TUESDAY MARKET UPDATE

Good morning. Index figures below are futures — I'm writing before the open. The Fed starts its two-day meeting today.

— Nathan Reed

Gold & Macro

YIELDS FELL ALL MONTH. GOLD DIDN'T CARE.

Gold is $4,013, down a tenth of a percent and about 2.5% over the month. Silver is $53.40, off nearly 12% in the same stretch. Meanwhile the 10-year yield has fallen for three straight weeks to about 4.98%.

That combination should look wrong. Falling yields usually help an asset that pays you nothing while you own it. But the dollar firmed to 102.22, and the yields are falling for the unhelpful reason — softer oil is pulling inflation fear out of the bond market, not growth fear.

Gold trades off real rates — the yield left after inflation. When inflation expectations drop faster than the yield does, that real rate goes up even as the headline number falls. October in one sentence, and the Fed decides tomorrow at two.

The Trade

NVIDIA IS NOW FUNDING ITS OWN CUSTOMER

Meta priced its equity raise and made it bigger. The common-stock piece went to $25 billion from $22.5 billion at $625 a share, with depositary shares taking the total toward $37.5 billion. Nvidia committed $3 billion of it, alongside a widened deal putting more Nvidia hardware in Meta's data centres.

Yesterday I read three simultaneous raises as a scramble for scarce capital. The pool was deeper than that — Meta asked for more and got it. But look at what the extra money bought.

The chip supplier is helping fund the share sale that pays for chips, and expanding what it sells in the same announcement. That circle isn't unusual in technology, and it isn't improper. It does make the demand number harder to read, because part of it is the seller's own money coming back round. Meta still slipped about 1.9%.

What to watch

Microsoft and Alphabet report tomorrow, Amazon later in the week, and capital spending guidance is the line that matters. Then the Fed at two o'clock, where the December language is the whole event.

Heat Check

Nathan's Take

"Nvidia put three billion into the company that buys its chips, and widened what it sells them in the same breath. The money and the order book are the same thing."

Names to Know

COCA-COLA, UPS, META

Coca-Cola $KO (▲) — beat on both lines with case volume up 5%, and raised its outlook, though North American demand slowed.

UPS $UPS (▲) — beat on adjusted earnings and lifted its full-year profit, revenue and cash-flow targets.

Meta Platforms $META (▼ 1.9%) — upsized its equity raise to $25 billion of common stock at $625 a share.

Broadcom $AVGO (▲) — upgraded by DA Davidson, which lifted its target to $400 from $350.

Whirlpool $WHR (▼) — posted an adjusted quarterly loss and cut full-year sales guidance by $500 million.

Figures are pre-market and will move once the session opens. For real-time data, I recommend monitoring Finviz.

The Macro Edge

🇰🇷  South Korea's Kospi jumped 3.47% and Japan's Nikkei 1.73%, led by chip investment and exports.

☢️  Iran's supreme leader called for conditions to end the war — the clearest signal yet out of Tehran.

🇨🇦  Washington and Ottawa are negotiating relief from steel and car tariffs, possibly before November 3.

🛒  Instacart jumped on reports DoorDash may acquire it for about $17 billion.

💉  Moderna was downgraded on valuation after a 545% run this year.

Tomorrow the Fed talks. Today a chip maker funded its own customer.

Nathan Reed  |  Profits & Insights