIF, Silver Lake and Affinity Partners for $210/share in cash, representing an enterprise value of about $55 billion.

LRCX – are up 3.4% after Deutsche Bank upgraded the semiconductor capital equipment company to buy from hold.

NVDA – +60bps but off highs - small downtick on headline regarding Huawei aiming to double high-end AI chip output next year

OKLO – +4% Barclays bullish - views Oklo as levered way to invest in the small modular reactor theme. As a developer, owner and operator of assets, Oklo can cash flows from the facilities that it puts into place from power purchase agreement; says Oklo currently has 14 GW of non-binding agreements with various customers. If the company is successful in deployment and commercialization, the stock could have material upside potential from current levels .. neutral on SMR

Huawei – aims to double highest end AI chip output in 2026 – Bloomey

Industrials 

US defense stocks are rising (RTX +1.9%, LHX +1.7%, LMT +2%, BA +0.8%) after the Wall Street Journal reported that the US Department of Defense is pushing missile suppliers to quickly double or even quadruple production rates.

CNM – initiated buy at UBS; $65 PT

GD – upgraded to buy from neutral at Seaport Research Partners; $376 PT

GT – downgraded to underweight from equal-weight at Morgan Stanley; $6.88 P

SMR – initiated equal weight at Barclays; $45 PT

OKLO – initiated overweight at Barclays; $146 PT

VSEC – initiated outperform at Wolfe Research; $190 PT

Latest Media

$SNAP - We think there could be value!

P/S: 30x to 3x, why?

Stock based comp = 27% of rev since IPO!