TSMC Keeps the Dream Alive

Before the first bell rung in New York, traders are already parsing earnings from a Taiwanese chip colossus with the intensity of medieval monks poring over chicken entrails for signs of divine favor. This Thursday, TSMC once again obliged their obsession. With a record quarterly profit and a raised revenue forecast, the world's most advanced chipmaker provided what markets have been craving: a reason to believe, again, in the gospel of artificial intelligence.

Futures climbed again, and the usual suspects - Nvidia, Micron, Broadcom - donned their rally caps. TSMC's update reaffirmed the AI narrative that has kept markets aloft through trade skirmishes, central bank pivots, and, lately, an inconveniently timed government shutdown.

In recent months, the promise of AI has functioned as a kind of monetary Prozac, blunting the edges of anxiety over everything from tariffs to Treasury yields. BlackRock's $40 billion data center deal with a Nvidia-backed group earlier this week, followed by ASML's strong results, had already created momentum for the market. TSMC delivered proof that demand for advanced chips isn't merely a speculative mirage. Banks are riding the wave too. U.S. lenders have turned in robust third-quarter profits, propelling the S&P 500 banking index to its first three-day winning streak in weeks.

Meanwhile, trade relations between Washington and Beijing are once again simmering, if not quite boiling. China bristled at U.S. complaints about its rare earth export controls, accusing Washington of 'stoking panic,' while U.S. officials shot back that Beijing's grip on these strategic minerals is a choke point for global supply chains. President Trump dangled the possibility of a 100% tariff hike on Chinese goods and even threatened to cancel an upcoming bilateral meeting.

Trump and his Treasury Secretary Scott Bessent have resumed their game of good cop, bad cop. While Trump issued several threats, Bessent raised the possibility of a further 90-day extension of talks between the two countries, suggesting that this would be decided in South Korea at the end of the month, during the scheduled meeting between Trump and Xi.

Beyond chips and tariffs, the market tableau on Thursday was crowded. Salesforce promised $60 billion in revenue by 2030 and was rewarded with a 6.7% surge. Hewlett Packard Enterprise, less fortunate, forecast slower growth and slumped nearly 10%.

Meanwhile, oil edged higher on diplomatic ripples between Washington and New Delhi, gold hit a new record as investors sought refuge from uncertainty, and the dollar weakened on expectations of further Fed rate cuts. European exports to the U.S. fell sharply under new tariff arrangements.

Today's corporate results include Charles Schwab and Bank of New York Mellon. Several statistics should have been published today but will not be due to the government shutdown caused by the budget impasse. Producer prices and weekly jobless claims are therefore scrapped. However, the NAHB housing market index and several public statements by central bankers are still scheduled.

In Asia-Pacific, Tokyo continues its rebound with a 1.2% gain. Mainland China is down 0.2%, and Hong Kong is down 0.8%. Other markets are bullish, notably South Korea (+2.1%) and Australia (+0.9%). Indices in Europe are mostly up, with the Stoxx Europe 600 up 0.3%.

Today's economic highlights:

On the agenda today: the EC Balance comm CVS; in the United Kingdom, the monthly GDP; in the United States, the new unemployment claims, the Philadelphia Fed business outlook, the final demand PPI GM, the retail sales advances GM, the business inventories, the NAHB housing market index, and the DOE crude oil inventories. See the full calendar here.

• Dollar index: 98,620
• Gold: $4,241
• Crude Oil (BRENT): $62.32 (WTI) $58.32
• United States 10 years: 4.02%
• BITCOIN: $111,756

In corporate news:

