The Weekend Macro

 

The takeaway: Brent settled Friday at $116.72 — its highest since April, up 6.2% on the week — on Houthi strikes inside Saudi Arabia and a reported US–Israel plan for a "short, intense" post-midterm offensive. That one move re-armed the whole inflation trade: the 10-year is back at ~5.00%, gold broke below $4,000 for the first time since mid-July instead of rallying, and the Dow fell 653 points Friday even as chips stabilized. The Fed meets Tuesday, decides Wednesday, and gets the PCE data Thursday — the day after. December hike odds have slipped to ~80% from ~90% a week ago. The midterms are 10 days out, and everything in Washington is now priced through November 3.

The economy: growth is standing, inflation is re-accelerating, the consumer is miserable

October activity stayed strong but prices worsened: the flash composite PMI was 57.6, manufacturing hit a 53-month high at 56.0, and services reached 57.9. New orders were the strongest since March 2022, while selling prices rose at their fastest pace since August 2022.

Consumer sentiment improved to 48.0 but remained near a record low. Inflation expectations edged higher—to 4.7% over one year and 3.5% over five to ten years—adding pressure ahead of the FOMC meeting.

The backdrop remains stagflationary: CPI is 3.7% y/y, PPI 6.3%, and import prices 8.1%, while jobless claims near 194K show little labor-market deterioration.

Geopolitics: the war's second front is now the market's first problem

Houthi attacks moved the conflict’s market focus to Saudi Arabia. Strikes hit Dammam airport and the Shaybah oil field, Aramco evacuated its Dhahran headquarters, and the US ordered non-essential personnel and families to leave the country.

Separately, US and Israeli planners reportedly prepared options for a short post-midterm offensive against Iranian energy, nuclear, missile, and drone infrastructure. No attack has been authorized, and the White House continues to rule out action before November 3.

Verification remains crucial: the IRGC’s claim that seven tankers were hit is unconfirmed, as is the cause of an oil slick off the UAE. Confirmed developments are the Saudi strikes, the US drawdown, and military options being prepared.

The supply cushion is thin. Gulf exports recovered to 13.9M bpd in September, but global inventories remain 509M barrels below February levels—even as the IEA expects Q4 demand to fall 2.5M bpd y/y.

Washington: 10 days out, and the market is already voting

Washington faces no pre-election shutdown risk: funding runs through December 11. Federal debt is $40.31T against a $41.104T ceiling, and the FY2026 deficit closed at $1.992T.

Democrats lead the generic ballot by roughly 8 points. Markets strongly favor a Democratic House but remain less certain about the Senate, while cost-of-living concerns dominate the campaign and shape the administration’s oil policy.

Friday brought two campaign signals rather than enacted policy: revised Canadian tariffs effective October 30 and a proposed $5,000 dividend if Republicans sweep.

After the vote, a November 5 hearing on Fed Governor Lisa Cook could quickly return central-bank independence to the market agenda.

The Fed: a hold on Wednesday, a verdict on Thursday

The setup is almost comically sequenced. The FOMC meets Tuesday–Wednesday, October 27–28, in blackout (running through October 29). The decision lands Wednesday at 11:00 AM PT / 2:00 PM ET, with Chair Warsh's press conference at 11:30 AM PT / 2:30 PM ET. There is no new Summary of Economic Projections at this meeting. And the September PCE — the Fed's preferred inflation gauge — arrives Thursday, October 29, at 5:30 AM PT / 8:30 AM ET, the day after the decision. The Fed walks in with the hot CPI/PPI set already in the books and walks out before its own favorite number lands.

Pricing: an October hold is ~88–91% (CME ~88% hold / ~12% hike; Kalshi 91% hold / 8% hike). December is where the action is — and it softened this week. The December hike watch read ~83% Friday morning, down from ~90% a week ago and the 96% note of October 14; other framings put it at 75–80% (Kalshi's cumulative above-current-range contract: ~78%). The definitional gap matters — cumulative vs. per-meeting — but the direction doesn't: December is still the base case, just a less certain one than it was. Barclays now expects December plus another 25bp in January; UBS's base case is an October hold with measured further tightening, and it thinks markets are pricing a more aggressive path than it expects.

