Michigan to the Rescue

After weeks of relentless upward motion, Wall Street seems to have remembered how to stand still. The blistering rally that has carried U.S. equities higher in recent months has slowed to a pause, as traders await fresh clues about the health of the economy. Yesterday, the main Wall Street indices ended down between 0.1% and 0.5%. This morning's spotlight falls on an unlikely star: consumer sentiment data. While it often goes unnoticed, the University of Michigan's survey has been promoted to leading role thanks to the government shutdown, which has forced official statistics into an unscheduled vacation.

The rally itself has been powered by more than just optimism. It's been a cocktail of technological promise, central bank generosity, and plain old fear of missing out. Investors have been bidding up equities with the fervor of latecomers spotting the last train home. Despite mutterings about bubbles, few seem ready to get off the ride. The bull market, now approaching its third birthday, has shown a stubborn refusal to be spooked by skepticism.

One striking feature of this rally is the way artificial intelligence has acted as its engine. The early gains were concentrated in the familiar technology giants, but attention is starting to turn to less glamorous corners of the economy. Energy and construction companies, for example, stand to benefit from the massive expansion of data centres needed to support AI's growth.

The coming earnings season will test whether expectations have run ahead of reality. Markets have been pricing in a smooth continuation of growth, robust margins, and endless demand. Corporate results will either justify that confidence or expose a few cracks. It's the financial equivalent of pulling back the curtain: the narrative has been set, but the numbers will have the final word. Proxy data suggest a weakening labour market, with layoffs linked to the political stalemate likely to deepen strains. If consumers grow cautious, companies may find their revenue forecasts suddenly look a little ambitious.

Beyond domestic data, a lot is happening in geopolitics. Israeli troops have begun withdrawing from parts of Gaza under a ceasefire deal with Hamas, offering a rare moment of easing tensions in a region that has long cast a shadow over global sentiment.

In corporate news, Intel rose in premarket trading after a broker upgrade, while Applied Digital soared more than 20% on better-than-expected earnings. Levi Strauss, by contrast, saw its shares tumble after forecasting annual profit below expectations, and Qualcomm slipped as Chinese regulators opened an antitrust investigation into its planned acquisition of Autotalks.

The price of silver briefly touched the mythical USD 50 mark yesterday. I say mythical because it has only happened once before, in 1980, the era of Magnum's moustache, shoulder pads, and when Walkmans were the height of technology.. And even then, it was due to a speculative story emblematic of that era: Silver Thursday, which I will try to summarize without making this column too long.

In the late 1970s, Nelson Bunker and William Herbert Hunt, heirs to a Texan oil empire and clearly uninspired by government bonds, decided that silver metal was the best insurance against inflation, the Fed and the spectre of a confiscatory government. As a result, they threw themselves into silver metal with physical bullion and futures contracts. Thanks to the leverage offered by their banks, they ended up controlling an indecent portion of the global supply (about a third of the market, excluding government holdings, according to several sources).

Between 1973 and early 1980, the price of silver rose from $1.50 to nearly $50 an ounce. Yes, thirty times. The Hunts, propelled by leverage that would make even the most brainless trader pale, created a bubble all by themselves. The market became a caricature of itself: industrial demand collapsed, regulators sounded the alarm, and COMEX, the New York precious metals market, finally tightened the screws by imposing leverage limits and minimum margin requirements. In other words, the game was over.

Silver collapsed by half in a matter of days, with a memorable plunge on 27 March 1980, dubbed Silver Thursday. The Hunts no longer had deep enough pockets to meet margin calls. Their positions were liquidated in a hurry, precipitating a spectacular crash. They ended up ruined, in debt, and convicted of market manipulation.

So much for Friday's history lesson, hoping I haven't oversimplified things too much.

On the political front, Democrats and Republicans continue to blame each other for the shutdown in the United States. It is the ninth day of deadlock.