• Charles Schwab posted a 27% jump in Q3 revenue to a record $6.14 billion, driven by strong trading and net interest income, with adjusted EPS beating expectations at $1.31.
• Snowflake and Palantir announced a partnership to integrate their AI platforms, boosting data analytics capabilities and driving up both companies' shares.
• M&T Bank reported higher Q3 profit, with net income rising to $754 million and non-interest income up due to mortgage banking gains.
• American Electric Power secured a $1.6 billion federal loan guarantee to upgrade 5,000 miles of transmission lines amid soaring AI-related power demand.
• Allstate disclosed $558 million in Q3 catastrophe losses, including $161 million in September alone.
• F5 suffered a major security breach attributed to Chinese state hackers, who reportedly accessed its systems for over a year, according to Bloomberg.
• VICI Properties entered into a new lease agreement for MGM Northfield Park, setting base rent at $53 million and amending its MGM master lease.
• Snap-On beat Q3 estimates with EPS of $5.02 and revenue of $1.29 billion, boosted by increased demand from auto repair shops and strong software sales.
• KeyCorp saw Q3 profit surge to $450 million, fueled by a 23.8% rise in net interest income and strong investment banking performance.
• Upgrade raised $165 million at a $7.3 billion valuation and is eyeing an IPO in 12 to 18 months as fintech IPOs begin to recover.
• BNY Mellon reported a 25% jump in Q3 profit to $1.34 billion, driven by higher net interest income and record fee revenue.
• US Bancorp reported Q3 profit of $2 billion on revenue of $7.33 billion, lifted by higher net interest income and fee revenue growth.
• Salesforce shares surged after it projected over $60 billion in revenue by 2030 and announced a $7 billion buyback, easing concerns about AI disruption.
• Marsh McLennan reported 11% Q3 revenue growth to $6.4 billion, driven by strong performance in risk, insurance, and consulting services, along with a rebranding announcement.
• SuperX launched a rack-scale AI platform powered by Nvidia GB300 chips, aimed at transforming data center infrastructure.
• CoreWeave introduced a new AI object storage solution with significantly lower pricing, aiming to enhance scalability for AI workloads.
• Apple CEO Tim Cook met with China's Vice Premier He Lifeng in Beijing, reaffirming Apple's investment commitment in the country.
• Hewlett Packard Enterprise outlined strategic goals including $3.5 billion free cash flow by FY2028, amid plans to capitalize on AI infrastructure growth.
• IBM introduced new AI agents on Oracle's Fusion Applications AI agent marketplace.
• Johnson & Johnson faces its first lawsuits in the UK over claims that its talc products caused cancer, with 3,000 plaintiffs seeking around £1 billion in damages.
• Ford is recalling over 59,000 U.S. vehicles due to fire risk related to engine block heaters, according to the NHTSA.
• Carlyle and Boyu Capital are leading bids to acquire Starbucks' China business, which could be valued around $4 billion.
• Microsoft plans to manufacture most of its new products outside China starting in 2026, per Nikkei.
• Meta Platforms is investing $1.5 billion in a new Texas data center to support AI advancements.
• SL Green Realty Corp. reported strong Q3 earnings and acquired Park Avenue Tower for $730 million.
• Navigator Global Investments Ltd announced a 3% rise in assets under management, reaching $87 billion.
• Activision Blizzard employees established a union.

Analyst Recommendations:

• Las Vegas Sands Corp.: JP Morgan upgrades to overweight from neutral with a price target raised from USD 56 to USD 60.
• Ppg Industries, Inc.: JP Morgan upgrades to overweight from neutral with a target price of USD 112.
• Tko Group Holdings, Inc.: Seaport Global upgrades to buy from neutral with a target price of USD 214.
• Unity Software Inc.: Arete Research downgrades to neutral from buy and raises the target price from USD 28 to USD 36.
• Verisk Analytics, Inc.: Rothschild & Co Redburn downgrades to sell from neutral and reduces the target price from USD 280 to USD 220.
• Alphabet Inc.: Roth Capital Partners maintains its buy recommendation and raises the target price from USD 210 to USD 265.
• Applovin Corporation: Arete Research maintains its sell recommendation and raises the target price from USD 250 to USD 394.
• Carmax, Inc.: Mizuho Securities maintains its neutral recommendation and reduces the target price from USD 78 to USD 46.
• Marvell Technology Group Ltd: Roth Capital Partners maintains its buy recommendation and raises the target price from USD 80 to USD 105.
• Transunion: Jefferies maintains its buy recommendation and reduces the target price from USD 120 to USD 95.
• United Airlines Holdings, Inc.: Deutsche Bank maintains its buy recommendation and raises the target price from USD 100 to USD 125.
• Vaxcyte, Inc.: BTIG maintains its buy recommendation and reduces the target price from USD 160 to USD 85.
• Venture Global, Inc.: Mirae Asset Securities maintains its buy recommendation and reduces the target price from USD 21 to USD 12.
• Warner Bros. Discovery, Inc.: Wells Fargo maintains its equalweight recommendation and raises the target price from USD 14 to USD 21.