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Briefing.com Summary:
*Stocks are set for a big rebound at the open after President Trump says the matter with China will all be fine.
*JPMorgan Chase announced a $1.5 trillion investment initiative.
*The Treasury market is closed today for Columbus Day.
You know all that stuff you heard Friday about the U.S. imposing massive additional tariffs on China because of its decision to impose export controls on rare earth minerals? Fuggedaboudit.
Okay, maybe don't forget about it, just lower your level of concern. That seems to be the message from President Trump, who said over the weekend, "Don't worry about China; it will all be fine!" The president added that he could still meet with President Xi at the APEC Summit (Oct. 27-31).
The message from the equity futures market this morning is that it is feeling less concerned about the matter. Currently, the S&P 500 futures are up 82 points and are trading 1.2% above fair value, the Nasdaq 100 futures are up 471 points and are trading 1.9% above fair value, and the Dow Jones Industrial Average futures are up 368 points and are trading 0.8% above fair value.
To be blunt, this is just such nonsense—the heaving to and fro on social media posts—but it is what it is, and the stock market seems to be fine playing the part of the puppet.
The buy-the-dip bid is back, then, but will it persist? Friday's price action exposed how vulnerable market pricing is to developments that threaten the rose-colored outlook embedded in premium valuations. Moreover, China isn't sounding so ready to declare that everything will be fine.
Its response was to urge the U.S. to "correct its erroneous practices as soon as possible" and that it hopes the U.S. "will confront its mistakes, work with China halfway, and return to the right track of dialogue and consultation."
Treasury Secretary Bessent said the U.S. had communication with China over the weekend and that, if China is not open to discussions, the U.S. has substantial levers it can pull.
That reminder is left hanging out there, right in front of the start of the third-quarter earnings reporting period that will get rolling this week with reports from the investment banks. The latter are expected to share some good news given the strength in capital markets activity and to sound a relatively upbeat note.
On a related note, JPMorgan Chase (JPM) said it is launching a $1.5 trillion, 10-year plan to facilitate, finance, and invest in industries critical to national economic security and resiliency. That is a 50% increase over a prior plan.
This news has provided an added boost for the equity futures market, along with the good vibes surrounding the news that Hamas has released all living Israeli hostages as part of the Gaza ceasefire agreement and Broadom (AVGO) and OpenAI announcing a collaboration for 10 gigawatts of custom AI accelerators. Shares of AVGO are indicated 11% higher.
There are no good vibes at the moment, however, with respect to the government shutdown. It carries on, with The New York Times reporting that the decision to fire government workers has deepened the divide between the two parties on government funding.
Federal offices would have been closed today anyway for the Columbus Day holiday, so they are doubly closed with the shutdown continuing. Separately, banks and the Treasury market are closed today for Columbus Day.
That means it is just stocks, commodities, and the dollar that are part of today's trading mix, and they are all indicated higher as participants are working to forget about the sell-off that happened on Friday.
