Things You Need to Know
- OpenAI and AMD are engaged! Investors celebrate!
- Call Options in AMD surged – on FRIDAY! Before the news hit the tape!
- Gov’t shutdown? Who cares! Stocks push higher.
- Trumps signals a willingness to talk – the media describes it as ‘cracking.’
- The ball is in Schumer’s court…..AOC breathing down his neck – not in a good way…
- Try the Pink Sauce
This is all you need to know……Semi-conductors are on FIRE!
“AMD and OpenAI Announce Strategic Partnership to Deploy 6 Gigawatts of AMD GPU’s”
Ok – ‘Under this agreement – AMD will supply OpenAI with the GPU’s to power large scale AI workloads’ -Investors went nuts on that headline – AMD surged by 37% in the pre-mkt – it traded as high as $226/sh – up from Friday’s close of $164.67. By the time the day was over – AMD was up $39/sh to end the day at $203.71.
Now – NVDA did not participate in the surge – it lost 1.1%, but again – here is where you have to stop and think. NVDA just made a deal with OpenAI on September 22nd….in what was called a ‘strategic partnership with OpenAI to deploy 10 gigawatts and invest $100 billion in OpenAI…. this on top of the $5 billion investment in INTC…. Jensen is doubling down on AI – these deals will generate HUGE chip demand…..so yesterday’s announcement caused Danny Newman – CEO at Futurum Group to declare that this deal makes NVDA the ‘best AI play by an inconceivable margin’. (Defined as – so large it’s hard to imagine or believe!)
As you can imagine – anything ‘tech’ was up on the day….Semi’s + 3%, Disruptive Tech (ARKK) + 3.7%, Next Gen Web (ARKW) + 2.7%, Cyber + 0.9%, The Growth Trade – SPYG + 0.5%, the QQQ’s up 0.75%, and the Quantum Stocks just won’t quit either….RTGI+4%, IONQ +7.8%, QBTS +7%, QTUM +2.1%.
AMD CEO Dr. Lisa Su had this to say.
“We are thrilled to partner with OpenAI to deliver AI compute at massive scale. This partnership brings the best of AMD and OpenAI together to create a true win-win enabling the world’s most ambitious AI buildout and advancing the entire AI ecosystem.”
OpenAI’s Sammy Altman added that.
“This partnership is a major step in building the compute capacity needed to realize AI’s full potential. AMD’s leadership in high performance chips will enable us to accelerate progress and bring the benefits of advanced AI to everyone faster.”
And interestingly enough – the ‘benefits of advanced AI’ was seen in options related activity on Friday – Oct 3rd….Reports tell us that there was significant options activity in AMD – specifically 8 million NEW call option contracts were added to the existing open interest…all this just 48 hr. before this announcement…..Amazing how that happens!
Call options give the buyer the right – but not the obligation — to buy – in this case – AMD at a predetermined price (called the strike price) within a specified time period (up to the option’s expiration date). And here is the KEY: Investors buy call options when they expect the price of the underlying asset to rise above the strike price before the option expires. Ding, Ding, Ding – we have a winner!
In any event – stocks pushed higher…for most of the day with the exception of the DOW names….while they tried to join in the fun, they went negative early on and never recovered….by the end of the day the Dow lost 63 pts, the S&P added 25 pts the Nasdaq added 161 pts, the Russell up 10 pts, the Transports added 50, the Equal Weight S&P lost 4 while the Mag 7 added 482 pts or 1.5%!
Gov’t shutdown? Let’s be clear – nobody really cares – why? Because from the market’s perspective, it’s the same story – they create all the drama, they create hysteria and then in the end – they make a deal. Now if it does drag on much longer, then maybe the markets start to pay attention – like it did in 2018 – that shutdown lasted 35 days (5 weeks)….and saw the S&P give back about 15%…..which it promptly recovered when the drama ended. So far – we are in the second week, and the market has gone higher and btw – the prediction markets are betting that this ends by next week.
Again, the gov’t shutdown is not a reason to panic. Trump has ‘signaled a willingness to strike a deal’ with the Democrats – Sen Majority John Thune has been saying that all along – but it has to be ‘After the gov’t re-opens’. What we do know is that Senator Jeanne Shaheen (D:NH) and Senator Susan Collins (R:ME) are ‘talking’ and Senator Markwayne Mullin (R:OK) is reaching across the aisle to talk to Democrats – but they have to re-open the gov’t first, period the end. In a desperate move – Minority leader Hakeem Jeffries has challenged Majority leader Mike Johnson to a televised debate to discuss the issues. That is not happening…. the time to discuss it was last month. Let’s see who blinks first.
Now bonds gave up a little ground – the TLT and TLH lost 0.8% and 0.6% respectively. Over the past month – we have seen treasuries rally sending yields lower – testing 4%. As of last night – treasuries have given back some of those gains causing the 10 yr to rise and kiss its short term trendline at 4.19%. The 30 yr has done the same thing – we tested as low at 4.6% – 2 weeks ago and last night the 30-yr yield ended at 4.725% – just 5 bps below the trendline. Remember – we are not in the ‘panic zone’ yet. Yields on the 10 yr need to kiss 4.5% while the 30 yr has to kiss 5% before it becomes an issue for the markets.
Oil is trading at $61.30 this morning — after dipping as low as $60.40 last week. Crude gave up about 8.5% last week as chatter built that Saudi Arabia and OPEC+ were set to open the spigots and raise production.
