Transcript

Increasingly Grumpy. · ANGLES.

0:01
SPEAKER_00: Increasingly grumpy, my weekly market review, October 18th, 2026.
0:09
SPEAKER_00: Deadly Houthi attacks in Saudi Arabia over the weekend,
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SPEAKER_00: and Trump throwing his weight behind Putin and his war on Ukraine
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SPEAKER_00: by lifting some Russian energy sanctions and shutting down satellite access to
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SPEAKER_00: the Ukrainian military,
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SPEAKER_00: pushed oil prices higher again as the 11th bull market in stocks since
0:27
SPEAKER_00: the 1950s celebrated its fourth birthday.
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SPEAKER_00: During which time the S&P 500 has risen by 117%,
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SPEAKER_00: to start a week packed with Q3 earnings reports and critical inflation data.
0:43
SPEAKER_00: While bond traders took the day off for Columbus Day,
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SPEAKER_00: energy price concerns offset broad earnings optimism when stocks opened on Monday
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SPEAKER_00: and the indexes finished a quiet session moderately lower.
0:56
SPEAKER_00: The previous week's scare caused by the Financial Times OpenAI revenue story was
1:02
SPEAKER_00: a warning shot across the bow of the whole big tech AI ecosystem
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SPEAKER_00: and emphasized just how vulnerable this corner of the stock market is
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SPEAKER_00: to any perceived downturns in the fortunes of just a handful of companies.
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SPEAKER_00: An alarming chip semiconductor sell-off in South Korea overnight on the back
1:23
SPEAKER_00: of potential Chinese competition Generated more tech jitters in New York
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SPEAKER_00: on Tuesday morning,
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SPEAKER_00: but center stage was occupied by a flurry of pre-market earnings reports.
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SPEAKER_00: Index heavyweights JP Morgan,
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SPEAKER_00: Goldman Sachs,
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SPEAKER_00: and United Healthcare all initially jumped higher
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SPEAKER_00: after announcing largely impressive results,
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SPEAKER_00: but Citibank,
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SPEAKER_00: Wells Fargo, and Johnson & Johnson sank after disappointing to varying degrees.
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SPEAKER_00: The net effect on stocks of the slew of earnings reports,
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SPEAKER_00: likely easing interest rates,
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SPEAKER_00: and concerns surrounding geopolitics and big tech AI lean neutral to negative,
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SPEAKER_00: and the indexes close fractionally in the red.
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SPEAKER_00: Bank of America failed to meet expectations with its earnings on Wednesday morning
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SPEAKER_00: and confirmed a $1.2 billion fine for money laundering and sanctions bustling.
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SPEAKER_00: Morgan Stanley also failed to wow Wall Street,
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SPEAKER_00: and both stocks were punished by an increasingly grumpy stock market,
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SPEAKER_00: which is not in the mood to tolerate earnings misses.
2:33
SPEAKER_00: But the big news was the final CPI report before the midterms.
2:37
SPEAKER_00: Early voting is already underway in 17 states,
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SPEAKER_00: which is also likely to anchor the conversation at
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SPEAKER_00: the next Fed interest rate meeting on October 28th.
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SPEAKER_00: It showed annualized U.S.
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SPEAKER_00: retail inflation accelerating to 3.7%, driven mainly by increased fuel costs.
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SPEAKER_00: This was deemed to add a little weight to the recently diminishing probability of
3:01
SPEAKER_00: an October increase in the Fed funds rate.
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SPEAKER_00: Short and medium term interest rates shifted higher,
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SPEAKER_00: but the stock indexes got trashed,
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SPEAKER_00: especially the NASDAQ,
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SPEAKER_00: With more of the tech stock carnage in South Korea spilling over into US markets.
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SPEAKER_00: CoreWeave,
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SPEAKER_00: a poster child for stretch valuation stocks with zero profitability and massive
3:27
SPEAKER_00: and increasingly costly debt, got completely hammered.
3:31
SPEAKER_00: Asian markets had another rough session,
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SPEAKER_00: and the tech wreck in the US continued on Thursday morning as money rotated out
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SPEAKER_00: of big tech AI stocks into more defensive names and into bonds,
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SPEAKER_00: which had a strongly moderating effect on interest rates.
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SPEAKER_00: Things weren't helped by the PPI data showing the biggest jump for years
3:53
SPEAKER_00: in annualized wholesale inflation, now up to 6.3%.
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SPEAKER_00: Retail sales are gradually slowing as the American consumer begins to finally show
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SPEAKER_00: the first signs of spending fatigue.
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SPEAKER_00: The pullback in interest rates,
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SPEAKER_00: however,
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SPEAKER_00: triggered something of a recovery in stocks as the session wore on,
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SPEAKER_00: and the indexes clawed their way back to finish flat for the day.
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SPEAKER_00: As soon as U.S.
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SPEAKER_00: markets opened on Friday morning,
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SPEAKER_00: money continued to fly out of big tech and AI stocks and
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SPEAKER_00: into other sectors like financials and healthcare, but mainly into bonds and cash.
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SPEAKER_00: It was announced that the U.S.
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SPEAKER_00: federal budget deficit widened to nearly $2 trillion for the 2026 fiscal year,
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SPEAKER_00: a 12% increase on the $1.78 trillion gap recorded last year.
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SPEAKER_00: Federal government spending rose by about 6%, while tax receipts increased about 3%.
4:53
SPEAKER_00: The combination of the never-ending conflict in the Middle East
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SPEAKER_00: and Ukraine's resumption of strikes on Russian energy infrastructure sent
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SPEAKER_00: the oil price screaming higher to top $110 since the first time since May.
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SPEAKER_00: The result was another miserable day for the stock indexes, which closed deep in the red.
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SPEAKER_00: With the tech-heavy NASDAQ 100 getting battered amidst another rout of
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SPEAKER_00: the semiconductor and memory universe ahead of tech earnings kicking off in
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SPEAKER_00: the next few days.
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SPEAKER_00: For the week,
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SPEAKER_00: the S&P 500 and NASDAQ 100 large cap indexes,
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SPEAKER_00: US small caps and international stocks all finished substantially lower.
5:37
SPEAKER_00: Some other things I'm thinking about.
5:39
SPEAKER_00: Tariffs,
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SPEAKER_00: rising interest rates,
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SPEAKER_00: persistent inflation,
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SPEAKER_00: and soaring fuel costs have driven the average price for a new vehicle to
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SPEAKER_00: above $50,000, according to a recent analysis by Kelly Blue Book.
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SPEAKER_00: Another survey found that vehicle pricing was the most cited reason
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SPEAKER_00: for customers walking away from a purchase at 66%.
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SPEAKER_00: Financing costs came in as the second most frequent reason at 47%.
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SPEAKER_00: The average price of gas at the pump has now been above $4 a gallon
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SPEAKER_00: for 160 days this year, breaking 2022's all-time record.
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SPEAKER_00: It may not always have felt like it,
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SPEAKER_00: but when the S&P 500 fell by 1.1% on Wednesday,
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SPEAKER_00: it snapped a run of extraordinary stock market stability.
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SPEAKER_00: With 52 trading sessions having passed since a 1% plus down day in the index,
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SPEAKER_00: the longest such streak on record.