Closing Volume

- NYSE volume 9% below its one-month average

- NASDAQ volume 4% above its one-month average

- VIX index: down 3.48% to 15.80

Breadth

Sectors

% Movers

Nasdaq 100 Heat Map

Advancers

Decliners

Earnings After the Close (Mon Oct 27)

Earnings Before the Open Tomorrow (Tues Oct 28)

No trades today... yet.

With dog issues, I totally forgot I have to attend a conference between 10 a.m. and 1 p.m.! With Ollie’s issues later today, I will try my best to post throughout the day. But my posts will be quite short; back full time tomorrow! 

From Peter Boockvar: 

A few things of importance

Any agreement between the US and China will be less a deal than the realization that both countries really need each other with respect to trade. Getting China to buy more soybeans or easing their delivery of rare earth magnets or reducing the tariffs we put on them (which we mostly pay for) and providing more tech products is all just going back to the way things were as we entered the year (outside of US export controls on certain semis). If there is a lesson to learn here also is that limiting China’s access to US technology has backfired as all we have done is create a tremendous competitor that will soon catch up to us. We also sped up their desire to be more independent of us trade wise and thus we are losing a major customer and gaining a major competitor. Again, economics will ultimately trump (no pun intended) ideology it seems with any deal agreed upon and the desire of some to decouple from China commercially is just delusional as we both really need each other, for now.

While markets are celebrating today the outlines of a framework deal, they didn’t seem to be too worried about no deal with markets at record highs last week. A bull run though is a bull run. The Chinese market response was higher too with the Hang Seng up 1% and the Shanghai comp up by 1.2%. The Nikkei, with hopes for the new PM, jumped another 2.5%. Sitting out today’s party though were European bourses which are all flattish. Global bond yields are modestly higher. On the commodity side, copper prices are popping higher but oil prices are lower. Gold continues to take its deserved breather.

Congrats to Javier Milei whose party won the midterm vote and thus will give him more time and help to implement a free market approach to their economy that has been breaking down the barriers to commerce that have been building for decades.

The October German IFO business confidence index rose .7 pts m/o/m to 88.4, just above the estimate of 88. The improvement was all in the Expectations component which rose to a 3 yr high as the Current Assessment slipped a bit. The IFO said simply, “Companies remain hopeful that the economy will pick up in the coming year.”

To some earnings calls.

From Proctor & Gamble:

Organic sales “rounded up to 2%. Volume was in line with prior year. Pricing and mix were each up 1%. Growth continues to be broad based across categories and regions with 8 of 10 product categories growing or holding organic sales.”

“Focus markets were up more than 1%. Organic sales in North America were up 1%. Consumption in our categories decelerated throughout the quarter with unit volumes essentially flat for both markets and P&G brands.”

“Consumers are a bit more careful in terms of purchase decisions and consumption. The market gets tighter. And some of the competitive response is increased promotion.” I bolded.

“Our fiscal ‘26 outlook now includes approximately $500 million before tax in higher costs from tariffs. While this is an improvement to the isolated tariff impact, keep in mind that there are other offsetting impacts including related supply chain investments and adjustments to pricing plans also assumed in our guidance.”

“a good part of the consumer continues to move into larger pack sizes. They shop in mass in club and online. And so we need to make sure that we have the right value offering there and we’re working on that with all of our retail partners. And then some consumers continue to live paycheck to paycheck and they are looking for a smaller cash outlay. They’re really looking at low promoted prices so they can stretch the paycheck a little bit longer and we’re again very intentionally driving our competitiveness there.”

From Decker’s, and whose stock fell 15% Friday:

“In the US, consumer sentiment is still under pressure, but we are encouraged by the signs of progress we have seen in our business and have maintained our focus to ensure HOKA and UGG remain positioned for long term success.”

UGG was weaker than HOKA. “UGG DTC was softer than anticipated, as we have continued to experience pressures from better in stock positions with our wholesale partners due to increased allocations delivered earlier in the year in an effort to match the demand that has continued to build in recent years.” Also, “A more challenging macroeconomic environment for the US consumers, with shifts in consumer preference toward multi brand in store shopping experiences. Additionally, we believe these factors will continue to have an impact on UGG growth in the second half.”