What Warsh says Wednesday matters more than what the Fed does. He has refused all forward guidance ("we're not in that business anymore"), and with PCE landing Thursday, any hint about what would confirm or kill December will be traded harder than the hold itself. The market's central contradiction is unchanged: the dot plot says one-and-done; futures have been pricing roughly three hikes by June.

Oil: $116.72, and the premium is now a war premium

Brent (December) settled Friday at $116.72, +$3.55 (+3.14%) on the day, +6.2% on the week — the highest settle since April 29, the third straight weekly gain, and past the $115 escalation marker this desk has been watching. WTI (December) settled at $103.27, +3.8% on the day, back over $100 for real. The Brent–WTI spread is roughly $13.50 — wide, because the premium is a waterborne, Hormuz-and-Red-Sea premium first and a US-barrel premium second.

Friday's rally had three legs, per Reuters: Houthi attacks across Saudi Arabia including energy infrastructure, Aramco's Dhahran evacuation, and the unexplained UAE oil slick — plus growing expectations of renewed US strikes on Iran. Citi cautioned that the rebound in Hormuz shipments may not last (it could reflect inventory drawdowns or released stockpiles); UBS warned further escalation could renew supply disruptions, with volatile flows and high freight rates leaving the market undersupplied.

The demand side is the counterweight nobody is pricing yet: the IEA's Q4 demand decline call, plus the simple fact that $116 Brent at the pump is a tax on the same consumer Michigan just measured at 48.0. The administration's pre-election pressure valves — IEA diesel releases, the SPR exchange RFP, Russian diesel buys — are loans and one-offs, not supply. Watch $120 as the next escalation marker, $108 as the level a ceasefire signal or a fresh Washington supply action would open.

The dollar: the stress vote that didn't happen

DXY closed around 101.70–101.80, +0.1% Friday, down roughly 0.2% on the week — its second straight weekly decline, briefly touching three-week lows near 101.50 midweek. EUR/USD sits around 1.1210 (down 0.24% on the week, under 1.12 after the weak eurozone PMIs); GBP/USD around 1.3380; USD/JPY around 156.90.

The dollar's soft week is the tell: it fell even as October hike odds collapsed and even as oil spiked — because the safety bid went to Treasuries on Thursday, not to the greenback, and because the euro's weakness is a growth story, not a dollar-strength story. If December pricing hardens again, expect DXY back toward 103; if the AI-credit wobble spreads or the BoJ surprises Friday, the yen is the pressure valve — Tokyo has warned it is ready to intervene again, with 160 as the market's red line and December BoJ hike odds near 90%.

Rates: back to 5%, for a different reason than last time

The 10-year finished Friday at ~4.99–5.00% (+4bp), the 2-year at ~4.69% (+4bp), the 30-year at ~5.31–5.33% (+4bp). Thursday's 18bp flight-to-safety rally was mostly reversed by oil-driven inflation fear; the 10-year ended the week down about 11bp at ~4.99%, but the round trip is the story. Two weeks ago bonds rallied on the AI-credit scare; this week they sold off on the war premium. Same 5% level, opposite fear.

The curve is telling you the tension plainly: the 2-year at 4.69% prices a Fed that is still expected to hike in December, while the 10-year at 5.00% prices an inflation risk that a December hike may not fix — because this inflation is coming through a strait, not through wages. The 30-year fixed mortgage eased to 7.32% in Freddie Mac's October 22 survey (down 0.08 point) — a lagging print from before Friday's selloff. Watch Wednesday's statement language on energy inflation: hawkish wording is a demand negative for oil, dovish wording is a green light for it.

Stocks: the rotation ate the defensives

Friday: S&P 500 7,623.68 (−0.52%), Nasdaq Composite 25,955.34 (−0.21%), Dow 52,215.16 (−1.23%, −653 points), Russell 2000 2,775.90 (−0.29%). For the week: S&P −0.47%, Nasdaq −0.71%, Dow +0.41% (its third straight weekly gain despite Friday), Russell +2.00%. The S&P sits about 195 points under its October 6 record close of 7,818.93, and Friday's close broke the 7,640 band that had held every selloff since the breakout. 7,600 is now the line in the sand for the whole technical read.

