Every Monday through Friday morning, we focus on macro, U.S. equities, AI, precious metals, and crude oil, reviewing the market with data and seizing the initiative with trends, produced by PANews.
U.S. inflation has still not fully cooled, the Middle East supply buffer continues to narrow, and French social unrest is spilling over. These three forces are pushing up U.S. Treasury yields and the dollar in parallel while suppressing gold. U.S. equities, meanwhile, staged a technical recovery led by AI hardware and memory sectors, with the Nasdaq leading gains, but cracks on the credit side are still widening. From a trader's perspective, this looks more like a "limited breather" than a trend reversal. The Dow Jones Industrial Average edged down 0.07%, dragged by traditional industrial and defense stocks; the S&P 500 rose slightly by 0.41%; the Nasdaq Composite jumped 1.11% on short covering in tech stocks.
However, Goldman Sachs' trading desk pointed out that the market is actually in "wait-and-see mode," with trading activity at only 3 out of 10. Although long-only funds are buying consumer and financial stocks on dips (buy orders 15% higher), hedge funds are taking the opportunity to sell tech stocks. SpotGamma and Bloomberg strategists have both raised alarms: although the S&P 500 has reclaimed its 50-day moving average, resistance above 7,700 points is heavy, and the SDEX index, which measures the risk of a broad market crash, has surged nearly 20% to its highest level since March, meaning the market could face a new round of deleveraging-driven selling at any time.
The international crude oil market is facing its most severe buffer depletion test in nearly four decades. The latest U.S. Strategic Petroleum Reserve data show inventories fell to 282.7 million barrels, less than 40% of total capacity, the lowest since October 1982. Combined with the U.S. continued maritime blockade of Iran that has brought its exports to near zero and escalating conflict in the Strait of Hormuz, the front-month WTI crude contract surged above $103/barrel, while Brent crude briefly stood above $110. A Goldman Sachs research report said that extremely low global inventories have saddled spot Brent crude with a pure geopolitical risk premium of nearly $25.
Under inflation pressure, combined with the liquidity drain from $25 billion in corporate bond issuance this week and a $13 billion 20-year U.S. Treasury auction on Wednesday, the 10-year U.S. Treasury yield surged 6 basis points overnight, breaking through 5.15% in one move, and Fitch even warned of a possible downgrade of the U.S. sovereign credit rating. Citi's quant team argued that a pullback in oil prices is a precondition for U.S. Treasury yields to peak. With both oil prices and inflation expectations strengthening, the peak in rates has not yet arrived, so Citi has adopted a defensive strategy and reduced equities and credit bonds.
White House National Economic Council Director Hassett publicly acknowledged that the 0.6% month-on-month rebound in U.S. September CPI shows inflation still needs to be addressed, and consumer resilience is further complicating the tightening cycle. Interest rate swaps show that even if the Federal Reserve holds steady at its upcoming meeting, the probability of a December rate hike has been pushed up to about 90%. Former New York Fed senior strategist Whalen went further, warning that under a high-rate environment, credit and AI construction costs are surging, and if the economy is dragged down by excessive tightening, the Fed will ultimately have to return to quantitative easing and directly purchase bonds.
Spot gold, after rising, came under pressure from a stronger dollar and high yields and edged down 0.6% to around $4,140/oz, while silver also maintained range-bound consolidation. Metals Focus directors and Saxo Bank both said that central banks and institutions will step in to buy the dip when gold falls toward $4,000, and the current move is only consolidation rather than a bear market; **former New York Fed researcher Whalen also disclosed that he had just liquidated bank stocks and heavily bought gold, silver, and energy ETFs,** warning that central banks around the world are de-dollarizing, and that the U.S. government's gold reserves carried on the books at $42.22/oz (book value $11 billion, actual market value above $1 trillion) will sooner or later need to be revalued. In addition, because farmers cannot afford fertilizer, fertilizer production will fall by one-third next year and trigger food price increases, so gold remains the most cost-effective purchase.