This morning Dow E-minis, S&P 500 E-minis and Nasdaq 100 E-minis all edged up 0.1% this morning. On the Asia-Pacific markets, Japan ended the week with a sharp decline (0.8%), followed by China (-1.5%) and Hong Kong (-1.5%). Australia fell more moderately (-0.1%), while India and Taiwan rose 0.4% and 0.8% respectively during the session. South Korea, after a series of public holidays, jumped 1.6% thanks to the contribution of its technology sector. Europe is mixed, with the Stoxx Europe 600 remaining flat.

Today's economic highlights:

On today's agenda: the producer price index in Germany; the hourly wage rate for permanent employees in Canada; in the United States, the University of Michigan sentiment index and the federal budget balance. See the full calendar here.

• Dollar index: 99,313
• Gold: $3,989
• Crude Oil (BRENT): $64.28 (WTI) $60.60
• United States 10 years: 4.10%
• BITCOIN: $121,520

In corporate news:

• CVS and UnitedHealth topped U.S. Medicare 2026 quality ratings, positioning them for higher bonus payments, while Elevance and Humana lagged behind.
• Bristol-Myers Squibb agreed to acquire Orbital Therapeutics for $1.5 billion to expand its cell therapy pipeline, including a next-gen CAR T-cell therapy.
• T. Rowe Price Group reported $1.77 trillion in assets under management as of the end of September 2025.
• Ford named Jim Baumbick president of Ford Europe and reshuffled several top executive roles.
• Biogen and Stoke Therapeutics reported long-term data supporting zorevunersen’s potential in treating Dravet syndrome.
• Johnson & Johnson unveiled 17 neuropsychiatric studies at ECNP, highlighting new data on treatments for depression and schizophrenia.
• AIG, Allianz, and Coface may face claims tied to First Brands Group's bankruptcy due to exposure via trade credit insurance.
• Intuitive Surgical received EU approval to acquire AB Medica’s distribution business for robotic-assisted surgical equipment.
• Mosaic reported lower-than-expected Q3 phosphate production due to mechanical issues, sending shares down over 8%.
• Apple, Google, YouTube, and Snapchat are under EU scrutiny for how their platforms protect minors under the Digital Services Act.
• Lennar launched an exchange offer to divest its remaining 20% stake in Millrose Properties, following an earlier spin-off.
• S&P Global and CME completed the $3.1 billion sale of OSTTRA to KKR.
• The UK antitrust regulator rejected the merger notice for Fidelity National Information Services and Total System Services, delaying the deal review.
• Carlyle and Qatar Investment Authority will acquire BASF's automotive paints unit for $8.91 billion, with BASF retaining a 40% stake.
• China launched an antitrust probe into Qualcomm over its acquisition of Autotalks, amid rising regulatory tensions with the U.S.
• Infosys launched a new customer experience suite for Salesforce to enhance enterprise CRM offerings.
• UPS is discarding US-bound packages due to issues with customs documentation, according to NBC News.
• BNY Mellon is partnering with German savings banks to offer cheaper international transfers, helping them compete with fintech rivals like Wise and Revolut.
• Chevron and Greece's Helleniq Energy aim to finalize a major offshore gas exploration contract by year-end, with drilling expected no earlier than 2030.
• Lockheed Martin raised its quarterly dividend by 5% to $3.45 per share, marking its 23rd consecutive annual increase.
• Hilbert Group appointed former Blackstone executive Jonathan Morris as its new chairman.
• Intel unveiled its first 2nm-class AI chip architecture, 'Panther Lake', with production set to start in late 2025 and commercialization in early 2026.
• China is intensifying customs checks on Nvidia AI chips, including those tailored for the Chinese market, amid growing trade and tech tensions with the US.
• Alibaba Group filed to list $2.64 billion worth of bonds in Singapore, causing its shares to fall nearly 4%.
• Amcor reaffirmed its fiscal 2026 EPS guidance and named Stephen Scherger as its incoming CFO.
• BP plc won an arbitration case against Venture Global, which could lead to over $1 billion in damages over undelivered LNG cargoes.
• Tesla CEO Elon Musk stands to earn tens of billions from a new pay package even without hitting his most ambitious goals, including developing robotaxis and humanoid robots.
• Ford and General Motors have dropped plans to continue claiming expired EV lease tax credits, reversing previous strategies amid political and regulatory pushback.
• OpenAI raises competition concerns with EU regulators.
• Microsoft faces a Microsoft 365 outage impacting thousands of users.
• Levi Strauss & Co. reports strong Q3 2025 financial results, revising full-year forecasts upward.
• Applied Digital Corp surpasses fiscal Q1 2026 revenue estimates due to AI demand and HPC hosting gains.
• 7-Eleven experiences a 4.8% year-over-year decline in Q2 fiscal 2025 same-store fuel volume.