The rotation is the story. Thursday's AI-capex rout stabilized — chips held the 200-day, the SOXX bounced, the Nasdaq fell only 0.21% — but the fear trade moved into the defensives that had been holding up: consumer staples −1.92% Friday, communication services −1.78%, discretionary −1.66%, financials down over 1%. Energy was the lone real winner at +2.5–2.6%, to a record for the sector. Cybersecurity ripped (CrowdStrike, Cloudflare, Palo Alto all up 7%+); American Express fell ~3% despite record revenue after announcing a ~5% workforce cut framed as AI preparation. Meta fell another ~1.3% Friday with no post-earnings bounce after its −7% earnings day; WDC's blowout quarter (−3% Friday) was sold anyway.

Breadth, not just levels: nearly three-quarters of S&P 500 stocks fell Friday. The VIX closed at 19.45 (+2.2%). The question for this week is whether the hyperscaler earnings gauntlet — Alphabet and Microsoft Wednesday, Amazon Thursday — gives the AI buildout a fundamental footing, or whether the capex question (Meta's quarterly capex at 106.5% of operating cash flow, free cash flow −$2.12B, net cash down to ~$1.5B) keeps spreading from buyers to suppliers. About a third of the S&P 500 reports this week.

Crypto: macro beta, no buyers, $80K in view

Bitcoin closed Friday around $81,600–81,700 (down ~0.7–1.4% on the day depending on the print, roughly flat on the week), about 35% below its October 2025 all-time high of $126,080. Ethereum finished near $2,400 (−1.0% Friday, −1.2% over five days). The global crypto market cap sits around $2.84T; the Fear & Greed gauge reads neutral (~47, with some snapshots at 33).

The flow story is whiplash, not trend. US spot Bitcoin ETFs lost $635M on Thursday — the largest single-day outflow since June 25, snapping a three-day, $1.08B inflow streak — then another ~$138M Friday, led by BlackRock's IBIT (−$110M). For the full week, though, Bitcoin ETFs still took in roughly ~$309M, while Ethereum ETFs lost ~$221M on the week (Thursday: −$111M). October month-to-date for BTC ETFs went back into the red after Thursday (−$175M at that point). Translation: the institutional bid hasn't left, but it flinches at every macro headline now.

Crypto is trading as a rate-sensitive risk asset, not a hedge: it sold off with the AI trade Thursday, barely moved on Friday's oil spike, and faces the same Wednesday–Thursday gauntlet as everything else — a Fed decision, then PCE, then a BoJ decision Friday. $80,000 is the level in view; a break there puts corporate holders' cost bases under water and tests whether the ETF bid is a floor or a memory.

📅 The week ahead (all times PT / ET)

·        Mon Oct 26 — Chicago Fed National Activity Index (Sep), 5:30 AM / 8:30 AM; Dallas Fed Manufacturing (Oct), 7:30 AM / 10:30 AM; $69B 2-year note auction, 10:00 AM / 1:00 PM. Earnings: Verizon (pre-open); Cadence, Nucor, Welltower after close. China's Fifth Plenum opens.

·        Tue Oct 27 — Durable goods (Sep), 5:30 AM / 8:30 AM; Case-Shiller home prices; Consumer confidence (Oct), 7:00 AM / 10:00 AM; New home sales (Sep), 7:00 AM / 10:00 AM. FOMC begins. Israeli Knesset election. Earnings: Coca-Cola, Boeing, Visa, SoFi.

·        Wed Oct 28 — FOMC decision, 11:00 AM / 2:00 PM; Warsh press conference, 11:30 AM / 2:30 PM. Advance goods trade balance, wholesale inventories. Bank of Canada and RBNZ decisions; UK Autumn Budget. Earnings (after close): Alphabet, Microsoft, Ford, ServiceNow.

·        Thu Oct 29 — Q3 GDP advance, 5:30 AM / 8:30 AM (consensus ~3.0% annualized, vs 2.2% in Q2); September PCE, 5:30 AM / 8:30 AM (headline consensus ~3.6% y/y, core ~3.1%; headline +0.5% m/m expected); Jobless claims, 5:30 AM / 8:30 AM. ECB decision (morning PT) and press conference. Earnings: Amazon, Mastercard, Eli Lilly.

