Macrosynthesis
Last Week's Recap
On the final trading day of September, US stock markets showed mixed results. Concerns about a potential government shutdown and persistently high-interest rates dampened investor mood. The Dow Jones saw a decline, influenced by Walmart and Chevron's performances, while the Nasdaq registered a slight gain. However, both indices marked their largest monthly drops this year.
Carnival's disappointing earnings forecast led to its share price drop, but positive evaluations helped Nvidia, Tesla, and Nike. Over the month, the Dow, S&P 500, and Nasdaq fell 3.2%, 4.8%, and 4.9% respectively. Their quarterly declines were 2.4%, 3.5%, and 2.9%.
Oil Tales
WTI crude futures reached approximately $91 per barrel on Friday, with a 12% rise in September and a 29% increase in the third quarter, due to tightening global supplies. This surge was influenced by OPEC+ nations, especially Saudi Arabia and Russia, maintaining a significant supply cut, and Russia's export restrictions. Diminishing US crude stocks also pushed prices up. Investors are awaiting the October 4th OPEC meeting for future production strategies, while monitoring global economic trends and a strict US monetary policy.
China and Saudi Arabia Military Drills
China and Saudi Arabia are set to conduct their second joint naval exercise, "Blue Sword 2023," in China's Guangdong province in October. The drills will focus on maritime counter-terrorism, sniper tactics, and joint rescue operations, according to Beijing's defense ministry. The collaboration aims to strengthen military cooperation between the two nations. This move is in line with China's growing involvement in the Middle East, as evidenced by its recent mediation in restoring diplomatic ties between Saudi Arabia and Iran.
Saturday Night Fever
The not-so distinguished gentleman, Rep. Jamaal Bowman (D-NY), triggered a fire alarm, seemingly to obstruct a GOP spending bill vote, an act captured on camera. Nonetheless, a 'clean' stopgap bill passed the House. With a shutdown imminent, House Speaker Kevin McCarthy courted Democrats for a bill excluding Ukraine or border funding. Ultimately, a 45-day stopgap funding bill passed Congress and was signed by President Joe Biden, avoiding a shutdown with 45 minutes to spare late Saturday night.
Commodity Movers
Uranium
+6.87% (1W Chg)
+819.66% (1M Chg)
UK Gas
+7.19% (1D Chg)
+19.78% (1M Chg)
Steel
+9.05% (1W Chg)
+11.19% (1M Chg)
Eggs
-7.94% (1W Chg)
-21.62% (1M Chg)
Last Week's Top Bullish Events
Noteworthy Events
Amazon-sized Lawsuit
Amazon was sued by the Federal Trade Commission and 17 state governments on grounds that the company operates an unfair monopoly in e-commerce, depriving fair competition.
Carnival
Carnival Cruise Line shares decreased by 4.9% on Friday after predicting a fiscal fourth-quarter loss of 10-18 cents per share. However, for the fiscal third quarter, Carnival reported adjusted earnings of 86 cents per share on $6.85 billion revenue.
NVDA
Nvidia's shares rose by 1% on Friday. A recent note from Citi highlighted that Nvidia's upcoming Blackwell B100 GPU is expected to significantly boost the stock, sales, and margins in the first half of 2024. Citi maintained a buy rating on Nvidia.
Nike
Nike's stock surged by 6.6% following its fiscal first-quarter announcement on Friday. The company disclosed earnings of 94 cents per share (24% higher than expected) with revenue of $12.94 billion.
Workday
Workday shares dropped 8.5% Thursday following the company's announcement that it reduced its long-term subscription growth forecast to 17%-19%, down from the earlier 20% prediction.
Peloton and Lululemon
Peloton's stock rose 5.4% on Thursday following the announcement of a five-year collaboration with Lululemon. Under this partnership, Lululemon will integrate Peloton content into its fitness app, while also becoming the main athletic apparel provider for Peloton.
LEVEL 2 TRADE UPDATES
VIX calls for October hit our target exit of 4.50/contract and a +29% gain in two weeks, thanks to the political drama in Congress.
CASE STUDY: American Airlines Down -30%
Sometimes it pays to follow the aggregate sentiment of institutional shareholders. In our trends section, the negative sentiment scenario does just that. And for the past several months the most shorted (via option puts) stock across institutional investors was American Airlines (AAL).
The trends section hosts the negative sentiment trend that identified AAL as the the stock with the largest number of institutions running put options on the stock.
In this case, following the trend would have made or saved investors 30 percent over a few months.
For more on this scenario, visit our help section.
Upcoming Catalysts:
Notable Earnings
Tuesday
McCormick & Company (MKC)
Wednesday
Tilray (TLRY)
Helen of Troy (HELE)
Thursday
Lamb Weston (LW)
Levi Strauss (LEVI)