With guidance, “Our first half demonstrates the strength of these brands. For the back half, we are anticipating a more cautious consumer as the full impact of tariffs and price increases will be felt here in the US.“ My bold.

On tariffs, “we now expect the unmitigated tariff impact on fiscal year 2026 to be approximately $150 million. Further, we now estimate that our mitigation efforts for this fiscal year will offset approximately $75 million to $95 million of this pressure, including benefits from select strategic and staggered pricing increases as well as partial cost sharing with factory partners.”

Illinois Tool Works described the macro as “a pretty challenging demand environment” and “just given the choppy demand environment, we’re maybe taking a more measured, a more cautious approach to our guidance here as we go into Q4.”

Upside:

-SOHO +132% (to be acquired for $2.25/shr by JV backed by Kemmons Wilson Hospitality Partners)

-RNA +43% (confirms to be acquired by Novartis at $72/shr for $12.0B in cash)

-BBAR +41% (companies with significant exposure to Argentina rise following President Milei strong legislative election performance)

-BMA +39% (companies with significant exposure to Argentina rise following President Milei strong legislative election performance)

-GGAL +38% (companies with significant exposure to Argentina rise following President Milei strong legislative election performance)

-DYN +36% (strength off RNA acquisition by NVS)

-EDN +29% (companies with significant exposure to Argentina rise following President Milei strong legislative election performance)

-TEO +24% (companies with significant exposure to Argentina rise following President Milei strong legislative election performance)

-ZBIO +22% (Phase 2 MoonStone Trial of Obexelimab in Relapsing Multiple Sclerosis met primary endpoint and expects to initiate global Phase 3 trial of orelabrutinib in patients with Secondary Progressive Multiple Sclerosis (SPMS) in 1Q26)

-PUMP +17% (secures 60MW data center power contract)

-CLRB +13% (receives Rare Pediatric Disease Designation from U.S. FDA for Iopofosine I 131 in Relapsed or Refractory Pediatric High-Grade Glioma)

-JHG +13% (confirms Trian and General Catalyst bid at $46/shr cash)

-DQ +9.7% (earnings, guidance)

-KDP +9.5% (earnings, guidance; announces capital-efficient $7B strategic investment co-led by Apollo and KKR)

-NMRA +9.5% (announces Class-Leading Weight Loss Demonstrated with NMRA-215 in Preclinical Diet-Induced Obesity Model)

-RCAT +8.3% (Red Cat and Palantir demonstrate GPS-denied navigation breakthrough on Army Black Widow drone)

-BBIO +7.9% (intends to file BBP-418 NDA for approval with FDA in 1H26; Phase 3 Results for Small Molecule BBP-418 in LGMD2I/R9 FORTIFY Study successfully achieved all primary and secondary enpoints)

-ELBM +7.4% (advances Idaho Cobalt-Copper Assets)

-ARLP +6.9% (earnings, guidance)

-MELI +6.0% (companies with significant exposure to Argentina rise following President Milei strong legislative election performance)

-GME +5.2% (White House reposts ‘console wars’ declaration)

-PPTA +5.2% (raises $255M in equity)

-CABA +4.5% (7 of 8 lupus patients with sufficient follow-up achieved DORIS or renal response)

-ADM +4.3% (strength off Treasury Secretary Bessent comments on soybeans)

-LULU +3.8% (reportedly entered an arrangement with the National Football League and sports merchandiser Fanatics Inc. to develop a line of fan apparel)

-FIVE +3.6% (JPMorgan Chase and Co Raised FIVE to Overweight from Neutral, price target: $186 from $154)

-CADE +3.4% (Huntington Banchsares to acquire Candence Bank for $7.4B)

-MCW +2.9% (Stephens Raised MCW to Overweight from Equal Weight, price target: $6.25 from $7.50)

-SANM +2.6% (completes its acquisition of the ZT Systems data center infrastructure manufacturing business from AMD)

-AMD +2.3% (SANM completes its acquisition of the ZT Systems data center infrastructure manufacturing business from AMD)

