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US Equities continue their rally back towards all-time highs but under the hood AI stocks are seeing increased volatility (Oracle -25.6% in the last month, and CoreWeave -36.8% in the ten days). Meanwhile secondary employment data continues to deteriorate but the OIS only prices 64% chance of a 25bp cut at the next FOMC meeting on 10th December.

ADP data indicates jobs declined by an average of 11,250/week over the four weeks through Oct 25.
“Official Nonfarm Payrolls Will Show a Decline of 50k in October Due to a Large Hit from the Government Deferred Resignation Program” – Goldman
Young adult unemployment at an all-time high going back to 1947. (Chart 1, Bloomberg)

CONTAINER SHIPPING VOLUMES FROM ASIA TO THE US ARE COLLAPSING CARGO SHIPMENTS FROM CHINA TO THE UNITED STATES HAVE DROPPED TO THEIR LOWEST LEVEL IN AT LEAST TWO YEARS
Lumber futures fall to lowest level in over a year. Obviously correlated with home building.
Q3 Revenue Growth, YoY % Change… Palantir +63%, AMD +36%, Meta +26%, Microsoft +18%, Netflix +17%, Google +16%, Amazon +13%, Tesla +12%, Apple +8%, S&P 500 +6%………..
Meanwhile Oracle falls 25.6% in the last month, and CoreWeave (cloud computing company purpose-built for artificial intelligence workloads) falls -36.8% in the last ten days.
Corporate CDS market is saying AI ‘bubble’ watch out. (Chart 2, @gherkinit)

JPMorgan says the next five years could require $5T to $7T in total investment. About $1.5T may come from investment-grade bonds, plus $150B from leveraged finance and up to $40B a year in data-centre securitizations. Even then, there’s still roughly a $1.4T funding gap likely filled by private credit and governments. (Chart 2, Bloomberg)

BESSENT: DON’T BELIEVE TARIFFS ARE A TAX ON CONSUMERS
BESSENT: ‘WE ALREADY HAVE A PROFIT’ ON ARGENTINA SWAP LINE
Data today – German inflation, OPEC monthly report.

Nasdaq closes +2.2% higher, S&P500 +1.5% higher, gold +2.9% higher, but UK bond yields open the day 5bp lower on another set of weak employment data. The headline UK unemployment rate has continued to increase steadily since Labour took power, from 4.2% in the three months to June 2024 to 5.0% in the 3m to September 2025 (highest since 2021), and since July 2024, the number of payroll jobs has fallen by 178,000. This is what happens to unemployment if you pay people more not to work, pay people less to work and tax people more for employing other people to work? (Chart 1, @julianHjessop)
FED’S MIRAN said: – 0.50% cut appropriate for December, 0.25% at a minimum….. Meanwhile the OIS prices 16bp cuts for December. More credit market losses slowly emerging (Chart 2, Bloomberg)
The critical issue of power is gaining traction in the US. Microsoft CEO admitted in an interview on Monday that thousands of GPUs were sitting idle in data centres because there isn’t enough energy to run them. The real constraint isn’t computer capacity, but electricity and space…… Now two state of the art Nvidia data centres stand empty and idle, awaiting electricity availability. (Chart 3, Bloomberg). 10 yr JGB yield closed at highest since June 2008. This is a concern for global bond yields as the debt sustainability story comes back to the forefront (Chart 4, Bloomberg). The US freight recession is deepening: the US truckloads index has fallen to its lowest level since 2014, as fewer goods are being moved across the country.
Data today – German ZEW, US ADP & NFIB Small Business Index data