Things You Need to Know
- October closes on a plus tick — bulls still charging.
- Narrowing market breadth raises eyebrows (Hindenburg Omen alert).
- Earnings optimism and rate-cut hopes overpower the bears.
- Oil up, Gold down, Bonds down, Yields up.
- US seals the rare earth deal with China.
- Try the Stuffed Baby Pumpkins
And October ends on a plus tick – be sure to give a shout out to AMZN +$21 or 9.6% and AAPL – which did end down 0.4% (after surging higher in the pre-mkt and early trade) for giving solid forward guidance. Remember they took AAPL up 12.5% over the past 2 weeks, so a bit of consolidation is nothing to worry about.
Stocks closed higher on Friday as the bull continues to charge ahead. All the indexes posted gains even as concern over narrowing breadth starts to rear its ugly head. (Recall the Hindenburg Omen that got triggered on Thursday.) Geo-political risks, the ongoing US gov’t shutdown and stretched valuations are at the top of the list of concerns.
But for now, investors, traders and algo’s are focused on the earnings excitement and expectations of further rate cuts to continue to overwhelm anything negative while the AI/Rare Earths and energy demand stories only get more exciting.
As the week came to a close: Dow +40 pts, S&P +17 pts, Nasdaq +144 pts, Russell +13 pts, Transports +160 pts, Equal Weight S&P +16 pts, Mag 7 recovered 410 of the 945-pts lost on Thursday.
Month to date for October: Dow: +2.5%, S&P 500: +2.3%, Nasdaq: +4.7%, Russell 2000: +1.7%, Transports: +1.2%, Equal Weight S&P: –0.9%, Mag 7: +5.7%.
That divergence — the S&P higher while the Equal Weight index fell — is yet another reminder that there’s plenty of churn beneath the surface and the rally that we are seeing is concentrated in the tech space –
Note the ytd performance of the Nasdaq + 22.8% and the Mag 7 at 25.4% – well outperforming the Dow at +11.8%, the S&P + 16.3%, the SMID’s are up 11.2% the Transport at -0.02% and the Equal Weight S&P at +7.2%. Now, this is not a reason to be panicked but is a reason to stay vigilant.
Year-to-Date Sector Performance so far looks like this: Tech: +29.3%, Communications: +25.8%, Industrials: +17.5%, Utilities: +17.45%, Financials: +8.2%, Consumer Discretionary: +7.2%, Healthcare: +4.7%, Energy: +3.0%, Basic Materials: +2.2%, Real Estate: +0.7%, Consumer Staples: –0.6%.
Now, I’d say that’s not bad at all considering how so many politicians, economists, analysts, and strategists spent the early part of the year creating hysteria and panic — warning us that Trump’s tariffs and trade policies would blow the place up.
Well, not only did that not happen, but you could argue those same tariff and trade policies are the very reason the economy remains strong — and why the outlook heading into the new year looks even stronger.
Will any of them admit how wrong they were? Don’t hold your breath…..Not happening.
The bond rally has stalled for now after JJ blew a hole in the December rate cut narrative – saying that it is NOT a foregone conclusion….. while Dallas Fed President Lorie Logan, Cleveland President Beth Hammack and Kansas City’s Jeffrey Schmid all made clear that they voted to do nothing in October (think concerns about inflation) – which leads you to believe they will vote the same way in December.
Expect their remarks to raise the temperature in the room about where to go next…Do we support a supposed weak labor market (unemployment currently running at 4.3% – historically considered full employment) or do we reign in the cuts to try and prevent inflation from spinning out of control. Just fyi, we have 6 weeks to discuss this…. December 10th is the next announcement.
On Friday – the TLT lost 0.3% while the TLH lost 0.15%. The 10 yr is now yielding 4.08% up from 3.96% while the 30 yr is yielding 4.65% up from 4.55%.
Fed Liquidity Injection – A Stealth QE Test Run?
And that brings us to Friday’s other headline — the Fed quietly added $29.4 billion into the system via overnight repos, marking the largest single-day liquidity operation since 2020.
Now, expect the usual chorus to scream that the Fed is manipulating markets, but let’s be clear — this was a short-term loan, not a QE reboot. The goal was to ease short-term funding pressures and keep both the repo and equity markets running smoothly — in other words, prevent stress in one corner from spilling into the others.
The cash will roll off over the next 14 days, so it’s not an explicit or ongoing commitment. But — and this is key — if we start seeing multiple $20–30 billion injections week after week, it begins to look and feel like stealth QE.
So, stay tuned for the FOMC minutes on November 19th — we may get more color on the MBS runoff and just how far the Fed is willing to go to keep liquidity flowing.
