Things you need to know.
– TSLA CRUSHED IT…Stock +22% Energy generation/Storage +52%
– IBM/HON disappoint- put pressure on the Dow.
– Eco data remains robust, Bond Yields Rise…
– What will JJ do at the next meeting?
– Try the Pumpkin/Butternut Squash Risotto
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TSLA beats on all measures ‘Lonnie” ‘delivered a BLOW OUT quarter’ and raised his next worth by $33.5 billion – bringing his total new worth to $270.3 billion as TSLA comes roaring back…..(And that is sure to send Lizzy, Bernie, Chucky, Hakeem, ‘the Squad’ and the rest of the DNC into a tailspin as they ‘change the rules’ to take his money by promising to make him ‘pay his fair share’ – recall he pays billions in taxes)
The latest forecast up 30% in vehicle sales next year while his CyberTruck finally generated a quarterly profit, Autonomous vehicles are a KEY growth area – with robotaxi’s due out in 2026 while their energy storage business was up 52%. Musk – telling investors that he expects TSLA will become the most valuable company in the world, ‘and probably by a long shot’. At the end of the day the stock was up 22% or $46.80 at $260.48.
And so, stocks rose…. for the first time this week……Treasuries rebounded just a bit – pushing yields lower, while Gold continues to flirt with $2750 ish, and Oil lost 45 cts to end the day at $70.30.
At the end of the day – the Dow lost 140 pts – IBM, HON, UNH, JNJ & BA – all putting pressure on the index while GS, HD, MCD, CRM, AMZN & JPM tried hard (but failed) to erase any losses….The S&P gained 12 pts, the Nasdaq up 140 pts, the Russell up 5, the Transports lost 10 while the Equal Weight S&P added 2 pts.
We saw gains in the Mag 7 – led by TSLA while UPS – a broad economic barometer rose by 5% after they reported better numbers and a return to sales and profit growth. IBM and HON though, disappointed and failed to inspire investor appetite and in fact – both came under pressure taking the Dow lower.
Eco data continues to show a robust economy and that continues to put pressure on the FED – because the current narrative is NOT what he told us it was. (Thus, get ready for NO rate cut in November). Yesterday saw New Home Sales up a whopping 4.1% while both Chicago and Kansas City Business Activity was better then expected. Manufacturing and Services PMI’s also both better than expected (but manufacturing remains in contractionary territory while services remain in expansionary territory). Initial Jobless Claims fell by 20k jobs.
Earnings continue to run at an 80% beat rate – which is a bit better than the average (but remember – the bar was low) but we still have 3 weeks to go to the end of earnings season…and with only 11 days until ‘election day’ do not discount some volatility ahead. In the end – as my friend Tom Essaye (7’s report) says.
“Goldilocks data that’s in line with expectations (not too good or too bad) is the best outcome for a continued rebound in stocks and bonds.”
Now 10 yr. treasuries which had ended Wednesday yielding 4.25% lost 4 bps and ended yesterday at 4.21%. The 2 yr. is yielding 4.06% while shorter duration 3 month and 6-month bills are yielding 4.46% and 4.50% respectively. 30 yr. bond yields are now yielding 4.46% and that yield is up 15.3% since JJ ‘cut’ rates….
Now remember this- the 30 yr. bond is an inflation risk proxy….bond prices and yields sensitive to both current and ‘anticipated’ inflation…… the 30 yr. bond includes a risk premium for future inflation expectations – so if inflation is expected to rise – investors will demand higher yields to compensate for the loss of purchasing power….Capisce? So, let me repeat – 30 yr. bond yields are up 15.3% since JJ promised to cut rates because inflation is (was) trending lower (10 yr. bond yields +16%) ……Well, boyz…So, WHAT is bond market is telling us? Just sayin’. At some point – the gov’t is gonna have to stop spending or they are gonna have to raise taxes significantly. You choose!
Oil declined on the idea that supply will overwhelm demand and if Donny wins and he opens the spigots (the conflicts around the world were not an issue yesterday) – then expect supply to continue to rise…and that will annoy the Saudi’s (because prices will decline) so, don’t be surprised if the Saudi’s open up their spigots driving the price of oil even lower to punish US and other swing producers (recall what happened in 2017/2018). In any event – it is what it is and today oil is trading up 35 cts at $70.54 – remaining tied to the trendline at $70.56.
