Core Insights - The earnings growth in 2026 is expected to be driven primarily by technology and communication services, with artificial intelligence playing a significant role [2][3] - There is a shift towards quality factors in the market, with healthcare and financial sectors showing strong performance, alongside technology [4][5] - The market dynamics in 2026 are anticipated to be more challenging, with a potential for elevated volatility and a need for different positioning compared to previous years [3][5] Earnings Growth - The majority of earnings growth in recent quarters has been attributed to artificial intelligence, particularly in technology and communication services [2] - A cyclical reacceleration is expected in 2026, with productivity and stable GDP growth contributing to this trend [6][7] Sector Performance - Financials and healthcare are expected to perform well in a reacceleration phase, with a potential focus on value-centric names and cyclical sectors [8] - Consumer staples may also become attractive as a defensive play in the face of market volatility, especially during the midterm election year [9] Market Outlook - Bank of America projects a 4% increase in the S&P 500, targeting a price of 7100 for 2026, indicating a positive outlook despite potential challenges [10][11] - The leadership in the market is expected to change, with a focus on sectors that can withstand volatility and provide stability [9]

Core Insights - The Federal Reserve is facing a divided stance on potential rate cuts as economic indicators show mixed signals regarding inflation and growth [1] - Retail spending is slowing down as the holiday shopping season approaches, raising concerns about consumer confidence and overall economic health [1] Group 1: Federal Reserve Insights - The Federal Reserve's decision-making is influenced by various economic factors, including inflation rates and employment data, which are currently presenting conflicting signals [1] - There is an ongoing debate within the Fed regarding the timing and necessity of rate cuts, reflecting differing opinions among policymakers [1] Group 2: Retail Sector Insights - Retailers are entering the holiday shopping season with signs of slowing consumer spending, which could impact sales forecasts and overall economic performance [1] - The slowdown in retail spending may indicate a shift in consumer behavior, potentially affecting inventory levels and pricing strategies for retailers [1]

Market Overview - Market indices experienced a positive trading session, with the Dow increasing by 664 points (+1.43%) and the small-cap Russell 2000 gaining +2.14% [3] - The S&P 500 and Nasdaq also saw gains of +0.91% and +0.67% respectively, indicating a rebound from recent lows [3] Economic Indicators - Case-Shiller Home Prices for September rose by +1.3%, slightly below the previous month's revised figure of +1.4%, marking the fourth consecutive month where home prices lagged behind inflation [4] - All 20 cities surveyed reported month-over-month declines in home prices, with year-over-year increases led by Chicago (+5.5%), New York City (+5.2%), and Boston (+4.1%) [5] - Pending Home Sales increased by +1.9% month-over-month in October, improving from a prior month’s upwardly revised +0.10%, although still down -0.40% year-over-year [6] Consumer and Business Sentiment - The Consumer Confidence index dropped significantly to 88.7 in November from 95.5, the lowest level since April [7] - Business Inventories for August remained unchanged at 0.0%, marking the third consecutive month without change, indicating a potential need for increased production in the future [8] Company Earnings Reports - Urban Outfitters reported earnings of $1.28 per share, surpassing the consensus estimate of $1.19, with revenues of $1.53 billion, driven by a strong performance in its flagship brand [9] - Dell Technologies reported Q3 earnings of $2.59 per share, exceeding expectations, but revenues fell short at $27.01 billion compared to the anticipated $27.27 billion [10] - Hewlett Packard's shares declined by -5% following a revenue miss, reporting earnings of 93 cents per share against a projected $15.02 billion in sales, which came in at $14.64 billion [11]

