Calendar

This Week – It’s all the Fed. 100% chance of 25bps, 70% chance of 50 bps as of this morning.

Tuesday – Retail Sales

Wednesday – Fed Meeting

Thursday – Jobless Claims, Philly Fed, Existing Home Sales, DRI, FDX, LEN Earnings

Trading Observations

• All green early

• Now pricing a 70% chance of 50bp

• 2yy suggests this is only the start of the easing

• Last three years- SPX +26%, Nasdaq +16%, Russell 200 -2%

• IWM has stalled around 220, we will see

• Allocations to Defensive sectors are elevated [bloomberg.com], renewed AI confidence could spark another leg higher

• Speaking of leading indicators- Broker/Dealers, Homebuilders, Semis all show life.  Can the Transports engage?

• Seasonality reminder- per GS, since 1928, the median S&P 500 return is negative for 10 out of the last 11 days in Sep

• ATHs are in sight after six consecutive positive days.  Support is 5600, then 5525

Futures

DOW +133

S&P +25

Nasdaq +136

10-Year Yield

BITCOIN

Consumer/Financial Healthcare

SCHW was one of the top financials during Monday’s trading session after the company reported a positive update on Aug business trends (including net new assets of $32.8B, up from $4.9B in the prior year).

SQ, FI – Baird positive on Square/Block and Fiserv as they are the fastest growers in the payments group, yet trade at a group median valuation.

V, MA – August data released from Credit Unions imply stable debit and credit trends.

COF – August statistics not as bad as ALLY earlier as auto delinquencies improved and credit cards were a mixed bag.

HUM – Falls to its lowest valuation relative to the S&P since 2014.

NYCB – Upgraded at Ray Jay.

INVH, AMH – GS out with a note on competitive dynamics. High levels of supply in single family rental markets (largely the South/Good Weather) has pushed absorption of units slowing and rents declining. Supply is now likely constrained for a while, which should help a recovery from here. Occupancy rates.

Technology

MSFT announced new $60B share repurchase program and boosted quarterly dividend by nearly 11%. (they refresh the buyback and bump the dividend every year at this time)

INTC extending Monday's rally with help from a series of announcements after the close, including the production of an AI fabric chip for AWS on Intel 18A.

MRVL: -1.6% neg read from INTC/AWS headlines

AMZN is set to kick off its annual Prime Big Deal Days event on October 8-9.

PLTR:+1.5% added to BofA US 1 list ... Retail driven / well followed

HPE: +3% upgraded @ BofA - sees the oppty for significant cost cuts, a cyclical recovery across servers, storage and particularly networking; revenue and increased cost synergies with the upcoming Juniper acquisition

WDAY: Analyst Day 5pm ET To buy Evisort

SNAP: Partner Summit today - focus on AR / VR / Hardware; also Monday - TikTok testified this am as part of their effort to avoid a ban that takes effect in Jan '25 ... stock has firmly been in penalty box since print

TikTok: a panel of federal judges sounded skeptical about TikTok’s legal arguments as the company combats a recent bill that would force the platform to be sold or face a US ban (NYT)

APP climbs 2.6% in premarket trading following an upgrade of the software maker to buy at UBS on improving revenue growth visibility.

Industrials 

AeroVironment (AVAV) downgraded to market perform from outperform at Raymond James

GE Vernova (GEV) upgraded to buy at BofA

Regal Rexnord (RRX) believes lower half of FY24 outlook range is more likely; introduces new three year financial targets ahead of Investor Day

SolarEdge Technologies (SEDG) downgraded to underperform from hold at Jefferies

BA – Ryanair’s CEO thinks the Boeing strike could last another 3-4 weeks - Bloomey