Economic Impact - The ongoing US government shutdown is delaying key economic reports, including unemployment claims and payroll reports, which could lead to an increase in jobless claims and an unemployment rate rise to 4.7% [1] - Boston Fed President Susan Collins indicated that with inflation risks contained but employment risks heightened, it is prudent to normalize policy further to support the labor market [2] Market Sentiment - The escalation of trade tensions between the US and China, along with the government shutdown, has led to increased demand for precious metals, with gold reaching an all-time high [4] - Dovish comments from the Fed have bolstered expectations for a potential interest rate cut at the upcoming FOMC meeting [5][9] Stock Market Performance - Stock indexes are rising, supported by better-than-expected quarterly earnings results, particularly in the technology sector, with notable gains from chipmakers and financial institutions [6][16] - The S&P 500 Index is up by 0.73%, while the Dow Jones and Nasdaq indexes have also shown positive movement [7] Earnings Season Insights - The Q3 earnings season is underway, with 71% of S&P 500 companies that have reported so far beating forecasts, although overall profit growth is expected to be the smallest in two years at 7.2% year-over-year [8] - Companies like Morgan Stanley and Bank of America reported solid Q3 earnings, contributing to positive market sentiment [16][17] Interest Rates and Bond Markets - The 10-year T-note yield has fallen to a 4-week low of 4.0%, influenced by dovish Fed comments and falling inflation expectations [10][11] - European government bond yields are also declining, with the 10-year German bund yield dropping to a 3.25-month low of 2.57% [13]

Economic Indicators - The US September NFIB small business optimism index fell by 2.0 to 98.8, weaker than expectations of 100.6 [1] Trade and Market Reactions - Escalation of US-China trade tensions has led to increased buying of precious metals, with gold and silver reaching new record highs [2] - The US-China trade conflict intensified as China sanctioned five US units of South Korean shipbuilder Hanwha Ocean Co., impacting global trade dynamics [5] - The markets are pricing in a 98% chance of a 25 basis point rate cut at the next FOMC meeting on October 28-29 [10] Stock Market Performance - Stock indexes showed mixed results, with the Dow Jones Industrial Average recovering from a one-month low, while the S&P 500 Index closed down by 0.16% and the Nasdaq 100 Index down by 0.69% [6] - Most stock indexes rallied to record highs last week due to optimism in the AI sector and expectations of resilient US economic growth [7] Corporate Developments - Walmart's stock rose over 4% after announcing a partnership with OpenAI to enhance shopping experiences on ChatGPT [3][21] - Caterpillar's stock increased by over 4% following a price target raise by JPMorgan Chase from $505 to $650, citing expected revenue growth [22] - Wells Fargo's stock rose more than 7% after reporting Q3 revenue of $21.44 billion, exceeding consensus estimates [20] Earnings Expectations - The Q3 earnings season is beginning, with over 22% of S&P 500 companies providing guidance expected to beat analysts' expectations, the highest in a year [9] - Q3 profits are projected to rise by 7.2%, the smallest increase in two years, while sales growth is expected to slow to 5.9% from 6.4% in Q2 [9] Interest Rates and Bond Markets - The 10-year T-note yield fell to a 3.5-week low of 4.00%, influenced by dovish comments from Fed Chair Powell and safe-haven buying due to trade tensions [4][11] - Falling inflation expectations supported T-notes, with the 10-year breakeven inflation rate dropping to a 3.25-month low of 2.299% [12]

Economic Indicators - China's September exports rose by +8.3% year-on-year, exceeding expectations of +6.6% and marking the largest increase in six months [1] - September imports in China increased by +6.4% year-on-year, surpassing expectations of +1.8% and representing the largest rise in 17 months [1] Market Reactions - Stock indexes experienced a sharp rise on Monday, recovering some losses from the previous Friday's plunge, driven by a softening of the Trump administration's rhetoric towards China [5][6] - The S&P 500 Index closed up +1.56%, the Dow Jones Industrials Index rose by +1.29%, and the Nasdaq 100 Index increased by +2.18% [6] Corporate Earnings - More than 22% of S&P 500 companies provided guidance for Q3 earnings that are expected to exceed analysts' expectations, the highest in a year [10] - Q3 profits are projected to rise by +7.2%, the smallest increase in two years, while sales growth is expected to slow to +5.9% from 6.4% in Q2 [10] Sector Performance - Chipmakers and AI infrastructure stocks rallied, with Broadcom's shares jumping over +9% following a multi-year agreement with OpenAI [5][15] - Rare earth stocks surged due to tensions between China and the US, with Critical Metals closing up more than +53% [17] - Mining stocks also increased as gold prices rose more than +3% to an all-time high, benefiting companies like Coeur Mining and Newmont [18] Upcoming Events - The market will focus on trade or tariff news and attempts to reopen the government, with major banks set to release Q3 earnings results [9]