Over the weekend, OPEC+ clarified its plan — yes, they’re boosting output, but not as much as the market expected. They’re clearly trying to stay ahead of what’s expected to be a supply glut coming in 2026.
So, prices bounced a bit higher — hardly a surprise. That said, oil is still below all three key trendlines, and most analysts still see it testing the mid- to high-$50s as we head into early 2026.
Gold continues to hold steady at $3,960. The shutdown is now in its second week, key eco data is on hold until that’s over – and so gold appears to be churning as it waits for an end to the shutdown and a clarification about what the FED does next. Right now, the market is still expecting a 25-bps cut.
US futures are essentially flat. …. Dow futures are down 75 pts, S&P’s down 4, Nasdaq and Russell are flat.
PEP and DAL are set to report on Thursday – word is that analysts are bracing for a weak PEP report… and a ‘cautiously optimistic’ DAL report. And then next week it’s all about the big banks…starting on the 14th….
September CPI is due out on the 15th and PPI on the 16th. But if the government is still shut down by then, we won’t get the latest inflation prints — and that’s going to stir up all kinds of chatter about what the Fed should do next.
I remain in the camp that the Fed won’t be flying blind. You can’t convince me they won’t know what the NFP report looks like — shutdown or not. They’re the ones setting policy, and I simply don’t buy the idea that they’d be cut off from that data.
The market still expects a 25-bp rate cut. Stevey Miran will keep pushing for more, but the rest of the committee isn’t there.
European markets are a bit higher – even as the French gov’t implodes. The resignation of the newest PM Sebastien Lecornu plunging the country into another fresh political crisis…. Here is the issue – Macron needs to go…. but we don’t get to vote in that election, we have our own issues here to worry about! Elsewhere in Germany – factory orders were disappointing.
The S&P closed at 6,740 up 24 points. With little to no new eco data being reported – the focus will continue to be on DC and what they are doing vs. what they are NOT doing. Expect more chatter about the latest AI news and who the next beneficiary will be…. And while we never go that expected September pullback, October has just begun…Earning season is only days away now – let’s see how this shapes up. In any event – Enjoy the ride!
Here’s your new countdown:
7 days until earnings season kicks off.
22 days until the next Fed decision.
45 days until Black Friday — although AMZN’s Prime Day starts today and ends tomorrow. Expect discounts across all categories – and expect it to become a barometer of consumer demand. AMZN is pushing hard for early markdowns as they try to build momentum and engage shoppers. Estimates call for an increase of 14% y/y growth – yet there are some analysts who remain cautious given inflation and an exhausted consumer.
And only 78 days until Christmas.
Let’s review your plan. Call me for a complimentary, no-obligation portfolio analysis: 561-931-0190.
Take good care,
Sources: Bloomberg, CNBC, Reuters, Wall Street Journal
Disclosure: The content provided in this material is designed for educational and informational purposes only, and it is important to note that it does not constitute personalized recommendations. This commentary is not nor is it intended to be relied upon as authoritative or taken in substitution for the exercise of judgment. The comments noted herein should not be construed as an offer to sell or the solicitation of an offer to buy or sell any financial product, or an official statement or endorsement of Kenny Polcari or SlateStone Wealth.
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.
While considerable effort has been invested to ensure the accuracy and dependability of the information presented, we must clarify that we cannot guarantee the accuracy of third-party information. Our usual sources for third-party data include channels such as Bloomberg.
Spaghetti in Pink Sauce
“Pink sauce,” or salsa rosa, is a relatively modern Italian-American creation. In Italy, the traditional mother sauces were either red (tomato-based) or white (cream or béchamel). When Italian immigrants in the mid-20th century found fresh cream plentiful in America, they began adding it to classic tomato sauces to make a velvety, slightly sweet, rose-colored sauce.
You need: 1 stick (8 tbsp) unsalted butter, plus 1 more for finishing, olive oil, 1 large Spanish onion, chopped, 2 medium carrots, chopped, 2 celery stalks, chopped, 2 cans (28 oz each) kitchen-ready crushed tomatoes. s&p, heavy cream (room temperature), freshly grated Parmigiana Reggiano, 1 lb. pasta (spaghetti, linguine, penne, rigatoni, fusilli — your choice)
Melt 1 stick of butter with a splash of olive oil in a large heavy pot over medium heat. Add the chopped onions, carrots, and celery. Cover and cook gently on medium heat so the vegetables soften in their own steam — about 20 minutes, stirring occasionally.
When the carrots are soft to the touch, transfer to a food processor and puree until smooth. Return the puree to the pot.
Add the crushed tomatoes, bring it to a gentle boil, then reduce it to a simmer. Season with s&p, cover, and cook for 20 minutes, stirring occasionally. Turn the heat off and let it rest for 5 mins and then stir in the room temp heavy cream. Adjust how “pink” you want it by adding more or less cream. Stir in 2 generous handfuls of grated Parmigiana Reggiano.
Bring a large pot of salted water to a boil. Cook the pasta until al dente, about 8–10 minutes. Strain the pasta always reserving a mugful of water.
Melt the second stick of butter and toss it with the drained pasta to coat. Ladle in 3 scoops of the pink sauce, toss well. Add in a splash of the pasta water to keep moist, then plate the pasta and top each portion with another spoonful of sauce. Always have extra grated Parmigiana on the table.
Buon Appetito!