Two days into earnings season and all there is to show are losses across the major averages. This is not how the midterm game plan is supposed to work.
Things that matter may be beginning to unravel for the Republicans in their hopes to keep the "A-OK" narrative alive through Election Day, now less than three weeks off and early voting already begun in a handful of states, including Illinois, Michigan, California, Florida, and Pennsylvania.
It's difficult to believe Americans could be dumb enough to vote for the incumbents with inflation running red hot, gas prices through the roof, wars still unresolved in Ukraine and the Middle East and a party that seems only intent on getting re-elected.
“No one in this world, so far as I know — and I have searched the records for years, and employed agents to help me — has ever lost money by underestimating the intelligence of the great masses of the plain people” - H.L. Mencken, Baltimore Sun, September 18, 1926
It could happen that the Republican party maintains its slim margins in the House and Senate, but, only because the Democrats have put up candidates that are far inferior in many voting districts and states. It seems like no matter which party wins - and be assured, there are only two choices - the American people will lose because the reality is that there is only one party - the uniparty, as some like to call it - and Republicans and Democrats are nothing more than factions of the same tax, borrow, and spend federal behemoth.
The American people don't have a choice when it comes to voting, at least at the national level. Whichever party or candidate wins an election, campaign promises and moral integrity are lost the moment he or she steps into the Capitol building. The party controls the votes; the leviathan - to use a Hobbesian metaphor - controls the narrative. Nothing changes in Washington D.C. except the occasional role players. Senators and House Reps alike toe the government line. The behemoth swallows them all.
“The worship of the state is the worship of force. There is no more dangerous menace to civilization than a government of incompetent, corrupt, or vile men. The worst evils which mankind ever had to endure were inflicted by bad governments. The state can be and has often been in the course of history the main source of mischief and disaster.” ― Ludwig von Mises, Bureaucracy
The longer this system of overwhelming government control survives, the worse off will be the fates of millions of Americans. It's become routine for congress and whatever entity is occupying the White House to pass legislation the public is adamantly against. Wars are started without weighing the consequences. Infrastructure bills are little more than handouts to loyalists. The government exerts more control, leading to a point at which a large segment of the public becomes apathetic toward voting and government and begins to drift towards a more reckless level of anarchy, one that dismisses government laws and regulations as little more than impediments against their own goals to live in a just, honest society.
Eventually, as is the emerging state of play in Europe, the taxes, the surveillance, the limits on freedom and liberty become too much for the general public to bear and the leviathan government is perplexed that their "perfect" system of control no longer functions as planned. This is the future of America: a country balkanized by regions, sects, and beliefs, an incongruous mass without an underlying, unifying force, the government's promises seen as empty slogans, its power diminished by its own hubris. The process unfolding happens over decades. America is within 20 years of the need for radical change, maybe even closer than that, lest it completely lose its identity and world standing.
So, as Thursday's opening bell approaches, the pundits and blabbers in the finacial media continue to talk the good talk, all the while, the investor class is walking away. Stocks are already wildly overpriced and breadth in the market favors only a few of the more popular issues, and even those are under assault.
Wednesday saw the worst daily performance on the NASDAQ in Four months, fueled by a CPI reading that was worse than expectations and a meltdown of one of the AI darlings, Coreweave (CRWV), which lost 15% on the day and is down nearly 2/3rds since its all-time high in June, 2025. The company's business model is under scrutiny, its funding under assault. Coreweave's credit default swaps (CDS) blew out to over 1000 basis points. Other companies in the AI space such as Oracle and Softbank are seeing outsized moves in the costs to insure gainst default.
Bank stocks reporting third quarter earnings failed to provide a boost to the markets or even maintain recent levels. Now that inflation is seen as a clear and present danger, the other shoe - the AI funding bust - is dropping.
Thursday morning, these stocks reported for the third quarter:
U.S. Bancorp (USB) - EPS beat, revenue miss, stock flat pre-market
Charles Schwab (SCHW) - EPS beat, revenue miss, shared down 2%
PNC (PNC) - EPS beat, revenue miss, shares flat
Bank of New York Mellon (BNY) - Top and bottom beat, shares higher by 2-3%
Taiwan Semiconductor (TSM) - Top and bottom beat, shares off by 2-3%
Ericsson (ERIC) - Huge EPS, revenue beat, shares higher by 11%
These results failed to move the market needle, especially after the BLS reported September PPI was came in like a house afire:
The Producer Price Index for final demand increased 1.3 percent in September, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices moved up 0.5 percent in August and 0.2 percent in July. (See table A.) The September increase is the largest advance since rising 1.7 percent in March 2022. On an unadjusted basis, the index for final demand climbed 6.3 percent for the 12 months ended in September, the largest 12-month increase since moving up 6.4 percent in December 2022.In September, prices for final demand goods rose 2.6 percent, and the index for final demand services advanced 0.8 percent.
Prices for final demand less foods, energy, and trade services moved up 0.5 percent in September after increasing 0.3 percent in August. For the 12 months ended in September, the index for final demand less foods, energy, and trade services rose 5.0 percent.
Those numbers are wildly inflationary, since producer prices eventually feed into consumer prices. Most companies aren't about to keep prices down and absorb margin losses. No matter how the PPI is viewed, it's possibly to be enough for the Fed to move rates higher at its October 27-28 FOMC meeting. There's now a 33% chance the Fed will raise rates at the October meeting and a 92% chance of a rate hike at the December 9 meeting, with a 29% chance the hike will be 50 basis points, to 4.25-4.50%, according to the CME's FedWatch tool.
Paradoxically, retail sales zoomed 0.8% higher in September, with gasoline purchases crowding out other consumer staples and discretionary purchases. The number is obviously not inflation-adjusted, signaling stress on consumers, especially in low and middle income groups.
All of this underscores the ongoing conflicts in Ukraine and the Middle East, both of which are again spiraling out of control.
With the opening bell 30 minutes away, Dow futures are up 235, NASDAQ futures are down 384, S&P futures are down 24 points. WTI crude oil has broken out of its recent range and is now trading above $95/barrel. Brent crude has been well over $100/barrel for the better part of the past six weeks.
Gold and silver continue to recover after Wednesday's bloodletting.
Doesn't look very rosy, does it?
At the Close, Wednesday, October 14, 2026:
Dow: 51,621.48, -48.62 (-0.09%)
NASDAQ: 26,692.87, -511.53 (-1.88%)
S&P 500: 7,718.94, -86.51 (-1.11%)
NYSE Composite: 23,865.42, -119.58 (-0.50%)
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