Pre-market market trends
1. On September 29 (Tuesday), the futures of the three major US stock indexes rose sharply before the US stock market. As of press release, Dow futures were up 0.29%, S&P 500 futures were up 0.26%, and NASDAQ futures were up 0.45%.
2. As of press release, the German DAX index rose 0.74%, the UK FTSE 100 index rose 0.24%, the French CAC40 index rose 0.24%, and the European Stoxx 50 index rose 0.95%.
3. As of press release, WTI crude oil fell 1.98% to $90.77 per barrel. Brent crude oil fell 1.77% to $96.10 per barrel.
Market news
On the eve of the developer conference, OpenAI will not release GPT-6.1 Astra due to insufficient security standards. OpenAI has decided not to release the upcoming artificial intelligence model GPT-6.1 Astra because it was determined that the model did not fully meet the company's safety standards. CNBC confirmed the news on Monday. At this point, just one day until the OpenAI annual developer conference, the AI industry's concerns about the security of advanced models are increasing. The leadership of OpenAI's main competitor Anthropic urged AI companies to slow down the pace of model development in an article earlier this month, and OpenAI CEO Sam Altman supported this. Saachi Jain, head of OpenAI's security systems, said in a statement: “We certainly want to ensure that model development is secure, both within the company and when delivered to users. But when delivering to users, we set a very high bar in terms of security and alignment.”
Speaker of the US House of Representatives: The White House AI summit will focus on finding a balance between innovation and regulation. US House Speaker Mike Johnson said that US President Trump's talks with tech company executives on artificial intelligence on Tuesday will focus on how to balance innovation and regulation, as the federal government is seeking to clarify its role in this emerging technology field. According to people familiar with the matter, Meta CEO Mark Zuckerberg, Anthropic CEO Dario Amodei, OpenAI co-founder Greg Brockman, and Nvidia CEO Wong In-hoon will attend Tuesday's meeting with Trump and Johnson. Other likely attendees include Google CEO Sundar Pichai, and Elon Musk, head of SpaceX and XAI. On the occasion of this White House meeting, a number of leading artificial intelligence companies are calling for a slowdown in the development of increasingly powerful artificial intelligence systems, warning of the risks they may pose to humans, and urging governments to work together to control this increasingly powerful technology.
US bond yields hit a 20-year high, with a record influx of traders into fixed-income ETF options. As 10-year and 30-year US Treasury yields rise to their highest level in 20 years, traders are rushing to readjust their portfolios with options linked to fixed income ETFs at a record rate. The options trading volume of BlackRock's iShares 20+ year US Treasury Bond ETF (TLT) soared, and its 20-day average options trading volume hit the highest level in the ETF's history. Unclosed contracts, that is, existing positions held by investors, have more than doubled in the past year, and are approaching the record of 13.55 million contracts set before the monthly expiration date last week.
Goldman Sachs warns that the risk premium has risen to a five-month high, and investors are beginning to “overwhelm it.” Amanda Lynam, head of credit strategy at Goldman Sachs Group, said that the surge in corporate bond supply in the US high-yield bond market is beginning to overwhelm bond investors and push risk premiums to their highest level in five months. Amanda Lynam said in an interview on Monday: “The market is preparing for the kind of phased indigestion that appeared in the investment-grade bond market at the beginning of this summer. The same situation is happening in the high-yield bond market.”
A big reversal in the wave of sell-off in US debt! Bond-market veteran Bianco is bullish for the first time in six years, saying the 5% yield is a “value buying point.” On Wall Street, few people chose to turn around and go long during the darkest hour of the bond market. But Jim Bianco did it. This macro strategist with over 40 years of experience working at First Boston and UBS is now at the helm of Bianco Research in Chicago. Since 10-year US Treasury yields hit a record low of 0.3% during the height of the pandemic in 2020, he has been one of the staunchest bears in the bond market. However, now, as the benchmark yield soars to a nearly 20-year high, he has let go of his bearish fist for the first time and gradually established long positions with a “value buying” attitude.
Federal Reserve Governor Cook: AI productivity dividends are difficult to contain inflation. The Federal Reserve may need to further tighten its policies. Speaking in preparation for an event in Oakland, California on Monday, Cook said that future productivity gains brought about by artificial intelligence may not be enough to offset recent price pressure, and warned that this trend could drive up overall economic inflation. She anticipates that productivity gains will have mild anti-inflation effects in the next few years, but these effects will not arrive in time to offset the growing inflationary pressure later this year. Cook said that the Federal Reserve's decision to raise interest rates earlier this month is necessary to deal with high inflation, and future policy actions will be guided by economic data.
Xiaomo: The valuation reset of the Big Seven US stocks may have been largely completed. After the Nasdaq 100 index reached a new high last week, Wall Street financial giant J.P. Morgan Chase began to follow the bullish pace of US technology stocks from giants such as Goldman Sachs, Jefferies, and Yardeni Research. To a certain extent, this also encouraged institutional and retail investors to focus more and more on the layout strategy of falling when the US stock market recovered on Monday. J.P. Morgan believes that the overall valuation adjustments of the seven major US tech giants (that is, Magnificent Seven, Mag 7), which have a high weight in US stocks, may have been largely completed, and profit growth is expected to once again become the main force supporting stock prices; J.P. Morgan said that the ratio of the Big Seven's expected price-earnings ratio over the next 12 months to the market has fallen to about one standard deviation below the historical median, which is at a ten-year low.
