- 0:04
SPEAKER_00: The earnings focus shifted from financials to tech
- 0:11
SPEAKER_00: and tech-adjacent companies reporting over the next couple of weeks,
- 0:14
SPEAKER_00: which will help set the narrative going into this week's FOMC meeting and
- 0:19
SPEAKER_00: the midterms, which are now just days away.
- 0:23
SPEAKER_00: European traders watched France burning over the weekend and got back
- 0:26
SPEAKER_00: to work selling local stocks and bonds on Monday,
- 0:30
SPEAKER_00: But Wall Street rebounded hard from the NASDAQ 100's worst week of the year amid
- 0:36
SPEAKER_00: the recent chip stock wipeout.
- 0:39
SPEAKER_00: Dip buyers swarmed in in a frenzy of bargain hunting right from the opening bell,
- 0:45
SPEAKER_00: which sent many of Wall Street's recent tech victims soaring,
- 0:49
SPEAKER_00: pushing the stock indexes solidly higher by the close.
- 0:54
SPEAKER_00: Initially,
- 0:54
SPEAKER_00: Monday's rally reversed when markets opened on Tuesday as anxiety returned
- 1:01
SPEAKER_00: about circular financing and AI debt levels,
- 1:04
SPEAKER_00: but attention soon turned to the upcoming earnings blitz beginning after
- 1:09
SPEAKER_00: the closing bell.
- 1:12
SPEAKER_00: The mood brightened a little in anticipation,
- 1:14
SPEAKER_00: helped also by rumored progress in the U.S.-Iran talks,
- 1:19
SPEAKER_00: and the indexes closed the session unchanged,
- 1:23
SPEAKER_00: although nothing could save CoreWeave stock, which continued to nosedive.
- 1:30
SPEAKER_00: Coming into its Q3 earnings report, Netflix had shed over $135 billion in value this year,
- 1:37
SPEAKER_00: There was nothing in the disappointing report to spark any confidence in
- 1:41
SPEAKER_00: an imminent turnaround.
- 1:55
SPEAKER_00: Elsewhere,
- 1:56
SPEAKER_00: United Airlines and General Motors also both missed forecasts
- 2:01
SPEAKER_00: and gave worrying profit and sales outlooks.
- 2:04
SPEAKER_00: But SpaceX, Supermicro Computer and 3M handily topped analyst estimates.
- 2:11
SPEAKER_00: When markets opened on Wednesday,
- 2:13
SPEAKER_00: a picky Wall Street set about punishing Tuesday's earnings disappointments,
- 2:19
SPEAKER_00: but rewarding the upside surprises,
- 2:22
SPEAKER_00: while at the same time bracing for more big reports after the close.
- 2:27
SPEAKER_00: The net result was nicely higher stock indexes by the end of the session.
- 2:32
SPEAKER_00: Earnings after the bell were mixed, however.
- 2:35
SPEAKER_00: Meta and IBM mostly exceeded expectations,
- 2:39
SPEAKER_00: but Tesla announced falling revenues and the stock dropped heavily in
- 2:43
SPEAKER_00: the aftermarket.
- 2:46
SPEAKER_00: Wall Street seems unable to keep an AI narrative going one way or another for more
- 2:51
SPEAKER_00: than a couple of days at a time,
- 2:53
SPEAKER_00: and the tech trade dramatically fell apart again on Thursdays.
- 2:58
SPEAKER_00: Severely dragging down all the indexes,
- 3:01
SPEAKER_00: but particularly the NASDAQ 100,
- 3:03
SPEAKER_00: which got absolutely pummeled as AI debt concerns flooded back.
- 3:08
SPEAKER_00: Even Meta was crushed despite its solid earnings report.
- 3:14
SPEAKER_00: The declines were further fueled by another surge in oil prices
- 3:17
SPEAKER_00: to new five-month highs,
- 3:20
SPEAKER_00: with traders on edge at the suggestion of an imminent resumption
- 3:23
SPEAKER_00: of US-Israeli bombings.
- 3:27
SPEAKER_00: Bonds were the main beneficiaries from the flight of assets from chip stocks,
- 3:31
SPEAKER_00: and interest rates cascaded lower,
- 3:34
SPEAKER_00: with the crucial 10-year Treasury rate falling back below 5%.
- 3:38
SPEAKER_00: And finally, slender signs of mortgage rate relief.
- 3:44
SPEAKER_00: The big tech AI bloodbath and the jump in bond and oil prices eased on Friday,
- 3:51
SPEAKER_00: but all failed to reverse their moves.
- 3:54
SPEAKER_00: Three of the magnificent seven report in the coming days,
- 3:57
SPEAKER_00: and Wall Street seems afraid of being caught offside.
- 4:02
SPEAKER_00: For the second week in a row,
- 4:03
SPEAKER_00: the S&P 500 and NASDAQ 100 large cap indexes
- 4:07
SPEAKER_00: and international stocks all finished lower,
- 4:10
SPEAKER_00: but US small caps ended up in the green.
- 4:14
SPEAKER_00: Some other things I'm thinking about.
- 4:17
SPEAKER_00: Confirmation came in last week
- 4:19
SPEAKER_00: that US residential real estate market is rapidly grinding to a halt.
- 4:24
SPEAKER_00: The number of closings on sales of existing homes collapsed last month
- 4:29
SPEAKER_00: to its lowest level since records began.
- 4:32
SPEAKER_00: Sky-high prices,
- 4:34
SPEAKER_00: supply being wrecked by holders of COVID-era mortgages staying put,
- 4:39
SPEAKER_00: and the trajectory of mortgage interest rates are all clearly to blame.
- 4:45
SPEAKER_00: No region was spared, but the West and the South are suffering the most.
- 4:50
SPEAKER_00: And it's not as if new construction is coming to the rescue either.
- 4:55
SPEAKER_00: New single-family home building is back to early pandemic-era lows,
- 5:00
SPEAKER_00: with the home builders getting throttled by the same rise in borrowing costs
- 5:04
SPEAKER_00: that is scaring away potential buyers,
- 5:07
SPEAKER_00: not to mention labour shortages due to immigration enforcement and exorbitant lumber
- 5:13
SPEAKER_00: and energy costs driven up by tariffs, inflation and war.
- 5:19
SPEAKER_00: Heading into the midterms,
- 5:20
SPEAKER_00: Trump is facing record levels of unpopularity,
- 5:23
SPEAKER_00: with two-thirds of all Americans failing to approve of his presidency,
- 5:27
SPEAKER_00: including 91% of voters aged below 30,
- 5:32
SPEAKER_00: two-thirds of whom cite antagonism towards Trump as their number one motivation
- 5:37
SPEAKER_00: for even voting at all.
- 5:39
SPEAKER_00: The president's volatile character could lead
- 5:42
SPEAKER_00: to some market-impacting surprise moves out of desperation before the polls open
- 5:47
SPEAKER_00: on November 3rd,
- 5:49
SPEAKER_00: But the most likely outcome is divided government,
- 5:52
SPEAKER_00: legislative gridlock,
- 5:54
SPEAKER_00: presidential vetoes,
- 5:56
SPEAKER_00: possible impeachments, and the never-ending prospect of more government shutdowns.
- 6:04
SPEAKER_00: This could all make for a turbulent financial market in the next two years and
- 6:10
SPEAKER_00: the lead-up to the 2028 election.