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.

Monday – Consumer Credit

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.

Trading Observations

• Market able to rally Fri despite rising yields (which was a surprise), not so fortunate so far as both 2/10 have pushed back thru 4% and curve has re-inverted

• Market has priced in 25bps for Nov now, and my view is if yields settle here at 4%, market will find its footing quickly

• CPI Thurs, AMZN prime days Tues/Wed, TSLA roboevent Thurs

• Earnings start to trickle in later in the week ahead of the ramp next week

• 5765 resistance 5670-5675 support....

Upgrades – BABA, ALLY, ALTM, CPB, COTY, BASE, CPNG, DT, ESTC, FRO, GILD, IART, MHK, NFLX, NXPI, TYL, WAL

Downgrades – AMZN, AXP, AME, CE, CRL, CIEN, STZ, DECK, DD, GRMN, HALO, HSY, HUM, INTA, KBH, LW, LEN, MBLY, NFLX, SHW, SITC

Futures

DOW -164

S&P -23

Nasdaq -105

10-Year Yield - back above 4%, turning back into a headwind

Oil - Middle East Tensions fueling move higher

BITCOIN

Consumer/Financial Healthcare

Bank Earnings Preview – Baird sees the group risk/reward going in as balanced on stronger spread revenue and good fee revenue but negative loan growth and higher expenses. No credit problems likely to pop up.

JPM Bank Preview – Calls Investment Banking the key to earnings. In consumer finance they are upgrading ALLY and downgrading AXP.

CMA – Downgraded to underperform at BAC.

PII – Polaris dealers reported weak demand down mid to high single digits on payment sensitive buyers tightening their belts per Baird.

WYNN receives the first commercial gaming license from the UAE – Reuters

HIMS - Hims & Hers Health indicated to join the S&P Smallcap 600, replacing Vector Group. Hims & Hers shares rose 5% in post market trading.

Technology

NFLX, GRMN and HSY among notable downgrades; AAPL assumed hold vs prior buy. a few sell-side downgrades in tech (including NFLX at Barclays and AMZN at Wells Fargo) while TSLA was the subject of a somewhat cautious Barron’s cover story over the weekend ahead of that firm’s robotaxi event later in the week. CIEN and MBLY downgraded at JPM.

AAPL / Jefferies Asian analyst negative: initiates on Apple and downgrades HOLD (Edison Lee). Believes AI doesnt take off until iPhone 18 - its smartphone hardware needs significant rework to support serious AI, with a likely timeline of 2026/27 as packaging and memory wont be ready until then.

• AAPL: sitting just above its 50D / $222.67

AMZN DOWNGRADE: Wells Fargo cutting - "positive est revision story faces multiple headwinds; Web Services strength alone is not enough and there is limited visibility into a resumption of positive est revisions until the July 2025 guide"

AMD: Advancing AI event 10/10: performance since Sept 1 impressive (+15% versus SOX +93bps; NVDA +465bps) ... stock has traded well into event. A large upgrade to the data center GPU revenue guidance for 2024 (which currently stands at >$4.5B) would obviously be received well, but this probably won’t happen)

• NVDA: up 8 out of 10 sessions although has massively lagged AMD since print

NVDA - NVIDIA’s AI Summit kicks off Monday, running from Oct. 7-9 in Washington, D.C. The three-day event will bring together industry leaders to explore how AI can tackle some of society’s biggest challenges. With a focus on healthcare, cybersecurity, manufacturing, and more, the summit will highlight AI’s potential to drive innovation across key sectors.

GOOGL’s dominance of the search market is gradually eroding thanks to Amazon, TikTok, and AI firms (Google’s share of the search ad market is expected to soon drop below 50%) - WSJ

Foxconn reported Q3 sales ahead of mgmt. and Street expectations (revenue rose 20.2% Y/Y to $57.3B), with robust AI server performance and a sequential improvement in consumer electronics thanks to new product launches (i.e. iPhone) – Reuters 

META on Friday unveiled a new AI tool that can generate or edit videos based on text commands – Bloomey

MSFT the subject of a cautious WSJ Heard on the Street article focusing on the company’s massive capex (which will weigh on free cash flow and margins) - WSJ

MU - DRAM slowing: DigiTimes - DRAM, flash momentum slows: Memory packaging and testing bracing for a soft 4Q24

Industrials 

BA ~ to restart negotiations today with its striking unions, with both sides summoned back to the table by a federal mediator.

Air Products (APD) holder Mantle Ridge reportedly builds ~$1B stake with plans to seek changes -- media report – separately, APD upgraded to buy at Vertical research and upgraded to outperform at Evercore ISI

Ametek (AME) downgraded to sell from hold at TD Cowen

Barnes Group (B) to be acquired by Apollo Funds for $47.50/sh cash

Canadian National Railway (CNI) upgraded to overweight from equal weight at Wells Fargo Securities

Celanese (CE) downgraded to sector weight from overweight at KeyBanc

DuPont de Nemours (DD) downgraded to underweight from equal weight at Barclays

KB Home (KBH) downgraded to Underweight from Equal Weight at Wells Fargo

Lennar (LEN) downgraded to equal weight from overweight at Wells Fargo

Mobileye Global (MBLY) downgraded to underweight from neutral at JP Morgan

Mohawk Industries (MHK) upgraded to Equal Weight from Underweight at Wells Fargo

Sherwin-Williams (SHW) downgraded to sector weight from overweight at KeyBanc

Vertiv Holdings (VRT) initiated buy, $129 PT at Jefferies

QQQ seasonality reminder

• Few things of interest - for the BULLS

  • Risk appetite at 11 month low RyanDetrick [x.com]

  • Weight of the evidence remains on their side granthawkridge [x.com]

  • Citi surprise index continues to ramp KevRGordon [x.com]

  • And NASI close to breaking out - IF it does should see breadth expand meaningfully ConnorJBates_ [x.com] 

• For the BEARS

  • Short-term, stochastics/Dow diverging McClellanOsc [x.com]

  • And equity put/call at extreme low reading SethCL [x.com] 

  • Longer term need to watch: trucking employment rolling over bravosresearch [x.com]

  • Home buying conditions at lowest ever bravosresearch [x.com]

  • fwiw - insiders not buying Barchart [x.com] ....