Economic Overview - There are two contrasting economies: a thriving AI economy and a struggling consumer economy, with the latter deteriorating daily [2][19] - AI-related stocks have significantly contributed to market performance, accounting for 75% of S&P's returns and 80% of earnings growth since late 2022 [18] AI Economy - Intel, a semiconductor company, is reportedly seeking funds from Apple to re-enter the AI market, although this has not been confirmed [4][5] - Corewave has expanded its agreement with OpenAI, increasing its total contract value to $22.4 billion, highlighting the robust activity in the AI sector [8] - Meta is constructing a $10 billion data center in Louisiana, which will require significant energy resources, raising concerns about the impact on local consumers [9][10] Consumer Economy - CarMax reported disappointing results, with sales 6% below expectations, leading to a 20% stock plunge; the company may benefit from lower interest rates [12][13] - KB Home is reducing its home construction due to high interest rates, which are critical for the housing market [14][15] - Starbucks announced layoffs of 900 corporate workers and a 1% reduction in North American store count as part of a restructuring plan to improve profitability [16][17] Market Dynamics - The consumer-oriented part of the economy is weak, and without rate cuts, the situation is expected to worsen [19][23] - High interest rates are not a concern for AI companies, which often have substantial cash reserves [23] - Retailers are struggling with excess workforce and store counts, with only large players like Walmart able to compete effectively [21][22]

Economic Overview - The U.S. economy grew by 3.8% in Q2, surpassing the previous estimate of 3.3% [1] - Economic growth is outpacing elevated inflation significantly, according to Northlight Asset Management [4] - New orders for durable goods increased by 2.9% in August after two months of declines [4] Stock Market Performance - Major U.S. equity indexes extended their losing streaks to three days, with the Dow Jones down 0.4%, S&P 500 down 0.5%, and Nasdaq down 0.5% [7] - The S&P 500 is currently more than 2% above the average year-end analyst forecast [4] Company Highlights - IBM's stock rose by 5.2% after HSBC reported using its quantum computers for bond market predictions, achieving a 34% improvement over classical methods [8] - Intel's stock surged by 8.9% amid reports of soliciting an equity investment from Apple, with a year-to-date increase of 69.5% [8][9] - CarMax's stock fell by 20.1% after reporting Q2 earnings of 64 cents per share, below the consensus estimate of $1.04, and same-store sales declined by 6.3% [10] - Lithium Americas' stock increased by 22.3% as it discusses an equity stake with the Trump administration, linked to a $2.26 billion loan for its Thacker Pass mine [12][13]

All right. Uh let's uh let's move on to the broader markets. The S&P 500 is pacing for what would be at least if it maintained what it's doing right now, a third straight day of declining.Still, although we're very close to record levels, joining us with his outlook is Michael Caneritz. He's Piper Sandler's chief investment strategist. Nice to have you here, Michael.Thanks. Uh you write um that you expect improving EPS breath to take over after three years of PE expansion. Can you explain what that means an ...

Interest Rate Trends - In the fall of 2024, the Federal Reserve lowered the Fed funds rate by 100 basis points [1] - Contrary to expectations, the 10-year Treasury yield increased from 36% to 47% during the same period [2] - As of September 17th, the Fed has restarted its rate cutting cycle [3] - Before the cut, the 10-year Treasury yield was at 405%, and it slightly increased to 413% over the next 5 days [4] Inflation and Market Reaction - Analysts suggested the initial rate cuts were premature due to persistent inflation [2] - Headline inflation remains above the Fed's 2% target [2] - The modest increase in yield after the recent rate cut may indicate a market rotation into equities [4] - The bond market's inflation perception could change based on upcoming PCE and CPI data [5] Economic Concerns - Rising yields may be due to inflation concerns or the increasing amount of debt needing to be rolled over [5] - Reduced demand from China could impact the US [5]

live. It's time now for the big picture. Let's welcome in the team from Charles Schwab.Joe Maza, head trading derivative strategist. Charles Schwab and Cooper Howard, director and fixed income strategist, Schwab Center for Financial Research. Let's start with you, Joe.We've been talking about a lot of um a lack of breadth in this market. You know, concentration risk. There's just a handful of names that, you know, continue to help chug things along.Why is that important. Why are you watching that. Well, I I ...

Governor, welcome to the program, sir. We've got tons of time to talk about what's going to happen next. Your thoughts on the labor market, the balance of risk, the broader economy.I actually wanted to lead the conversation with this one. Governor, what was your experience like. I'm sure this was unexpected 12 months ago.What was it like walking into the room and was it different to what you expected. Good morning and thanks for having me. It's great to see you again.Look, you know, walking into the room, y ...

