Morning Reads

Morning Reads

Open Interest Changes



 "The Chinese have basically severed those [U.S.-China military] communication links," U.S. National Security Advisor Jake Sullivan told CNN's State of the Union. "We need those lines of communication so that there aren’t mistakes or miscalculations or miscommunication. President Biden would like to reestablish them and he will look to this summit as an opportunity to try to advance the ball on that."

The economic side appears to be just as big of an equation, with mixed ideas of how to structure that relationship with the potential for serious repercussions. How much subsidies should be granted stateside to prop up industries like semiconductors and electric vehicles? Artificial intelligence and quantum computing? Should Trump-era tariffs still be retained to encourage reshoring or manufacturing in more hospitable countries? Or what about new trade alliances and the remapping of critical supply chains?

Go deeper: Laying the groundwork for the San Francisco summit was Treasury Secretary Janet Yellen, who met with Chinese Vice Premier He Lifeng last week to "strengthen communication and dialogue at all levels." Following two days of meetings, she had the following to say on what things might look like going forward. "We do not seek to decouple our economy from China's. This would be damaging to both the U.S. and China and destabilizing to the world, but a healthy economic relationship requires American workers and firms to be treated fairly." Take the WSB survey.

Ballooning costs

Earlier this year, Microsoft (NASDAQ:MSFTinvested in OpenAI to the reported tune of $10B, but the latter is seeking even more cash from the tech giant as it looks to create sophisticated models of artificial general intelligence. "Training expenses are just huge," OpenAI CEO Sam Altman declared. "You have this research lab, you have this API, you have the partnership with Microsoft, you have this ChatGPT thing, now there is a GPT store. But those aren't really our products. Those are channels into our one single product, which is intelligence - magic intelligence in the sky." Artificial intelligence is seen as a catalyst that recently catapulted MSFT shares to all-time highs, as well as the company's recent quarterly results. (9 comments)

Credit watch

Citing heavier downside risks to the country's fiscal strength, Moody's late on Friday dropped its credit-rating outlook on the United States to negative from stable. "The sharp rise in U.S. Treasury bond yields this year has increased pre-existing pressure on U.S. debt affordability. In the absence of policy action, Moody's expects [United States] debt affordability to decline further, steadily and significantly, to very weak levels compared to other highly rated sovereigns." Deputy Treasury Secretary Wally Adeyemo disagreed with the stance, ahead of another potential government shutdown at the end of this week. "The American economy remains strong, and Treasury securities are the world’s preeminent safe and liquid asset," he said in a statement mailed to media outlets. (235 comments)

Oil reassessment

It was only a month ago that many analysts predicted triple-digit oil prices, but many of those forecasts have changed in recent weeks with WTI crude (CL1:COM) now trading under $80 a barrel. Demand worries were raised last week as Chinese refiners asked for less supply for December, which helped counteract the fear of production outages related to war in the Middle East. However, some maintain that analysts are still not looking in the right places and need to reevaluate the supply side of the equation. "Smugglers, dark fleet operators, thieves and black market dealers are working overtime washing and gushing oil produced or stolen from Russia, Iran, Kurdistan, and Nigeria," noted Manish Raj, managing director at Velandera Energy Partners. (160 comments)

Today's Markets

In Asia, Japan flat. Hong Kong +1.6%. China +0.3%. India -0.5%.
In Europe, at midday, London -0.7%. Paris -0.6%. Frankfurt +0.4%.
Futures at 6:30, Dow flat. S&P -0.2%. Nasdaq -0.2%. Crude +0.3% to $77.38. Gold +0.3% to $1942.70. Bitcoin -0.4% to $36,982.
Ten-year Treasury Yield unchanged at 4.63%

Today's Economic Calendar

11:00 Fed's Cook Speech
12:30 PM Investor Movement Index

Companies reporting earnings today »

What else is happening...

U.S. banking system less vulnerable than pre-2008 GFC - NY Fed.

This company topped Tesla to become most shorted S&P 500 stock.

New weight loss drug: Eli Lilly (LLY) expected to add $4.1B in U.S. sales.

South Carolina Senator Tim Scott abruptly ends 2024 presidential bid.

Air Force said to begin test flights of Northrop's (NOCB-21 bomber.

UBS sees pickup in mergers and acquisitions next year.

Nike (NKE), Target (TGT) lead retailers among biggest Q3 decliners.

How to monetize? Apple (AAPL) is working on generative AI.

Wynn Resorts (WYNN) inks labor deal with Las Vegas culinary workers.

Foreign investor appetite for U.S. debt could abate when Fed starts easing

Known to most as Uranium Pinto Beans, Jason has more than 15 years under his belt of trading stocks, options and currencies. His expertise primarily lies in chart analysis, and he has a strong eye for undervalued stock. Because he’s got the ability to identify great risk/reward trades he usually enjoys taking the path less traveled and reaping the benefits from the adventure.

He is a co-founder of Option Millionaires, and he is best known for his weekly webinars with Scott, as well as his high level training webinars and charts found in the forums.

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