Author: Igor Kuchma

Many were hoping that a strong earnings report from Nvidia would help turn sentiment around. The company’s numbers for Q3 FY2026 indeed didn’t disappoint, yet the S&P 500 index is still on track for its worst November since 2008.

So what’s going on?

First, let’s talk about Nvidia’s results. Revenue hit $57 billion, up 22% from last quarter and 62% from a year ago. But most importantly, the company expects around $65 billion in revenue next quarter.

Furthermore, Nvidia CEO Jensen Huang argued that AI demand is real: companies are moving to GPUs, new AI applications are emerging, and “agentic AI” will need even more computing power. 

The takeaway, thus, is that Nvidia stock price growth is driven by structural shifts in AI, not hype.

So why didn’t the indexes soar?

Because uncertainty remains.

In particular, there’s still no clarity on how long Nvidia can sustain this kind of explosive growth. Infrastructure constraints and a heavy reliance on a few major customers raise concerns, especially at a time when consumer sentiment is deteriorating.

On top of that, the broader fear of an AI bubble hasn’t gone away. Investors see companies boosting their CAPEX just to stay competitive, in some cases relying on debt to do so — for example, Oracle. Finally, there is a worry that weakness in just one key player could ripple across the entire sector, and let’s not forget about still-high valuations.

As a result, investors have been trimming their exposure to riskier assets, including Bitcoin, which last week dropped to nearly $80,000.

And then there’s the rapid deterioration of U.S. liquidity. Repo rates are climbing, reverse repo balances are plunging, and funding costs for banks and hedge funds are spiking. If leveraged investors are forced to unwind positions, it could lead to waves of forced selling, creating a domino effect across the market.

Whether this will lead to an already long-forecasted market crash depends, of course, on how circumstances unfold. One of the factors to watch will be macro data in the U.S. and Fed rhetoric, especially regarding liquidity issues.

There’s less than a month left until the Fed’s final meeting of the year, and investors’ hopes for another rate cut are fading fast, at least according to the CME FedWatch Tool. Back in October, markets were pricing in almost a 100% chance of a cut; now that probability has dropped below 45%.

Even the end of the longest U.S. government shutdown in history didn’t help, and no wonder. Since no data was collected during that period, we won’t receive a flood of new reports, which means the Fed will have little new information on which to base its monetary policy decisions.

The rhetoric of Fed officials doesn’t help. For instance, the Kansas City Fed President warned that further rate cuts could entrench higher inflation rather than support the labor market. Meanwhile, Cleveland Fed President Beth Hammack indicated that she does not favor another rate cut in the near term.

This week, the speakers include Philip Jefferson, Christopher Waller, Michael Barr, Stephen Miran, and Lisa Cook. If they collectively signal that inflation concerns outweigh worries about slowing employment, risk appetite could continue to decline, hurting the S&P 500 index along the way.

The same story applies to the minutes from the last FOMC meeting. 

With Chair Powell making it clear in the press conference that we shouldn’t assume a December rate cut, the minutes are likely to come across as hawkish. As for the long-delayed September jobs report, which is set to be released this week, its impact should be fairly limited given that the data is already somewhat outdated.

Last but not least, the fact that Trump went “TACO” again and exempted food products from tariffs could actually be a worrying sign. At first glance, it appears to be a move to curb inflation and support purchasing power. But it might really suggest that everyday consumers are feeling significant pressure.

The good news is that expectations for rate cuts have dropped quickly, although they could rise just as fast.

The week kicked off on an upbeat note for the markets. 

What initially appeared to be the start of a correction in the S&P 500 and Nasdaq barely took off. Buoyed by hopes of a quick end to the record US government shutdown and Trump’s tweet hinting at “dividends” for Americans financed by trade tariffs, sentiment had already returned to risk-on by Monday.

But how solid are these drivers in the long term?

Starting with Trump’s proposal of an equivalent to helicopter money, “saying it doesn’t mean doing it.” Some suggest it may have been aimed more at boosting market confidence — and perhaps bolstering his own declining popularity — than signaling real action. Optimism based purely on expectations could be fleeting.

Given the fact that tariffs are basically an import tax, borne mainly by U.S. companies and consumers, what Trump called a “dividend” is more like government-backed cashback. The inflationary pressures that come with tariffs will not disappear.  Markets would gain much more confidence if tariffs were actually eliminated. 

As for the shutdown, Democrats caved, and the Senate passed a bill to end the longest shutdown in U.S. history. The bill, pending House approval, would fund the government through January 30, 2026, reinstate furloughed employees, and guarantee back pay. Most of this is likely already priced in by the market.

So, have the markets peaked?