·        Fri Oct 30 — Employment Cost Index (Q3), 5:30 AM / 8:30 AM; Chicago PMI (Oct), 6:45 AM / 9:45 AM (consensus ~53.0 vs 58.8). Bank of Japan decision (overnight). Earnings: ExxonMobil, AbbVie. New Canada tariff measures take effect.

·        Beyond — Midterms Tue Nov 3 · Jobs report Fri Nov 6 · Cook hearing Thu Nov 5 · MSCI decision on Strategy (MSTR) index exclusion Nov 11 · December FOMC Dec 8–9.

The feedback loop: a lead/lag map

Link	Leading (moves first)	Current state	Lagging (gets hit)	Outlook
Hormuz/Saudi → crude	Houthi strikes on Dammam airport, Shaybah, Dhahran evacuation; US diplomatic drawdown; post-midterm strike plans on paper; IRGC 7-tanker claim unconfirmed	Brent $116.72 (+6.2% w), WTI $103.27, spread ~$13.50	Diesel near record, gas → CPI/PPI; airline and consumer margins	Confirms if strikes hit Saudi export infrastructure or Hormuz claims get UKMTO confirmation → $120. Breaks if a ceasefire signal or Washington supply action lands → $108 opens
Energy → inflation	Selling prices fastest since Aug 2022 (flash PMI); import petroleum +4.6% m/m in Sep	CPI 3.7% y/y, PPI 6.3% y/y, imports 8.1% y/y; Michigan 1-yr expectations 4.7%	PCE Thu (after the FOMC); consumer resistance (sentiment 48.0)	Confirms: PCE Thursday validates the hot set → December hardens. Breaks only via demand collapse
Inflation → Fed	Hot CPI/PPI/imports; Warsh refusing guidance; blackout through Oct 29	Oct hold ~88–91%; December hike ~75–83% (down from ~90%)	Statement language Wed; December pricing into Nov 10 CPI	Confirms if Warsh keeps December live without pre-committing. Breaks if PCE Thursday is soft or AI-credit stress spreads → December pricing fades
Fed → rates/USD	December pricing ~80%; 2Y 4.69%	10Y ~5.00%; DXY ~101.8 (2nd straight down week); EUR/USD ~1.121	Mortgage rates (7.32% lagging); EM and yen carry	Confirms if December hardens → 10Y back above 5%, DXY toward 103. Breaks if December fades → yields and dollar fall together
Rates/USD → risk assets	VIX 19.45; AI capex question (Meta FCF −$2.12B); BTC ETF Thu outflow −$635M	S&P 7,623.68 (−0.47% w), Nasdaq −0.71%, BTC ~$81.6K, gold ~$4,000 (−~4% w)	Credit spreads; hyperscaler earnings Wed–Thu; crypto $80K level	Confirms: the AI-credit repricing stays contained to buyers/renters. Breaks if Alphabet/Microsoft/Amazon capex guides disappoint → full risk-off into the midterms

The chain's tension has flipped twice in two weeks. First the leading edge (crude, inflation prints) was hot while the lagging edge (bonds) rallied on a different fear. Now the leading edge is hotter still — $116 Brent, selling prices at a 4-year pace — and bonds have stopped rallying and gone back to 5%. The market is no longer pricing two contradictory fears. It's pricing one: that the war premium becomes an inflation print, and the inflation print becomes a December hike, and the December hike lands on an economy whose consumer is already at 48.0.

The big picture: how it all ties together

Follow the chain: Houthi strikes inside Saudi Arabia and a post-midterm strike plan on paper → Brent $116.72, past the $115 marker → diesel near record and selling prices at their fastest since 2022 → the hot CPI/PPI set, now with Michigan expectations ticking up behind it → a Fed that meets Tuesday, decides Wednesday, and gets its favorite inflation number Thursday → a 10-year back at 5% and a dollar that can't decide whether it's a haven or a funding currency → an equity market where the selloff has rotated out of tech and into the defensives, with 7,600 as the line in the sand → crypto flatlining at $81.6K with ETF buyers flinching at every headline.