Core Viewpoint - Veteran investor Howard Marks does not currently label the artificial intelligence boom as a bubble, stating that while valuations are high, they are not excessively so [1][2]. Group 1: Valuations and Market Sentiment - Marks acknowledges the high valuations of AI-related stocks but emphasizes that high prices do not equate to a bubble [1]. - He notes that investor enthusiasm for AI stocks has led to historic highs in valuations for chipmakers and software companies, driven by fear of missing out [2]. - Marks believes that current investor optimism does not necessarily indicate irrational exuberance [2]. Group 2: Historical Context and Psychological Patterns - A comparison is drawn to the late 1990s internet boom, which transformed the world but also resulted in many worthless companies [3]. - Marks warns that psychological patterns seen in past bubbles often reappear, where investors assume current leaders will remain dominant and that even underperformers will succeed [3]. - He highlights the flawed logic of backing companies with minimal chances of massive success, labeling this as "bubble psychology" [4]. Group 3: Future Outlook on AI - Marks expresses confidence in the potential of AI, suggesting it is likely to deliver significant advancements, although the specifics remain uncertain [4]. - He concludes that the current AI rally does not exhibit manic behavior typical of bubbles [4].

Market Overview - The ongoing US government shutdown is impacting market sentiment and delaying key economic reports, with estimates suggesting that 640,000 federal workers may be furloughed, potentially raising the unemployment rate to 4.7% [2] - The S&P 500 Index is down -0.28%, the Dow Jones Industrials Index is down -0.16%, and the Nasdaq 100 Index is down -0.40% [5] - Market focus includes developments regarding tariffs, trade, and the US government shutdown, with upcoming releases of FOMC meeting minutes and consumer sentiment index [6] Corporate Earnings and Stock Performance - More than 22% of S&P 500 companies have provided guidance for Q3 earnings that are expected to exceed analysts' expectations, the highest in a year, although Q3 profits are projected to rise by only +7.2%, the smallest increase in two years [7] - Advanced Micro Devices (AMD) is up more than +5%, following a +23% surge, after being upgraded by Jeffries due to a deal with OpenAI [17] - Ford Motor is down more than -7% due to reported disruptions from a fire at an aluminum plant [14] Sector Movements - Chipmakers have retreated after an initial surge, impacting broader market performance, with notable declines in companies like KLA Corp, Lam Research, and NXP Semiconductors [13] - Homebuilder stocks are under pressure after Evercore ISI downgraded the sector, with major companies like DR Horton and Lennar down more than -2% [15] - Interest rates are influenced by hawkish comments from Kansas City Fed President Jeff Schmid, indicating a need to combat high inflation, which may affect T-note prices [9][10] International Market Developments - The Euro Stoxx 50 is up +0.02%, while Japan's Nikkei Stock 225 closed up +0.01% at a new record high [8] - European government bond yields are rising, with the 10-year German bund yield up +0.6 bp [11]

Economic Indicators - US MBA mortgage applications fell by -12.7% in the week ended September 26, with the purchase mortgage sub-index down -1.0% and the refinancing sub-index down -20.6% [1] - The September ISM manufacturing index rose +0.4 to a 7-month high of 49.1, exceeding expectations of 49.0 [6] - The September ADP employment change unexpectedly fell by -32,000, marking the largest decline in 2.5 years, while August was revised lower to -3,000 from +54,000 [5] Market Reactions - Stocks initially moved lower due to the US government shutdown, but later recovered, with the S&P 500 and Nasdaq 100 reaching new all-time highs [2][4] - The dollar index fell to a one-week low, while gold prices climbed to a record high amid risk-off sentiment [2] - Rising corporate earnings expectations are a bullish backdrop for stocks, with over 22% of S&P 500 companies providing guidance for Q3 earnings that are expected to beat analysts' expectations [8] Sector Performance - Pharmaceutical stocks rallied, with AstraZeneca closing up more than +9% and Eli Lilly up more than +8%, driven by hopes from Pfizer's deal with the US government [15] - Chipmakers and AI-infrastructure stocks also saw gains, with Super Micro Computer closing up more than +9% and Micron Technology up more than +8% [16] - Grocery retailers declined after Amazon announced a new private-label food brand, leading to Dollar Tree and Dollar General closing down more than -4% and -3% respectively [22] Upcoming Economic Data - Weekly initial unemployment claims are expected to increase by +7,000 to 225,000, and August factory orders are expected to rise by +1.4% month-over-month [9] - September nonfarm payrolls are anticipated to increase by +51,000, with the unemployment rate expected to remain unchanged at 4.3% [9]

