Calendar

This Week – 20 Fed speakers, but no Powell should all drown out in noise. This would be a key negative pre-announcement week for some into bank earnings which kick off Friday.

Tuesday – DOJ decision on GOOGL?

Wednesday – Mortgage Applications

Thursday – TSLA Robotaxi, CPI, Jobless Claims, DPZ and DAL earnings.

Friday – PPI, Bank earnings begin with JPM, WFC, BK, BLK.

Upgrades – AFRM, HUM, SNCY, UFPI, UWMC, WAT, WFC

Downgrades – ALB, AXP (2 cuts), CME, STZ, FYBR, MSFT, OMF, OTIS, QCOM, SYNA

Trading Observations

• China didn't deliver, and HK down big

• But more importantly, yields stabilizing, so we are trying to bounce (most technicians view 4.25% on the 10yr as the BIG level)

• Number of Fed speakers today as we await earnings later in the week.  25bps now expected in Nov

• PEP lowering guidance on weaker sales growth - consumer or pricing too stretched ?   

• 5690 continues to hold 5650 next.  5765 resistance....

• Oscillators pushing toward oversold Scot1andT [x.com]

Futures

DOW +54

S&P +22

Nasdaq +74

10-Year Yield

Oil

Consumer/Financial Healthcare

August RV Retail – Down 14% y/y in August. Tracking down 10% YTD.

Baird’s top Retail Picks – Defensive – BJ, VVV, CHWY, Share Gainers – WMT, COST, TSCO, Storm Exposure and Rate Sensitive – HD, LOW, FND.

ACN – Announced selling $5B in notes at 4.2% (please don’t buy these, we beg of you, Treasuries pay 4.5%).

AFRM – Up 5% - Upgraded at BTIG on path to profitability as margins can be fixed given they were overspending related. They also downgraded AXP to sell, down 1%.

ARES – To buy GCPs ex-China assets for up to $5.2B, $3.7B to start. 

PEP reported EPS essentially inline for FQ3 at 2.31 (vs. the Street 2.30), but organic revenue growth fell short of expectations at +1.3% (vs. the Street +3%). EPS was bolstered by healthy margins (op. margins of 17.9% were about 50bp above plan).

Technology

Megacap Tech: group has fallen victim to aggressive rotation ... Bouncing: NVDA+1.3%, MSFT+1%, GOOGL/AMZN/AAPL +0.5%, META +0.1%

MSFT – Downgraded at Oppenheimer warns AI revenue overestimated. 

NVDA: +1.8% in pre, extending breakout above neg trend line ($130 major level resistance to watch). Monday saw nice move on volume (+22% vs 20D avg) ... increasingly clear the supply chain is doing all it can to ensure Blackwell product gets out the door. HON HAI Chairman told Bloomberg that demand for the next-gen Blackwell chips was “crazy,” echoing similar remarks from Jensen last week.

AI: ex NVDA, seems like AVGO / META/ TSMC favored names to quickly increase AI exposure in public markets

ANET: Citi positive / remains crowded AI long ... raised its 2024 growth outlook for "Big Four" cloud data center capex from 40% to 50% y/y, based on the strength of 1H'24 data center spend and positive company commentary/guidance

CART: outperformer in ALPHA ystrdy ... why? (1)Co is expanding the advertising solutions offered on the in-store "Caper Carts" - not a huge driver of the business today but it is a bit more open-ended as they can generate ad revenue from shoppers in physical retail locations that aren't Instacart shoppers; (2)1.3mm shr distro @ MS - heard not much supply; (3)From Conf few wks ago: few ppl taking Fidji’s comment on Q3 as a blessing of the top end of guide: “We have delivered 2 qrtrs of double-digit growth, and we have double-digit growth at the high end of our Q3 guide”; (4)CART CEO is speaking at tmrw

DOCU: +5% inclusion to S&P Midcap 400 index

GOOGL: shares hit Monday after Co was ordered by a judge to make it easier for Android users to download apps and make app-based payments outside of the restrictive confines of the Google Play app store (Bloomberg)

UBER: WSJ headline hit 5:50am ET - Uber starts $18 Shuttle Service between Manhattan and LaGuardia Airport

SMCI (yesterday) says it is shipping over 100K GPUs per quarter, and that it has delivered 2K liquid cooled racks since Jun-24 – Reuters

Industrials 

BA continuing negotiations today with its striking factory workers.

Albemarle (ALB) downgraded to hold at CFRA

General Motors (GM) hosting an Investor Day today

Honeywell (HON) announces plan to spin off advanced materials business to shareowners

Leonardo DRS, Inc. (DRS) - Leonardo CEO calls Drs a "fundamental asset"; will not sell any more shares -- Sole24Ore citing CEO

Otis Worldwide (OTIS) downgraded to peer perform from outperform at Wolfe Research

Sun Country Airlines (SNCY) upgraded to outperform from peer perform at Wolfe Research