That depends on how circumstances evolve. Optimism is also riding on hopes for a more dovish Fed amid a cooling labor market. In October, U.S. companies cut 153,000 jobs, almost triple last year’s number. Tech and logistics layoffs pushed total job losses in 2025 past one million, the highest since the pandemic.

If Fed members signal in upcoming speeches that a larger rate cut may be necessary at the December meeting, it could boost not only gold prices but also overall market sentiment. On the other hand, if they insist that more data is needed before taking action, risk appetite could cool, punishing risky assets.

Unlike XAUUSD or the S&P 500, which have risen since the start of the year, oil prices have dropped nearly 15%, putting producers in a challenging, though not critical, position. The issue isn’t weak energy demand; on the contrary, demand remains strong, especially with the growth of artificial intelligence. The real problem is oversupply, with forecasts even pointing to a potential surplus.

For example, the IEA predicts a surplus of 4 million barrels per day by 2026. According to Vortexa, oil tankers are currently carrying a record 1.3 billion barrels at sea. Even OPEC+ acknowledges the market is entering an oversupply situation, despite tighter U.S. sanctions on Russian oil.

So, is there any chance that the trend will reverse?

Fundamentals suggest it might.

It all begins with OPEC+’s decision to slow the pace of production increases next year. Specifically, eight member countries plan to add about 137,000 barrels per day in December, then pause any further increases in January, February, and March. Officially, this is attributed to the usual seasonal dip in demand, but it also seems intended to ease concerns about oversupply.

Geopolitics could also push prices higher. In particular, a potential U.S. military operation in Venezuela could have a significant impact, given that Caracas produced 1 million barrels per day in September. President Trump has also raised the possibility of sending troops to Nigeria, one of Africa’s largest oil producers, or even carrying out airstrikes. Meanwhile, in the Middle East Iran remains a black swan.

Finally, oil could benefit from the global economy’s resilience. According to World Economics, the Global Sales Managers’ Index reached 51.5 points in October, signaling moderate expansion. While 57% of companies (28 out of 49) have issued negative EPS guidance for Q4 2025,matching the five-year average but below the ten-year average of 61%, this suggests that corporate outlooks aren’t overly pessimistic.

China has released its GDP data for the third quarter, showing year-on-year growth of 4.8%. Compared to the U.S. or Canada, the figure seems impressive. However, if we analyze the trend over recent quarters, the picture is less optimistic: growth was 5.4% in the first quarter, 5.2% in the second, and has now fallen again. 

Even so, the CSI 300 has not reacted much: has it become as resilient as the S&P 500?

Not exactly. First, the slowdown was expected. Second, analysts had predicted something worse, around 4.7%. A rebound in industrial production and stronger exports, driven by increased shipments to Southeast Asia and Africa, helped soften the blow, although it is unclear how long that support will last.

As for the key takeaway for investors, the data suggests that China’s economy remains on track. When combined, the figures from January to September show a 5.2% year-on-year growth — meaning the government’s annual target of around 5% still looks well within reach. And that’s the double-edged sword.

On the one hand, it’s cheering that the trade war with the US doesn’t affect China that much yet. On the other hand, stronger-than-expected data could delay the introduction of new stimulus measures — something markets have been waiting for quite a while, and which has been a key factor supporting the CSI 300 index.

So, will the government announce new support measures?

There is still a chance. Although GDP has not disappointed too much, domestic demand remains weak and lags behind overall GDP growth, even though it was supposed to be the main driver of the economy this year. Then there is the troubled real estate sector: house prices fell in September at their fastest rate in 11 months. 

And fixed-asset investment hasn’t been particularly encouraging either. All in all, there seem to be more factors in favor of a new stimulus package than against it. Perhaps some clues will emerge at the upcoming plenary session of the CPC, where Beijing is expected to outline the main lines of its next five-year plan.

Friday brought fresh data on the Fed’s favorite tool for monetary policy decisions — the PCE index, showing a 0.26% month-over-month and 2.74% year-over-year (previously 0.16% m/m and 2.60% y/y) rise in August. Expectations were 0.3% m/m and 2.7% y/y. The S&P 500 and Dow Jones jumped slightly, and the DXY pulled back.

The figure was lower than expected, so why worry?

These forecasts had already been set at the upper end, so there is not much reason for real optimism. It is also worth remembering that the Fed’s target is 2%, but instead of getting closer, the U.S. seems to be moving in the opposite direction so far. And it is not just about a stronger economy, but mostly trade wars.

And those, for now, are only getting hotter. For example, it was announced last week that, starting this Wednesday, the U.S. will impose 100% tariffs on branded pharmaceuticals, 25% on trucks, and up to 50% on furniture. Strikingly, investors don’t seem particularly concerned, and markets keep climbing.

What does the Fed say?