Market Trends - Intel's stock rise due to Nvidia investment lifts chipmakers [1] - AMD's stock sinks [1]

The S&P 500 Index ($SPX) (SPY) today is up +0.41%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.17%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.49%.  September E-mini S&P futures (ESU25) are up +0.43%, and September E-mini Nasdaq futures (NQU25) are up +0.54%. Stock indexes are moving higher today, with the S&P 500 and Nasdaq 100 posting new all-time highs.  Falling bond yields are supportive for stocks ahead of the Tue/Wed FOMC meeting, when the Fed is expected to cut interest rates by 25 bp ...

Core Viewpoint - The competition in artificial intelligence is intensifying globally, with companies outside the U.S. starting to catch up, particularly in chipmaking and AI engines, which may deter some investors for unfounded reasons [1] Group 1: Alibaba's Position and Market Reaction - Alibaba Group's stock has risen by 11% over the past month, contrasting with NVIDIA's decline of nearly 3% following Alibaba's announcement of developing its own AI chip [7][8] - The market's positive reaction to Alibaba's new chip development indicates a bullish outlook for the company, suggesting a compelling reason for investors to consider buying [8] - Analysts forecast a potential upside of 18.33% for Alibaba's stock, with a 12-month price target of $162.38, based on 14 analyst ratings [10][11] Group 2: Strategic Developments and Future Outlook - Alibaba's move to develop its own AI chip comes in response to NVIDIA's decision to halt sales of H20 chips to China, indicating a strategic pivot to fill the demand gap left by NVIDIA [6][8] - The company has established data centers across Asia, positioning itself to benefit from the region's growing middle class, which is expected to provide strong tailwinds for future growth [10] - Historical stock performance shows that Alibaba's shares reached an all-time high of over $310 three years ago, suggesting the potential for revisiting or surpassing previous highs [9] Group 3: Institutional Interest and Market Sentiment - Institutional buying activity has reached $7.3 billion over the past quarter, signaling confidence in Alibaba's future fundamentals [12] - Despite the current Moderate Buy rating among analysts, there is a perception that this rating is conservative, driven by market fears regarding Chinese stocks [11][13] - The overall sentiment suggests that Alibaba is well-positioned in the AI race, with significant upside potential as the market begins to recognize its developments [13]

Market Overview - Wall Street experienced broad losses, with major indices retreating as investors adopted a risk-off approach due to concerns over high valuations, seasonal challenges, and fiscal strains [1][2] - The CBOE Volatility Index (VIX) surged nearly 20% to 19.2, marking its third consecutive advance, indicating increased market fear [1] Major Indices Performance - The Nasdaq 100 led the decline, falling 1.7%, while the S&P 500 decreased by 1.4% in its first session of September, historically the weakest month [2] - The Dow Jones lost over 500 points, or 1.1% [2] - The Vanguard S&P 500 ETF (VOO) slipped 1.5% to $584.49, and the SPDR Dow Jones Industrial Average (DIA) fell 1.1% to $451.04 [6] Sector Performance - Chipmakers were significantly impacted, with NVIDIA Corp. dropping 3.6%, Arm Holdings plc sinking 5%, and ASML Holding NV and Qualcomm Inc. each losing about 3% [2] - The Consumer Staples Select Sector SPDR Fund (XLP) outperformed, down only 0.3%, while the Technology Select Sector SPDR Fund (XLB) lagged, down 2% [6] Economic Indicators - The ISM Manufacturing PMI indicated a sixth consecutive month of contraction, suggesting that tariffs meant to protect domestic industries are increasing costs and delaying investments [3] - Safe-haven assets saw strong demand, with gold reaching record highs above $3,500 an ounce and silver surpassing $40 [3] Bond Market Activity - Long-dated yields rose across advanced economies, with 30-year U.S. Treasuries increasing five basis points to 4.97%, just below the 5% mark [4] Notable Stock Movements - Top gainers in the S&P 500 included Ulta Beauty Inc. (+6.45%), Biogen Inc. (+3.84%), and Ralph Lauren Corp (+3.36%) [5] - The worst performers included TransDigm Group Inc. (-7.50%), Constellation Brands Inc. (-6.97%), and Kraft Heinz Co. (-6.96%) [7]