President Trump Ruins the Party
The government is shut down so key economic data remain missing in action.
Is that a problem? No way!
The S&P 500, Nasdaq 100, and Russell 2000 all made record highs this week.
So let's look at the 10 things you need to know right now!
1) President Trump Ruined the Party
I'm just sitting here cranking out this article in peace… and President Trump just dropped this bomb on Truth Social:
So China's getting tougher when it comes to exports of rare earth materials, and Trump is considering fighting back with a bunch of tariffs.
This gave traders an excuse to do some profit taking after a powerful start to Q4.
The question is – was Friday's dip just another buying opportunity?
Or a prelude to a slopfest like we had in April?
Now whether you like Trump or not, we all have to admit markets are more interesting with him around.
Real world effects notwithstanding…
We'll talk about The Ultimate Trump Trade soon, but isn't it odd that…
2) Bullish Sentiment Hit a 10-Month High
The latest AAII Sentiment Survey shows that 45.9% of investors are bullish.
This is the fourth straight week of above-average bullishness.
And it's the highest bullish reading since December 5, 2024.
So yes, higher stock prices pushed sentiment to a 10-month high right before President Trump kicked us in the shin.
3) Earnings Season Is About to Kick Off HARD
Next week's economic calendar is jammed with key data like CPI, PPI, Jobless Claims, NFP, and Retail Sales.
But we may get none of these numbers if the shutdown continues.
The good thing is we're about to get assaulted with earnings reports from heavyweights in two key sectors:
- Banks: JP Morgan (JPM), Goldman Sachs (GS), Wells Fargo (WFC), Citigroup (C), Bank of America (BAC) and others.
- Semiconductors: ASML Holding (ASML) & Taiwan Semi (TSM)
So we'll get key insights on housing, consumer strength, and AI.
The problem is that earnings estimates have been rising ahead of earnings season – not falling like in recent quarters.
So the bar is high.
But back on the economic numbers, don't forget that…
Related: 7 Things I HATE About Earnings Season:
4) Interactive Brokers Will Update Us on The Ultimate Trump Trade
Leading brokerage Interactive Brokers (IBKR) is one of my biggest long-term stock investments, so take what I say with a grain of salt.
They report earnings Thursday and could give us an update on “The Ultimate Trump Trade” – the basket of financial stocks that benefit from a combination of market volatility and rising stock/crypto prices, including Robinhood (HOOD), Coinbase (COIN), and Webull (BULL).
Interactive Brokers should give us insights on what trading volumes could look like in October.
That could mean dip buying opportunities in this basket of stocks, so keep an eye out.
5) Fed Chair Powell Speaks on Tuesday
Even with the economic data mystery, the market is still banking on a rate cut later this month.
The CME's FedWatch Tool shows a 95% probability of an October rate cut.
So the market assumes the missing data supports the Fed's dovish course.
On Tuesday, Fed Chair Powell will give a speech on Economic Outlook and Monetary Policy at the National Association for Business Economics (NABE) annual meeting in Philadelphia.
On October 9, Powell was unable to make his appearance at the Fed Community Bank conferences, so the stakes may be higher for this Tuesday.
6) 2025 Is the Year of Heavy Metal
Yep, SPY is up 15% and Bitcoin is up 28%.
Pretty impressive.
But have you seen the metals complex?
We sampled some of the more popular metals ETFs and the numbers are shocking, with gold miners (GDX) up 125%:
Silver, copper, palladium, and uranium are also putting up massive numbers.
It's been a perfect storm because of trends like the falling US dollar, lower rates, flight to safety, central bank buying, institutional demand, and plain old supply-demand constraints.
7. Jamie Dimon Made Me Question AI
Earlier this week, JP Morgan (JPM) CEO Jamie Dimon said the company spends $2 billion a year on AI.
And it's now saving that much money a year as a result.
Now, spending $2 billion to save $2 billion doesn't sound like anything great.
But those savings should snowball over time because $2 billion spent this year should save at least $2 billion this year, and also provide savings next year.
And I'm a JP Morgan shareholder, so I'm glad to see this.
My concern is why aren't more companies making announcements like this?
Are they keeping things quiet to avoid freaking out employees fearful of being replace by ChatGPT?
An MIT report showed that most AI programs have “little to no measurable impact on P&L.”
So it's exciting to see all these mega deals like the AMD (AMD)/OpenAI link-up.
But where's the beef? More companies should be saying “we saved $XYZ or increased sales by XYZ% through the use of AI.”
Right?
8. Ray Dalio Warns of Danger Ahead
Super investor Ray Dalio, founder of Bridgewater Associates, is comparing the current climate to pre-World War 2.
In a Bloomberg interview, Dalio warned about skyrocketing US government debt, saying “it’s like plaque in the arteries that then begins to squeeze out the spending.”
But good luck explaining that to a politician.
He also said “civil war of some sort” is developing in the US and other parts of the world.
Let's hope he's wrong.
9. Utilities Might Heat Up
We might be entering a perfect environment for the typically sleepy utilities.
We have economic uncertainty, rising power demand, a friendlier regulatory environment, and falling interest rates.
The market's not blind to this, with the Utilities SPDR ETF (XLU) up 22% YTD, and up 4% in October:
Plus, many XLU components like Constellation Energy (CEG) offer exposure to the booming nuclear power trend.
FYI – I have a small XLU position.
10) This Market Cycle Expert Predicts SPX 7100
Jeff Hirsch, Editor-in-Chief of The Stock Trader's Almanac appeared on The T3 Live Alpha Show podcast to share why he has an SPX 7100 price target for Q4:
Jeff also explains the seasonal strength in Bitcoin, and why the Presidential cycle points to potential downside ahead in 2026.
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