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Here's everything you need to know this week: Stronger-than-expected economic data has fueled chatter that the Fed won’t cut rates anytime soon. Investors will get fresh insight on Thursday with the release of September’s retail sales report. Economists predict a 0.2% rise for September, following August’s 0.1% increase—which had already defied expectations of a decline. If consumers keep swiping those credit cards, the Fed gets more ammo to hold rates higher for longer, leaving rate-cut dreamers with little to hang onto. After all, it’s tough to argue for easing when the economy refuses to hit the brakes. Basically, Wall Street will be dissecting Thursday’s numbers like it’s Black Friday. |
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1. Once Again, the Bond Market is Trying to Tell us a Story |
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The 10-year Treasury yield is hovering around 4.1% for the first time since July, climbing 30 basis points this week as investors start accepting that interest rate cuts may not arrive as fast, or as deep, as they’d hoped. Inflation’s proving stickier than expected, and steady economic growth isn’t exactly giving Jerome Powell and The Fed reason to ease off the brakes. For stocks, higher yields are like gravity: hard to fight. Expensive valuations get harder to defend when borrowing costs rise, and the cozy era of cheap money seems farther away with every tick up in the 10-year. Investors betting on an imminent Fed pivot might need to recalibrate. J-Pow’s pace is more likely to look like a slow jog than a sprint, and Wall Street's hopes of a rapid easing cycle are starting to feel a little…optimistic. |
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2. Well, Elon Has Had Himself Quite a Few Days |
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First came Thursday’s Tesla Robotaxi unveiling, a not-so-glamorous affair that felt more Flintstones than Jetsons. Instead of revolutionary self-driving tech, investors got an awkward demo that made Optimus (the Tesla bot) look like the brains of the operation. But On Sunday, SpaceX did what it does best: breaking the laws of physics and bureaucracy by launching its Starship rocket and catching the Super Heavy booster with giant robot chopsticks. Engineers at mission control shed actual tears because landing a booster mid-air after biffing a robot unveiling is what passes for “routine” in Musk’s empire. |
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3. Middle East Tensions Ratchet up and Spread |
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The U.N. accused Israel of breaching a peacekeeping base in southern Lebanon early Sunday, reporting two Merkava tanks smashed through its gate, followed by nearby shell explosions that released smoke, sickening U.N. personnel. Israel disputes this, saying Hezbollah fired anti-tank missiles near the base, wounding 25 troops. An Israeli tank evacuating the injured backed into the U.N. post under fire, not as an attack. “It’s not storming a base—it’s getting out of harm’s way,” said military spokesperson Nadav Shoshani. Meanwhile, the U.S. is deploying its Thaad missile defense system and troops to Israel, preparing for possible Iranian retaliation amid discussions over a planned Israeli strike. President Biden confirmed the move, saying it was “to defend Israel.” |
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4. Killer Clown Beats Out The Joker at the Box Office |
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Terrifier 3, a gory, low-budget slasher from Cineverse, sliced up the weekend box office with $18.3 million, leaving big studios and prestige films in a pool of regret. Take for instance, Joker: Folie à Deux, which faceplanted hard by tumbling 81% in its second weekend to a measly $7.1 million, one of the worst drops ever for a superhero film. Todd Phillips’ sequel, starring Joaquin Phoenix and Lady Gaga, cost $200 million but has only scraped together $165.3 million globally. Even flops like The Flash held up better in week two. With Joker bleeding out, Universal’s The Wild Robot scooped up second place, earning $13.4 million thanks to strong reviews and Lupita Nyong’o’s charm. And The Apprentice, a Donald Trump origin story, barely registered with $1.6 million in 10th place. When a murderous clown in a Santa suit outperforms the Joker and Trump one thing is clear… the holidays are right around the corner(?) |
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Political and Market Sentiment |
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Three weeks out from Election Day, Donald Trump and Kamala Harris are tied at 48% in the latest NBC News poll, with undecided voters and third-party candidates poised to play spoiler. After trailing Harris in September, Trump has rallied support, thanks to Republicans returning to the fold post-debate and some voters’ rosy view of his presidency. Harris, meanwhile, is seeing her summer momentum fizzle. The poll reflects deep voter anxiety, with 10% admitting they could still switch sides and a record-high share believing this election will significantly affect their lives. Trump edges Harris by 1 point when third-party candidates are included, suggesting every sliver of turnout will matter. Gender dynamics also loom large. Men favor Trump while women lean Harris. In a high-turnout scenario favoring Republicans, Trump wins 49%-47%. Flip the script with a stronger Democratic turnout, and Harris leads 49%-46%. Basically, this thing’s razor-thin, and with a margin of error of 3.1%, the only certainty is uncertainty. |
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Global Markets Overview |
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Europe: The STOXX Europe 600 rose 0.66% as investors bet on faster ECB rate cuts and more stimulus from China. Italy’s FTSE MIB jumped 2.13%, Germany’s DAX gained 1.32%, and France’s CAC 40 added 0.48%. The UK’s FTSE 100 lagged, slipping 0.33%. ECB minutes hinted inflation could hit its 2% target by year-end, opening the door to gradual rate cuts, if the data plays nice. But in classic ECB fashion, officials avoided firm promises, leaving markets to read between the dovish lines. |
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Asia: Chinese equities slumped in a holiday-shortened week, with the Shanghai Composite down 3.56%, the CSI 300 off 3.25%, and Hong Kong’s Hang Seng tumbling 6.53%. Markets were closed Monday for National Day, but by Tuesday, China’s economic planners promised to speed up growth measures—investors shrugged. Meanwhile, Japan’s Nikkei 225 rose 2.45%, and the TOPIX edged up 0.45%, as a weakening yen boosted exporters. The currency hovered near 148 per dollar, close to its August lows, giving companies a profit tailwind. New Prime Minister Shigeru Ishiba added to the yen pressure, signaling that Japan isn’t ready for rate hikes just yet. China’s stimulus promises are starting to wear thin, but Japan’s exporters are cashing in on a currency break. |
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The Week Ahead |
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Coming off a week where the Nasdaq, S&P 500, and Dow all climbed over 1%, and both the Dow and S&P 500 closed at all-time highs on Friday, investors will now deal with even more uncertainty about what the Fed will do in November. But first, Wall Street will spend this week obsessing over retail sales data, hoping to gauge (again) whether the economy is still speeding up after that shockingly strong September jobs report (Spoiler: Everyone will read it differently). And earnings season rolls on, with Bank of America, Goldman Sachs, and Morgan Stanley finishing off the big-bank parade. If that’s not thrilling enough, Netflix will drop its results to give us a sense of streaming strength. Meanwhile, United Airlines will also report and we’ll see if Delta’s weird quarter was unique or a trendsetter. |