In his speech last week, Powell noted that tariffs are more likely to have a one-off effect on prices than to fuel long-term core inflation. At the same time, he acknowledged that the Fed faces a “difficult situation” in deciding how much and how quickly to cut interest rates, given the risk of renewed inflation.

This concern appears to be shared by the entire FOMC. The president of the Kansas City Fed said monetary policy was “on the right track,” while his counterpart in Chicago warned of the risks of cutting too quickly, and St. Louis pointed out that further easing could make policy overly accommodative.

Still, dissenting voices remain — and interestingly, they are all Trump appointees. Stephen Miran, for instance, is calling for two more half-point cuts before year-end. Michelle Bowman, the Fed’s current vice chair for supervision and a potential future chair candidate, has also taken a more dovish stance.

This content is for informational purposes only and does not constitute financial, investment, or other professional advice. It should not be considered a recommendation to buy or sell any securities or financial instruments. All investments involve risk, including the potential loss of principal. Past performance is not indicative of future results. You should conduct your own research and consult with a qualified financial advisor before making any investment decisions.

The week of central banks hasn’t brought much surprise to investors.

Starting with the Japanese central bank, in line with expectations, it has kept its official interest rate at 0.5%. Still, there was something that initially spooked the markets: the announcement that it would begin selling ETFs worth around ¥330 billion per year, along with real estate funds (J-REITs) worth ¥5 billion.

Later, as Kazuo Ueda mentioned, the bank could resume rate hikes if its economic and inflation forecasts hold, the yen strengthens, and government bond yields rise. If this trend continues, it could trigger capital outflows from U.S. markets to Japan, leading to a correction in the S&P 500, Dow Jones, and other indices.

The Bank of England also kept rates unchanged — at 4%. Although inflation remained high in August, at 3.8% year-on-year, and is expected to rise again in September, policymakers are betting on a gradual decline toward the 2% target. This suggests that rate cuts are unlikely in the short term, supporting the GBP/USD pair.

Finally, the Fed did exactly what the markets had anticipated: cut rates by 25 basis points to between 4.0% and 4.25%, citing emerging tensions in the labor market. The only dissent came from Stephen Miran — appointed under Trump and a Fed member until February 2026 — who advocated for a deeper cut of 50 basis points.

What cheered the mood was that the rate forecasts for 2025 were revised downward from 3.9% to 3.6%, implying at least two more cuts. For 2026, the forecasts were lowered from 3.6% to 3.4%. On top of that, GDP growth forecasts were revised upward: 1.6% for 2025 (up from 1.4%) and 1.8% for 2026 (up from 1.6%).

The only drawback was that inflation expectations for 2026 rising 0.2 points to 2.6%. 

As for why the Fed’s monetary policy outlook is now more dovish despite ongoing pricing pressures: on one hand, the central bank must support full employment; on the other, there may be hopes that the impact of tariffs won’t be short-lived. There’s also a chance the Fed gave in to pressure from Trump.

The latter theory gains weight from the fact that, despite the Fed’s dovish stance, Treasury yields still rose.

This content is for informational purposes only and does not constitute financial, investment, or other professional advice. It should not be considered a recommendation to buy or sell any securities or financial instruments. All investments involve risk, including the potential loss of principal. Past performance is not indicative of future results. You should conduct your own research and consult with a qualified financial advisor before making any investment decisions.

A week ago, there was still a chance that the Fed would keep rates unchanged at its September 17 meeting. The probability was not high, perhaps 10% at best, but it existed. Since Friday, however, that chance has been reduced to zero, shifting the debate to whether the Fed will cut 25 basis points or go straight to 50, for the sake of the S&P 500.

What triggered this change in market expectations was weak labor market data. Instead of the 75,000 jobs expected in August, only 22,000 were created, down from 79,000 in July. As for unemployment, it rose from 4.2% to 4.3%, which is in line with expectations. All in all, the situation is clearly deteriorating.

To make matters worse, June’s figures were revised downward for the second time. Initially, the figure was reduced from 147,000 to 14,000, but now it has been revised again to -13,000, marking the first monthly job loss since the pandemic. How such a drastic revision came about remains a mystery.

This puts the Fed in a difficult position. Powell has been talking up the economy, but reality is undermining his message. Like it or not, the Fed has to act if it wants to stop the bleeding. The thing is, the worsening labor data may have been caused mainly by trade wars, something that lowering interest rates won’t fix.

Ok, the Fed will cut rates in September. But by how much?

The answer could depend on inflation data due out this week. If core CPI falls to around 3%, or even closer to 2%, the odds of a 50 basis point cut could rise significantly. Conversely, if core CPI surprises on the upside, the Fed could opt for a more moderate move, dampening investors’ bullish momentum.

