Your midday read, what moved overnight, and what it means for long-term investors. A 3-minute brief from Kodiak Capital Advisors.

The Setup

The war premium is coming out of oil, fast, on signs that the United States and Iran are talking. That is doing more for stocks this morning than any earnings report will.

Stocks

Futures are up about half a percent across the board, with the Nasdaq a touch better. That follows an ugly Friday: the S&P 500 fell 1.8%, the Dow 1.1%, and the Nasdaq 100 dropped 3.5% in its worst session since June, undone by two technology earnings reports and a sudden case of arithmetic about what artificial intelligence is costing.

The driver this morning is diplomacy. Secretary of State Rubio said the President prefers negotiation to further military action, Iran signaled after two days of Qatar-mediated talks that a deal remains possible, and Iran's supreme leader has given his government room to negotiate. Cheaper energy lifts almost every company that is not an oil producer, so the bounce is broad.

Our read: this is a relief rally, not a resolution. Nothing has been signed, and the Nasdaq 100 is still roughly 9% below its October high. A market that falls 3.5% on Friday and rises 1% on Monday is not telling you anything about the next five years.

Rates & The Fed

Yields barely moved. The 2-year Treasury, the maturity most sensitive to Fed policy, sits near 4.60%, nudging back up after last week's slide, and the 10-year, which most mortgage and business-loan rates are priced against, is around 4.93%.

That is worth noticing. Cheaper oil should mean less inflation and lower yields, and instead the short end firmed. Traders now put the odds of a December rate increase near 70%, down from the mid-80s right after the Fed's October 28 hold at 3.75%–4.00%. That vote was 10–2, with both dissenters wanting a hike, and Chair Warsh said flatly that "returning inflation to 2% is paramount" without committing to December. The committee meets December 8–9.

In plain English: cash and short-term bonds still pay you well, and nobody should budget on borrowing getting cheaper this year.

Commodities & The Dollar

West Texas crude is back to about $100 a barrel, down roughly 4%, with Brent through $110 and still sliding as the morning goes on. Gold bounced about 1% to near $3,915 after touching a one-year low on Friday, it lost 6.8% in October. The dollar is little changed.

What It Means For You

October was a month in which the average stock and the index went different directions: the gap between an equally weighted S&P 500 and the usual market-weighted one was the widest in roughly seventeen years. Today that reversed in a morning, on news from Qatar that no one could have put in a spreadsheet.

The lesson is not that you need a better forecast. It is that a portfolio which required oil to stay above $110, or required a war to end, was never a portfolio, it was a wager. Owning a mix of things that respond differently to the same headline is what lets you read a morning like this one with interest instead of anxiety. General commentary only, not a view on any security, nor advice tailored to your situation.

On Deck Today

• 10:00 a.m. ET: ISM manufacturing, the oldest read on American factory activity. Expected a shade better than September.
• After the close: the largest consumer-technology company reports, along with a closely watched data-analytics firm, the next test of the AI-spending question that broke Friday's tape.
• Tomorrow: the midterm elections. Expect noise, and expect it to matter less to your portfolio than the coverage will suggest.
• The rest of the week: the Treasury's quarterly borrowing plans Wednesday, the Bank of England Thursday, and Friday's October jobs report, 55,000 new jobs expected, and the last major labor reading before the Fed's December meeting.

A note from Kodiak

Markets give you a new reason to react every single morning. Our job is to help you tune out the noise and keep your plan on track. If you'd like a second opinion on how today's headlines fit your portfolio, book a 15-minute intro call →.

Written by Jeffrey Mansell, Kodiak Capital Advisors, LLC.

Kodiak Capital Advisors, LLC is a registered investment adviser. This newsletter is for informational and educational purposes only and does not constitute investment, legal, or tax advice, nor an offer or solicitation to buy or sell any security. It does not consider the individual financial circumstances of any recipient. Information is obtained from sources believed reliable but is not guaranteed as to accuracy or completeness. Investing involves risk, including the possible loss of principal. Past performance is not indicative of future results. Registration does not imply a certain level of skill or training. For our full disclosures and Form ADV, see [link].