The Dow’s Up 1% And The Nasdaq 100 Isn’t
Look at the S&P this morning and you’d think nothing’s going on. It’s up 3.42 points. That flat number is sitting on top of a real rotation. The Dow’s up 491.96 points, the Russell 2000’s up 0.8%, and the Nasdaq 100’s down 211.36.
The size-and-style grid tells the same story. Value beats growth in every row. Mid value and small value are both up 1.0%, and large growth is the only red box on the board, down 0.6%.
The VIX is 16.86, barely changed on the day, though it’s up 13.61% on the week. Yuriy Matso posted two short ones this morning:
“#ES_F, 4h. Dip buyers in action.”
“#NQ_F, 4h. Perfect setup”
The Chips Are Still Being Sold
The chip names are down hard on the day and harder on the week. The pre-market wire had the theme. MT Newswires at 9:01:
“Update: US Equity Futures Mixed Pre-Bell as Traders Assess AI Overspending Concerns, Raised Odds …”
AMD’s down 4.44%, Intel 4.29%, Marvell 3.65%, Sandisk 3.03% and NVIDIA 2.16%.
All seven are red on the week too, and Sandisk’s off 15.45% in a week. Look at the last column, though. Five of these are still up more than 150% on the year. A week like this one is the price of a year like that.
The big platform names are mixed, not much of a refuge. Microsoft’s up 0.60%, Alphabet 0.40% and Apple 0.08%, while Meta’s down 0.44% and Amazon 0.36%. Netflix is up 2.83% and Tesla’s down 1.19%.
Jensen Huang had CoreWeave on the wires this morning. Walter Bloomberg’s headline:
“HUANG SAYS NVIDIA DOESN’T NEED TO BACKSTOP COREWEAVE”
On the same wire he said CoreWeave’s strength is improving every day and its cost of capital is actually decreasing. @amitisinvesting took it as a lift for the whole group:
“Jensen single handedly helping the semis find some level of recovery right now... $NVDA $CRWV”
When our tables were taken, every chip name in them was still red.
Then there’s Germany. Walter Bloomberg again:
“$NVDA - GERMAN GOVERNMENT INTENDS TO ENTER INTO PARTNERSHIP WITH NVIDIA, HANDELSBLATT REPORTS, CITING GOVERNMENT AND INDUSTRY SOURCES”
“German Chancellor Friedrich Merz is preparing a major AI partnership with Nvidia ($NVDA), backed by hundreds of millions of euros in government funding.”
That’s a report citing sources, not a signed deal. NVIDIA’s down 2.16% anyway.
A Day After A Hot CPI, Bonds Are Up
September’s inflation number came in hot. Benzinga reported the Consumer Price Index rose 0.6% in September and 3.7% from a year earlier, accelerating from 3.4%. The White House’s read, also via Benzinga:
“White House economic adviser Kevin Hassett said September’s hotter inflation report was largely driven by what he described as a “temporary” surge in energy prices.”
Benzinga also carried John Arnold’s view on what the Fed should do about it:
“Billionaire investor John Arnold (@johnarnold) says Fed rate hikes may be “counterproductive” and do little to lower inflation.”
You’d expect a print like that to knock bonds down. They’re up. TLT’s up 1.54% this morning and 3.84% on the week. Every line on the bond board is green except convertibles, which are down 0.5%.
Don't confuse a rally with cheap money, though. The US ten-year is still 5.099% and the thirty-year 5.428%. Britain's thirty-year is higher than ours at 5.854%.
Portfolio 1 sold a TLT put on October 9 and bought it back today for a profit. A bond rally is the backdrop that trade wanted. The P1 alert has the numbers.
The dollar index is down 0.41% at 102.14. The euro’s up 0.4% at 1.1207, the pound’s up 0.5% at 1.3255, and dollar-yen is 158.1245, down 0.1%.
Health Care Leads, And Crude’s Up More Than $2
Seven of the eleven sectors are green. Health care leads, up 2.8%, then materials and staples at 1.6% each and discretionary at 1.5%. Technology’s the weakest, down 1.5%, with energy just behind it, down 1.3%.
Energy’s the odd one, because the barrel is going the other way. XLE’s down 1.3% while US crude is up 2.5% at $97.44. From First Squawk:
“US CRUDE FUTURES JUMP MORE THAN $2 TO HIGHEST SINCE SEPT 21, WHILE BRENT FUTURES TURN POSITIVE”
Brent’s barely positive, up 0.2% at $106.27. Natural gas is up 2.3%.