Market Overview - Investors are assessing the potential for rate cuts from the central bank to support a weakening labor market without triggering inflation [1][7] - The three major indexes and the small-cap Russell 2000 reached record highs simultaneously for the first time in years [1][7] - Federal Reserve Chair Jerome Powell indicated that asset prices appear highly valued, suggesting caution in future policy decisions [1][2] Valuation Insights - Analysts noted that current S&P pricing reflects 23-24 times expected earnings, with a projected 15% annualized earnings growth over the next five years, which is considered high [2][8] - Some valuation measures for stocks are at their highest levels since 2021, with potential further increases reaching thresholds not seen since the internet boom [5][8] Sector Performance - The materials sector was the worst performer in the S&P 500, declining by 1.6%, with Freeport-McMoRan's stock plunging 17% due to a force majeure declaration at its Grasberg mine [5][8] - Conversely, the S&P 500 energy index rose by 1.2%, benefiting from higher crude prices, which reached a seven-week high following a surprise drop in U.S. crude inventories [8] Company News - Sales of newly constructed single-family homes in the U.S. unexpectedly surged by 20.5% in August [5][8] - Lithium Americas' shares nearly doubled to close at $6.01 after reports of potential government equity stake discussions [8] - Ongoing talks for a government loan exceeding $2.26 billion for Lithium Americas' Thacker Pass lithium project with General Motors, which saw a 2.3% stock increase [5][8] - Micron Technology's stock fell by 2.8% following its quarterly results [5][8] - Oracle's stock declined by 1.7% amid news of plans to raise $15 billion in corporate bond sales [8] Market Activity - Declining issues outnumbered advancers on both the NYSE and Nasdaq, with ratios of 1.88-to-1 and 1.35-to-1, respectively [6][8] - The S&P 500 recorded 21 new 52-week highs and 10 new lows, while the Nasdaq Composite saw 85 new highs and 55 new lows [6][8] - Trading volume on U.S. exchanges was 18.04 billion shares, slightly above the 17.75 billion average over the last 20 trading days [7][8]

Market Overview - The market showed signs of fatigue before Jerome Powell's speech, where he stated that stocks are "fairly highly valued," leading to a slight sell-off in the market [1][2][3] - Powell discussed the economic landscape, highlighting the balance between inflation risks and a weakening labor market, indicating that future rate cuts are not guaranteed and will depend on incoming data [2][3] Federal Reserve Commentary - The week has seen a consistent theme of multiple Federal Reserve speakers, with Mary Daly being one of the notable figures providing commentary [4][5] - The market is expected to digest comments from both Fed officials and the Trump administration, which could influence market sentiment [5] Housing Market Insights - Recent data indicates a modest increase in mortgage applications, with purchases up 0.3% this week, following a 2.9% increase last week, and an 18% increase year-over-year [6][7] - Refinances saw an 8% increase this week, down from 24.4% last week, but still up 42% year-over-year [7] - Mortgage rates are trending downwards, with conforming loans decreasing from 6.39% to 6.34% and jumbo loans from 6.48% to 6.44%, moving closer to the 6% mark [7] Upcoming Economic Data - New home sales are anticipated to be around 649,000 to 650,000, with existing home sales data expected the following day [8] - The market is also awaiting GDP and PCE data later in the week, along with jobless claims, as expectations grow for two more rate cuts from the Fed [8]

Market Overview - The Federal Reserve Chair acknowledged that equity prices are highly valued, indicating stretched valuations in the market [1][3] - Major indexes had reached all-time highs before a recent pullback, with the NASDAQ rallying 47% since April lows [2][3] Economic Indicators - The focus remains on the labor market, with expectations for two additional rate cuts by the end of the year [4] - There is a possibility of a near-term market correction due to a weaker-than-expected labor report or high expectations for the upcoming earnings season [5][6] Artificial Intelligence Investment - The total addressable market for AI is currently estimated at $450 billion and is expected to double in the coming years, indicating significant infrastructure and software development opportunities [8] - Companies are investing heavily in AI, with a focus on both cutting-edge AI firms and integrating AI into existing portfolio companies, potentially creating $1.5 billion in enterprise value [9][10] Characteristics of Beneficiary Companies - Companies that benefit from AI typically possess proprietary data sets and the ability to automate business processes [11][12] - There is a distinction between companies that will benefit from AI advancements and those that may be disrupted by them [11] Labor Market Concerns - There are concerns regarding the labor market, particularly if companies begin to tighten budgets, which could lead to job layoffs and decreased consumer confidence [14][15] - The potential for a stagflation scenario exists if inflation rises alongside labor market issues, although current service inflation remains stable at 2.5% year-over-year [16][17] Earnings Season Outlook - The upcoming earnings season has a high bar set for performance, with more companies issuing positive guidance compared to historical averages [18]

Market Overview - U.S. stock futures rose on Wednesday after declines on Tuesday, with major benchmark indices showing positive futures [1] - Federal Reserve Chair Jerome Powell noted that equity prices are "fairly highly valued" but downplayed immediate financial stability risks [1] - Investors are anticipating the release of the Fed's preferred inflation gauge, the PCE Index, scheduled for Friday [2] Economic Indicators - The 10-year Treasury bond yielded 4.10%, while the two-year bond was at 3.56% [2] - The S&P Global U.S. Composite PMI slowed to 53.6 in September, indicating softer growth [4] - The U.S. current account deficit shrank by 42.9% to $251.3 billion in Q2 [4] Sector Performance - Energy, real estate, and utilities stocks led gains on Tuesday, while information technology and consumer discretionary stocks declined [3] - The Dow Jones index fell by 89 points (0.19%), S&P 500 dropped 0.55%, and Nasdaq Composite decreased by 0.95% [5][6] Company-Specific Movements - Nvidia Corp. shares fell 2.8% after announcing a $100 billion investment in OpenAI [4] - Cintas Corp. is expected to report earnings of $1.19 per share on revenue of $2.70 million [15] - Micron Technology Inc. rose 1.86% after reporting better-than-expected fourth-quarter results and a strong revenue forecast [15] - Ares Acquisition Corporation II jumped 4.39% following successful fundraising for a merger with Kodiak Robotics [15] Investment Insights - BlackRock advises clients to seek "granular opportunities" in Europe while maintaining an overweight position on U.S. equities [8] - The report highlights financials, industrials, and utilities as outperforming sectors in Europe, with financials achieving a 32% year-to-date return [9][10] - BlackRock sees value in European fixed income, particularly when currency is hedged, potentially pushing yields on euro investment-grade credit to near 6% for U.S. investors [11]