Good morning and Happy October Yankee fans. We flip the calendar and hit the home stretch for 2026. We also say goodbye to Artificial Intelligence and Hello to Super Intelligence, codified in an executive order. The S&P 500 ended September down 0.5%, but that papers over the 5% decline in the equal-weight. Small caps were down similarly. Equities had to navigate the surge yields as rates climbed 40-50bp across the curve, along with sharply higher crude prices. Mega caps and semis kept the market cap weighted index afloat. For Q3 the S&P rose 2.0% while the equal-weight and Russell fell ~2%. Energy led in Q3 while the rate-sensitive Utilities- which are increasingly dragged into AI/SI build-out tensions, lagged, along with Industrials. Yesterday the S&P fell 0.3% on the last day of the month/quarter, while the equal-weight dropped 0.7% and Russell 200 0.4%. Equites were holding up but sold off into the close as the month/quarter came to a close and rebalancing flows likely kicked in. Yields continued to climb as did oil. PCE was the big data update and came in cooler than expected. 2y yields dropped initially but recovered the entire move by day’s end, while the long-end continued to climb.

The Yankees went Bachman Turner Overdrive last night, Taking Care of Business against the Red Sox and moving on to face the Rays. To celebrate, S&P futures are trading higher. They moved well off their best levels in the early morning but have recovered most of that drop. MU reported last night and reported strong results as expected though the stock is trading down 1% in the pre-market. The company sees memory supply constrained through 2028 and commentary couldn’t be any more optimistic- “Micron delivered record fiscal 2026 results, and we expect an even stronger fiscal 2027.” GOOG is up ~2% after launching its latest Gemini model, Argon. ORCL is up modestly as well, following news that Tencent will lease 100K AI chips from the company’s Asian data centers. NKE repots after the close. ACN is sharply higher after results helped cool the AI/SI displacement narrative.

There’s more curve steepening this morning as the 2y sinks 2bp while 10/30y rise 2-4bp. Weekly claims were as expected. The US Dollar Index is up and has reached a YTD high, briefly hitting 101.75. ISM Manufacturing comes out after the Open. Crude is higher with Brent Dec contract back above $100. Metals are mixed with Gold and silver up ~1-2%, with gold looking to put in a low ~$4150. Copper is modestly lower. Ag is mixed as is crypto, with Bitcoin flat to slightly lower.