Stocks closed the week at record highs as a result of heightened expectations over the upcoming meetings between the Trump Administration and China, cooler than expected inflation as measured by the Consumer Price Index and hopes that the Fed will cut interest rates Wednesday, at the conclusion of its regularly scheduled two-day meeting. However, at these valuations, earnings along with their outlook provided during conference calls will be crucial if we are to move higher. Investor appetite will be tested as several companies which have been driving this bull market report earnings (see below).
· An open letter, published by the Future of Life Institute, entitled “Statement on Superintelligence,” signed by more than 32,000 individuals including Apple cofounder Steve Wozniak, Virgin Group founder Richard Branson and political strategist Steve Bannon, called for a pause in the development of more advanced large language models. The letter warned that “Innovative AI tools may bring unprecedented health and prosperity. However, alongside tools, many leading AI companies have the stated goal of building superintelligence in the coming decade that can significantly outperform all humans on essentially all cognitive tasks. This has raised concerns, ranging from human economic obsolescence and disempowerment, losses of freedom, civil liberties, dignity, and control, to national security risks and even potential human extinction. The succinct statement below aims to create common knowledge of the growing number of experts and public figures who oppose a rush to superintelligence.” Ponder that for a few moments!
· The Social Security Administration announced a 2.8% cost-of-living adjustment increase in 2026 resulting in an average additional increase of $56 per month for the nearly 71 million recipients starting in January. Over the past 20 years, the annual cost-of-living increases have averaged 2.6%.
· Although he still sees opportunity in the stock market, famed hedge fund manager Paul Tudor Jones, did sound cautious during a recent interview on CNBC. Jones stated that “Well, if you just think about bull markets, right. The greatest price appreciation is always the 12 months preceding the top. So that’s the nature of the bull market. It kind of doubles whatever the annual average is. And before then. So if you don’t play it, you’re missing out on the juice. If you do play it, you get you have to have really happy feet because there will be a really, really bad end to it. And my guess is that I think all the ingredients are in place for some kind of blow off.”
· During Tesla’s Q3 earnings call, CEO Elon Musk argued for a new contract, offering him the ability to earn $1 trillion over the next decade as well as an increase in ownership in the EV maker from its current thirteen percent to twenty-five percent. Musk stated that his “fundamental concern with regard to how much voting control I have at Tesla is, if I go ahead and build this enormous robot army, can I just be ousted at some point in the future?” Did he say “enormous robot army?”
· The Federal Home Loan Mortgage Corporation (Freddie Mac) reported that mortgage rates as of October 23 continued to trend lower “hitting their lowest level in over a year. At the start of 2025, the 30-year fixed-rate mortgage surpassed 7%, while today it hovers nearly a full percentage point lower. This dynamic has kept refinancings high, accounting for more than half of all mortgage activity for the sixth consecutive week.”
It’s The Economy…”
· The Consumer Price Index rose 0.3% during September (3.0% y/y), after rising 0 4% during August. The CPI has fallen from a y/y high of 9.1% during June 2022 but is at its highest since January. Energy prices spiked 1.5$ higher during September (2.8% y/y) after rising 0.7% in August. Food and beverage prices rose 0.2% (3.1% y/y) during September after increasing 0.5% in August. The cost of shelter rose 0.2% during September (3.6% y/y), after rising 0.4% during August. Excluding food and energy, the core CPI rose 0.2%, after rising by 0.3% during August. Over the past year the core CPI has risen 3.0%, well below the September 2022 peak of 6.6%. (Source, U.S. Bureau of Labor Statistics)
· Sales of Existing Homes rose 1.5% to a Seasonally Adjusted Annualized Rate (SAAR) of 4.60 million units during September from 4.00 million during August (4.1% y/y). According to the National Association of Realtors (NAR) total housing inventory at the end of September was 1.55 million units, up 1.30% from August (14.0% y/y). Unsold inventory sits at a 4.6-month supply at the current sales pace, unchanged from August, but up from a low of 1.6 months in January 2022. The report also noted that the median price for all existing homes fell 1.7% to $415,200 in September (2.1% y/y) from $420,700. (Source, National Association of Realtors)
Economic Reports scheduled to be released this week assuming a resolution of the budget impasse, include the following – on Monday, September Orders for Durable Goods; on Tuesday, October Consumer Confidence; on Thursday, Q3 Gross Domestic Product and the Weekly Report of Initial Claims for Unemployment Benefits; and on Friday September Personal Income and Spending.
Q3 Earnings Season is ramping up. Companies expected to report quarterly earnings this week, to include United Health Group (UNH), Visa (V), Caterpillar (CAT), Meta Platforms (META), Microsoft (MSFT), Alphabet (GOOG), ServiceNow (NOW), Amazon.com (AMZN), Apple (AAPL), Mastercard (MA), Eli Lilly (LLY), Merck (MRK), Chevron (CVX), ExxonMobil (XOM) and AbbVie (ABBV).