Core Insights - The cryptocurrency market is experiencing a significant downturn, with Bitcoin (BTC) dropping from an all-time high (ATH) of $126,000 to around $80,000, resulting in a loss of over $600 billion in market value [1][2] - Current sentiment among traders is one of extreme fear, with debates on whether Bitcoin can maintain its support level around $80,000 or if a further decline is imminent [2][3] Market Analysis - Bitcoin's recent rejection from the $90-$92K range has led to a focus on critical support levels, with the $80K mark being a psychological barrier and previously tested support [3][5] - The long-term trendline since 2013 remains intact, suggesting a macro uptrend for Bitcoin despite short-term volatility, although a break below $80K could lead to deeper support levels around $69K-$62K [5][6] Macroeconomic Factors - The primary driver of the market crash is macroeconomic conditions, particularly the collapse of expectations for interest rate cuts by the Federal Reserve [7][8] - Recent inflation data has caused the Federal Reserve to reverse its course on rate cuts, leading to a risk-off rotation in the market, with capital moving away from cryptocurrencies into bonds and cash [8][9]

Fed Policy & Market Outlook - The market sentiment suggests a high likelihood of the Federal Reserve cutting rates in December [5][6] - The key risk lies in the messaging accompanying the Fed's rate cuts, specifically whether it will be a hawkish cut, data-dependent, or signaling a pause [7] - The market anticipates the Fed to lean dovish in 2026 due to incoming soft data [8] - Rate cuts and stable long-term rates are expected to benefit housing and hard assets like real estate, potentially boosting GDP and the economy [9] - The second year of a presidential cycle is typically the best, and midterms are expected to be incredibly important, potentially injecting fiscal stimulus into the economy [9] Economic Indicators & Potential Growth - Earnings are supporting the economy, indicating potential for continued market growth [10] - Maintaining anchored inflation signals is crucial for sustained economic growth [10] Market Technicals & Sentiment - The selloff last week was not primarily driven by hawkish Fed signals, as the bond market remained stable [2] - Concerns about AI's impact on the market may have been overdone, with technical factors like hedge fund selling, deleveraging, ETF selling, and short gamma positions contributing to the volatility [3][4]

Core Viewpoint - The Thanksgiving week is historically bullish for the S&P 500 Index (SPX), with expectations for a positive performance following a volatile week that saw a nearly 2% decline in the index [1][3]. Historical Performance - Over the past 50 years, Thanksgiving week has shown a median return of 0.8%, significantly higher than the overall weekly median return of 0.3% [3][4]. - The SPX has a 70% win-rate during Thanksgiving week compared to a 57% win-rate for all weeks [3][4]. Daily Performance Insights - Each trading day during Thanksgiving week has historically outperformed average returns, with Wednesday showing the highest average return of 0.25% and a 74% positive return rate [4][7]. - In contrast, the average return for other weeks over the past five decades did not exceed 0.07%, indicating that Thanksgiving week presents a unique opportunity for gains [5][8]. Upcoming Influences - The upcoming week will feature earnings reports from companies such as Li Auto (LI), Nio (NIO), Dell Technologies (DELL), HP (HPQ), NetApp (NTAP), and Workday (WDAY), which could impact market movements [8]. - Anticipation surrounding potential rate cuts may also influence market sentiment and performance for the broader market [8].