And the latter scenario seems more likely. Consensus forecasts point to a 0.3% monthly increase in the US core CPI, which would keep the annual rate at 3.1%, mainly due to Trump’s tariffs. In that case, the dollar index could strengthen slightly, while Treasury yields could rise slightly, and the S&P 500 could experience a correction.

This content is for informational purposes only and does not constitute financial, investment, or other professional advice. It should not be considered a recommendation to buy or sell any securities or financial instruments. All investments involve risk, including the potential loss of principal. Past performance is not indicative of future results. You should conduct your own research and consult with a qualified financial advisor before making any investment decisions.

Thousands of companies publish quarterly results worldwide, but few attract as much attention as Nvidia (NASDAQ:NVDA). And it’s easy to see why: the chip and GPU giant now accounts for almost 8% of the S&P 500, meaning if it disappoints, the whole market could suffer, and if it exceeds expectations, it can help boost the sentiment.

This time, the results were a mixed bag. On one hand, the numbers look solid: in the second quarter, the company reported record revenue of $46.7 billion, up 56% year-over-year, driven primarily by its AI-focused data center business ($41.1 billion). For comparison, Wall Street was expecting around $46.23 billion.

In terms of earnings per share, the company also exceeded forecasts, coming in at $1.05 compared to the expected $1.00. Net revenue, on the other hand, skyrocketed 59% to an impressive $26.4 billion. However, despite all this, Nvidia shares fell after the report was released and have yet to recover.

The decline wasn’t just because investors had grown accustomed to blockbuster numbers. Instead, it came from the absence of H20 chip sales to China-based customers during Q2. To make matters worse, reports indicate that Chinese authorities have advised local firms to avoid using Nvidia’s H20 chips altogether.

The reaction might have been harsher had Nvidia not simultaneously announced a record $60 billion share buyback program. However, the fact that this was not enough to stem the sell-off suggests that investors seek more clarity on demand trends and export restrictions, especially in the context of trade wars.

So, has Nvidia already peaked?

It seems that clouds are gathering. Beyond geopolitical risks, concerns are growing about valuations in the AI sector. Even Sam Altman has warned of possible over-enthusiasm, and a recent MIT study has revealed that only 5% of companies currently using AI are experiencing revenue growth as a result. 

Meanwhile, competition is intensifying: Alibaba recently launched its own AI chip. Even so, major banks, including JPMorgan, BofA Securities, Citi, and Jefferies, have raised their price targets for Nvidia to over $200 per share, betting that the AI boom will continue regardless of what happens.

This content is for informational purposes only and does not constitute financial, investment, or other professional advice. It should not be considered a recommendation to buy or sell any securities or financial instruments. All investments involve risk, including the potential loss of principal. Past performance is not indicative of future results. You should conduct your own research and consult with a qualified financial advisor before making any investment decisions.

Energy markets have been some of the most sensitive to geopolitical tensions in recent years. In 2022, gas and oil prices skyrocketed after the conflict in Ukraine broke out. Once most of that initial impact had settled, tensions in the Middle East sparked another round of volatility across commodities.

However, the effect proved to be temporary: as nothing has happened, Brent crude is trading below $70 per barrel again. This is good news for central banks, as lower energy prices help combat inflation. It also provides a welcome boost of optimism for stock markets such as the S&P 500 and the Dow Jones.

Is another upward surprise possible?

Perhaps, but only if something serious disrupts supply again. One of the risks in this regard could be Iran. If the nuclear agreement is not reached before the end of August and tougher sanctions are imposed on its oil exports, prices could subsequently see an upside, even without bombs falling on Tehran.

As for Venezuela, on paper, Caracas has the world’s largest oil reserves, but in reality, it barely contributes to global supply. Years of sanctions plus a lack of modern technology mean production is a shadow of what it could be. So even if U.S.–Venezuelan relations sour further, it probably won’t move the needle much.

What about OPEC+?

One might assume that the cartel would be interested in keeping oil prices as high as possible and, with that goal in mind, if they did not cut production, they would at least not increase it. But they did the opposite: +548,000 barrels per day starting in August and another 547,000 barrels per day beginning in September.

In theory, this puts the market in a good spot for oil bears. Unless a major geopolitical crisis disrupts supply from key exporters while global demand holds steady, there’s little reason for oil to climb back to $80 a barrel. But that doesn’t mean the situation can’t change dramatically in the coming weeks or months.

This content is for informational purposes only and does not constitute financial, investment, or other professional advice. It should not be considered a recommendation to buy or sell any securities or financial instruments. All investments involve risk, including the potential loss of principal. Past performance is not indicative of future results. You should conduct your own research and consult with a qualified financial advisor before making any investment decisions.