Good morning and Happy Friday,

We saw some interesting dynamics in the market yesterday. The S&P 500 fell 0.5% as basically the entire AI complex came under pressure on news that OpenAI would see a lower-than-expected ARR for the year. However, breadth was actually solid- the equal-weight index rose 0.6% and Russell 2000 was flat. Yields fell and the curve flattened despite oil gaining ~3%, digesting headlines that the US was preparing for renewed strikes on Iran before the midterms (surprisingly), followed by President Trump saying any strikes would commence after the elections. Energy, Staples and Financials led while Tech was the big laggard. The OAI news set off a controversy over how ARR was calculated and if the news was misleading. Right on cue, follow up stories noted the lower ARR numbers were not apples to apples.

Heading into the open, S&P futures are higher but moved down from their best levels after reports of an attack on a large tanker. Delta is down ~2% after reporting earnings, with a top line beat but earnings miss on high fuel costs. Tech stocks are bouncing a little after the follow-up reporting on OpenAI’s ARR. SoftBank is reportedly looking to raise up to $100B from Gulf investors to fund more AI investments. The news should draw more handwringing from Bears that point to the extraordinary debt buildup funding AI- SpaceX looking to raise $40B, Broadcom looking at raising $50B most recently. Speaking of SpaceX, the company bought spectrum assets to expand its Starlink network into the US mobile market. That has pressured major telecoms in the pre-market.

Treasury yields were flat to slightly higher but are moving up on the tanker news as oil rallies off its lows. The US Dollar Index has pushed back toward its highs of the day. Despite the tanker news the energy complex is lower, though crude is off its lows. Metals are higher despite yield backing up again, with gold moving above $4200. November Copper bounced off its 100d and rose back above its 50d ma ~$6.70. Ag is flat to higher ahead of the WASDE report today. Bitcoin and Eth are rallying modestly after weakness the past two days.