Core Insights - Falling interest rates are reshaping the outlook for major U.S. lenders, with Bank of America (BAC) and Wells Fargo (WFC) being closely monitored for potential benefits from monetary easing [1][11] Bank of America (BAC) - BAC is focusing on organic domestic growth through the expansion of its physical and digital presence, with a medium-term plan emphasizing sustainable growth, digital scale, cost discipline, and capital efficiency [3][5] - The bank aims for over 12% earnings growth and a return on tangible common equity (ROTCE) between 16% and 18% over the next three to five years, while maintaining a Common Equity Tier 1 ratio of 10.5% [4] - With the Federal Reserve initiating a rate cut cycle, BAC is expected to benefit from fixed-rate asset repricing, higher loan and deposit balances, and a gradual decline in funding costs, projecting net interest income (NII) growth of 5-7% in 2026 [5][11] - BAC plans to expand its financial center network by opening more than 150 centers by 2027, which, along with digital tool adoption, will support NII growth and cross-sell opportunities [6] - The investment banking (IB) business is positioned for growth as deal-making activities resume, targeting mid-single-digit CAGR in IB fees over the medium term [7] Wells Fargo (WFC) - WFC is expanding across multiple business lines following the lifting of its asset cap, focusing on deposit growth, targeted loan expansion, and product investment as funding costs decrease [8][10] - The bank aims to benefit from a softer rate environment, which is expected to increase lending activity, stabilize net interest margins (NIM), and enhance market share in fee-generating businesses [9][12] - WFC's strategy includes prioritizing organic growth, competing for deposits, and selectively increasing lending while remaining cautious during economic uncertainty, which is expected to improve profitability and margin resilience [13] - Management anticipates stable NII in 2025, leveraging an expanded balance sheet to grow fee-rich franchises [12] Performance and Valuation Comparison - Year-to-date, shares of BAC and WFC have increased by 18.2% and 20.4%, respectively [14] - BAC is trading at a 12-month forward price-to-earnings (P/E) of 12.11X, while WFC is at 12.31X, both below the industry average of 13.93X [15][16] - BAC's dividend yield is 2.16%, slightly higher than WFC's 2.13%, both exceeding the S&P 500 average of 1.52% [16] - BAC's return on equity (ROE) is 10.76%, lower than WFC's 12.51%, indicating WFC's more efficient use of shareholder funds [19] Growth Estimates - The Zacks Consensus Estimate for BAC's revenue growth is projected at 7.2% for 2025 and 5.7% for 2026, with earnings expected to rise by 15.6% and 14.5% for the same years [21] - In contrast, WFC's revenue growth estimates are 2.1% for 2025 and 5.4% for 2026, with earnings growth projected at 17% and 10.8% [22] Investment Outlook - While both banks benefit from falling rates, BAC's scale-driven efficiency, branch expansion, and digital growth strategy position it favorably to capture increased lending activity [25] - BAC's clearer earnings trajectory and stronger NII growth prospects make it a more compelling investment choice compared to WFC [26]

The yen looks set to appreciate nearly 10% against the dollar in the coming months if the Fed delivers back-to-back rate cuts amid growing signs of a US economic slowdown, Morgan Stanley strategists say https://t.co/s5vSc2Yjgt ...

Federal Reserve & Monetary Policy - A crisis is underway at the Federal Reserve, with Jerome Powell facing a revolt from fellow central bankers due to disagreements on monetary policy [1][2][6] - Two Fed governors dissented at the same meeting in July, a rare occurrence not seen since 1993, signaling potential cracks in the central bank's armor [4][6] - There's nearly an even split among voting members of the rate-setting Federal Open Market Committee (FOMC) regarding a December rate cut, with approximately 63% odds assigned by the market to a rate cut and 95% odds on Poly Market for a 25 basis point cut [6][7] - The author anticipates the central bank will likely cut another 25 basis points, despite preferring a 50 basis point cut to bring interest rates below 3% [13][14] - Market chaos is expected if the Fed doesn't cut interest rates, as financial markets are anticipating cheap capital [16] Economic Data & Poverty Line - The traditional poverty line calculation, based on a 1963 formula of food costs multiplied by three, may be outdated due to significant changes in household spending patterns [17][21][22] - Applying the original poverty line logic to current spending patterns suggests a modern poverty line for a family of four could be between $130,000 and $150,000 per year [25][26] - Two-thirds of Americans may be living below this modern poverty line, indicating the economic data may be inaccurate and not reflecting people's actual financial struggles [27][28] Bitcoin & Market Volatility - Bitcoin has experienced a 35% drawdown from its all-time high, which is considered a healthy reset in the context of its historical volatility [41] - Over the last decade, Bitcoin has drawn down 30% or more 21 times, with seven of those drawdowns being 50% or more [39] - Bitcoin's volatility may be decreasing, potentially leading to smaller drawdowns (around 40% instead of 80%) [42] - Despite recent price drops, the S&P is only about 5% off all-time highs, and most markets around the world are up double digits, suggesting a broader bull trend [30][37]

Polymarket now says there is a 75% chance of rate cuts happening in December https://t.co/RIiWUpkHoW ...