This is the week the story stopped being inflation vs. the Fed or the Fed vs. the AI buildout and became the war vs. everything. The October FOMC was supposed to be the neutered meeting — hold, no projections, PCE the day after. Oil just made it the most consequential non-decision of the year, because whatever Warsh says about energy inflation on Wednesday will be graded against Thursday's PCE before the ink is dry. And behind all of it, the calendar: 10 days to an election the market has already priced as a Democratic House and a coin-flip Senate, with a post-election strike plan and a Fed-governor hearing waiting on the other side of November 3.

The question for the week: Does Wednesday's hold come with language that keeps December alive — letting yields press back above 5%, the dollar retake 103, and $116 Brent read as a tax the economy can absorb? Or does Thursday's PCE, landing after the decision, do what the Fed couldn't do in the room: confirm that $116 oil is already in the inflation data, harden December toward certainty, and force the market to choose between the war premium and the AI trade? Against a 19.45 VIX, a 7,600 line in the sand, and a Fed gone dark until Wednesday morning, the tape is set for something to break. This week decides which thing it is — and then the voters decide the rest.

Tech slipped to the back. Defense kept the lead.

How last weekend's scorecard settled

1. Tech (XLK) on the sector map: it dropped into Lagging. Last week it was Weakening at 100.5 / 99.4; now it's 99.8 / 98.6. Last Saturday's edition said a drop into Lagging would make this a lasting rotation, and it happened in one week.
2. The four bond funds on the asset map: all four are still Improving and closer to the line. TLT and IEF moved from 98.7 and 98.8 to 99.3, with momentum above 102. None crossed into Leading, and US stocks kept their lead, so the asset read stayed RISK-ON, FADING.
3. Korea and Taiwan on the world map: the selling didn't spread. Taiwan stayed Weakening and didn't fall into Lagging. Korea's momentum turned up, from 97.2 to 97.8, and Korea rose 0.6%, the best of the eleven markets. That's the first sign last week's chip selling is easing, though Thursday showed it isn't over.
4. Energy and commodities: both stayed Leading. Oil's lowest close was 97.15 on Wednesday, above the 96.52 pivot, and it finished the week at 103.27.
5. The sector read itself: RISK-OFF for a second week. It didn't turn to RISK-OFF, BOUNCING.

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The week

On the surface, a quiet week. The S&P 500 slipped 0.5%, the Nasdaq 0.7%, and the Dow rose 0.4%. World stocks (ACWI) fell 0.6%. The VIX ended at 19.45, a little lower than a week ago.

Underneath, it was two weeks in one. Through Wednesday, stocks rose: SPY hit 773.09 and QQQ 725.20. On Thursday, the chip trade sold off again. QQQ fell 2.9% in a day, Taiwan 4.6% and Korea 5.0%. SPY gave back its gains and ended the week at 759.97.

What rose tells the story. Small caps (IWM) gained 2.0%. Energy and health care led the sectors, and long Treasuries (TLT) rose 1.6% as the 10-year yield fell back under 5%, to 4.988%. What fell: communications (XLC) lost 4.4%, gold lost 4.0%, and China lost 4.5%.

Gold is the odd one out. In a week when money moved to safety inside stocks and into bonds, gold fell, as it did last week. Safe havens aren't moving together.

The week in one table

Sectors	Week	Assets	Week	World	Week
Energy (XLE)	+1.6%	Small caps (IWM)	+2.0%	Korea (EWY)	+0.6%
Health care (XLV)	+1.5%	Long Treasuries (TLT)	+1.6%	US (SPY)	−0.4%
Real estate (XLRE)	+1.0%	Commodities (DBC)	+1.1%	Japan (EWJ)	−0.8%
Utilities (XLU)	+0.8%	7–10y Treasuries (IEF)	+0.7%	UK (EWU)	−1.0%
Materials (XLB)	+0.8%	Corporate bonds (LQD)	+0.4%	Taiwan (EWT)	−1.3%
Staples (XLP)	+0.7%	High yield (HYG)	+0.3%	Emerging (EEM)	−1.3%
Financials (XLF)	+0.7%	Dollar (UUP)	+0.1%	Germany (EWG)	−1.5%
Discretionary (XLY)	+0.6%	US stocks (SPY)	−0.4%	Hong Kong (EWH)	−1.6%
Tech (XLK)	−0.1%	Developed ex-US (EFA)	−0.9%	France (EWQ)	−1.8%
Industrials (XLI)	−1.9%	Emerging (EEM)	−1.3%	India (INDA)	−2.5%
Communications (XLC)	−4.4%	Gold (GLD)	−4.0%	China (FXI)	−4.5%

Friday Oct 23 close against Friday Oct 16 close. World stocks (ACWI): −0.6%.

