Market News

• Q3 revenue $64.6B vs $63.3B expected
• Q4 revenue guide $73–76B vs $73.7B expected
• Q3 capex $34.9B; free cash flow turned negative
• 2026 capex $135–145B (floor raised from $130B)
• $825B in future spending commitments
• New nonvoting Class C shares through a 2-for-1 split

Meta beat on revenue, beat on guidance, and the stock is still down 7% and that's a troubling sign for everything touching AI. It's also trading below where it did before the rollout of the impressive Muse app. 

Shares are down intraday to $651.61 and were down 7.3% around midday. Meta was off about 3% premarket at $677.50, and the selling has intensified as the session wears on.

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The ad business isn’t the problem. Revenue rose 26% to $64.6 billion, comfortably ahead of estimates. The…

The mood in markets isn't good today but there is some good news below the surface for stock markets and gold.

Treasury yields are down 12-14 basis points across the curve as the market gorws increasingly confident that the Fed won't hike rates next week or be overly hawkish. At the 10-year tenure, yields are down 13.5 basis points and nearing the key 5% level.

That's a substantial decline from a high of 5.34% earlies this month, in what was a post-financial crisis high. 

The negative take on the drop in yields is that the tide is going out on the AI trade and investors are seeking safety. That's certainly a consideration strictly in terms of the AI trade. On the other side, there's a large part of the economy that's not AI or particularly…

Middle East risks keep oil supported

Crude oil is moving back toward the $100 level today as Middle East risks give buyers another reason to push prices higher.

In Adam’s post, he outlines the bullish fundamental backdrop for oil: increased military risks involving the US and Israel, a continuing stalemate, and recent Houthi activity in Saudi Arabia adding to the anxiety. A war that was supposed to be quick and easy continues to drag on, keeping concerns about energy supplies firmly in play.

The fundamental story is supportive. The technical price action is helping to confirm that story.

The moving averages help tell the story

Since bottoming on October 6 near $86.93—the 50% midpoint of the move higher from the July 2 low—crude oil has…

Gold typically benefits when Treasury yields and the U.S. dollar move lower. But “typically” is an important word. Those relationships can help frame an expectation. They do not guarantee the next move.

Why do lower yields tend to support gold? Gold pays no interest. When bond yields fall, investors give up less income by owning gold instead of an interest-paying asset. Falling real yields—yields adjusted for inflation—are particularly supportive.

A weaker dollar can also help. Gold is priced in dollars, so a declining greenback makes it less expensive for buyers using other currencies.

When both move lower, gold can get a double tailwind. However, other forces can outweigh those benefits. A decline in the nominal Treasury yield alone also…

December WTI crude oil is up $2.71 today to $99.84 while brent trades at $112.

The market can't seem to shake off the idea of further escalation before any chance of peace. Republicans are being hammered in the midterms over gasoline prices and an unpopular war but Iran has also dug in and wants concessions before it makes any kind of agreement.

Trump yesterday said the US is not negotiating with Iran.

“No, I think we’re not negotiating," he said.

Later in the day, he repeated a line he's said many times before. “It’ll end very soon. We could leave now, but we want to make sure it lasts for a long time.”

Finally, he said something ominous: 

“We’re gonna have something one way or the other that’ll happen fairly soon. Most people seem to think…

Headlines:

• Oil rises as hopes for a deal fade amid growing prospects of another US attack on Iran
• US futures tumble as AI rally faces fresh scrutiny despite solid Meta earnings
• Chart of the day: Gold price falls below $4,100 as sellers threaten another breakdown
• Gold drops as Middle East tensions escalate, but growth concerns could provide support
• EUR/CHF falls to three-month lows as French bond turmoil raises fresh euro risks
• Ethereum tumbles as renewed Middle East tensions weigh on risk sentiment. What's next?
• France business confidence improves in October but cracks remain beneath the surface
• US-Iran tensions refuse to fade as fresh Strait of Hormuz attacks keep oil markets on edge

Markets:

• JPY leads, NZD lags on the day
• Brent crude up 2.8% to…

Morning Kickstart

Stocks are pointing to a sharply lower opening, crude oil is higher and Treasury yields are moving lower as traders prepare for the North American session. Renewed concerns about military action against Iran are keeping energy risks elevated, while corporate earnings are producing mixed results—and some unforgiving share-price reactions.

