Amazon Web Services outage spans globe, Trump says he wants China to buy soybeans

This broadcast covers significant market news, including an Amazon Web Services outage impacting numerous websites and apps. It also discusses President Trump's trade deal demands from China, particularly regarding soybeans and fentanyl, and his upcoming visits to Asian nations. The segment highlights the strong performance of Apple's iPhone 17, with sales significantly outperforming its predecessor.

• A widespread Amazon Web Services outage affected major websites and apps globally.
• President Trump outlined his demands for a trade deal with China, including increased soybean purchases and an end to fentanyl sales.
• Apple's iPhone 17 is outperforming the iPhone 16, with sales 14% higher in the first 10 days in the US and China.
• Key economic data to watch includes the September CPI report, with forecasts predicting an acceleration in total CPI.
• Tesla's upcoming earnings report is highly anticipated, with potential influence from EV tax credit expirations and advancements in its robo taxi and AI business.

Global Outage and Trade Negotiations [0:15]

• A widespread outage impacted websites and apps globally due to issues with Amazon's cloud services.
• Wall Street was poised for a positive opening, with investor focus on key earnings and the ongoing government shutdown.
• President Trump detailed his requirements for a trade deal with China, including increased soybean purchases, an end to fentanyl trade, and no manipulation of rare earth minerals.
• He expressed belief in a potential soybean deal, stating that without it, he would not make a trade deal.
• China imported no soybeans from the US in September, a first in 7 years, compared to 1.7 million metric tons the previous year.
• President Trump is planning visits to South Korea and other Asian nations to discuss trade, security, and regional cooperation.

"One of the things I want is China's going to buy soybeans. I want China to stop with the fentinol. We very, you know, normal things. I don't want them to play the rare earth game with us."

Amazon Web Services Outage [1:51]

• An Amazon Web Services (AWS) outage caused disruptions for numerous websites and apps.
• Services affected included Amazon itself, Canva, United Airlines, Verizon, cloud-based games like Roblox and Fortnite, and the crypto exchange Coinbase.
• AWS reported that recovery was in progress.

"Amazon Web Services or AWS cited an operation issues affecting multiple services."

iPhone 17 Performance [2:27]

• Apple's iPhone 17 is outperforming last year's iPhone 16, with sales 14% higher in the first 10 days in the US and China.
• In China, standard iPhone 17 model sales are nearly double that of the iPhone 16 during the same launch period.
• The iPhone 17 features more storage, an improved screen, and Apple's new A19 chip, which buyers are noticing.

"Sales are 14% higher during the first 10 days of release in the US and China."

Economic Data and Earnings Watchlist [3:02]

• The current week is crucial for earnings reports and economic data releases.
• The government shutdown, entering its fourth week, has delayed key economic reports, but the September CPI report will be released on Friday.
• Economists forecast total CPI to accelerate to 3.1% year-over-year, with core CPI remaining steady at 3.1%.
• This data will provide insights for the Fed's FOMC meeting later in October.
• Tesla's third-quarter earnings report is a major focus, with expectations of strong profits due to buyers rushing to purchase vehicles before the expiration of the $7,500 EV tax credit.
• Investors will be looking for updates on Tesla's future plans, including its robo taxi business, following previous warnings of rocky quarters.

"So, this is another crucial week of earnings coming up and economic data."

Investment Advisor's Perspective [4:32]

• Earnings season is in full swing, with key reports from companies like Tesla, Netflix, Coca-Cola, IBM, and Intel.
• Consumer sentiment from consumer-focused companies and insights from the tech sector are of particular interest.
• The resilience of the consumer remains a confounding feature of the current marketplace.
• Regarding Tesla, there's a focus on its robo taxi ambitions and how incentives impact car sales, especially in Europe and the US.
• AI stocks are seen as the current beacon for the AI wave's longevity and potential cracks.
• For IBM and Intel, the focus is on their backward-looking performance and the interconnectivity among AI stocks.
• Concerns exist about potential slowdowns in AI build-out strategies due to costs, but strong orders and expenditure momentum are expected to continue.
• The private credit arena is mentioned as having potential issues ("cockroaches"), and the possibility of similar concerns ("canaries in the coal mine") in the AI sector is raised.

"I think we know that the resilient consumer continues to be the one of the confounding features of the current marketplace."

Regional Banks and Private Credit [7:17]

• JPMorgan CEO Jamie Dimon's "cockroach" metaphor for private credit issues has resonated.
• Recent difficulties with some underwriting practices in the private credit space are concerning, especially following issues with other financial institutions.
• Two more regional banks are showing signs of substandard due diligence or credit landscape cracks, which is worrying.
• However, previous instances in early 2023 did not lead to contagion, highlighting the difference between large, diversified banks and more concentrated regional banks.
• A wave of consolidation among regional banks is occurring, with larger banks potentially absorbing distressed ones.
• This situation indicates strain and distress at the seams due to high interest rates, particularly in concentrated, less diversified regional banks.