Worse than 2008? Outside of the AI bubble, a new fund backed by “big short” Bury targets private equity credit risk. While Wall Street is busy searching for signs of a bubble in AI stocks, a new hedge fund linked to “big short” Michael Berry has its sights set on another direction that may be more dangerous — private equity. Minerva Investment Management, a shorting strategy fund managed by Lax Ganapati, has hired Bury as a senior advisor. The fund is looking for shorting targets in industries such as healthcare, retail, catering, and small banking. Ganapati said that the financing of many companies in these industries is linked to private equity credit, and they may be quietly “rotting.” Short-selling strategy funds are usually set up in the form of hedge funds, which mainly profit when stock prices fall. Ganapati declined to disclose specific shorting targets and fund size. She said the fund will launch later this month. “AI doesn't represent the entire market, even though it may seem like it,” Ganapati said. “For us, credit is the leading indicator and signal for judging the direction of the market.”
Consulting giant Bain sounded the alarm: the global AI industry needs to achieve an annual revenue of 6 trillion US dollars to support the “money-burning wave” of data centers. Global consulting giant Bain said that by 2031, the global artificial intelligence (AI) industry will need to achieve annual revenue of 6 trillion US dollars to prove that the huge capital investment currently used to build data centers around the world is reasonable. Bain said in its annual global technology report on Tuesday that existing consumer and business AI services could contribute up to $1.8 trillion of this, which means it still needs to generate $4.2 trillion in new revenue. Bain said that this revenue gap may come from fields that are still in their infancy, such as autonomous driving machines and robots, as well as emerging fields such as drug research and development, mental health, and energy production.
Japan's finance minister reiterated concerns: the undervaluation of the yen is a “big problem” and will cooperate closely with the US to maintain order in the foreign exchange market. Japan's Finance Minister Katayama Satsuki said that the weak yen is still an issue that continues to receive attention, and Japan and the US will continue to maintain close ties to seek to maintain the orderly operation of the foreign exchange market. Katayama said on Tuesday, “As Sanae Takaichi said during the recent Japan-US summit in New York, I think, in general, the undervaluation of the yen is a problem. We will continue to maintain close communication between the Japanese and US financial authorities and strive to maintain the orderly operation of the foreign exchange market.” Katayama Satsuki made the above remarks after talking on the phone with US Treasury Secretary Bezent last Friday evening.
Individual stock news
AMD (AMD.US), which has surpassed a trillion-dollar market capitalization, has begun to compete for the “right to define computing power”! World Labs, founded by Li Feifei, was officially announced to have swallowed up 8.2 billion US dollars. AMD suddenly announced on Monday EST that it will acquire World Labs, an AI startup founded by “AI godmother” Li Feifei, for 8.2 billion US dollars. According to reports, AMD, which is at the helm of Su Zifeng, plans to acquire World Labs founded by Li Feifei in an all-stock transaction of 8.2 billion US dollars to incorporate one of the most core AI R&D forces in the field of world models and spatial intelligence into the integrated business layout of this chip supergiant. This large-scale acquisition transaction is expected to be completed by the end of 2026, and approval from important regulators is still required; according to statements issued by both parties, after completing the relevant settlement procedures, Li Feifei will serve as AMD's Executive Vice President and Chief Scientist to directly report the progress of the work to AMD's CEO Lisa Su (Lisa Su).
The S PaceX (SPCX.US) starship entered orbit for the first time and completed a revenue-generating mission. The mission ended prematurely due to engine failure. The new-generation heavy launch vehicle “Starship” under SpaceX (SPCX.US) first entered orbit on Monday and deployed a new Starlink satellite. Despite the early termination of the mission due to engine failure, its 14th test flight still achieved a landmark achievement. This unmanned mission was originally scheduled to last 10 hours, but after the Starship was separated from the lower-level overweight booster, one of the three main engines shut down early, and the mission was shortened to 3 hours. Monday's engine failure is the latest failure the Starship has experienced since the 2023 test flight. It's unclear how much impact this will have on Elon Musk's newly listed company's goal of putting Starship into regular service later this year. Unlike previous Starship flights, Monday's mission was both a high-risk test of a next-generation rocket and an operational mission to launch a multi-million dollar Starlink satellite into orbit. This marked the Starship's first revenue-generating mission, even though its final design is still under development.
Received an investment of 2 billion US dollars from AstraZeneca (AZN.US) + joint drug development! Summit (SMMT.US) responded loudly. After AstraZeneca announced an investment in American biotech company Summit Therapeutics and collaborated on a new anti-cancer drug, AstraZeneca rose about 2% before the market on Tuesday, and the SMMT increase widened to about 23%. Analysts at J.P. Morgan and Citibank welcomed the deal, saying it was in line with AstraZeneca's cancer strategy.
