Monday Takeaways: Tesla, the Mag Seven, and More

Shah Gilani|October 28, 2024

Despite a week that ended nearly flat… Tesla shook up the entire market.

What Elon Musk said during that earnings call? Game-changing stuff.

Now we’re staring down what could be the most consequential week for tech stocks this earnings season. Five major players are about to show their cards… and it won’t be just about numbers on a spreadsheet.

Throw in a crucial jobs report and some wild moves in the bond market, and we’ve got ourselves the perfect storm.

And all of this?

It’s just the warm-up act for what’s coming next week with the election.

See what’s going on in your Monday Takeaways, your inside track on what’s moving your money… NOW.

Click on the thumbnail below to watch.

Transcript

Hey, everybody. Shah Gilani here with your Monday Takeaways. First and foremost… What happened last week? A whole lot of nothing except for Tesla, but I’ll get to that.

Market-wise, S&P, first time in several weeks that it didn’t have a gain net-net at the end of the week. The loss was so tiny as to be, I would say, de minimis.

Something like really 0.01% lower than a week before.

No big deal. Nasdaq composite, however, eked out a tiny gain, tiny as in 0.002% gain. Lot of nothing, lot of churning, but not even a lot of volume. Just a little bit of, like, election’s coming up.

Fed meetings coming up. Bond rates are rising and bunch of turnover. But even at that, not a lot. Not a lot of volatility.

VIX drifted down, drifted back up. So ending the week at about 19.5, we went around its historical average.

So what is the takeaway from last week? Market seemed to be teeing up, ready for what might happen in the election next week and what might happen with the Fed meeting. But before that, we have this week. But the big news last week, and there is a takeaway from it, is what happened to Tesla.

Tesla stock soared. OK? Earnings come out. The stock’s up 26%. Twenty-six percent on an earnings report.

It was good. Earnings were good. They were beast. It was all groovy, baby, except it wasn’t really that.

Besides some short cover because Tesla had not been doing that well, there had been bets against Tesla stock. So there was short cover. But what really got the stock popping was if you didn’t catch this, Elon Musk in the earnings report talking about the future of the country, talking about the need for inefficiencies, talking about what he would do if he was to be maybe the efficiencies czar, which is something that Donald Trump and he have talked about, whether or not that ever comes to pass, of course, remains to be seen. But here’s the conjecture he put forward with if I was to be that guy, I would clear a path, essentially, he said, for autonomous driving.

What does that do? That benefits Tesla above everybody else. No wonder the stock soared, people.

Elon Musk doing his top hat circus act.

Gotta hand it to him. Absolutely brilliant. That’s what really happened with Tesla. So it says that there had been some short betting against Tesla stock that had to get covered, and then the rest of it was hype.

Yes. Hype. A lot of hype. But that could be the future. So investors want to grasp onto that potential future, and that’s what happened. So as far as the Nasdaq, as far as the QQQs, as far as anything related to tech, it got that massive bounce from Tesla.

This week, we have five of the seven Magnificent Seven reporting.

Tesla was No. 1. We got five of them this week.

That’ll be six.

News flash, not Nvidia. Nvidia is not in that group reporting this week. Nvidia reports in about a month, though Nvidia made another new high last week. So all good for Nvidia. But the other five Magnificent Seven stocks reporting this week are gonna move the needle. If they beat if their numbers are across the board good and good beats and but just net numbers are good, markets going higher.

That’s, I think, a given. If they disappoint across the board, their rally is gonna take a breather, especially going into the election next week and the Fed meeting next week. So it could go either way. If they’re a mixed bag of good and bad and or nothing or flatlining or whatever it is, then the market may not do a whole lot.

But there’s going to be betting one way or the other if there’s going to be big moves in some of those earnings. And, individually, the stocks may do well or not do so well. My bet is investors seem to be nervous about the market in whole as a whole. So what are they doing?

They’re going back to not necessarily tech, but the Magnificent Seven. So, you know, yes, we had financial leadership. Industrials have done well. Utilities have done well.

Heck, REITs have done well.

But still, when investors are nervous, they’re going to probably plow back into the Magnificent Seven. So if the earnings are decent to good, investors are gonna park their money there, and we should see a sustained rally hopefully through the end of this week going into the election. We got some other big numbers this week. We have the jobs report on Friday.

Now the consensus estimate is for 110,000 new jobs that have been created for the month of October.

The range that I’ve looked at goes from just there there was couple of two outliers I saw in about 50 of negative about negative 10,000. In other words, loss of that no job created, jobs lost to so I called, but they’re really 10,000 to 15,000 to 200,000. Now the consensus at 110,000 in middle, which comes from Bloomberg, makes sense because numbers are across the board. The question is, what impact have the hurricanes had Helene and Milton had on jobs growth? So we’ll find out on Friday. It’s gonna be a big deal. The unemployment rate is expected to remain at 4.1%.

We know that the Fed is gearing into labor market and its potential softening to cut rates. If we see a higher expect than expected uptick in unemployment, then maybe we can see come the end of next week when the Fed meets another 25 basis point cut. If the market looks resilient, the labor market starts to strengthen, and we see something like 150,000-175,000 jobs created in October, I mean, we may not get a cut.

Markets can be watching that. So that’s important this week. We got the Magnificent Five of the seven reporting, we’ve got the jobs report on Friday.

Those are the big ones that we’re gonna see this week, and we got some heavy issuance treasury issuance this week. So how the bond market reacts to that treasury issuance is gonna be important too. We’ve got something like $140 billion, in an array of issues coming, to market today. And then the rest of the week, we got other issues.

So we’ve got treasury issuance. Bond markets have already backed up since the Fed cut 50 basis points. The 10-year went from 3.63% yield.

Three-point-sixty-three yield.

Two days before the Fed cut. So on Sept. 16, two days before the Fed cut, yields had bottomed out at 3.63% yield.

Right? Two days later, the Fed cuts 50 basis points, and yields have gone straight up. Sitting around 4.25% now. That’s a big jump after the Fed makes a surprise 50 basis point cut. We got a heavy issuance this week. We’re gonna you should be I’m going to be keeping an eye on the bond market to see what takeaways we get as far as how investors bond investors feel about the heavy issuance with rates rising. Rising.

Gonna be an interesting week. It’s gonna be a really interesting week across the board because next week’s the election, so be safe out there. Wow. I’ll catch you next week. Cheers.