"Well I certainly the cockroach metaphor did seem to grab the imagination a little bit more than the canary in the coal mine and I think it is sinister."

Bitcoin Seasonality and Catalysts [9:00]

• Bitcoin has experienced a volatile month, with talk of the debasement trade easing.
• October is historically one of the best months for Bitcoin, with a median gain of 11% from 2018-2024.
• July and February also show positive median gains of 18% and 11% respectively.
• November and December tend to skew negative, unlike the typical year-end rally seen in stocks.
• October has an 86% positive win percentage since 2018.
• The middle of October through the first week of November is seasonally bullish for Bitcoin.
• Key catalysts to watch for Bitcoin investors include:
  1. Bank custody of Bitcoin and crypto assets rolling out after SEC approval.
  2. The deadline for distributing confiscated coins from the Mt. Gox collapse on October 31st, with a small risk of "whales" dumping holdings.
  3. New IRS tax forms for reporting crypto sales in Spring 2026, potentially causing jitters around tax day but considered a small risk.
  4. ETF flows, with $40 billion in spot crypto funds this year; a slowdown could signal lower demand.
  5. The current trading range of Bitcoin from roughly $108,000 to $125,000 since July, with a caution about rug pulls and false breakouts.

"And October is historically one of the best months for Bitcoin."

Trending Stocks and Market Moves [14:10]

• Amazon's stock showed minimal movement despite a widespread cloud services outage.
• Beyond Meat's stock surged over 70% in pre-market trading after investors viewed its debt restructuring as a positive sign. The company has lost over 99.6% of its value in the last 5 years.
• Paramount Global is planning mass layoffs, aiming to save around $2 billion, with its stock up around 1% in pre-market.
• Kering, the parent company of Gucci and Balenciaga, is selling its beauty division to L'Oreal for 4 billion euros, causing its stock to rise over 3%. Kering's stock has nearly doubled in 6 months.
• TKMS, the marine defense division of Thyssen Group, debuted with a valuation over $4 billion. Thyssen Group shares fell 20%, while TKMS opened sharply higher, trading up nearly 70% by midday in Europe, driven by demand for defense technology amid global conflicts.
• Tesla's stock is a major focus for the week, with high trading volumes ahead of its earnings report. Shares were up over 1% in pre-market.

Tesla Earnings Preview [17:11]

• Revenue for Q3 is projected at $26.27 billion, up nearly a billion year-over-year, with adjusted EPS of 53 cents and EBITDA estimates of $3.78 billion.
• Q3 saw a quarterly record of 497,000 EVs sold, exceeding expectations, partly due to the pull-forward effect of EV tax credit expirations.
• Record deployments of energy products, a high-margin business for Tesla, are also noted.
• Cheaper Model Y and Model 3 standard versions are expected next quarter, potentially boosting sales.
• Updates on robo taxi deployments, considered Tesla's biggest AI play, are anticipated.
• The Dojo supercomputer initiative is being scaled back, with Tesla planning to use Nvidia chips for its AI training and robo taxis.
• A Tesla bull believes the China story is improving markedly, potentially a tailwind for the company, citing good production numbers from Shanghai Giga Shanghai and popularity of the new Model Y L.
• Musk is viewed positively in China, seen as an entrepreneur.
• The question remains whether China's performance can compensate for potential losses in North America and Europe.

Japanese Politics and Stimulus [19:23]

• The "Sai Takayichi trade" is ongoing following a coalition government deal in Japan.
• Sai Takayichi is expected to become Japan's first female prime minister.
• Analysts anticipate more stimulus and opposition to further interest rate hikes from her government.
• This is expected to be negative for the Japanese yen and government bonds but positive for equities.
• The Nikkei index jumped over 3% to an all-time high, and the yen slipped modestly.
• Ultra-long JGBs rose, possibly due to relief over the government formation.
• Caution is advised as it's a minority government requiring support from other opposition groups.
• Potential policy directions include higher defense spending and stricter immigration rules.

AI Bubble Concerns [20:34]

• The MAG 7 companies represent about a third of the S&P 500's capital expenditures.
• Free cash flow growth for the MAG 7 has decelerated from over 60% positive five quarters ago to slight negative territory.
• The current boom has been largely equity-financed from cash flows.
• As free cash flow growth slows, more deals are being done with debt.
• There is less speculative fervor in the mega-cap names, with recent hype cycles shifting to more esoteric micro/small levels like quantum computing, drones, and meme stocks.
• AI-driven speculation is now more concentrated in smaller pockets rather than mega-cap names.

Market Overview [22:18]

• Asia-Pacific markets were in the green, with investors seemingly unfazed by China's economic growth slowing to its lowest in a year (4.8% in July-September), which was in line with expectations.
• China kept its benchmark lending rate unchanged at 3% for the one-year loan prime rate.
• European stocks were positive, led by defense stocks after a volatile few days.
• US stocks were expected to open positively, possibly on hopes of a US-China trade deal.