Futures Bounce, Oil Tumbles, and Oracle's $20B Raise

Grant Calloway

Welcome to the Bull Sheet podcast. It's Monday, November 2nd, and the tape this morning feels like a man who took a hard fall on Friday, got up, dusted off his knees, and is checking whether anybody saw. Futures are green, but nobody's celebrating. Let's get you set before the bell.

Grant Calloway

Here's the hangover. Friday, the S&P 500 fell about 1.8 percent, the Nasdaq Composite dropped nearly 2.9, and CNN is reporting the Nasdaq just logged its worst month in more than a year as AI nerves rolled through the market. The worry is simple. Big Tech is spending so much on AI that free cash flow is getting squeezed. This morning, futures are pushing back.

Grant Calloway

S&P 500 futures are up roughly six tenths of a percent, near 7,657. Nasdaq 100 futures are up somewhere between eight tenths and one percent. Dow futures are up about seven tenths, a gain of around 374 points. And the Russell 2000 is up about eight and a half tenths in early trading. Small caps are joining the party, which I like to see.

Grant Calloway

The real story is oil. WTI crude is down more than six percent, trading around 97 dollars and 57 cents a barrel. Brent is down about six percent, near 106 and a half. That's a big move, and it pulls back some of the recent supply scare premium. Lower oil means lower energy costs feeding into inflation, and traders are treating that as a little breathing room. Keep in mind, ninety seven dollar crude isn't cheap. It's just less expensive than it was on Friday.

Grant Calloway

The rest of the dashboard. The ten year Treasury yield is 4.896 percent, down a hair and back under 4.90. The two year is around 4.59, so the curve is still positive by about 31 basis points. The dollar index is softer, down about three tenths to 101.45. Gold is up about one and a half percent, near 3,950 an ounce. Silver is up over three percent, around 51. In crypto, Bitcoin is near 77,700, down slightly. Ether is near 2,284, up slightly.

Grant Calloway

Overseas was mixed to firmer. The Shanghai Composite rose about one percent, and Korea's KOSPI jumped over two. The Nikkei added a third of a percent and the Hang Seng gained about four tenths. Europe is tame. The DAX is up slightly, the CAC 40 is down about four tenths, and the FTSE 100 and Stoxx 600 are flat. Nobody over there wants to get out in front of America.

Grant Calloway

Now the movers, and this morning the action is not all tech. Oracle is down roughly 2.5 to nearly 4 percent after filings showed it plans to raise 20 billion dollars through bonds and new shares. Hold that thought, because it's the center of today's debate.

Grant Calloway

Healthcare diagnostics. IDEXX Laboratories is sharply higher, up at least high single digits premarket, after third quarter earnings of 3.96 a share against about 3.72 expected, on revenue of 1.21 billion. Consumer. Marriott is up about four percent after adjusted earnings of 3.02 versus 2.83 expected, with revenue of 7.01 billion. Media. Fox is up anywhere from four to seven percent on earnings of 2.54 against 2.06 expected, helped by political advertising and sports viewership. Estée Lauder also beat, 72 cents against 51 cents expected.

Grant Calloway

Energy is the other side of that oil move. Diamondback is down roughly three to nearly five percent, and Devon Energy is down about three, as crude craters. Diamondback reports after the close, so that will be a fun one. Industrials. A.O. Smith is down around ten percent, and I don't have a confirmed catalyst for that one, so check the print before you read anything into it. Norfolk Southern, on the other hand, is up about three percent.

Grant Calloway

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Grant Calloway

Now, the segment that gives this show its name. Bull versus Bear, and today's fight is about Oracle's 20 billion dollar raise. I'll argue both sides, then tell you where I land.

Grant Calloway

The bull says this is what a boom looks like. Companies that believe in a build out borrow to finance it. Manufacturing has stayed above the 50 line that separates expansion from contraction. Cooling oil gives consumers and corporate margins some room, and it lowers the odds the Fed has to lean harder on rates. If the productivity payoff from all this AI spending is real, the funding cost is a price worth paying.

Grant Calloway

The bear says, slow down. Oracle just told you internal cash flow can't carry this arms race on its own, so it's issuing bonds and diluting shareholders to fund it. The ten year is sitting near 4.90 percent, and oil is still historically high. Money isn't free. If earnings guidance wobbles this week, higher capital costs shrink the multiples investors will pay. Friday's sell-off was about exactly this worry.

Grant Calloway

Here's where I come down. The bear has the better argument on balance sheets. The bull has the better argument on the economy. Both can be true at once. Raising capital isn't a crime, it's a signal, and the signal says the build out costs more than the cash coming in right now. I'd rather watch whether investors reward the spending or punish it when Apple and Palantir speak tonight. The market will tell us which story it's buying, and it usually does so loudly.

Grant Calloway

On deck. At 9:45 Eastern, the final S&P Global Manufacturing PMI for October, consensus 56.0. At 10:00, the ISM Manufacturing PMI, consensus 54.6 against 54.5 last time. Watch the Prices Paid component, which was 77.9 last month, and Employment, which was 52.7. Also at 10:00, September construction spending, expected up around half a percent after 0.9 before. At 11:15, Chicago Fed President Austan Goolsbee speaks. At 2:00, the Fed's Senior Loan Officer Survey, which tells us how tight credit is getting.

Grant Calloway

Earnings. Before the open we have Entergy and Public Service Enterprise Group, on top of the beats we covered. After the close, Apple is expected to earn 1.99 a share on about 113.4 billion in revenue, and Palantir is expected at 41 cents on 2.17 billion. Also after the bell, Vertex, Diamondback, Williams, Realty Income, and ON Semiconductor.

Grant Calloway

What matters most today? The ISM print at ten, and then Apple tonight, because this market is hunting for proof that big spending turns into big profits. Come back tomorrow and we'll see how the tape took it. An old floor saying: the market can stay worried a lot longer than you can stay interested. And a quick reminder, this podcast is for educational purposes only and is not investment advice. Have a good one.