Gold is down $15 this morning at $2733….as traders ‘take profits and lock in recent gains. Gold remains in the $2700/$2800 trading range.
US futures are up Dow futures + 85, S&P’s up 14, Nasdaq +60 while the Russell is up 10 pts. Eco data today includes Durable Good (exp -1%), Capital Goods Ordered (exp +0.1%) while Capital Goods Shipped (exp 0%). We will also get the U of Mich sentiment surveys…. not a mkt moves. Next week is a HUGE eco data week – NFP due out on Friday….and that will be the focus……as it is out 7 days BEFORE the next FED announcement.
Earnings today include AON, CL, HTZ, MPW, & NYCB – nothing to write home about…. for me – only CL is the one that speaks to the consumer and the economy because everyone touches something that Colgate-Palmolive sells…. Toothpaste, toothbrushes, shampoos, deodorants, soaps, laundry products, dishwashing detergents, as well as pet nutrition products…. etc. CL is up 25%, they pay a 2% divy – nothing ‘sexy’ not everything has to be ‘sexy’ – you do need some boring and stability!
European mkts are up slightly…. between 0.1% and 0.4%.
The S&P closed at 5809 – up 12 pts…. Futures are up this morning…. some of that a direct result of the ‘excitement’ around earnings and what next week’s numbers will say…. It is a BIG week for tech and the hyperscalers….so expect all kinds of activity and volatility….Remember – stick to the plan…do not make emotional decisions…Remember – I still want to see us shake the branches a bit more…..but there is already talk of a ‘super rally’ into year-end….something I do not think will happen….rally yes, SUPER rally ah…not so much but maybe if DJT wins? Only time will tell……Trendline support is at 5670 – down 2% from here….
Remember – Do not go changing your portfolio based on who will live in the WH…. politics do not price stocks in the long term – although it can and does create short term chaos and long-term opportunity.
Successful investing is a marathon not a sprint. Click on the link to send me a message – I’m happy to discuss.
https://slatestone.com/contact-us/
Take good care.
Sources: Bloomberg, CNBC, Reuters, Wall Street Journal
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The market commentary is the opinion of the author and is based on decades of industry and market experience; however, no guarantee is made or implied with respect to these opinions, which may not necessarily align with our firm’s standpoint.
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Kenny Polcari is the Chief Market Strategist for SlateStone Wealth. Neither Kenny nor the partners of SlateStone Wealth are compensated in any manner by the issuers of any securities mentioned in the publication.
Pumpkin/Butternut Squash Risotto
It is that time of year…. you see the pumpkins all around….it is fall, the air is brisk and this weekend you need to try this great hearty dish. Easy to make because you BAKE this one and it is delicious to eat……
You will need: Chicken Broth, Arborio rice, Butternut squash, 1 1/2 cups of pumpkin puree (not the pie filling that you buy in the store – you need real pumpkin puree), large diced onion, chopped fresh basil, plenty of fresh grated Parmegaina Cheese, olive oil – and the kicker – 3 tblspn of Mascarpone Cheese. – (Mascarpone is a soft white cream cheese from the Lombardy region of Southern Italy.
It is the result of the culture being added to the cream skimmed off the milk used in the production of Parmegiana. It has the consistency of soft cream cheese and is used in a variety of Italian dishes including deserts)
Preheat the oven to 400 degrees.
In a baking dish – combine the rice, cut up butternut squash, the pumpkin puree, diced onion and the chicken broth. Season it with a bit of s&p and mix well. Cover it tightly with a lid or with tin foil and place in the middle rack in the oven. Re-visit it in 10 mins intervals and stir. It will be done when most of the broth has been absorbed and the rice is no longer hard. This should not cook any longer than 40 mins max.
Remove from the oven and add – the Parmegiana, the Mascarpone and the chopped basil – mix well (but do not smash the butternut squash) and serve immediately in warmed bowls.
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Buon Appetito
