Good morning.
Hope you guys had a good Monday and a great weekend. We are entering Halloween week with quite a few stories and themes worth paying attention to.
Today we’re getting back into markets and investment picks as we approach midterm season and as the world devolves into more psy ops and chaos.
Side note - reports this weekend indicated that the War Department is preparing major U.S. military bases to be able to operate for 90 days without any outside support, including civilian power grids, food, water, and other supplies. Hmm.
Curious!
Probably a good time to take some of the prepping considerations we reviewed two weeks ago more seriously. It seems that the next black swan or “big thing” could definitely be cyber/AI or digital related. Take 5 minutes to consider how your life would be impacted if we lost power, internet, and cellular for 2 days. How about a week or more?
It’s going to be a very busy week in markets globally. We already witnessed a catastrophic -30% collapse of Brazilian equities in the aftermath of their election in which Luiz Inácio Lula da Silva “defeated” Flávio Bolsonaro. Air quotes because it’s pretty obvious what happened down there.
But I digress!
Our friends at the Kobeissi Letter laid out a nice clear schedule of this week’s major events for the US on Sunday. We have data drops, major earnings for AMZN 0.00%↑ INTC 0.00%↑ and MSFT 0.00%↑ and a Fed meeting Wednesday.
Good spread of chaos to unfold.
In my mind we are at an interesting crossroads moving into year end with a handful of potential outcomes/catalysts to move market.
The Iran War (rumors of escalation before and after Midterm results are flooding the internet and OSINT communities right now
The Midterms themselves and the outcome may influence market projections and sentiment for next year or so as people look ahead to 2028
A potential AI/cyber black swan event (many signs this might be coming including banks reporting AI agent hacks and governments warning of cyber threats)
All of these have the capability to drastically swing markets and prices, but there’s the possibility they are all noise as well — what are the chances we get to 2027 and markets decide to turn on the afterburners?
I’ve already stressed repeatedly (along with other outlets) that you need to own assets to make it in this new economy.
There’s no choice anymore.
Because of that the mistake of being sidelined or taking risk off at the wrong time is even more brutal.
Regardless one major bi-product of the money printing and hyper bullish environment we have seen for years is people just get used to a turbo bullish environment at all times. They forget that markets ebb and flow.
The majority of people are going to let this volatility, uncertainty, and fear get to them and either panic sell, overtrade, or miss some golden opportunities on the dip. I’ve talked endlessly about the power of accumulating on a longer time frame and right now is no different. I believe it is an excellent chance to get some good buys in at levels that may look silly in a few months or in 2027.
Today we will look at my batch of equities and assets I am buying on this pullback as well as my general thoughts on where crypto stands. We will wrap up with some thoughts on all of this fear mongering across various nations on potential black swans and how to incorporate that into the risk you are taking in markets.
Let’s get to it.
We will start with my stock picks for Q4.
Equities
Equities head into the final week of October with quite a few reasons for people to panic and hit the sell button. We have the Iran War, expensive oil, questions about AI spending/AI topping out, and the crucial November 3 midterms which are beginning to really heat up.
“I think it’s turned into a panic around AI because the Korean stock market has taken out the July lows and people are talking about an AI debt problem.”
— Tom Lee Fundstrat
For stocks, understand that the problem is pretty straightforward. We have higher oil prices that squeeze the consumer. This raises business costs and it makes inflation harder to bring down (in theory).
All of that puts more pressure on Warsh’s Fed right when investors would be very happy to get some breathing room. But let’s be honest the market runs of since Covid have been laughably bullish. We’ve probably gotten a little spoiled and gotten much too accustomed to every dip getting bought back up almost immediately.
Keep that in mind, this recent pullback isn’t THAT crazy, especially when you keep in mind that the administration really can’t keep markets down going into Midterms. That would be pretty brutal for optics.
Now, this guide is dropping Tuesday morning and I am writing it on Sunday.
There is a chance we see a turbo bounce on Monday (yesterday). Don’t be surprised (I am editing this Tuesday morning and this did in fact happen).
I would enter the rest of this week cautiously bullish.
Be on the lookout for a catalyst that the administration uses to prop up the markets leading into the bulk of voting. That’s why I think right now is an interesting time to look at some of the names we will discuss today.
Yeah we have sold off, but is anyone REALLY convinced we are going to enter some multi year recession or bear market?
I’m not.
So what am I buying?