Market Deep Dive: An Affair to Remember

Macro: Hike Risk Meets Huang Risk

Nvidia will be what people remember about this week, but the pressure on risk started in the data, well before the boardroom. Last Friday’s October payrolls came in at 165,000 against a consensus near 65,000, with unemployment slipping to 4.1%, and Tuesday’s CPI confirmed the direction: +0.4% headline and +0.3% core, the third straight 0.3% core reading. That last number carried extra weight, because hours earlier Governor Waller had named 0.3% as the level at which a half-point hike should be discussed. Markets took him at his word. CME pricing for the December FOMC now sits at 88.7% for 25bp and 11.3% for 50bp, the 10-year has climbed to 5.13% from 4.81% a week ago, and DXY is back above 103, +1.6% on the week as a December hike moves from likely to all but certain and 50bp enters the debate. 

It was into that backdrop that the Nvidia story broke. Nvidia spent the week in the headlines over Jensen Huang’s private life, and yesterday it cost him the job he had held for 33 years after his formal resignation was confirmed. The stock suffered double-digit losses on the news and is now down just over 15% on the week. 

So the market has a new problem and an old one. The new one gets its first test on Tuesday, when Nvidia reports without Huang. The numbers are unlikely to be the issue. Investors will be listening for who is running the company and whether the roadmap leaves with the founder. The old one waits until 9 December, and it has more room to get worse. October PCE and the November jobs report both land before the Fed meets, and after this week’s CPI neither needs to be very hot to keep 50bp in the conversation.

Crypto: Long and Wrong

BTC spent the week grinding lower, then gave way overnight. This morning’s low of~ USD 67,500 was the first print under USD 70,000 since 19 August, and ETH lost USD 2,000 on its way toward USD 1,900. 

It was a leverage flush more than a change of view. Liquidations reached USD 1.64 billion in 24 hours, 95% of them longs, with BTC accounting for ~USD 916.5 million. 

What needs to change before this stabilizes: 

• Rates: a December hike is all but certain and the dollar is firming. Both need to turn lower for any relief to last. And with that the likelihood of a 50bps hike. 
• Flows: US spot BTC ETFs have now posted six straight sessions of outflows, taking the total past USD 1.4 billion, and ETH funds are showing the same pattern. Until that streak breaks, there is no marginal buyer to lean on. 

For the time being at least, the levels are doing the talking. The USD 72,000–USD 73,000 zone broke cleanly and we are now at the USD 67,000–USD 68,000 retest. A failure here opens up USD 62,000–USD 66,000 pocket as the next key area.

Looking Ahead: Earnings, a Listing and a Letter to Santa

Next week puts the AI trade’s two biggest tests into three sessions. Nvidia’s results on Tuesday evening come first. Anthropic then prices on Wednesday and starts trading on Thursday as ANT, at USD 70–USD 78 a share and a valuation up to USD 1.4 trillion. A strong debut would say that appetite for AI exposure has outlasted both the sell-off and the Nvidia story. A weak one would say the opposite, and loudly. 

For crypto, the date to mark is 30 November, when MSCI removes Strategy from its indexes. That means passive selling in the market’s largest BTC proxy, and we have no reliable estimate of the size.

It is a little early to be writing to Santa, but we are still hoping for a year-end rally and remain constructive into December. With key levels broken, though, another leg lower may come first. Until rates and flows reverse course, any bounce is relief, not reversal.