Market 10/16: Market Heads Toward Nuclear Energy

FED Bostic: Confident inflation will return to 2%

• Inflation will return to 2% but not in a straight line

• Only supports additional 0.25% cut from now until year-end

• Did not support 50bps cut last month

• Economy and labor market remain strong

→ FED Bostic, Atlanta FED Governor, is a fairly hawkish member of FOMC and was the one who said last week that FED “may not cut in November” so his softer tone this morning helps stabilize bond yields.

Probability of no FED cut in November down to nearly 6%

Imports and exports drop sharply in September

• Import prices fall -0.4% in September

• Import prices down -0.1% YoY but exports down -2.1%

→ Falling prices is an optimistic signal for inflation → Bond yields fall in the morning

Amazon pours money into nuclear energy

• According to Google, Amazon will invest $500 million into 4 small reactors

• Partnering with and X-Energy

→ up +70% in 3 days in a short-squeeze

Steve recommended OKLO on public chat right before the short-squeeze started

And then when short-squeeze confirmed, there was an alert:

Everyone can join Discord to read hot news and chat about the market with Steve completely free at:

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Morgan Stanley: Huge profits from the market

• Revenue $15.38B vs $14.41B expected

  • Trading +21% YoY

  • Asset management +14% YoY

  • Investment banking +56% YoY

• Earnings $1.88/share vs $1.58 expected +32% YoY

Key from CEO:

• Cash from PE: Over $1.3 trillion excess

• Investment funds are spending cash faster than raising capital

• Many private companies are seeking ways to go public

• IPOs market is gradually heating up again

Steve: " similar to focuses more on investment banking so has specific risks, however CEO's comments are what Steve thinks is important. Steve will not recommend at current prices because if confident in the continuation of the current profitable environment of there will be many better opportunities outside this sector".

United Airlines: 2024 flying season will end strongly

• Earnings $3.33/share vs $3.07 forecast

• Revenue $14.83 billion vs $14.77 forecast

• Announces $1.5 billion stock buyback - first since 2020

• Affirms Q4 earnings forecast at $2.75

Steve: “Financial reports couldn’t be better from similar to what Steve said above about , if good economic conditions continue then discretionary consumer companies like or the small caps sector will offer more opportunities. However, from Steve’s perspective, the success of still depends heavily on the health of the economy. Investing in here means people believe in soft-landing.”

Market: SPX successfully defends 5800

After yesterday's decline in all 3 US, China, and Europe markets, today's session is much more stable overall.

• China mild rebound overnight

• Europe selling slows down

• SPX opens holding above 5800

However after morning open then:

• Bond yields decline

• Oil prices rise again

• Small caps sector up

• Mega cap tech stocks except NVDA break down dragging the market

→ Money rotation in risk-on phase as bond yields decline

From a structural perspective, nothing changes from Steve's assessment yesterday:

• Yesterday's volatility normal after hitting ATH

• SPX holds 5800 → Rally continues

• Yields decline → small caps benefit

  • IWM above 220 → Calls in control

  • Solar breaks down but Nuclear up

However, both stock and bond markets have entered “complancent” phase with no demand for hedge.

• Stock market:

• Credit spread: Spread between corporate and US government yields at lowest level right before 2008 crisis

→ Investors see no risk in bonds or stocks → No demand for hedge

Hedge like insurance, no hedge means more money for investing

→ But if there's a problem then no insurance

→ No hedge doesn't break market → but if market breaks it will break harder