Morning Note

Trading Observations

• Headline risk still elevated, but reversing the late sell-off yday

• LVMH + ASML positive reaction to earnings helping with TSM tomorrow

• More banks on the docket after yday's strong results... BAC + MS higher on first blush

• A close above 6720 will calm the waters, 6550 the big support level to hold

• Notable, smalls held with a new closing high with Growth breaking out https://tinyurl.com/2t7mcmdf [tinyurl.com]

• Small caps relative to large showing signs of life as well, new 8 month highs https://tinyurl.com/2zuyt9uu [tinyurl.com]

• Smalls even poking their heads up vs. QQQ https://tinyurl.com/ycu9723m [tinyurl.com]

• The 2 year below 3.5%, screaming for cuts https://tinyurl.com/2kzr3k8t [tinyurl.com]

Futures

DOW +195

S&P +50

Nasdaq +251

Charts/Sentiment

Financials / Consumer / Healthcare

DLTR - reaffirms its FQ3 and F25 guidance and outlines a 12-15% EPS CAGR for ’26-’28, including 17-19% EPS growth in F26 (the 17-19% EPS outlook for F26 is a bit better than the consensus forecast of ~16%

PNC - Solid Q from PNC, modest PPNR beat driven by fees, solid credit supporting EPS outperformance.

BAC +3% this am on a beat across the board…

GS warns of looming layoffs as AI reshapes Wall Street (mentioned that right after they put up a pretty sweet qtr yesterday)

PZZA - a big gainer after Apollo reportedly submitted fresh bid to take company private for $64 a share. 

HIMS - Hims & Hers Health said it is now providing menopause care, marking the company's latest push into hormone-replacement therapies.

GRND gains 3.6% after the company said its largest shareholders are exploring an acquisition that would take the company private at no less than $15 a share, confirming an earlier media report.

Technology

OpenAI reportedly working on new revenue lines, debt partnerships and further fundraising to make good on $1T in spending commitments.

AAPL: expand its manufacturing operations in Vietnam as the country continues to diversify away from China (the firm plans to launch a slew of new home devices in 2026 and 2027) (Bloomberg)

AI Hard Catalyst Path: ORCL CloudWorld in Vegas; NET: Cloudflare hosting Connect; Dreamforce in SF ongoing .... 10/15: HPE Analyst Day ..... 10/28: NVDA | Jensen keynote at GTC DC in Washington .... 10/28-30: Adobe MAX in LA .... 11/11: AMD Investor Day.. 11/17-21: Microsoft Ignite – SF .... 11/19: Nvidia earnings .... 12/1-5: AWS re:Invent (decent catalyst in '24)

AMZN: Jeff Bezos filed a Schedule 13G disclosing ownership of 964.3M Amazon shares, representing 9% of the company

ASML: +4% qrtr ok (better margins vs sales miss); KEY bookings ahead (EU5.4B vs St EU4.9B) driven by memory (+VE LRCX). EUV bookings of €3.6b in 3Q is the highest since 4Q23 (15-16 tools) ... Prior '25 guide unch; sees Q4 sales slightly better. Mgmt now says it doesn’t expect sales to be below 2025 (more color on 2026 coming in January) .... Expect China customer demand in 2026 to decline significantly vs 2024/25

CART: Guggenheim neutral launch - questions whether Instacart's "best days are behind or ahead" of it. The co's slower growth relative to peers and competitive pressures make Instacart a "show me" story

CRWV - AI Startup Poolside, CoreWeave Plan Massive West Texas Data Center, Companies Say -- WSJ

DASH: Gugg positive - expects Marketplace gross order volume growth to outpace growth in the overall delivery market in the coming years, fueled by volume, while investments in grocery and retail "will turn from a meaningful profit drag to a tailwind over the intermediate- to long-term"

ETSY: 3p data here has turned better in early Oct which is helping support the ChatGPT Instant Checkout is driving incremental sales narrative

CRM: Dreamforce in SF (‘investor & analyst session’ @ 4pm ET) ... Day 1 / Benioff pretty dull - likely remains viewed as a funding short

LYFT - Lyft buys the luxury chauffeuring company TBR Global Chauffeuring for about $110 million in cash plus additional contingent costs.

MPWR - Oppenheimer & Co raised the target on Monolithic Power Systems Inc. to $1,200 from $800. Maintains outperform rating.

GOING NUCLEAR / SMR (OLKO, HOND, LEU, SMR) : "The U.S. military is making one of its most significant pushes yet into modern nuclear power with a program to put small reactors on Army bases across much of the country where strained power grids can’t keep up with rising energy demands." (WSJ)

OKLO: +6.7% in pre on 300k shrs ... up 6 out of 7 sessions (+27% last five sessions)

ORCL (OP, $365) AI World Day 1 Quick Takes - Product announcements, keynotes and sessions. Oracle drove home hte message of the transformational nature of AI. But it also drove home another more important message (for investors): getting the benefits of AI at Enterprise - leveraging enterprise data co-mingled with foundational model data to securely drive outcomes - is complicated and risky.

HPE: Analyst Day @ 3pm ET

NVDA: upgraded @ HSBC (better late than never?) - sees potential for "significant" earnings upside in Nvidia's fiscal 2027 on renewed chip on wafer on substrate allocation momentum. Nvidia's "aggressive" fiscal 2027 CoWoS wafer forecasts at TSMC will drive upward revisions to 2027 datacenter rev ests; also believes potential easing of China GPU uncertainties following a potential U.S.-China trade deal could enable Nvidia to see a demand recovery in the Chinese market

Industrials 

Amphenol (APH) Raised to Buy at BofA; PT $150

Fortive (FTV) downgraded to neutral from overweight at JP Morgan; $53 PT

GE Vernova (GEV) downgraded to sell from neutral at Rothschild & Co Redburn; $475 PT

Hillenbrand (HI) – Lone Star in advanced talks to acquire Hillenbrand

MasTec (MTZ) downgraded to neutral from buy at Guggenheim Securities

Nextracker (NXT) and T1 Energy sign multi-year agreement for supply of solar panel frames. NXT +3% pre-mkt on the news.

Primoris Services (PRIM) downgraded to neutral from buy at Guggenheim Securities

Roper Technologies (ROP) downgraded to underweight from neutral at JP Morgan; $541 PT

Sunrun (RUN) Raised to Market Perform at BMO; PT $19

Pool Corp (POOL) Cut to Market Perform at William Blair

SiteOne Landscape (SITE) Cut to Market Perform at William Blair

Watsco (WSO) Cut to Market Perform at William Blair

Latest Media

$JPM and many big banks trading at >2x P/B.

We keep saying valuation matters, especially in the medium to long run.

Another example, coupled with the history of returns when purchasing at current levels.