Calendar

Monday: Japan Carry Trade

Tuesday: Trade balance, CAT, TAP, YUM, UBER, ABNB earnings

Wednesday: HLT, DIS, LYFT earnings

Thursday: Jobless Claim, Fed’s Barkin

Friday: Weekend 

Trading Observations

• PPI was a bit cool after CPI was a bit warm yesterday, and the market is deciding what it thinks of all this, which is likely to amount to nothing. The real story over the past few weeks has been that yields have spiked as 10-year yields have gone from ~3.6% to 4.1% today despite a 50bps rate cut from the Fed. The Fed is going to have to stimulate demand for long bonds somehow, or any comeback in housing, which is the best driver we have on the board going forward, is likely to fizzle. That said, interest rate policy in our opinion is the slight of hand and deficit spending is the real driver of inflation, which remains out of control.

Futures

DOW -2

S&P -4

Nasdaq -56 (TSLA is 3%)

10-Year Yield has Spiked, Stock Market Does Not Care (yet)

Consumer/Financial Healthcare

Bank/Financial Earnings – BAC +2%, WFC +3%, JPM +1.5%, BK +1%, BLK +2% -

• Blackrock now has $11.5T in assets after a private credit push.

• WFC beat on investment banking.

• JPM beat on both net interest income and a strong investment banking fees. Equity Trading wasn’t too shabby either. Jamie Dimon probably deserves CEO of the decade.

• BAC is higher on news Berkshire’s ownership is now below 10%, which means we won’t see Uncle Warren’s sales on a real time basis anymore.

Luxury Goods – GS negative on the space after China has made it a tough one, and it likely has 6 more months of difficulty. Q3 comps +0% vs +1% in Q1. They prefer LVMH, CFR, BCU, ZGN, WOS and YACHT.

Chinese Real Estate – GS positive on price stability coming next year, but negative on lack of stimulus, netting out to neutral.

HUM, UNH – HUM down 3% on another negative catalyst, this one being a ratings decline. UNH fared better and is +1%.

AFRM – Upgraded to overweight at Wells. Has been a theme.

Florida hotel names that might see an uptick due to displacements – HST, PEB, XHR, BHR.

Technology

TSLA – Down 6% on skepticism over robotaxi event. People disliked “could go into production 2026” and “could cost $30k”.

UBER, LYFT – Higher on “toothless” robotaxi event. UBER +5%, LYFT +3%. LYFT has better short squeeze potential in our opinion.

PLTR – Seeking Alpha says “It’s time to get off the train” up 120% in the past year. We would agree the 30x revenue multiple is not justified.

NVDA – GS raising their PT to $150, reiterate buy after a conference presentation talking up demand.

EBAY – Baird talking up further growth prospects.

Industrials 

STLA – First of all, Stellantis needs to change its name to Jeep/Chrysler. None of us know what a Stellantis is. Second, the stock is down 4% on a further management shakeup.

KMI – Upgraded to Buy at BAC.

RACE – Ferrari up 2% on a JPM upgrade saying China weakness is overblown.