TQ Morning Briefing
Brent rose about 3% and the 10-year yield climbed back toward 5% as price gauges ran hot. The Dow fell 1.2%, and LKQ lost more than a fifth of its value.
Thursday Bonds Bought Growth Fears. Friday Priced Inflation.
The Dow fell 1.2% on Friday, and the S&P 500 lost 0.5%. The Nasdaq slipped 0.2%, a day after a 2.6% drop that was its worst session since June.
Thursday's bond rally came as tech sold off and oil climbed. Brent rose about 3% to above $116 a barrel, and the 10-year yield rose about 4 basis points to 4.99%. Gold futures fell 1.3%.
The morning data pointed the same way as oil. S&P Global's flash survey showed U.S. companies raising selling prices at the fastest pace since August 2022. The University of Michigan's long-run inflation gauge rose to 3.5%, above its 2024 range of 2.8% to 3.2%.
Yields were already higher before the reports. Kalshi's October hike contract also edged up to about 8 cents, a move that began before the data.
TQ Trade Implication
Thursday's bond rally came during a tech selloff and an oil spike, a growth scare on two fronts. Friday's surveys showed the oil shock reaching what companies charge and what households expect to pay, the channel that keeps hike risk alive. Yields rose with crude instead of against it, a move already under way before the data. If price gauges keep climbing alongside oil, Thursday's rally looks like the exception rather than the trend.
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Two Beats, Opposite Verdicts: SLB Up 7%, Amex Down 4%
SLB earned 64 cents a share before charges, above the 62 cents analysts expected, on revenue of $9.45 billion. Middle East revenue rose 13% from the second quarter despite late-quarter disruptions. The stock jumped 7.1%, Halliburton rose 5.2%, and energy stocks gained about 2.6% as a group.
SLB's fourth-quarter guide of about $10 billion in revenue assumes Middle East revenue stays flat at about $1.9 billion. Chief Executive Olivier Le Peuch pointed to "further upside as Middle East activity recovers" in 2027.
American Express beat too, with adjusted earnings of $4.68 a share against about $4.50 expected. That figure excludes a one-time gain. Revenue came in light, and the company is cutting about 5% of its workforce. The shares fell 3.7%.
Amex lifted its 2026 outlook to $18.30 to $18.60 a share, from $17.30 to $17.90. Reported quarterly earnings included a $982 million pretax gain on a stake sale. The adjusted range is $17.60 to $17.90, the same top as before.
Robert Half rose 21.7% after its staffing revenue grew for the first time since 2022.
TQ Execution Bias
Two clean beats drew opposite verdicts. SLB guided as if the Middle East stays flat, so a recovery there is upside not yet in its numbers, and it rose with the oil group. Amex's adjusted ceiling did not move, so its higher reported range leans on a one-time gain, and revenue came in light. Investors rewarded the beat that left room above its guidance.
LKQ Pulled Its Forecast and Changed CEOs. The Stock Closed at Its Lowest Since 2020.
LKQ withdrew its 2026 guidance and named former Veritiv chief Salvatore Abbate as CEO, starting Dec. 15. Justin Jude "ceased to serve" effective Friday, with severance due on a termination without cause, and its Europe chief also left. The filing gave no reason. Alvarez & Marsal will advise on Europe.
Preliminary adjusted earnings were 47 to 53 cents a share, against the 69 cents analysts expected, according to LSEG. Europe's segment EBITDA margin is expected at 4.1% to 5.1%, down from 10% a year earlier.
The shares fell 22.5% to $17.42, their lowest close since April 2020. Genuine Parts (GPC) fell 3.9%. All of LKQ's news came out together, so no single item explains the drop.
The board tied the moves to a review it began in January that includes a possible sale. Abbate's pay package runs on a three-year schedule, with sign-on stock vesting from March 2027, and includes a change-of-control agreement. Full results and a call follow on Oct. 29.
TQ Edge Setup
The drop has no single explanation, but it left LKQ without an earnings anchor. A three-year pay schedule reads like a longer runway. Yet the offer carries a change-of-control agreement, and the board frames every move as part of a sale review. That leaves the stock priced between a turnaround and a deal, with neither on a timetable. If the Oct. 29 results add nothing on the review, LKQ trades on earnings it no longer forecasts.
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Brent Kept Rising. So Did the Priced Odds of a U.S. Strike.
This morning's issue set a test: oil climbing while Polymarket's Iran ceasefire contracts drifted toward a dollar. That would have pointed oil's premium at Gulf supply alone. The contracts did not cooperate.
The contract on the ceasefire holding through Oct. 24 stood at 93.5 cents in the morning and traded around 88 cents later in the day. The Oct. 31 contract slid to about 75 cents. Each pays only if the U.S. does not strike Iranian territory by its deadline, so lower prices mean higher priced odds of a strike.
Supply risk did not fade either. Houthi forces claimed new attacks on Saudi targets, including an Aramco site, while the White House has said the U.S. will not strike Iran before the Nov. 3 midterms. Even after the slide, the Oct. 24 contract still priced roughly 88% odds of no strike. Its deadline falls Saturday.
These contracts settle on decisions few people know in advance. A Pentagon memo dated Oct. 20 bars Defense Department staff from trading prediction markets on nonpublic information, naming Polymarket and Kalshi.
TQ Edge Setup
Oil and the strike contracts moved the same way on Friday, alongside fresh attacks on Saudi targets. One session cannot split crude's premium between Gulf supply and U.S. action. What changed is that the contracts stopped offering a calm signal against rising oil. If they keep sliding through Saturday's deadline and Brent opens higher anyway, oil is carrying a strike bet.
- The named landlord kept more of its gain. After a report that SpaceX (SPCX) is seeking space on U.S. cell sites, Crown Castle (CCI), the one landlord named, closed up 9.1%. American Tower (AMT) was up as much as 11.3% and finished up 4.1%, and SBA Communications (SBAC) up 3.6%. AT&T (T) fell 8% and T-Mobile (TMUS) 7.7%, while Verizon (VZ) slipped 1.2%. No company has confirmed talks.
- Bitcoin sat still. Crypto stocks did not. Bitcoin held above $81,000, little changed on the day. Galaxy Digital (GLXY) and miner CleanSpark (CLSK) touched 52-week lows. In Hong Kong, HSBC made its licensed Hong Kong dollar stablecoin, RedCoin, available to more than 3.3 million PayMe users, with wallets activating in stages. U.S. stablecoin rules take effect Jan. 18, 2027.
- Private credit has the money, not the deals.Direct lenders had their worst quarter for new deals in more than three years, Bloomberg reported. Some of the largest firms are now courting borrowers with under $20 million of annual earnings. Direct lending funds raised a record $129.15 billion in the first nine months, industry data show.
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Oil, Yields and Strike Odds Moved Together.
On Thursday, bonds rallied through a tech selloff as crude climbed. On Friday, crude, yields and the priced odds of a U.S. strike rose together. SLB rose with oil, and Amex fell on a clean beat.
The Oct. 24 ceasefire deadline falls Saturday, so oil's first read on it comes when trading reopens. The bigger tests are the Fed's Oct. 28 decision and the Oct. 29 PCE report. If both lean the way Friday's surveys did, Thursday's bond rally was the outlier.
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