Trump publicly lashed out over the Ukraine ceasefire negotiations, even saying bluntly that "maybe it's time for Zelensky to find someone else to negotiate," and hinted that his private contacts with Putin have already involved diesel and Middle East maneuvering, adding further uncertainty to Europe's geopolitical landscape; at the same time, large-scale riots in France caused the 10-year French-German government bond spread to widen sharply to 146 basis points, dragging the euro lower.
Although U.S. equities last night saved face with a rebound in chip stocks—the Philadelphia Semiconductor Index rose 1.61%, ending its longest eight-day losing streak since 2008 (the iShares Semiconductor ETF also ended a nine-day decline)—the **credit crisis beneath the surface is worsening, and the composite AI index rose then fell back to a new low.** Tyler Radke, head of software research at Citi, pointed out: "Right now it's the bond market that is controlling U.S. equities!" As the 10-year U.S. Treasury yield has surged 30% from its March low, borrowing spreads for data center and cloud computing companies have been pushed to historical extremes. Former New York Fed researcher Whalen even exposed the AI industry's "left hand to right hand" trick: of this year's $500 billion in AI financing, much of it is chipmakers lending money to customers to buy their own chips, but because of power shortages, the chips can only pile up in warehouses gathering dust. Goldman Sachs data show hedge funds are selling tech stocks at the fastest pace in a decade.
Wall Street veterans such as BTIG strategist Krinsky generally remind that although such rebounds have short-term momentum, they are more suitable as a window to reduce high-valuation semiconductors rather than a good opportunity to chase highs; Barclays and Wells Fargo both take a dim view of short-term tech stock performance, while LNW's chief investment officer reminded that the current risk is an "earnings expectation bubble," and "neocloud" companies that build data centers with high-interest debt will be eliminated.
But some bulls remain in the market. Morgan Stanley's head of wealth management believes the bulk of AI spending comes from cash-rich cloud giants, and the boom can last until 2027; Morgan Stanley strategist Michael Wilson pointed out that "quality stocks" with resilience and strong profitability have hit 52-week highs, with earnings expectations 10% higher than junk stocks, and recommended adding on dips in November; Citi's Radke also believes that power shortages and grid bottlenecks actually make existing computing power more valuable (H100 rental rates remain at historical highs), and he most recommends pure software giants with abundant cash flow that do not need to worry about hardware depreciation.
However, high rates have already taken a heavy toll on U.S. third-quarter earnings. Wells Fargo strategists warned that **this earnings season is "one of the worst starts in history,"** with companies that have reported profits 0.3% below expectations (versus an average beat of 4% in prior years), and only 48% of companies meeting the bar. BofA strategists also noted that only 40% of bank earnings beat expectations last week (versus 100% last quarter), and large bank stocks posted their longest losing streak since the 2008 financial crisis. As a result, **Oppenheimer decisively removed BofA, Goldman Sachs, Morgan Stanley, and Citi from its latest buy list, replacing them with payment and insurance giants such as Visa and Mastercard.** Meanwhile, amid concerns that a Democratic midterm election victory would cut Trump's military budget, U.S. defense ETFs have plunged 16% since July, and analyst Robert Stallard warned that any defense project with the words "Trump or gold" is very dangerous.
**Memory chip sector rebounds:** Micron Technology +2.97%, Western Digital +6.09%, SanDisk +5.53%, memory ETF (DRAM) surged 4.05%, SK Hynix ADR rose 4.67%, Seagate Technology rose 3.41%. Among them, Micron Technology announced it will hold a technology seminar on October 21 to unveil its HBM and DRAM memory chip road map for the next decade.
**Semiconductors and optical communications broadly recover:** SiTime rose 5.00%, Lattice Semiconductor rose 4.90%, Intel rose 2.43% after JPMorgan upgraded it to "neutral" (bullish on AI agents driving CPU demand), TSMC rose 1.84%, Broadcom rose 1.78%, AMD rose 1.76%; in the optical communications sector, Marvell Technology surged 4.06%, AAOI rose 3.48%, CRDO rose 1.83%, Lumentum rose 1.26%, and Coherent edged down 0.38%.
