AMZN225.68 is in talks to invest more than $10bn in OpenAI and sell it additional chips and computing power, another circular deal. The market is reacting positively pre market, with AMZN up 1.5%. Most major AI players have seen sell the news reactions over the past two months. If AMZN can sustain the pre market gain, it could be an early signal that sentiment is rotating back toward AI.
With the midterm election less than a year away, polls suggest the cost of living remains the top voter concern. With control of both chambers of Congress and the White House, Republicans are in a position to pursue policy measures to shift sentiment ahead of the election. The consensus expectation, reflected in prediction markets, is that Democrats are more likely to win the House majority next year, which could motivate Republicans to act sooner rather than later. The most obvious policy lever would be tariff reductions. The Supreme Court looks more likely than not to rule early next year that most of the tariffs the administration has imposed so far this year are illegal, which would create an opening to make changes. While I think the White House would seek to reimpose tariffs under different authorities if the court blocks the IEEPA tariffs, the risks still lean toward lower tariff rates.
Futures were bid overnight with NQ1!25249.5 making a higher high. Note the pattern remains bearish across the board. This is expiration week, and as I noted in yesterday's opening comment, I expect ES1!6878.75 to chop between 6820 and 6930 throughout this week, and it rebounded from our 6820 yesterday. GC1!4347.3 made two more attempts to make new highs and both failed. Momentum remains strong for GC, though as I noted in recent days, it must break resistance in the near term, otherwise we should expect a larger pullback. SPX6800.26 is forming a potential double top and the chart is tracking the worst possible trajectory. A rebound from 6550 to 6700 would be the perfect spot to open a short, should the double top materialize.