Metals are bid as well. Gold’s up 1.3% at $4,155.02 and GLD’s up 1.29%. SLV’s up 2.65%, and it’s still down 19.98% on the year. Bitcoin’s up 0.7% at $82,237.98.
Financials are up 0.8%, but Liz Ann Sonders had the banks on a longer clock:
“After a solid run over the past year, the KBW Bank Index has retreated sharply from its August peak, falling nearly 14%”
That’s a bank index, which is narrower than XLF. The broader financials fund is up just 0.38% on the year.
Around The World
South Korea’s fund, EWY, is down 3.4%, the worst of the fourteen markets below. Emerging markets as a group are down 1.0%. Most of the rest of the world is up: ten of the fourteen are green, though the all-country fund is up by a cent. South Africa leads at 2.2%, then Britain at 1.8% and France at 1.5%.
The G20 meets in Thailand today, and Mohamed El-Erian isn’t impressed with its record:
“Once seen as a conduit for better global policy coordination because of its broader representation, the G20 has struggled in recent years to agree on a joint communiqué, let alone act as a conductor of collective action to address global challenges.”
Where The Year Stands
QQQ’s still the best of these six on the year at 17.82%, even after a down week of 3.18%.
TLT’s the worst at minus 8.09%, even after a week up 3.84%.
SPY’s up 12.88% and IWM 11.19%.
Not everybody’s had that year. Keith McCullough’s chart of the day ran under this title:
“CHART OF THE DAY: The CNBC-type “Retail Investor” Got Rinsed, Now Down -9.3% YTD”
And the post we’d keep from this week is from yesterday. Peter Mallouk wrote it and Charlie Bilello passed it along:
“73% of the companies in the S&P 500 in 1996 are no longer in the index. That’s capitalism in action. Creative destruction. Constant disruption. No company stays on top forever.”
It’s about thirty years, not one Thursday, and it’s worth keeping in mind on a morning when chip names up 150% or more this year are getting sold.
Also On The Wire
Ukraine has reportedly run out of US-made Patriot interceptors, according to a CNN source. Walter Bloomberg’s note on it: “The report remains unconfirmed independently.” Separately, from Walter Bloomberg: “ZELENSKYY: RUSSIA LAUNCHED NEARLY 1,000 DRONES AS UKRAINE SEEKS MORE AIR DEFENSE.”
In Europe, from First Squawk: “ECB OFFICIALS GET IMPATIENT FOR LAGARDE TO CLEAR UP HER PLANS” and “EU BEGINS ASSESSING ADDITIONAL SECTORS FOR CHINA TRADE QUOTAS”.
And First Squawk had “UBS CUTS KIMBERLY-CLARK PRICE TARGET TO $106 FROM $116”.
Bottom Line
Written off mid-morning prices, so the afternoon can still change the picture. In the order we’d rank it:
The Dow’s up 1.0% and the Nasdaq 100’s down 0.7%. Value beats growth in every row of the grid, and the S&P sits flat in the middle.
The chips are still being sold. AMD’s down 4.44% and NVIDIA 2.16%, even with Jensen talking up CoreWeave and a reported German partnership.
CPI ran hot, 3.7% on the year as Benzinga reported it, and bonds are up anyway. TLT’s up 1.54%, and the ten-year is still 5.099%.
US crude’s up $2.35 while energy stocks are down 1.3%. Health care leads the sectors, up 2.8%, and the VIX is 16.86.
Disclaimer
This is not investment advice. Nothing in this letter is a recommendation to buy or sell any security. Grow Your Pile and Squared T Capital publish what we do in our own accounts for education. Options involve substantial risk and are not suitable for every investor. A short put can require you to buy stock at the strike price and can lose more than the premium collected. Past results do not predict future results. Do your own work and consider speaking with a licensed advisor about your circumstances.
Past performance is not indicative of future results, and results shown are those of our own accounts and are not representative of any subscriber’s results. Read the Characteristics and Risks of Standardized Options before trading.
Tony Rihan and Tony Battista Grow Your Pile · Squared T Capital
Every options trade in Portfolio 1 and Portfolio 2 goes out win or lose, with entry, exit and running P&L. Portfolio 3 publishes its full weights. All of it is at growyourpile.com.