The dollar is mixed. The yen and Swiss franc are advancing against the greenback, while the euro, pound, Australian dollar and New Zealand dollar are lower. The Canadian dollar is holding a modest gain as crude oil moves back toward $100.

In the morning video above, I take a look at the three major currency pairs—EURUSD, USDJPY and GBPUSD—from a technical perspective. For each pair, I…

Many bulls are somewhat surprised and trapped in today's pre-market

Wall Street may be sending investors an early warning through the way it is reacting to corporate earnings. After Netflix disappointed investors, Meta and Tesla delivered another revealing development: both stocks initially rose following their October 21 earnings announcements, only to surrender those gains and turn negative ahead of Thursday's U.S. trading session.

The concern is not simply that several popular stocks have declined. It is that investors initially welcomed some encouraging results, but that enthusiasm did not last.

For investors holding these companies, or exposed to them through S&P 500 and Nasdaq-linked funds, this changing reaction to earnings deserves…

• Prior week for initial claims 199K
• Prior week for continuing claims 1.710M

Details from the release:

• Initial jobless claims: 194,000, down 6,000 for the week ending October 17. Prior revised to 200,000 from 199,000.

• Initial claims four-week average: 197,750, down 1,000. Prior revised to 198,750 from 198,500.

• Continuing claims: 1,728,000 vs 1,720,000 est., up 25,000 for the week ending October 10. Prior revised to 1,703,000 from 1,710,000.

• Continuing claims four-week average: 1,711,000, up 4,000. Prior revised to 1,707,000 from 1,708,750.

• Insured unemployment rate: 1.1%, unchanged.

US initial jobless claims fell to 194,000, according to the Department of Labor’s weekly report. The decline reverses the previous week’s increase, while the four-week…

• Prior was +1.3% m/m
• PPI y/y 14.5% vs 13.5% prior
• Raw materials price index 4.8% m/m vs 3.3% prior
• Raw materials price index 27.0% y/y vs 22.9% prior

The market is pricing in an 80% chance of a Bank of Canada rate hike on October 28. This week's CPI number was on the low side but this data point highlights the inflation in the pipeline.

USD/CAD is down 10 pips to 1.4035 today and that highlights how the dynamic in the FX market has totally flipped. S&P 500 futures are down 0.9% but the market sees it as money fleeing the US AI trade, not a traditional 'risk off'.

For background, Canada’s producer price data come in two monthly reports from Statistics Canada: the Industrial Product Price Index (IPPI) and the Raw Materials Price Index (RMPI).…

If you've been in markets long enough, I'll bet you have surely encountered a situation where you were absolutely sure that something was going to happen. And as it turned out, you called it and you were right. But somehow, you still ended up losing money on the trade. Does that sound familiar?

Well, I would say it's one of the biggest traps that a trader can fall into. It is the very fact that even having a convincing market story doesn't necessarily mean you have a good trade.

Let's go back to our little apple store example, shall we?

Just imagine that you are selling apples and one day, you hear that bad weather has damaged apple harvests across the country. With that information, you quickly make the connection that supplies are going to…

USD:

The US dollar has recently been driven mainly by growth concerns rather than inflation fears. In fact, despite hotter US inflation data last week, Treasury yields dropped significantly and rate hike probabilities saw a slightly dovish repricing. Given the overstretched long positioning in the greenback, we’ve started to see an unwind which could extend further if growth concerns strengthen.

That’s why tomorrow’s US Flash PMIs could be an important catalyst. Strong data could quell those fears and give the US dollar a boost. A soft report, on the other hand, will likely increase growth concerns and put further pressure on long-term Treasury yields and the greenback.