Markets Jump As Earnings Stir Rebound

SPEAKER_1 (0:00)

Looking for strategies to help you protect your portfolio in these uncertain times? Visit robblack.com, robblack.com, powered by EP Wealth.

Rob Black (0:11)

What we're seeing in the market today, by the way, a good day, October 20th, Tuesday, solid participation in the broader market after yesterday's narrow tech leadership. I like seeing that, like broadening of the market. I do want to see some companies that are not AI-driven driving the market. And ultimately, what I mean by that is, today, I think it's a good day when we see things like Northrop Grumman and RTX, as well as 3M, advancing after their earnings.

Oil pulling back a buck to $102 a barrel, that's helping overall investor sentiment.

We're definitely not in a green light go scenario. Tech stocks are quickly erasing the opening losses today. Oil reversing from that overnight highs amid reports of a potential agreement between the United States and Iran to resume negotiations. All believe that when I see it. Core weaves down again. There was some ugly IPO for a Korean neo-cloud company called Ellis talking about a bad IPO down 30% on its first day of trading. I don't even know how that happens. Investor concerns over AI fueled debt burden. With CoreWeave announcing what they did, they didn't really announce their distressed debt. With Wall Street announcing CoreWeave's distressed debt last week, I don't know how this company got slated for an IPO. I don't know how the window didn't close. Loop Capital is downgrading Apple to neutral from buy-on concerns of slower iPhone sales. That's pretty interesting. And I'm totally, doesn't it make sense that should happen in this kind of economy where we're concerned about AI and debt? Maybe it doesn't make any sense at all because their new Duo is sold out through January. And that's $1999 phone versus their Pro Maxes. So Loop Capital downgraded Apple today to hold from buy $330 price target. They've become more cautious after supply chain checks indicated Apple does not plan to recover the roughly 13 million iPhone units cut from their second half 2026 production. When they had previously expected to be recaptured in 2027, they also see potential gross margin pressure from rising memory costs and lower than normalized earnings per share estimate to $11 a share from 12

For the December quarter, they now model 79 million iPhone units versus the previous consensus of 85 million and they reduced their average selling price estimates to $1123.

They still like Apple's longer term share gain and service story, but they believe the recent stock appreciation leaves the shares and a new need, if you will, for a fundamental catalyst beyond the duo.

Which again is pretty interesting because we don't know how many duos will be available for launch in early November at stores. We know that they're sold out online through mid to late January. That number will come down, but will it be Christmas? Likely not. Taking a look at some of the other elements of the market today. Total housing starts were down 5.2% month over month in September to a seasonally adjusted annual rate of 1.221 million.

Little less than consensus expectations. Building permits were down 2 tenths of a percent month over month to a seasonally adjusted annual rate of 1.4 million.

There is no growth in permits for a single unit dwellings in any region. Building permits are a leading indicator in a lack of growth as a reflection of the constraints builders and homebuilders alike are facing with higher interest rate and financing costs. Ten year sits at 5.11 percent. It's not terribly uplifting, but it's been driven lower recently which took some of the pressure off. When ten year treasury bonds above 4.5 percent, it's tough for me to buy stocks. When it's at 5 percent, it's really, really tough. When it's at 5.5 percent, I might sit in some money market accounts and wait for buying opportunity in stocks. Today we get SpaceX, Netflix, United Airlines, and Capital One all reporting after the closed day. What do they do? They all tell us something different, huh? SpaceX, how well Starlink is performing, what plans might be for the future, how their various spacecraft are getting more cargo up in the air. It seems on almost a daily basis, the launches are occurring, not quite, but pretty darn close. Feels like there would be some fatigue working at a rocket company that sends so many rockets up in the space. Just 10, 9, 8, 7, 6 Let's get ready for another one. Okay, there's another blast off. Let's get ready for the next one. Those are big productions where a lot can go wrong. So kudos to the men and women at SpaceX, because they're making it seem relatively easy on the outside. Of course, today with SpaceX earnings call, they're going to talk about potential AI revenue. Well, not potential AI, potentially merging with Tesla, but they're going to be talking about AI revenue, sterling growth, and a lot of merger speculation. Let's power forward. Let's get a little bit more on that housing data, because I think that's a big one. Home builder sentiments at 14 year low.