These are the early headlines and other items poised to influence the market at the start of the trading day. As we share this collection of market drivers, U.S. equity futures point to a down market open later this morning.
1. A global bond rout deepened on Thursday as oil jumped back above $105 a barrel, adding to inflation fears after the US Treasuries market suffered its biggest fall since last year’s trade war sell-off. Ten-year US Treasury yields rose as high as 5.15 per cent on Thursday, up 0.03 percentage points to their highest since 2007. This added to a 0.15 percentage point jump on Wednesday as rising crude prices and strong economic data triggered bets on faster rate rises by the Federal Reserve. (FT)
New York Federal Reserve President John Williams said on Thursday it was reasonable to think that the U.S. central bank might need to raise interest rates again before the end of the year to help bring down inflation risks. (Reuters)
Oil and Treasury yields up are weighing on the market on Thursday and as we discussed with followers of the Pro Portfolio late on Wednesday, after having raised cash levels earlier this month, we are now waiting and watching technical support levels for the S&P 500 and the Nasdaq Composite. The view from Citadel Securities is that we could see the market bottom on or around September 30, but given the timing of September PMI data from ISM and the September Employment Report, and what that data has to show, a market trough could arrive in early October.
2. Treasury Secretary Scott Bessent said Wednesday evening that the U.S. and China have agreed to extend their trade truce, shortly after Chinese leader Xi Jinping arrived in Washington for two days of meetings. But the extension is just two months — setting up another deadline for early next year. (Politico)
Analysts say tangible outcomes are likely to be limited to an extension of a trade truce expiring in November and an agreement to examine threats posed by artificial intelligence… People familiar with the plans say the talks could also yield deals to lower some tariffs, combat drug trafficking and expand military-to-military dialogue, while Trump is expected to seek the release of Americans and others detained in China. (Reuters)
The above and similar headlines suggest the meeting between Trump and Xi will largely be a kicking-of-the-can-down-the-road exercise. Is it possible there are some surprises? Certainly possible, which is why we and others will follow up as the two-day event progresses. As we do that, we’ll also be looking to see what unfolds next between the U.S and Iran.
This means that those who expected a new commitment for China to buy Boeing (BA) to be announced this week are likely to be disappointed.
3. Energy Secretary Chris Wright told oil industry leaders to brace for possible US curbs on diesel exports amid an intensifying debate within the Trump administration over such a move… The differences among Trump’s advisers over the idea and the industry opposition demonstrate the president’s few good options to tame fuel prices before the November midterm elections, which have been dominated by voters’ cost-of-living concerns. While a diesel export ban may offer some relief, that would be short-lived and the havoc on energy markets risks counteracting any benefits, critics warn. (Bloomberg)
Earlier this month, we flagged the growing risk of elevated diesel prices and the impact on company margins and EPS expectations. Since the, the average price for a gallon of diesel has moved even higher, and at more than $6.50 compared to $3.70 this time last year, we are now seeing more across Wall Street take notice. And yes, gas prices have continued to trend higher as well, with the average price for a gallon of regular gas nearing $4.50 per gallon compared to $3.16 a year ago per data from AAA.
4. At Wednesday’s Meta Platforms Connect keynote, CEO Mark Zuckerberg made clear that the company is trying to challenge Apple as the provider of secure, private personal artificial-intelligence services for consumers… Now at the center of the company’s strategy is the recently released Muse AI personal agent, which can carry out complicated tasks on behalf of a user on a phone or computer. Backing that up is a new emphasis on private and secure interactions that even Meta won’t be able to see after an update the company said is coming soon. Meta sees e-commerce as key to monetizing Muse. It announced new retail partnerships on Wednesday adding Walmart, Best Buy, and Gap to its existing relationships with Shopify and PayPal… Zuckerberg said that the company will take a fee from transactions executed through Muse… Meta’s hardware strategy is primarily focused on smart glasses, a category that Apple is also keenly interested in. There is a long road ahead to make these a mass-market product category that can supplant the smartphone as Meta predicts, and it will depend on multiple technological breakthroughs. (Barron’s)
The highly anticipated Meta (META) Connect event has come and gone, and while there were several announcements that were largely expected, like its new camera-less smart glasses, the market is likely to focus more on what wasn’t said. As Zuck shared during his keynote, “The centerpiece of our vision for what we’re building is Muse,” and that means Meta is making a big bet on consumer AI. To us that means we will focus not on the number of free downloads of Muse, but metrics for the number of paid subscriptions, the number of transactions performed with muse, and the like.
Those data points will shape Muse monetization expectations, and inform us as to how disruptive Muse could actually be to other segments of the market relative to what the market reaction to Muse so far has implied. As far as the Muse Charm goes…. We’ll see, but we see the possibility of its landing just as well as Apple’s (AAPL) Newton did.
5. Flock Safety, which is facing scrutiny over the proliferation and alleged abuse of its cameras, is weighing whether to sell itself, according to people familiar with the matter. The company has had conversations with outside advisers, the people said. The people described the discussions as preliminary and said that no decisions had been made about whether to move forward with a sale process. A Flock spokesperson declined to comment. (Semafor)
Flock Safety reportedly has an estimated network of over 120,000 to 130,000 automated license plate reader (ALPR) cameras across 49 states. Other estimates peg the company’s position as five out of every six ALPR cameras. However, as we’ve shared with you, the company faces intense public, legal and political backlash over mass surveillance, data privacy and misuse concerns. Given that those ALPR cameras are already installed and law enforcement are grappling with widespread staffing shortages, odds are they would be in favor of a solution that would allow for the continued use of those ALPR cameras and alleviate concerns.
We will look to see if Portfolio holding Axon (AXON) moves to acquire Flock, a move that would build on its own ALPR efforts, deepen its existing law enforcement relationships, and enhance the positioning for its higher margin software and service offerings.
6. Qualcomm Incorporated today announced the renewal of its global patent license agreement with Apple, effective April 1, 2027. “We are pleased to extend the Apple license agreement,” said John Han, Executive Vice President and General Manager of Qualcomm Technology Licensing (QTL). (PR Newsire)
At first blush, some folks may think this means Qualcomm (QCOM) has extended its chip relationship with Apple (AAPL), but that is not the case. As we saw with Apple’s newest iPhone introductions, it is accelerating the adoption of its proprietary Apple Silicon modem across nearly the entire lineup. What this announcement refers to is Apple licensing the portfolio of cellular standard essential patents for mobile and wireless technologies so that it can produce its own solutions. Arguably such an announcement has been expected, and Qualcomm isn’t the only company that Apple pays licensing fees to.
7. Economic data today per TipRanks: Initial & Continuing Jobless Claims (Weekly), New Home Sales (August), EIA Natural Gas Inventories (Weekly).
8. Companies reporting today per TipRanks: AM – Darden Restaurants (DRI), TD Synnex (SNX). PM – Blackberry (BB), Costco (COST)
Note: The next edition of 8 Key Items Shaping the Market will be published on Tuesday, September 29.
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At the time of publication, TheStreet Pro Portfolio was long AAPL, AXON, BA, COST and META
