Markets Likely to Stay on the Sidelines as Uncertainty Looms

- Markets pulled back again on Friday under pressure from the relentless rise in oil prices. Brent crude rose 3.1% to above $116 a barrel, while the S&P 500 fell 0.5%, the Dow lost 1.2%, and the Nasdaq declined 0.2%. Several potential volatility catalysts lie ahead this week: the October 27–28 FOMC meeting, followed by the advance estimate of U.S. third-quarter GDP and September PCE data on October 29. Major political events are also clustered together, with Israel’s general election on October 27 and the U.S. midterm elections on November 3 next week. Key technology companies are scheduled to report earnings as well, including Microsoft and Alphabet on October 28, followed by Intel and SanDisk on October 29. Dates are based on U.S. local time. Friday’s market performance · Economic data and earnings calendar · Israeli general election · U.S. midterm elections

- Ahead of these events, I expect markets to trade largely sideways with a modest upward bias. The semiconductor ETF SOXX has already pulled back to $478.20 as of Friday’s close, just roughly 1.3% above its 200-day moving average of $472.04. I expect that average to serve as a psychological line of defense and support prices in the near term. Still, Korean equities warrant more caution than U.S. semiconductor stocks. On Friday, domestic institutions bought a net KRW 872.2 billion, but foreign investors sold a net KRW 992.8 billion, while net purchases by pension funds and similar investors totaled just KRW 52.8 billion. SK Hynix’s decision to halt consideration of a Solidigm IPO may have improved sentiment, but without sustained buying from foreign investors or pension funds, the Korean market will struggle to overcome its relative disadvantage in investor flows compared with the U.S. SOXX and its 200-day moving average · Korean market investor flows · Solidigm IPO review halted

- On the geopolitical front, the U.S., Ukraine, and Russia have agreed to resume working-level talks, while the U.S. and Iran continue to alternate between diplomatic overtures and military pressure. I have little expectation of a breakthrough in the trilateral talks on Ukraine. Meanwhile, I believe the U.S. is positioning itself to resume attacks on Iran immediately after the midterm elections. That makes volatility around the elections a risk to watch. As for Israel’s general election, my personal view is that its hardline stance toward Iran is unlikely to change significantly regardless of who takes power. With U.S. cooperation, the risk of renewed Israeli attacks on Iran would remain… Agreement to resume working-level trilateral talks · Prospects for November talks · Weekend U.S.–Iran developments · Remarks on expanding airstrikes after the elections

- In this environment, I continue to favor long-term bonds. If Democrats take control of the House in the midterm elections, they could put a brake on the Trump administration’s budget plans, helping ease concerns about a fiscal crisis. Meanwhile, the financing challenges facing pure-play neocloud companies look likely to persist for some time, as Elon Musk suggested in a recent post on X. On October 25, Musk said SpaceX had secured $40 billion in debt financing to purchase GPUs, while claiming that bond-market funding had effectively dried up for companies without substantial revenue outside AI data centers. He added that few of the more than 200 neocloud providers were likely to survive. Ultimately, I believe the focus should remain on companies with strong cash flow. How the composition of Congress could affect fiscal policy · Musk’s post on X · Coverage quoting the post