Three Things to Watch
- Earnings will be front and center with more than 70 members of the S&P 500 on tap to report this week. Tesla, SpaceX, Meta and Texas Instruments are some of the companies that will report earnings, and the artificial intelligence (AI) trade will be back in focus. Much stronger-than-expected earnings, particularly around AI spending, have been the biggest driver of equities this year.
- On the data front, housing starts are out on Tuesday, the leading index will be released on Thursday, and the University of Michigan Consumer Sentiment and Inflation Expectations will be released Friday. Sentiment remains generally very poor, and inflation expectations continue to edge higher.
- Investors remain cautious about large swings across both stocks and bonds as questions grow over the massive spending on AI infrastructure.
Three Things to Know
- The U.S. deficit widened to $1.99 trillion for fiscal-year 2026, up +12% from the $1.78 trillion recorded last year. Spending rose by +6%, to $7.4 trillion, and net interest officially rose above $1 trillion. Debt-servicing costs are now the third-largest expense for the U.S. government, behind only Social Security and Medicare. This marks the fourth straight year with the U.S. fiscal deficit around $2 trillion. (Source: The Kobeissi Letter)
- Monday, October 19, is the 39th anniversary of Black Monday, when the Dow Jones Industrial Average fell 22.6% for the biggest one-day decline on record. (Source: Google)
- Since January 2026, consumer sentiment is down -27% among the bottom 33% of stockholders, the largest decline among the stock-wealth groups surveyed. This is followed by those who do not own stocks, whose sentiment is down -25% over the same period. By comparison, sentiment is down just -9% among the middle 33% and -7% among the top 33% of stockholders. Asset ownership has helped offset the impact of higher living costs, leaving consumers with fewer or no stocks more exposed to the recent acceleration in inflation. (Source: The Kobeissi Letter)
The above information reflects the current opinion of the author. It is based upon sources and data believed to be accurate and reliable. Opinions and forward-looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security mentioned.
6032138 – EXP: 10/31/2029