**CoreWeave fell 0.44%:** As a "bellwether" of the AI debt model, this neocloud giant staged a high dive last night. In premarket trading, Goldman Sachs upgraded it to "buy" (target price $106, implying 73% upside), and JPMorgan and Deutsche Bank also sang bullish in unison, driving the stock up more than 7% in early trading. But because the spread on its 2032 bonds remains stuck at a high of 1,000 basis points, the market worries that its high interest costs will eat up all the computing rental income, causing the stock to give back all its gains and close lower.SpaceX rose 1.32% and will report earnings after the bell on Tuesday: On the eve of the earnings release, Musk announced that next year, through the Treasury's "Trump children's accounts," he would give one share of SpaceX stock to each of the 73 million children across the United States, with a total value exceeding $10.5 billion, advocating skipping charitable intermediaries and directly making everyone a shareholder, while also conveniently avoiding huge capital gains taxes. However, because the shares would be locked up until June 2027, outsiders question whether this is merely a public relations stunt. On the other side, OpenAI is seeking a lightning-fast $30 billion financing round from backers such as SoftBank at a valuation exceeding $1.4 trillion, aiming to lock up capital before Anthropic's mid-November listing; while Anthropic (which announced it would set aside up to 20% of its shares for a public-interest fund to address the AI job displacement wave) is not only developing a new model that can infer humans' deeper intentions, but is also in talks with the UK's Nscale for a second $45 billion computing-power order (planning to use Nvidia's next-generation Rubin chips, doubling the two sides' cooperation to $90 billion).
**Amazon rose 4.98%:** leading the mega-caps, as Morgan Stanley named it a "top pick" and raised its price target to $350, expecting AWS cloud business, which contributes 60% of profit, to surge 47% in 2027; the company also launched the open-source tool TorchNeuron, allowing developers to run AI on Amazon's in-house chips without changing code, directly poaching Nvidia's turf; at the same time, it partnered with American Electric Power to build a 960-megawatt nuclear power plant in Indiana to power data centers.
**Tesla rose 3.76%:** A Morningstar research report emphasized that the technological brand halo brought by the Roadster will effectively stimulate purchase intent across the entire model lineup; Musk continued to send signals on Robotaxi and Optimus mass production, boosting funds' risk appetite.
**Nvidia rose 1.38%:** announced that it used 8,192 GH200 chips on a German supercomputer to complete a record-breaking 104-qubit fault-tolerant simulation, reducing the required physical qubits by 90%. Google C rose 0.96%, Microsoft rose 0.84%.
**Apple edged down 0.15%:** the company confirmed it will hold an event in Los Angeles on October 28, expected to unveil the first-ever MacBook Pro with an OLED touchscreen and "Dynamic Island" as well as the M6 chip. Meta fell 0.55% (after the bell on Wednesday it will be the first tech giant to report third-quarter results, and the market fears its AI spending is out of control, so funds chose to retreat first.)
October 20 (Tuesday)
Nvidia GTC Berlin conference opens, running through the 22nd: focus on AI chip architecture, inference, robotics, and European customer orders, to judge whether technological breakthroughs can turn into revenue.
APEC finance ministers' meeting held in Hong Kong, running through the 21st; 12:15 European Central Bank Chief Economist Lane speaks: focus on the fiscal cooperation and digital infrastructure financing information released as Lan Fo'an chairs the meeting, as well as European monetary policy signals.
US stock earnings: GE Aerospace, RTX, 3M, General Motors before the bell, Netflix, SpaceX after the bell.
October 21 (Wednesday)
08:00 South Korea's export and import data for the first 20 days of October: focus on semiconductor exports to judge whether demand for HBM, DDR5, and AI storage remains strong.
Jensen Huang's GTC keynote: European sovereign AI, inference demand, new architecture, and the scale of partnerships are the focus; the market needs clear orders, not just long-term vision.
World Intelligent Connected Vehicles Conference convenes; China-Europe Investment, Trade, and Technology Cooperation Fair held through the 23rd: focus on autonomous driving, vehicle-road-cloud standards, and cross-border industrial cooperation.
Bessent and Druckenmiller attend the JPMorgan-Robinhood investor conference: the meeting is closed to the media; if there is public information, focus on fiscal financing, interest rates, and market risk judgments.
US stock earnings: IBM, AT&T before the bell, Meta, Tesla, Lam Research, Texas Instruments after the bell.