Oil and Gold – Two Different Stories
Oil traded a bit higher on Friday — up 31 cents at $60.88. OPEC+ announced that they’ll move forward with a December production increase but plan to pause starting in January as they deliberately try to recalibrate the oil markets and avoid the glut everyone’s been warning about.
That pause is nothing more than risk management amid what’s being viewed as uneven demand — and please, don’t buy into the “waning Chinese demand” narrative. Nobody’s buying it. Demand is alive and well — just ask any of the massive AI data centers that do nothing but suck it up 24/7.
For now, crude remains comfortably within its $55–$62.50 trading range.
Gold, on the other hand, continues to pull back — falling $22 on Friday and down another $6 this morning. It’s now trading below $4,000 again as it searches for stability — and that floor may still be lower.
Look, the rally in gold was tremendous, but the reasons for the move are starting to fade. With rate cuts no longer guaranteed and trade tensions calming, that safe-haven bid is losing steam — leaving us at a technical crossroads.
The chart shows near-term support around $3,830, but if that fails, we could see a move down to the $3,650 area — and below that, intermediate support at $3,590.
Over the weekend we learned that the US has succeeded in making yet another deal that should change the course of history. The US and China have reached a deal on rare earths, in fact the WH issued a ‘fact sheet’ on Saturday outlining the details. In a Bloomberg article, the story is that.
“China will effectively suspend implementation of additional export controls on rare earth metals and terminate investigations targeting US companies in the semiconductor supply chain. Under this deal, China will issue general licenses valid for exports of rare earth, gallium, germanium, antimony and graphite for the benefit of US end users and their suppliers around the world.”
The story goes onto say that ‘China will also terminate its antitrust, anti-monopoly and anti-dumping investigations into US chip companies’.
But to be clear – Scotty (Bessent) remains wary of China saying that ‘unfortunately, at times, they have proved to be unreliable partners. Ok then, let’s see if that changes, but for now markets are celebrating.
US futures are higher on the back of the China news and ahead of another big week of earnings….at 5 am – Dow futures are +80, S&P’s +30, the Nasdaq +145 and the Russell is up 4.
This week brings us more earnings… this morning before the bell we will hear from LQDA, FUBO, CIFR, BRKR, ARES, ON, IDXX and after the bell – we will hear from 15 more…CLX, SNDX. HOLX, STRL, NVTS, VRTX, O, CRK, PLTR, HIMS along with a few others.
The gov’t is still shutdown, but we will get S&P US Manufacturing PMI – expected to be 52.2 and ISM Manufacturing PMI – expected to be 49.5 – leaving one in the expansion zone while the other is the contraction zone.
European markets are higher…. It’s a big week across the zone for earnings as well. Riksbank (Sweden) is expected to announce their latest rate decision on Wednesday, and then Thursday brings the BoE rate decision. Germany’s Bundesbank will also release their latest ‘stability report’. At 5 am – markets across the zone are up between 0.1% – 0.8%.
The S&P closed at 6,840 – up 17 pts. We are 80 pts off of the all time high, while we are 200 pts above the trendline. Once again, investors have no gov’t data, and it looks like we will have another month of NO NFP data – which is due out on Friday…. So, here’s the deal — the markets have had a great run. The Fed’s still in play, the bond rally’s catching its breath, and liquidity is quietly being managed behind the curtain. Meanwhile, oil’s steady, gold’s wobbling, and stocks continue to defy the doomsayers.
Bottom line: the bulls are still in control — but the ground is shifting just enough to keep everyone on their toes. Stay focused, stay disciplined, and don’t get sucked into the noise. Because in the end, discipline always beats drama.
Countdown
34 days into the Gov’t shutdown — and it’s getting HOT here.
26 days until Official Black Friday
52 days until Christmas
58 days until the ball drops in Times Square
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
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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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Stuffed Baby Pumpkins (Butternut/Pumpkin Risotto)
Ok – what a great dish for the holiday that is only 4 weeks away. Use the pumpkins to stuff with the Butternut/Pumpkin Risotto.
You get the little pumpkins – you know the ones – take them home – slice off the tops – discard the seeds- save the tops. – place a dab of butter in the center and then place in a roasting pan with the lids on. Drizzle with oil and roast in a 400-degree oven until they soften some – but do not collapse – maybe 35/40 mins.
Remove and let cool. Once cooled using a spoon scrape the ‘flesh’ away from the outer skin…. careful not to pierce. Place in a bowl to use in the risotto.
Now make the Pumpkin/Butternut Squash Risotto –
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 Parmegiana Cheese, olive oil – and the kicker – 3 tblspn of Mascarpone Cheese. –
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 and the flesh from the pumpkins. Mix well. Now fill each pumpkin with the risotto so that it is overflowing a bit, place the lid back on and set it in a large serving platter for the presentation. It’s a great way to brighten your dining room table and your guests will love it.
Buon Appetito!