Analyst Recommendations:

• Align Technology, Inc.: Jefferies downgrades to hold from buy and reduces the target price from USD 215 to USD 140.
• Celsius Holdings, Inc.: William O'Neil & Co Incorporated initiates coverage with a buy recommendation.
• Comerica Incorporated: Keefe Bruyette & Woods downgrades to market perform from outperform and raises the target price from USD 73 to USD 93.
• Littelfuse, Inc.: Baird upgrades to outperform from neutral with a price target raised from USD 290 to USD 310.
• Newmont Corporation: CIBC Capital Markets upgrades to outperform from neutral with a price target raised from USD 78 to USD 112.
• Synchrony Financial: HSBC upgrades to buy from hold and raises the target price from USD 73 to USD 81.
• Abbvie Inc.: Piper Sandler & Co maintains its overweight recommendation and raises the target price from USD 231 to USD 284.
• Aerovironment, Inc.: Goldman Sachs maintains its buy recommendation and raises the target price from USD 333 to USD 486.
• Align Technology, Inc.: Jefferies downgrades to hold from buy and reduces the target price from USD 215 to USD 140.
• AMD (Advanced Micro Devices): TD Cowen maintains its buy recommendation and raises the target price from USD 195 to USD 270.
• Americold Realty Trust, Inc.: Wolfe Research maintains its outperform recommendation and reduces the target price from USD 23 to USD 17.
• Applied Materials, Inc.: B Riley Securities Inc. maintains its buy recommendation and raises the target price from USD 200 to USD 265.
• Applovin Corporation: Loop Capital Markets maintains its buy recommendation and raises the target price from USD 650 to USD 825.
• Borgwarner Inc.: Barclays maintains its overweight recommendation and raises the target price from USD 45 to USD 55.
• Coherent Corp.: Morgan Stanley maintains its equal weight recommendation and raises the target price from USD 89 to USD 120.
• Corning Incorporated: Morgan Stanley maintains its equalwt recommendation and raises the target price from USD 56 to USD 75.
• Elf Beauty: JP Morgan maintains its overweight recommendation and raises the target price from USD 130 to USD 168.
• General Motors Company: RBC Capital maintains its outperform recommendation and raises the target price from USD 63 to USD 77.
• Intel Corporation: TD Cowen maintains its hold recommendation and raises the target price from USD 20 to USD 35.
• Kratos Defense & Security Solutions, Inc.: Goldman Sachs maintains its buy recommendation and raises the target price from USD 71 to USD 102.
• Lattice Semiconductor Corporation: TD Cowen maintains its buy recommendation and raises the target price from USD 57 to USD 85.
• Lumentum Holdings Inc.: Morgan Stanley maintains its equalwt recommendation and raises the target price from USD 100 to USD 145.
• Marvell Technology Group Ltd: Oppenheimer maintains its outperform recommendation and raises the target price from USD 95 to USD 115.
• Monolithic Power Systems, Inc.: TD Cowen maintains its buy recommendation and raises the target price from USD 840 to USD 1100.
• Robinhood Markets, Inc.: Citizens maintains its market outperform recommendation and raises the target price from USD 130 to USD 170.
• Rocket Lab Corporation: Goldman Sachs maintains its neutral recommendation and raises the target price from USD 32 to USD 51.
• Tesla, Inc.: RBC Capital maintains its outperform recommendation and raises the target price from USD 325 to USD 500.
• United Therapeutics Corporation: Morgan Stanley maintains its equal weight recommendation and raises the target price from USD 328 to USD 435.