Map 1: sectors against the S&P 500

Settled read: RISK-OFF, a second week. Offense is still lagging defense.

• Leading: energy (XLE), health care (XLV), and now staples (XLP, up from Improving)
• Weakening: none
• Improving: discretionary (XLY), utilities (XLU), real estate (XLRE), and materials (XLB, up from Lagging)
• Lagging: tech (XLK, down from Weakening), communications (XLC), financials (XLF), industrials (XLI)

Two weeks ago tech led the market. Now it's in the back corner, and communications, home of the big internet names, is the weakest sector on the map (98.0 / 97.4). Staples joined energy and health care in the lead: three of the four defensive sectors are now Leading or Improving.

Since 1999, weeks that settled RISK-OFF were followed by a 10%+ SPY drop within 13 weeks about 1 in 6 times, against 1 in 8 for all weeks. The read raises the risk; it doesn't call the direction.

Map 2: asset classes against world stocks

Settled read: RISK-ON, FADING, unchanged. Risk assets are still ahead of safe havens, but the gap keeps closing.

• Leading: US stocks (SPY), commodities (DBC), the dollar (UUP)
• Improving: high yield (HYG), corporate bonds (LQD), long Treasuries (TLT), 7–10y Treasuries (IEF)
• Lagging: small caps (IWM), developed ex-US (EFA), emerging markets (EEM), gold (GLD)

No quadrant changed, but the bonds moved closer to Leading: all four now sit between 98.9 and 99.3 with momentum above 101.7. SPY is still Leading, though its momentum slipped again, from 101.7 to 101.3. Gold went the other way, deeper into Lagging (98.6 / 97.8).

Small caps are the quiet change. IWM rose 2% and is the closest of the stock funds to Improving (98.3 / 99.6).

Map 3: the world's markets against world stocks

There's no risk read for this map. It shows where the world's money is going, not how much risk it's taking.

• Leading: the US (SPY), and now the UK (EWU, up from Improving)
• Weakening: Japan (EWJ), Taiwan (EWT)
• Improving: France (EWQ) and India (INDA), both up from Lagging
• Lagging: Germany, Hong Kong, Korea, China, emerging markets (EEM)

The UK made it to Leading even though it fell 1% this week. Its relative trend had turned up the week before, and it lost less than most. It's the defensive market of the group, heavy in energy, health care and staples, the same sectors leading Map 1.

China moved the other way: down 4.5%, the worst on the map, and deeper into Lagging.

One more map: value took the lead from growth

On the OT Trend style map, value (VTV) moved into Leading against the S&P 500 this week, and large-cap growth (VUG) dropped from Leading to Lagging. On the factor map, dividend payers (HDV), quality (QUAL) and value lead, while high beta (SPHB) and momentum (MTUM) lag. Its risk read is RISK-OFF for a second week: since 2011, those weeks were followed by a 10%+ SPY drop within 13 weeks 1 in 8 times, against 1 in 12 for all weeks.

What the maps agree on

The rotation out of tech has lasted two weeks. Tech went from Leading to Weakening to Lagging, and growth from Leading to Lagging. On the other side, staples, value, dividend payers and the UK moved into the lead. That's the same move seen through four maps.

Across asset classes, it's still only a lean. The sector and factor reads are RISK-OFF; the asset read isn't. US stocks, commodities and the dollar still lead world stocks, and the bonds are gaining but haven't crossed. Money has moved to defense inside the stock market, and it's only starting to move across asset classes.

Lower yields helped the defensive side, not tech. The 10-year fell from 5.098% to 4.988%, and the stocks that rose with it were small caps, real estate and utilities. Tech fell anyway, and the yield drop didn't reverse the rotation, as it didn't last week.

