Markets have bounced back strongly this week. The S&P 500 is now just 1.5% from record highs, and the Nasdaq is recovering well following its pullback.

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Rate Cut Expectations

The main driver behind this rally was a shift in Federal Reserve rate cut expectations. Markets are currently pricing in a quarter-point rate cut for December, with only a 25% chance of another reduction in January. This week's economic data will be crucial in shaping expectations going into 2026.

Key Economic Data This Week

Several important data releases are scheduled for this week.  The PCE inflation data — the Fed's preferred inflation measure — for September will finally be released on Friday and could have the biggest impact on December and January rate decisions. The ADP jobs report and weekly jobless claims will also be released, while the non-farm payrolls report has been delayed again.

Global Manufacturing Snapshot

Today also kicks off a busy week of manufacturing data releases. Global PMI numbers are due across the board, including figures from the Eurozone, UK, Germany, and the US this evening. These reports will provide a critical snapshot of global economic health and could help reveal the impact of the US trade tariffs.

Gold Breaks Higher

Gold made a significant move on Friday, breaching the key $4,200 level after consolidating last week. The precious metal has followed through today, and the $4,400 level now looks achievable if buying pressure continues.

Bitcoin Under Pressure

Bitcoin has given up last week's modest gains and seen substantial selling pressure. A significant drop of about $4,000 occurred during Asian trading this morning — a notable decline for an Asia session. The key level to watch is $84,000, with potential support at $80,000 (the lowest level since March).

Market Insights

‍Watch Mike Smith's analysis of the week ahead in markets.

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Key Economic Events

‍Stay up to date with the key economic events for the week.

Nvidia's AI computing dominance is facing its most serious challenge yet, with Google strengthening its position as an equal competitor in the AI chip market this week.

Google’s newest AI model, Gemini 3, was announced to be powered by Google’s in-house tensor processing units (TPUs) a few weks ago. A blow to Nvida, but not a huge shock.

However, this week it was announced that Google is now negotiating with Meta to supply billions of dollars' worth of its TPUs for Meta's data centres in 2027.

Google is reported to be pitching its cloud customers on TPU purchases, claiming it could capture as much as 10% of Nvidia's annual revenue.

Nvidia Shares fell 2.6% following the Google-Meta report and are down 10% for the month, erasing more than $500 billion in market value.

For Google, this represents pure upside—monetising technology development while a competitor helps fund the operation.

Meta also stands to benefit from presumably lower costs compared to Nvidia's premium-priced GPUs.

Nvidia maintains it is "a generation ahead of the industry" and emphasises that it offers greater performance, versatility, and fungibility than application-specific integrated circuits (ASICs) like Google's TPUs.

Yet the very act of addressing these concerns—after years of untouchable dominance—may signal the pressure mounting on the AI chip leader.

For now, the crown remains Nvidia's. But with Google emerging as a credible challenger and other cloud computing hyperscalers diversifing their chip sourcing, that crown sits considerably less comfortably than it did a few weeks ago.

Tesla's Pivot Eroding EV Dominance

Tesla's dominance in the electric vehicle market is eroding across all three major global markets.

European sales collapsed 48.5% in October compared to the previous year, with year-to-date sales down roughly 30% even as the broader European EV market surged 26%.

China's once-reliable market has similarly soured, with October deliveries hitting a three-year low, falling 35.8%.

In the U.S., October sales dropped 24% after a brief September surge driven by buyers rushing to capture expiring tax credits.

In Europe, Chinese automaker BYD now significantly outsells Tesla, while legacy manufacturers like Volkswagen saw sales through September reached 522,600 units—triple Tesla's European sales.

Tesla's response has been to pivot toward robotaxis and humanoid robots rather than new consumer vehicles.

CEO Elon Musk claimed Tesla will be doubling its Austin's fleet to 60 vehicles by year-end, although this is also short of his October prediction of 500.

Despite these challenges, Tesla maintains a $1.4 trillion valuation, making it the world's tenth most valuable public company by market cap.

Fed December Rate Cut Flips to Certainty

Market odds for a December rate cut have flipped to above 80%, after dramatically dropping down to 42% just last week.

JPMorgan Chase has reversed its forecast entirely. After briefly predicting the Fed would delay cuts until January following delayed September jobs data, the bank now expects quarter-point reductions in both December and January.

The shift came following seemingly sudden supportive commentary from key Fed officials. New York Fed President John Williams made a case for additional rate cuts, while San Francisco Fed President Mary Daly also came out to publicly support cuts due to labour market concerns.

