Brazil's Shockwaves, SoFi Earnings Beat, and Yields Test 5%

Grant Calloway

Welcome to the Bull Sheet. I'm Grant Calloway. Yesterday I left you with a question. Brazil got hit hard, the Fed meeting was about to start, and nobody knew who'd blink first. Well, it's Tuesday morning, and so far nobody has. Futures are nudging higher, the kind of tape that's tighter than a drum, and everybody's holding their breath for Wednesday at two Eastern. Let's get into it.

Grant Calloway

The headline is still Brazil. Monday, after President Luiz Inácio Lula da Silva won reelection, the Bovespa closed down about thirteen point nine percent. Per Reuters, that's its biggest one day drop since March 2020. Trading was halted for thirty minutes along the way. The real fell something like eight to eleven percent at its worst, and the iShares Brazil ETF, ticker EWZ, lost close to twenty percent. Long dated Brazilian dollar bonds got hit too.

Grant Calloway

Here's why it matters beyond São Paulo. Mauricio Monge, senior Latin America economist at Oxford Economics, wrote that Lula's victory triggered a sharp selloff as investors reassessed the fiscal outlook under his fourth term. His point was that the big test is convincing markets he can deliver a credible fiscal adjustment while still prioritizing wages and jobs. Reuters says the focus now turns to his finance minister pick. And Senator Flávio Bolsonaro has challenged the results, so there's political noise on top of the fiscal worry. When a market loses nearly fourteen percent in a day, the aftershocks usually run longer than one session. That's not a forecast, it's just how these things tend to go. I'd watch that finance minister name more than any headline.

Grant Calloway

Now the tape. As of early this morning, Dow futures were up roughly a quarter of a percent, S&P 500 futures up about three tenths, Nasdaq 100 futures up four to five tenths, and Russell 2000 futures up a similar amount. Overnight, Japan's Nikkei jumped one point seven percent to 63,268. Hang Seng added around half a percent. Europe's green too. The DAX is up about a quarter of a percent, the CAC up four tenths, and the FTSE 100 up somewhere between six and nine tenths.

Grant Calloway

Cross asset, the number that matters is the ten year Treasury yield, sitting just under five percent, around 4.97. The two year is near 4.69. The dollar index is a touch firmer, with the euro slipping about a quarter of a percent. Oil is a little lower but still expensive, WTI around 101 dollars and Brent around 115. Gold is near 4,000, roughly 4,012 to 4,023. And Bitcoin is hovering just under 80,000.

Grant Calloway

Movers, and let's spread them around. Starting with financials, SoFi is up about ten to eleven percent, near sixteen dollars. Third quarter GAAP net revenue was 1.4 billion dollars, up forty four percent from a year ago, and EPS of eighteen cents beat the seventeen cent consensus. Management raised 2026 guidance to 5.04 billion dollars in adjusted net revenue and 1.66 billion in adjusted EBITDA, and put out a 2027 revenue outlook of 6.4 billion. I won't get giddy about it. A good quarter is a good quarter, and the stock's already moving.

Grant Calloway

JetBlue is up eleven percent or more premarket, near two seventy a share, after the airline tried to calm liquidity worries. Remember, creditors reportedly hired restructuring advisers to review about two billion dollars of debt. A bounce on reassurance isn't a fix. Royal Caribbean is up about five and a half percent to roughly 296 after earnings, and Johnson Controls is up around five percent, near 155, on fiscal fourth quarter results. Boeing is down about two percent, near 184, and it reports before the bell. Moderna is off about three percent after William Blair downgraded it on valuation following the recent run.

Grant Calloway

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Grant Calloway

Now, Bull versus Bear. Today's question: can consumer balance sheets and fintech growth, the SoFi story, hold up against a ten year yield near five percent and oil north of a hundred dollars, with the Fed meeting tomorrow?

Grant Calloway

The bull goes first. SoFi is growing deposits, growing revenue forty four percent, and raising guidance with borrowing costs this high. That tells you the consumer isn't cracking. Earnings outside the big tech names keep showing up, and we're getting solid reports from industrials, cruise lines, and building systems. The expectation is the Fed holds at 3.75 to 4 percent, and the bull says the rate hiking cycle is near its peak. Stocks are green and futures are calm. Why fight it?

Grant Calloway

Because the bear has a very good answer. Ten year yield near five percent, crude over a hundred. That's a double squeeze, and it lands hardest on credit sensitive businesses. Look at JetBlue, bouncing on a reassurance while debt advisers review two billion dollars. Look at housing, where new home sales are expected around 650,000 annualized. And one strong fintech report doesn't make a whole economy. With the Fed in the room and policy staying restrictive, multiples leave no room for error.

Grant Calloway

Where do I land? I've traded through two crashes, so I don't love a market priced for perfect. But the bear is arguing about valuation and the bull is arguing about earnings, and earnings are winning this week. I'd say the bull has the better of the facts and the bear has the better of the risks. What settles it isn't SoFi. It's whether that ten year yield stays under five after Wednesday.

Grant Calloway

On deck. Durable goods orders for September hit at 8:30 Eastern, with consensus around one point five to one point seven percent, so that may already be out when you hear this. At 9:00, the Case Shiller home price index for August, expected near two and a half percent year over year. At 10:00, new home sales and Conference Board consumer confidence, with consensus near 81. At 1:00 in the afternoon, a five year Treasury note auction, and with yields where they are, I'll be watching demand closely. The Fed's two day meeting kicks off today.

Grant Calloway

Earnings. Before the bell, besides SoFi, we've got Coca Cola, Boeing, S&P Global, Corning, HCA Healthcare, Freeport McMoRan, Johnson Controls, and UPS. After the close, Visa, Seagate, Waste Management, Robinhood, Baker Hughes, and NXP Semiconductors.

Grant Calloway

What matters most today: the ten year yield against five percent, and whether Brazil's wobble spreads. The greatest four hundred milliseconds in capitalism, the opening bell, comes at 9:30 Eastern, and then we find out who's nervous. Tomorrow we'll be live on the Fed decision at two Eastern, with Chair Kevin Warsh's press conference at 2:30. Remember, the market always waits for the Fed, and then pretends it knew all along. This podcast is for educational purposes only and is not investment advice. See you tomorrow.