This Week

Last week’s action in equities could best be described as shaky — but ultimately steady enough to finish higher. It was a week dominated by earnings from the mega-caps, where META nearly dragged the market lower before Amazon swooped in the next day to save the tape. This week’s lineup looks a bit different — less about headline-grabbing market cap swings, and more about sector-specific moves that could shift things under the surface. Futures have opened Sunday evening slightly in the green (ES-mini +0.25%).

We were supposed to get Friday’s Jobs Report, but that now looks unlikely with the ongoing government shutdown. Still, other key employment data, including JOLTS, ADP and Challenger will have to do for now. More on what to watch this week in a bit, but first, a quick roundup of some interesting stories from over the weekend.

• White House releases new details on US-China trade deal, including curbs on rare earth export controls (CNBC)

  • The White House released a fact sheet late Saturday with more details about the trade agreement ironed out between President Trump and China's President Xi Jinping in South Korea last week. China will suspend additional export controls on rare earth metals and end investigations into US chip companies, according to the new release. The US will pause some of Trump’s "reciprocal tariffs" on China for another year and will halt plans to slap a 100% tariff on Chinese exports to the US that was set to take effect this month.

• Is OpenAI Becoming Too Big to Fail? (WSJ)

  • Sam Altman’s ability to intertwine the startup throughout major tech players puts it at the nexus of a vital part of the U.S. economy

  • Slowly then all at once, OpenAI became something of a juggernaut that’s hard to fully fathom. It hasn’t yet turned a profit. Its annual revenue is 2% of Amazon.com’s sales. Its future is uncertain beyond the hope of ushering in a godlike artificial intelligence that might help cure cancer and transform work and life as we know it. Still, it is brimming with hope and excitement. But what if OpenAI fails? There’s real concern that through many complicated and murky tech deals aimed at bolstering OpenAI’s finances, the startup has become too big to fail. Or, put another way, if the hype and hope around Chief Executive Sam Altman’s vision of the AI future fails to materialize, it could create systemic risk to the part of the U.S. economy likely keeping us out of recession. That’s rarefied air, especially for a startup. Few worried about what would happen if Pets.com failed in the dot-com boom.

• Surging Power Costs Are Putting the Squeeze on Customers (WSJ)

  • Americans could continue to see an increase in energy costs this winter. Data centers contribute to higher prices as fat energy bills electrify local politics

• Crypto Treasury Stocks Face a Reckoning. Why Boom Could Turn to Bust. (Barron’s)

  • The boom in companies holding large stocks of cryptos has been a hot play this year, but that trade is now at risk of imploding and dragging down the rest of the sector with it.

• Why Companies Are No Longer Hanging On to Employees (WSJ)

  • The practice of ‘labor hoarding’—holding on to employees for fear of not being able to get them back later—has reached its end. Companies scrambled for years after the pandemic to build back their workforces, learning a simple lesson along the way: Keep the workers you’ve got, because if you lose them you will have a hard time getting them back.

• Microsoft plans to hire more but with ‘a lot more leverage’ thanks to AI, CEO Satya Nadella says (CNBC)

  • Microsoft will expand its employee base once again, CEO Satya Nadella told investor Brad Gerstner on a podcast that aired on Friday. The software maker’s workforce didn’t budge in the 2025 fiscal year, which ended in June. It stood at 228,000, with multiple rounds of layoffs lowering the total number by at least 6,000. In July, Microsoft let go of another 9,000 workers.

    “I will say we will grow our headcount, but the way I look at it is, that headcount we grow will grow with a lot more leverage than the headcount we had pre-AI,” Nadella said

• Berkshire Operating Profits Rose 33% in Third Quarter. There Were No Stock Buybacks. (Barron’s)

  • Berkshire Hathaway’s operating profits rose 33% in the third quarter to $13.5 billion after taxes, bolstered by strong insurance underwriting profits, as well as gains at the company’s railroad and manufacturing businesses.

• OPEC+ to Pause Output Hikes Next Year as Market Set for Glut (Bloomberg)

  • OPEC+ will pause output increases during the first quarter — after making another modest hike next month — as the group balances its push for market share against signs of an emerging surplus. Key members led by Saudi Arabia agreed during a video conference on Sunday to revive 137,000 barrels a day next month, matching increases scheduled for October and November, then take a January-to-March hiatus. The first quarter is normally a period of weaker demand and delegates said the decision to pause from January reflects an expectation for a seasonal slowdown.

Friday’s choppy action held volatility at slightly elevated levels near term (when typically vols would have compressed following that 3 day run of events) and we’re entering this week with very similar expected moves as we saw last week:

This Week’s Expected Moves:

• SPX/SPY: 1.4%

  • QQQ: 1.9%

  • IWM: 2.2%

  • TLT: 1.2%

  • USO: 3.4%

Looking ahead to this week’s economic data, the government shutdown will likely delay the NFP on Friday but we’ll still see other employment data, as well as ISM numbers:

Economic Calendar: 

• Monday

  • Fed Speak: Daly, Cook

  • 10am - ISM Manufacturing

• Tuesday

  • Fed Speak: Bowman

  • 10am - JOLTS Job Opening

• Wednesday

  • 8:15 - ADP Employment

  • 10am: ISM Services

• Thursday

  • Fed Speak: Musalem, Waller, Paulson, Hammack

  • 7:30am - Challenger Job Cuts

• Friday

  • Fed Speak: Miran, Williams

  • Unlikely: NFP Jobs

Earnings reports this week include some interesting names including PLTR, AMD, and QCOM. The calendar stays full the next few weeks leading up to the next batch of megacaps including NVDA in late Nov and AVGO in early Dec.

Earnings (with expected moves):

• Monday

  • Pre-market: ON 12%

  • After-hours: PLTR 9.5%

• Tuesday

  • Pre-market: UBER 6.5%, SHOP 10%, SPOT 9%, PFE 4%

  • After-hours: AMD 8%, SMCI 11%

• Wednesday

  • Pre-market: NVO 8%, MCD 3%

  • After-hours: QCOM 6%, APP 13%, HOOD 9%, IONQ 13%, SNAP 14%

• Thursday

  • Pre-market: MRNA 10%

  • After-hours: TTD 15.5%, OPEN 15%, DKNG 9%

• Friday

  • Pre-market: CEG 7.7%

One last note: Equities have been trading in a fairly neutral options environment over the past few weeks — not much in the way of significant gamma to compress market moves or accelerate them . But just above current levels, if the SPX were to approach the 7000 mark over the next few weeks, it would likely run into meaningful overhead supply for the first time in a while. That overhang actually extends through year-end, where alot of calls have been sold at or near that big round number. That suggests the market’s risk/reward may be a bit skewed here. It’s going to take real momentum to punch through 7000, while even modest pullbacks could come more easily.

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