The sudden shift in communication means the Fed officials may have decided that market stability concerns now outweigh inflation risks — at least for now.

Markets found support last Friday after what was the worst week for global markets since Liberation Day.

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Shortened Thanksgiving Week

‍This week, Thanksgiving Day impacts the US trading schedule, affecting both liquidity and data timing. Despite the shortened week, it's still packed with key releases. The PCE index, US PPI, retail sales, GDP, and weekly jobs figures are set for a concentrated release on Wednesday, before the Thursday holiday.

‍Australian CPI in Focus

‍Australian CPI data also drops on Wednesday, and it's shaping up to be a crucial number. With strong signals from the RBA indicating a Christmas interest rate cut is unlikely, this inflation reading could either reinforce or challenge the RBA's stance — a must-watch for any surprises that might move rate expectations.

‍Gold Coiling

‍Gold has established a strong base above $4,000. The chart shows six consecutive weekly candles testing support around $4,065, with clear rejection of downside moves. This pattern suggests insufficient selling pressure to push prices lower, potentially setting the stage for a move back toward $4,200-$4,250 if buyers step in.

‍Bitcoin Under Pressure

‍Bitcoin is experiencing another wave of selling. The weekend brought some respite with a bounce off $84,000, but the current support level sits at $82,000—a level we haven't seen since April. While there may be short-covering opportunities toward $92,000, the buyer momentum looks weak, and another test of $82,000 support appears equally likely.

Market Insights

Watch Mike Smith's analysis for the week ahead in markets.

Key Economic Events

Stay up to date with the key economic events of the week.

NVIDIA delivered a resounding answer to AI bubble concerns this morning, reporting third-quarter earnings that surpassed Wall Street expectations and signalling sustained momentum in AI infrastructure spending.

The chip giant posted adjusted earnings of $1.30 per share on revenue of $57.01 billion, beating analyst estimates of $1.26 EPS on $54.92 billion.

Revenue surged 62% year-over-year, with the critical data centre segment delivering $51.2 billion against expectations of $49 billion.

More importantly, NVIDIA projected fourth-quarter revenue of approximately $65 billion, significantly above the $61.66 billion consensus, indicating demand for AI accelerators shows no signs of cooling.

The company's next-generation Blackwell architecture is seeing unprecedented demand from cloud providers building out massive AI infrastructure. CEO Jensen Huang simply stated: "Blackwell sales are off the charts, and cloud GPUs are sold out."

NVIDIA shares had declined nearly 8% in November as prominent investors raised concerns about AI valuations. Peter Thiel's Thiel Macro completely exited its approximately $100 million position, while SoftBank divested $5.8 billion in holdings.

However, the continued capital expenditure by Big Tech customers — Microsoft alone spent nearly $35 billion in its most recent quarter, with roughly half allocated to chips — suggests the buildout phase is far from complete.

Beyond data centres, NVIDIA’s gaming revenue reached $4.3 billion (up 30% year-over-year), professional visualisation generated $760 million (up 56%), and automotive/robotics sales hit $592 million (up 32%).

The near-term trajectory remains strong, with the company continuing to capture the lion's share of AI chip demand in a market showing no signs of saturation.

Experts Split on Bitcoin's Trajectory

Bitcoin is at a vital inflection point, trading around $92,300 after briefly dipping below $90,000 for the first time in seven months.

The pressure stems from retail selling, leveraged trading liquidations, and institutional positioning, creating an environment where experts are split as to whether this is the end of the cycle or just a healthy pullback.

Glassnode data show approximately 65,200 BTC—valued at roughly $6.08 billion—was sold at a loss within 24 hours, indicating capitulation among short-term holders who bought near recent highs.

Yet, while retail investors panic-sell, wallets holding at least 1,000 BTC have increased to 1,384, a four-month high. Over 102,000 whale transactions exceeding $100,000 and 29,000 transactions over $1 million have been made this week, potentially making this the most active whale week of 2025.

This accumulation pattern during fear-driven selloffs has historically preceded medium-term recoveries (though past performance offers no guarantees).

For now, the market remains on a knife's edge, with high volatility seemingly the only certainty.

Fed Still Faces Divide as Data Starts Flowing

The Federal Reserve stands at a crossroads heading into its December 9-10 meeting, with internal divisions threatening to derail what was considered a near-certain third consecutive rate cut.

The released minutes of the October FOMC exposed strongly differing views within the Fed about the December policy decision, with many suggesting no more cuts are needed through the end of 2025.

