Rise and shine everyone.

China opened today after a long holiday and markets are pulling back quite drastically, by some measures almost -11%. While markets had become overbought, Chinese officials discussed hitting the growth target but didn’t talk about further stimulus measures. The markets want their lifeline!

But to put things into a bit of context, this is still where we stand with the Shanghai Composite.

This created a risk-off situation in some Asian markets and European markets followed. US Equity futures, however, are trading higher this morning. Nvidia is leading the way, yet again. After yesterday’s outperformance, it’s up over 1% in the pre-market.

The US Dollar is pulling back, alongside crude oil and base metals. Gold is moving higher.

Yesterday’s Fed Speakers discussed a balanced approach to rate cuts. So it would seem that we may see a less aggressive easing path ahead.

More Tragedy

Hurricane Milton, a Category 5 storm, continues its path toward Tampa, Florida, and is poised to become the strongest storm to strike the U.S. this late in the season. Notably, Hurricane Beryl set the record in July 2024 as the earliest Category 5 on record. According to the National Hurricane Center (NHC), Milton’s hurricane and tropical storm-force winds are expected to nearly double in size before landfall. Wind speeds are expected at 155mph.

Milton is set to hit many of the parts that have already been devastated by Helene. With the potential to become one of the most devastating hurricanes for west-central Florida, some analysts are comparing Milton to 2022’s Hurricane Ian, which caused insured losses between $50-65 billion.

Pepsico kicks off earnings season

PepsiCo reported Q3 core EPS of $2.31, slightly beating estimates, while revenue of $23.3 billion fell short of expectations. The company trimmed its FY24 organic revenue outlook due to a subdued growth environment but reaffirmed its core EPS guidance of over $8.15 and its commitment to return $8.2 billion to shareholders. Q3 saw declines in volumes for Convenient Foods and Beverages, while Frito-Lay North America and Quaker Foods also faced challenges. Despite these headwinds, PepsiCo benefited from strong cost controls and plans to continue investing in brand support to drive demand.

Economic conditions remain uncertain, with geopolitical tensions, supply chain disruptions, and inflationary pressures affecting business operations. Slower growth in key markets, especially in North America, is likely to persist, with companies focusing on cost management and efficiency to offset weak consumer demand.

The stock is down -0.95% in the pre-market.

Chart of the Day

Buy Vix Calls - GS predicts that October will continue to be the month of volatility. Over the past 30+ years, the Vix has increased 6% from September to October.

Calendars

(news taken from Reuters, FT, Bloomberg; Calendar from Trading Economics)