Analyst Watch: the Dow 30 and Exxon, Oct 19–23

62 analyst actions: 46 targets raised, 7 cut, 7 kept and 2 new. Among them, 2 upgrades, both from Freedom Broker, Hold to Buy: Procter & Gamble, and Goldman Sachs with a lower target (1,200 to 1,100). One downgrade: Loop Capital on Apple, Buy to Hold, target 370 to 330. One new coverage: Wolfe Research starts Nike at Underperform, target 28.

The week's headline: IBM. Eleven firms moved their IBM targets on Thursday, all up or unchanged, and the stock rose 9.2% for the week. The new targets range from 240 to 280. Most now sit within 10% of the 253.56 close, so most carry high Reach scores but little upside. Procter & Gamble had nine raises and an upgrade on Friday, to targets between 166 and 190. Travelers had eight raises, but seven of the eight targets are still below its 398.28 close.

Upside with decent odds (10%+ above Friday's close and a Reach score of 80 or more):

• IBM: Jefferies and Citigroup at 280, 10.4% above the close, Reach 80.
• 3M (MMM): JP Morgan at 191 (10.1%, Reach 87) and Bernstein at 197 (13.6%, Reach 82). 3M rose 5.3% this week.
• On the consensus targets, two Dow stocks qualify: JPMorgan (372.26, 12.3% above the close, Reach 88) and Goldman Sachs (1,031.14, 17.8%, Reach 85).

Targets below the price: Apple's two moves this week (MoffettNathanson's 283 and Loop's 330) are both below the 347.73 close, and Apple's consensus target (328.35) is 5.6% below it too. Amgen's consensus target is 9.7% below its price, and Travelers' is 5.8% below.

Big upside, lower odds: Nvidia's consensus target is 55.9% above the close (Reach 70), Boeing's 41.9% (Reach 47) and Caterpillar's 37.7% (Reach 66). High upside and lower Reach scores usually go together.

Consensus	Close	Target	Upside	Reach
JPMorgan (JPM)	331.58	372.26	+12.3%	88
3M (MMM)	173.46	189.98	+9.5%	87
Goldman Sachs (GS)	875.68	1,031.14	+17.8%	85
American Express (AXP)	313.22	368.72	+17.7%	77
Merck (MRK)	145.27	159.76	+10.0%	76
Salesforce (CRM)	248.57	286.14	+15.1%	74
Microsoft (MSFT)	524.51	601.73	+14.7%	71
Nvidia (NVDA)	210.96	328.95	+55.9%	70
Boeing (BA)	188.35	267.22	+41.9%	47

Consensus = the average analyst target. Reach is OddsTrader's score for how likely the price is to touch the target within a year.

Scorecard for next Friday's settled reads

1. Tech (XLK) and communications (XLC) on Map 1: both are Lagging. A turn up in momentum (above 100) would move them to Improving, the first sign the rotation is running its course. Further drops would mean it's still going.
2. The bonds on Map 2: TLT and IEF are 0.7 from the line. If one crosses into Leading while SPY loses its lead, the asset read turns RISK-OFF and agrees with the sector read.
3. Small caps (IWM): momentum at 99.6. A move above 100 puts IWM in Improving against world stocks, the first stock fund outside the US large caps to get there.
4. Gold: two weeks down while bonds rose. Whether gold rejoins the safe-haven trade or keeps falling with it is the open question on Map 2.
5. The 10-year under 5%: it closed at 4.988%. Whether it stays under 5% and keeps helping the defensive side, or climbs back above, frames the week for bonds and real estate.

Next Saturday's edition opens with how each of these settled.

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For the data-minded

Each value is RS-Ratio / RS-Momentum on the weekly map. Above 100 / above 100 is Leading, above / below is Weakening, below / above is Improving, below / below is Lagging.

