• Welcome back to Morning Trade Live. It's time now for the big pictures. Let's welcome in Nathan Peterson, director of derivatives analysis, Schwabs Center for Financial Research. So we're seeing some give back in the markets today off the back of the relief rally we saw yesterday. What stands out, Nate?
    Sam
  • Nathan Peterson
    Sure, good morning Sam, you know I think this is just some normal consolidation. It's nice to see that potentially we can get a vote from the House on getting the government shutdown over with tomorrow, which would be nice for the markets, but then that's also going to bring in a lot of the economic data that's been in the queue so to speak. Goldman Sachs put out an estimate they thought 50,000 jobs were lost in October. Perhaps that's not that big of a deal. Maybe an uptick in unemployment toward 4.5% doesn't rattle the bull thesis of a strong enough economy, double digit EPS growth, four quarters now. As we move through Q4, we've got bullish seasonality, potentially performance chasing, and technical support held on Friday at the 50 SMA on the S&P 500. That held up, which is nice to see because traders have something to trade against for exits if support doesn't hold in the coming weeks. For Q4, historically a good time for the market, but not 100% sure it's all about AI. Some damage done to speculative momo group, including quantum computing and crypto lagged. Bitcoin trying to hold support at 100k. The question is when we get economic data, does it thwart our thesis of more Fed easing in coming FOMC meetings? Currently about 69% for December. Another question is rotation—does it broaden out beyond small caps into other sectors? We've seen selloffs post earnings in Palantir, Meta, and CoreWeave in data center compute leases. Wonder if rotation will keep index levels in a healthy uptrend. We'll take it as it comes with data and Nvidia earnings next Wednesday.
  • What do you think is going to be the bigger catalyst? Nvidia or the deluge of data influencing December Fed decision?
    Sam
  • Nathan Peterson
    I think it's going to be the data that rolls in after job cuts and declining job openings. Some of this is anticipated; could be good for corporate margins, but extent of labor market weakening is the big question. If labor market weakens, Fed easing likely; but if layoffs too severe, could impact forward earnings estimates—14% for 2026 currently in the cards. Also rotation: not sure if the AI tech trade will dominate again given price reactions and rattled bullish sentiment. Oracle fell from 330 post earnings to 235. Wall Street patient with CapEx but may be questioning ROI now.
  • Thanks Nate. Always a pleasure.
    Sam
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