-NVDA +2.2% (momentum)

Downside:

-NTLA -45% (temporarily paused patient dosing and screening for MAGNITUDE and MAGNITUDE-2 Phase 3 clinical trials of nex-z for patients with transthyretin amyloidosis with cardiomyopathy (ATTR-CM) and polyneuropathy (ATTR-PN), respectively)

-GNTA -35% (enters into securities purchase agreement with institutional investors for 4.3M ADS at $3.50/ADS)

-OGN -19% (appoints Company Executive Joseph Morrissey as Interim CEO and Board Chair Carrie Cox as Executive Chair; announces Results of Audit Committee Investigation)

-HBAN -5.4% (Huntington Banchsares to acquire Candence Bank for $7.4B)

-AREC -5.3% (weakness ahead of potential China/US trade agreement)

-CRSP -5.3% (lower in sympathy with NTLA)

-NEM -4.9% (hearing company exploring deal for Barrick assets)

-RVTY -3.0% (earnings, guidance; announce share buyback program)

Treasury Auctions Today

11:30 a.m.: Treasury hosts an $86 billion 3- and a $77 billion 6-Month Bill Auction;

11:30 a.m.: Treasury hosts a $69 billion 2-Year Note Auction;

1:00 p.m.: Treasury hosts a $70 billion 5-Year Note Auction

Economic Calendar for the Week

From JPMorgan:

US: Futs are higher as US / China establish a framework of a deal ahead of the Trump / Xi meeting this week. Pre-mkt, NDX and RTY are outperforming as the framework deal is boosting Semis / Mag7 while rare earth plays are under pressure. AMD, AVGO, and NVDA are +2%+ with all Mag7 higher by 86bp to 236bp. Cyclicals are outpacing Defensives with parts of Staples in the red. Bond yields are up 2bp across the curve as USD kicks off the week lower. Cmdtys are mixed as both energy and precious metals are for sale, though base metals are higher and Ags are mostly higher. Earnings and the Fed are the focus this week with ~44% of SPX market cap reporting this week and the Fed likely to cut by 25bps and potentially to halt QT.

and...

JPM MARKET INTEL EQUITY & MACRO NARRATIVE

Last week, SPX added 1.9%, NDX 2.2%, and RTY 1.2% with SPX and NDX closing the week at all-time highs and RTY closing ~25bp below its all-time high. Over the last two weeks we had a more cautious stance on markets given risks from positioning, technicals, and valuation. While we did see a vol spike and some churn, markets ultimately moved higher. Now, as we enter the bulk of Mag7 earnings with a series of trade deals expected to be formally announced this week, the setup is much cleaner. We are tactically bullish as we think Mag7 earnings will beat expectations; we are removing our cautious tone which ultimately proved to be the wrong call. Speaking with John Schlegel, he tells me that while positioning in the group is high, higher than the last two earnings periods, positioning is similar to early 2024 when the group traded well in 24Q2 ahead of setting a near-term peak in July taking until November to set a new high. Mag7 (proxied using JP1BMAG7 Index) added 17.3% in 24Q1, 17.1% in 24Q2, 3.3% in 24Q3, and 13.4% in 24Q4. More generally, our bullish framework of (i) resilient macro data; (ii) positive EPS growth; and (iii) thawing trade war remains intact receiving a boost from the US / China deal, among others, and expectations for Mag7 names to beat a low earnings bar. As buybacks resume, this may be the strongest quarter on record for buybacks which is the single largest source of Equity demand.

Bonus — Here are some great links:

Skipping the Weak Season 

A Sweet Trade for Halloween

Is the Meltup Unstoppable? 

Are Bulls Whistling Past the Stock Market Graveyard?

You Can’t Kiss All the Girls

I continue to have pet problems so I will be taking my dachshund Ollie to a specialist this morning.

I am not sure when the appointment will be, but I will keep you all up on this.

The news that a "framework" (or preliminary consensus) for China/U.S. tariff discussions has led to a further rise in stock futures overnight.

* But now overbought

The S&P Short Range Oscillator has moved into a more heavily overbought — at 4.96% vs. 2.41%.