Sectors against SPY: RISK-OFF → RISK-OFF

	Week 42	Week 43	Quadrant
XLE energy	101.9 / 101.2	102.2 / 101.4	Leading
XLV health care	101.4 / 101.0	102.0 / 102.1	Leading
XLP staples	99.7 / 101.8	100.8 / 102.2	Improving → Leading
XLY discretionary	98.6 / 100.5	99.0 / 101.4	Improving
XLU utilities	98.8 / 101.4	99.2 / 102.0	Improving
XLRE real estate	98.3 / 100.6	98.7 / 101.5	Improving
XLB materials	98.5 / 100.0	99.2 / 100.8	Lagging → Improving
XLK tech	100.5 / 99.4	99.8 / 98.6	Weakening → Lagging
XLF financials	99.3 / 98.9	99.6 / 99.4	Lagging
XLI industrials	98.3 / 99.7	98.3 / 100.0	Lagging
XLC communications	98.9 / 99.2	98.0 / 97.4	Lagging

Asset classes against ACWI: RISK-ON, FADING → RISK-ON, FADING

	Week 42	Week 43	Quadrant
SPY US stocks	102.5 / 101.7	102.4 / 101.3	Leading
DBC commodities	101.8 / 101.1	101.9 / 101.1	Leading
UUP dollar	101.0 / 102.0	101.4 / 101.8	Leading
HYG high yield	98.5 / 100.2	98.9 / 101.7	Improving
LQD corporate bonds	98.8 / 102.0	99.2 / 102.5	Improving
TLT long Treasuries	98.7 / 101.8	99.3 / 102.5	Improving
IEF 7–10y Treasuries	98.8 / 101.3	99.3 / 102.3	Improving
IWM small caps	97.8 / 99.0	98.3 / 99.6	Lagging
EFA developed ex-US	98.0 / 99.3	98.4 / 99.8	Lagging
EEM emerging	98.5 / 98.1	98.1 / 97.9	Lagging
GLD gold	99.1 / 98.9	98.6 / 97.8	Lagging

World markets against ACWI (no risk read)

	Week 42	Week 43	Quadrant
SPY US	102.5 / 101.7	102.4 / 101.3	Leading
EWU UK	99.6 / 100.7	100.3 / 101.4	Improving → Leading
EWJ Japan	100.9 / 99.4	100.4 / 98.9	Weakening
EWT Taiwan	101.1 / 99.5	100.5 / 98.5	Weakening
EWQ France	97.8 / 99.6	98.1 / 100.1	Lagging → Improving
INDA India	98.3 / 99.9	98.5 / 100.2	Lagging → Improving
EWG Germany	98.3 / 99.2	98.5 / 99.5	Lagging
EWH Hong Kong	99.3 / 99.9	99.3 / 99.9	Lagging
EWY Korea	98.6 / 97.2	98.3 / 97.8	Lagging
FXI China	99.1 / 99.7	98.7 / 98.4	Lagging
EEM emerging	98.5 / 98.1	98.1 / 97.9	Lagging

How to read this

• RS-Ratio compares each fund with its benchmark (SPY for sectors, ACWI for the other two maps) on weekly closes, smoothed and scaled so 100 is the average of the past 21 weeks. Above 100 means it's been doing better than the benchmark.
• RS-Momentum is whether RS-Ratio itself is rising, scaled over 10 weeks. Above 100 means the relative trend is improving.
• Quadrants: groups usually travel Leading → Weakening → Lagging → Improving → Leading. A move up a quadrant is money starting to arrive; a move down is money starting to leave.
• Sector risk read: offense (tech, discretionary, communications, financials, industrials, materials) against defense (staples, utilities, health care, real estate). The drop odds are from weekly reads since 1999: how often SPY fell 10% or more within the next 13 weeks. They describe past risk, not future returns.
• Asset risk read: risk assets (US, ex-US and emerging stocks, small caps, high yield, commodities) against safe havens (Treasuries, gold, the dollar); corporate bonds are neutral.
• World markets are US-listed country funds in dollars, so a currency move counts as part of each market's move.
• Reach is OddsTrader's score, from its proprietary algorithm, for how likely a stock is to touch an analyst's target within a year, from 0 to 100. It was tested on more than 13,000 past targets. A high Reach on a target close to the price means likely but small; the useful mix is real upside with a high score.

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You’ll find the rotation maps in OT Trend’s Rotation tab, and a Reach score for every analyst target in OddsTrader’s Analyst Ratings. Both apps are on the App Store, each with a free 1-week trial.

For information only. This is not investment advice. The rotation reads describe relative strength and past drop risk, not future returns. Analyst targets are opinions, and Reach scores describe odds, not forecasts. Do your own research and manage your risk.