Micron, Market Breadth, and the Rally Test

Grant Calloway

Brent crude, a hundred dollars and one cent a barrel this morning, up about two percent. The ten year Treasury is parked at five point three one seven, and Schwab says that's up roughly sixty basis points since mid August. And yet, and yet, Dow futures are up a hundred twenty one points near 51,030, and S&P futures are up twenty three at 7,675.50. This tape's tighter than a drum, but it's pulling in two directions at once.

Grant Calloway

Europe can't agree with itself either. Investing.com has European stocks extending a sell off into the fourth quarter, with a French budget unveil and inflation weighing. Meanwhile Tokyo's Nikkei is breaking out on yen weakness. So the world, um, can't settle on what kind of Thursday this is.

Grant Calloway

Now, yesterday I put you on alert for Micron, the litmus test for the AI trade. Well, the print is in. Per Benzinga, fourth quarter revenue was $54.23 billion against $51.13 billion expected, and adjusted earnings were $33.42 a share. But the line that stopped me was from CEO Sanjay Mehrotra. Quote, more than 75% of our output is already committed for 2027, and the majority of discussions with our customers today are already around 2028. Some supply agreements, Benzinga says, now stretch into 2031.

Grant Calloway

So here's the puzzle. A company that's sold out for next year, and the stock does... nothing. Closed flat Wednesday at $1,065.11, then crept up about a third of a percent after hours, to around $1,069. Why the shrug?

Grant Calloway

Benzinga quotes Futurum analyst Shay Boloor, who says the quarter was still largely price driven. DRAM and NAND revenue growth outran actual shipment growth by a wide margin. Think of a steakhouse. Revenue's up because the same steak costs more, not because more people walked in. That's a fine business, but the market asks how long people keep paying.

Grant Calloway

Now, you might say, Grant, who cares, a price hike drops straight to the bottom line. Fair, for Micron it does. But every company buying those chips eats the cost. And Schwab, citing The Wall Street Journal, says the administration is preparing tariffs on imported memory chips, which could intensify an existing shortage. A tariff is a cost stacked on a cost. Somebody's hardware bill goes up.

Grant Calloway

I've been through two crashes, so let me tell you what makes me, uh, twitchy. When everybody's order book is full years out, everyone feels safe. And that's exactly when one budget meeting, somewhere, can quietly shrink the whole thing. I'm not saying that's happening. I'm saying I notice that Reuters, by way of Yahoo Finance, reports Broadcom will lend Anthropic up to $42 billion to lease chips. When the supplier helps finance the buyer, I, I, I keep one eye on the exit. Wreckage is where I hunt, and I'd rather be early to the wreckage than late to the party.

Grant Calloway

Now, away from chips. Premarket, Accenture is up 17.5% to $215.44, on $18.7 billion in revenue against $18.05 billion expected. Fair Isaac's up 7.5% to $636.76, a bounce after losing more than a quarter of its value Tuesday, when the housing finance director said a new mortgage pricing structure would let rivals compete with the FICO score. That's Barron's, via Schwab.

Grant Calloway

Yesterday, per The Wall Street Journal, Boeing climbed 2.3% on a Navy fighter award, while Northrop Grumman fell 3.9%. And Moderna is down 3.1% to $186.55 after Citigroup downgraded it to sell on valuation. Schwab notes the shares were up 222% since the cancer vaccine trial results. Sometimes you just get paid too much, too fast.

Grant Calloway

Quick reset. If your morning is twenty open tabs and a terminal shouting at you, Jellypod can swap that for one personalized audio brief. Jellypod dot com, before the opening bell, which, by the way, I still call the greatest four hundred milliseconds in capitalism. Okay, back to it.

Grant Calloway

So, the fight I keep having with myself. The bull says tech infrastructure spending isn't stopping, and the Atlanta Fed's GDPNow has the third quarter tracking at 3.7%. Fine. Real money, real growth.

Grant Calloway

The bear says, hold on. Schwab has only 24% of S&P 500 stocks above their fifty day moving average. That was above 70% in mid August. And the Russell 2000 is down almost ten percent from its peak, right at the line that defines a formal correction. Small caps borrow a lot, and the ten year is sitting above five and a quarter. It's a parade where three floats are enormous and the rest of the street is empty. The index looks like a parade, but you're counting floats.

Grant Calloway

Who wins today? Um, the data decides. Initial jobless claims hit at 7:30 Eastern, forecast at 201,000, up from 197,000. Then at 9:00, the ISM Manufacturing PMI, forecast 54.8. But I'm watching the prices paid component, forecast 72.9 against 71.1 last time. That's what manufacturers pay for inputs, a gauge of inflation pressure, and with crude at a hundred, a hot number lands hard.

Grant Calloway

Then the Fed parade. Waller, Bowman, Williams, Jefferson, Cook, all with something to say. Schwab has Friday's payrolls seen at 84,000. And after the close, Nike reports with that record 87 million shares sold short, which I flagged yesterday. A crowded short can squeeze, but a squeeze is a rumor with a price tag.

Grant Calloway

So my warning is simple. Don't trade thin breadth like it's thick. When a few names carry the tape, a single bad print can show you how empty the street was. This is general education, not personalized advice, so do your own homework. Alright, that's it from me.