1. US yields climbed as inflation data boosts chances for larger Fed rate hike.

Just when you thought that it was safe to get back in the risk-taking ring, a hot CPI ruined the party.

Deutsche Bank expects a quarter point at each of the next three meetings.

However, even without these developments, prospects for further turbulence remain uncomfortably high.

2. Goldman expects another wave of selling from risk-parity funds.

Last week’s rise in volatility should continue to radiate through markets as risk-parity funds respond by reducing nominal risk.
Risk parity advisers are set to unload about $31 billion of S&P 500 futures over the next week if the market stays flat, according to estimates from Goldman Sachs’s trading desk.
The pressure is entirely on US stocks.

Meanwhile, the crisis at Nvidia trains an even brighter than normal spotlight on its quarterly earnings report scheduled for next week.
The other main catalyst tech investors are watching is the Nasdaq debut of Anthropic PBC following its mega-IPO, also due next week.

Below: Nasdaq 100 remains 9% below peak.

3. The Nasdaq is now cheaper than the Russell 2000.

Since Oct. 1, the Nasdaq and Mag Seven have both lagged small caps amid concerns that enthusiasm for AI was running ahead of reality — even before the Blue Wave US midterm election raised the question of stepped-up regulation. But big tech’s earnings profile is substantially stronger, and after the drawdown of the last month or so valuations have reset.
The Nasdaq 100 forward price-to-earnings ratio has slipped beneath 2022 lows.

4. AI demand remains extremely strong.

According to UBS, annualized dollar growth in cloud revenue across hyperscalers and neoclouds nearly tripled from the first quarter to the third quarter against a revenue base above $500 billion.
The bullish case for AI doesn’t make every company in the space attractive — it just places funding and balance sheets under the microscope. The days of just blindly owning AI beta are over, and the time for quality is now.

Below: GPU rental prices are melting up and are pointing to a clear demand inflection.

5. Betting market probabilities on France’s 2027 presidential race.

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