Complicating things further is the data pause from the recent 44-day government shutdown. The Labor Department announced that October and November employment data won't be released until December 16 — six days after the FOMC meeting concludes — depriving the Fed of crucial labor market information.

Fed Chair Jerome Powell stated that a December rate cut is "far from a foregone conclusion," and there is "a growing chorus" among officials to "at least wait a cycle" before cutting again.

This represents the highest level of internal discord during Powell's tenure, with predictions of potentially four or five dissents at the December meeting — the most since 1992.

The December meeting will reveal whether the Fed can maintain the credibility needed to navigate a U.S. economy caught between stubborn inflation and (seemingly) weak labour market.

Every data release and Fed official comment between now and then will move markets as investors search for clues about the Fed’s next move.

Last week brought some relief as markets found support following the retreat from record highs... with the recent crypto crash being a notable exception.

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Bitcoin Breaks Below $100K

Crypto markets are under significant pressure after Bitcoin crashed through the psychological $100,000 level. Currently trading around $94,650, Bitcoin has fallen to its lowest point since May. The $94,000 level appears critical; if it fails, we could see Bitcoin slip back into the $80,000 range and potentially enter bear market territory.

Fed Minutes and Rate Cut Signals

The Federal Reserve minutes are due this week, and they could provide crucial insight into the timing of rate cuts in 2026. Markets have already priced in a likely December cut, but the January 2026 cut that was initially expected may be in jeopardy. Pay attention to the Fed speakers scheduled throughout the week—their comments could help clarify the path forward on monetary policy.

Strong Earnings Season Winds Down

We're in the final stretch of what's been an exceptionally strong earnings season, with 82% of companies beating EPS expectations and 76% surpassing revenue forecasts. This week features some heavyweight reports, most notably Nvidia reporting Wednesday after the bell. Major retailers Target and Walmart will cap things off, giving us a clear picture of consumer health heading into the holidays.

Market Insights

Watch Mike Smith's analysis for the week ahead in markets

Key Economic Events

‍Stay up to date with the upcoming economic events for the week.

The longest government shutdown in US history has finally ended after 42 long days.

After a month and a half of political theatre, seven Democrats and one independent broke ranks and voted with Republicans to pass a stopgap measure. The Senate went 60-40, the House followed 222-209, and Trump signed it hours later.

The legislation includes three-year appropriations for the Agriculture Department, FDA, military construction, veterans affairs, and congressional operations, along with restoration of pay for federal workers and reversal of Trump administration layoffs through January.

However, the most contentious issue, healthcare subsidies, has been kicked down the road to a December Senate vote.

COVID-era ACA subsidies expire at year-end. When they do, premiums for the average subsidised household will more than double from $888 to $1,904 per year, with an estimated 3.8 million people losing coverage entirely.

If the December vote fails, which is likely considering how far apart the two parties are on the topic, we could see a new shutdown begin in January.

What Happens Next?

This Week:

• Federal employees return to work.
• Paychecks start flowing again.
• SNAP benefits get restored for 42 million people, though heating assistance won't come back for weeks.
• National parks reopen.
• Airports start to go back to normal.

December:

• Senate votes on healthcare subsidies. It will probably fail.
• Premium notices continue to be sent showing 2026 costs doubling.

January 30:

• Government funding expires.
• We do this whole thing over, except now the healthcare subsidies have already expired.
• If Republicans and Democrats remain divided on budget priorities, another shutdown will likely begin.

By the Numbers:

Over the past 42 days, approximately 750,000 federal workers have been furloughed. Another two million worked without pay. Over 42 million had their food assistance delayed. And the FAA cut flights by 10% because air traffic controllers stopped showing up to work.

Further concern is the "data blackout" that has hampered Federal Reserve decision-making. Key economic indicators, including jobs reports, were suspended, leaving the Fed blind during an active rate-cutting cycle.

Meanwhile, separate analyses from Challenger, Gray & Christmas showed layoffs surged 183% in October, which would make it the worst October for jobs since 2003.

The Bottom Line

Today’s deal ended the shutdown, but it didn’t actually solve anything. The deal essentially kicks the can down the road to January while leaving the healthcare crisis unresolved.

With both parties divided on healthcare and spending priorities, and Trump lacking a comprehensive plan to address rising premiums and high deductibles, a resolution in the December vote seems unlikely.

If no compromise is accepted by the time Government funding expires on January 30, another shutdown is almost inevitable.

Impact of Australian Jobs Reports and U.S. Shutdown End on the Aussie