Even before the sell-off last week, we’ve all had the feeling of white-knuckling through the fourth quarter.
Anthropic’s (ANTH.PVT) IPO prospectus. Big Tech earnings. Bond yields through the roof. An unexpectedly tall blue wave that lifted the stock market up — and threw it back down.
With volatility (^VIX) running hot, investors are balancing on a knife’s edge between a flywheel of angst — or a bounce.
As Goldman Sachs’ panic gauge suggested, the extremeness may signal more of Friday’s bounce to come.
It’s a new week, and we’ll have plenty of scheduled plot points to guide us.
Of particular note, we’re looking forward to CoreWeave (CRWV) quarterly results on Tuesday and Nebius Group (NBIS) and Cerebras Systems (CBRS) on Thursday, a few companies caught up in the data center destruction post-election.
What they have to say about their plans and outlook, the debt markets they’ve been tapping, and the health of their business will be at the top of mind.
Good timing to have that a mere week after midterms.
On the economic calendar, we’re in inflation mode once again, especially after that hot jobs report.
We’ll kick off the week with the New York Fed’s consumer inflation expectations before getting some actual data on Tuesday — and wholesale inflation figures on Friday to close the week.
2 big AI narratives keep wrestling with each other for control of the market
What’s more important: the chip and AI infrastructure trade or the companies that actually provide AI?
As we wrote in the Morning Brief on Friday, “A data center slowdown is bad for the stock market’s AI engine,” and “A data center slowdown is good for Big Tech’s profit machine.”
Can Google (GOOG, GOOGL), Microsoft (MSFT), and Amazon (AMZN) deliver AI at least some productivity and tools to clients with the compute they have — and make a lot of money doing so, flipping the switch from growth and scale to monetization?
Maybe! Those companies are healthily in the green since the election, doing just fine amid the broader sell-off. And while Tesla (TSLA) has sold off, SpaceX (SPCX) is mostly doing fine.
As DataTrek’s Nicholas Colas wrote on Thursday, you need to look at the entire week, not just the bloody Thursday, to see the bigger picture (small as that is). And it’s pretty clear that this may be reflected in the broad indexes, but it’s mostly about chips.
“As for what the market is ‘saying’ over the last 2 days, we believe the moves are AI-centric, not augurs of a looming recession,” Colas wrote, also noting that Google and Co. are doing fine.