Jefferies (JEF.US) stock trading surged 29% in Q3, but was dragged down by asset management thundered. Jefferies's results in the latest fiscal quarter were markedly divided: stock trading and investment banking business handed over record results, but poor bets from the asset management department continued to drag down results and made the market wary about the prospects of restructuring its platform. In the third fiscal quarter ending August 31, the net revenue of Jefferies's asset management business fell to US$85.6 million, down more than 50% from nearly US$177 million in the same period last year; of these, income from expenses and return on investment plummeted from US$84 million to US$34 million. The main problem is the exposure of Leucadia Asset Management's Point Bonita Fund to First Brands Group and Radiant World. First Brands is a bankrupt auto parts supplier, and Radiant World is facing fraud charges. According to previous reports, Jefferies's risk exposure to Radiant World is less than $300 million.
The US relaxes fuel standards, and car companies' technical costs have dropped dramatically: General Motors (GM.US) is expected to save 20.4 billion US dollars, and bicycle prices may drop by nearly 1,300 US dollars. GM's technology costs are expected to drop by $20.4 billion by 2031 as fuel economy standards finalized this week were drastically cut, according to NHTSA. Similarly, technology costs for Stellantis (STLA.US) will drop by $6.2 billion, Ford (F.US) by $5.1 billion, Hyundai (HYMLF.US) by $5.3 billion, Toyota (TM.US) by $4.5 billion, and Honda (HMC.US) by $4.1 billion. Overall, NHTSA expects automakers' technology costs to drop by $60.6 billion by 2031. The agency predicts, “If the savings are passed on to consumers, NHTSA estimates that the average cost of a new bike for the 2031 model year will be reduced by an average of 1,289 US dollars.”
Samsung is increasing the layout of AI infrastructure! Invest $1 billion in Helix Digital, a subsidiary of KKR (KKR.US). A number of Samsung Group companies, including Samsung Electronics, have agreed to invest a total of 1 billion US dollars in Helix Digital Infrastructure, an American company supported by private equity giant KKR, to further increase the Korean conglomerate's layout in the rapidly expanding artificial intelligence infrastructure market. According to a statement issued by Samsung on Tuesday, Samsung Electronics, Samsung C&T (Samsung C&T), Samsung SDS, Samsung SDI, Samsung Life Insurance (Samsung Life Insurance), and Samsung Fire & Marine Insurance (Samsung Fire & Marine Insurance) will participate in this investment. The investment will enable Korea's largest industrial group to hold shares in a company with operations spanning multiple fields, and these are areas where Samsung already has an important business layout, including semiconductors, construction, data centers, cloud computing, and finance. Helix was co-founded by KKR, Kuwait Investment Authority, Nvidia (NVDA.US), and US power producer Vistra (VST.US) in June, and has now received long-term capital commitments of over $10 billion.
The Tesla (TSLA.US) Roadster's debut was rescheduled for October 15, and bad weather forced the press conference to stop. Tesla has rescheduled the new-generation Roadster unveiling event scheduled to be held this week until October 15. The company updated on social media platform X: “We have been closely tracking the weather conditions with local meteorologists, but due to the predicted severe weather conditions and the event can only be held outdoors, we have made the difficult decision to reschedule.” The event is still expected to take place at the SpaceX test site in McGregor, Texas. The electric vehicle manufacturer has yet to announce the final sale price, production schedule, or customer delivery date for the highly anticipated Roadster.
Key economic data and event forecasts
22:00 Beijing time US JoLTS job vacancies in August (10,000), US Chamber of Commerce Consumer Confidence Index for September
At 23:00 Beijing time, Federal Reserve Governor Bauman delivered a speech
The time of the day is yet to be determined. US President Trump, Speaker Johnson of the House of Representatives, and CEOs of various technology companies will hold a meeting on artificial intelligence
At 0:00 a.m. the next day Beijing time, OpenAI CEO Altman was interviewed by CNBC
At 0:40 a.m. the next day Beijing time, Federal Reserve Governor Barr delivered a speech
At 1:00 a.m. the next day, Beijing time, the 2027 FOMC voting committee and Chicago Federal Reserve Chairman Goulsby delivered a speech, and OpenAI CEO Altman delivered a keynote speech at the OpenAI Developers Conference
At 1:30 a.m. the next day Beijing time, 2028 FOMC voting committee and St. Louis Federal Reserve Chairman Mussalem delivered a speech at the London School of Economics and Political Science
At 2:00 a.m. the next day Beijing time, FOMC Permanent Voting Committee and New York Federal Reserve Chairman Williams delivered a keynote speech at the University of Buffalo
At 3:00 a.m. the next day Beijing time, Federal Reserve Governor Waller delivered a speech
At 4:30 a.m. the next day, Beijing time, changes in US API crude oil inventories for the week ending September 25 (10,000 barrels), US API gasoline inventory changes for the week ending September 25 (10,000 barrels)