November 25th Market Overview

Happy Tuesday

Ok, maybe we will get that final end of the year fed cut after all.

Fed rate cut odds jumped from 40% to 83% in five days. Never seen that kind of move outside crisis mode. Williams said rates can come down Friday, then Hassett emerged as the likely next Fed chair today.

Google made the first real move on Nvidia's AI chip business. Reports dropped that Meta is talking to Google about spending billions on their TPUs instead of Nvidia hardware for 2027.

Let's dig in...

Today's Big Picture

Fed Rate Cut Odds Jump From 40% to 83% in Five Days

Rate cut odds went from 40% to 83% in less than a week. New York Fed President John Williams said Friday there's room to lower rates soon. That opened the door. Then Kevin Hassett became the likely next Fed chair - Trump's pick who wants lower rates.

Treasury Secretary Bessent said the announcement comes before Christmas.

Google Takes First Real Shot at Nvidia's AI Chip Monopoly

Meta is talking to Google about buying billions in AI chips for 2027 instead of using Nvidia $NVDA. Google is pitching the same deal to big banks. The Information says Google could grab 10% of Nvidia's revenue if this works. Nvidia fired back, claiming it's still "a generation ahead" and sent a private memo to Wall Street defending its position. Circulating defensive memos? I think the threat is real.

Three Retailers Raise Guidance While Consumer Confidence Tanks

Kohl's $KSS, Best Buy $BBY, and Dick's Sporting Goods $DKS all raised full-year guidance Tuesday. Kohl's posted a surprise profit. Best Buy said people are still buying new tech. But consumer confidence just hit its lowest level since April. People say they're worried. Their wallets are saying something else.

Market Overview

Index Performance

Stock Spotlight

Alphabet $GOOGL ( ▲ 0.07% ) 
hit new all-time highs on the Meta chip news. The stock rallied over 10% in three sessions as its Gemini 3 AI model keeps winning praise.

Nvidia $NVDA ( ▼ 1.81% ) 
dropped on Google competition fears then fought back publicly. The company posted on X that it's "a generation ahead" and sent a private memo to analysts defending against Michael Burry's AI bubble thesis. When you're circulating defensive memos, the threat is real.

Abercrombie & Fitch $ANF ( ▲ 2.87% ) 
crushed Q3 earnings. Hollister grew 16% while the main brand dropped 2%. Company expects Hollister to keep driving sales through the holidays.

Tesla $TSLA ( ▲ 0.84% ) 
European sales got cut in half in October to just 6,964 units. Down 30% year-to-date while the EV market is actually growing. Consumers are choosing Volkswagen and Chinese brands instead.

Big Name Updates

Meta Platforms $META ( ▲ 2.26% ) 
will spend $600 billion through 2028 on AI infrastructure. Zuckerberg believes whoever builds the best AI infrastructure fastest wins the next platform.

SoftBank dropped 10% in Tokyo. Down 44% from its peak, wiping out over $100 billion. Heavy OpenAI exposure turns it into a bet on AI sentiment.

Netflix $NFLX ( ▲ 1.36% ) 
completed its 10-for-1 stock split, leaving the $1,000+ stock club. Shareholders up 89,000% since the 2002 IPO.

Oracle $ORCL ( ▼ 1.47% ) 
got hit by the Google news. D.A. Davidson cut the price target from $300 to $200 on doubts about its $300 billion OpenAI deal.

Other Notable Company News

J.M. Smucker $SJM ( ▲ 0.97% ) 
won't raise coffee prices after Trump rolled back tariffs. They'll eat $75 million in costs instead.

Sandisk $SNDK ( ▲ 3.83% ) 
joins the S&P 500 Friday, replacing Interpublic.

Zoom Communications $ZM ( ▲ 0.63% ) 
beat Q3 estimates, raised guidance, and added $1 billion to its buyback.

Symbotic $SYM ( ▼ 4.04% ) 
beat on revenue at $618 million and landed its first customer outside retail.

Alibaba $BABA ( ▼ 0.19% ) 
cloud revenue jumped 34% on AI demand. Shares still dropped.

Novo Nordisk $NVO ( ▲ 1.31% ) 
weight-loss drug worked in both injection and pill form.

Rocket Lab $RKLB ( ▲ 0.5% ) 
stays Buy at Needham with $63 target. Electron is profitable and Neutron looks strong for 2026.

Sector Watch

Bond Market

The 10-year Treasury yield dropped below 4% for the first time in almost a month. Weak economic data pushed it there. September retail sales rose just 0.2%, missing estimates. Producer prices ticked up 0.3%, matching forecasts. These are the last major inflation reads before the Fed meets December 10.

Today's 10-year auction went fine. Tomorrow brings the $22 billion 30-year sale.

Policy Watch

Fed Chair Search

Kevin Hassett is the frontrunner for Fed chair. He wants lower rates, which is why markets jumped on the news. Treasury Secretary Bessent said Trump will likely announce before Christmas.

The December 10 rate decision is still close despite market confidence. John Williams and Christopher Waller want a cut. Susan Collins and Jeffrey Schmid don't. If Hassett gets named before the meeting, it could tip the scales.

Fiscal Reality

The government spent $689 billion in October. Adjusting for timing quirks, that's flat with last year. The shutdown barely made a dent - it hit less than 5% of spending.

Key numbers:

• October deficit: $284 billion, up $27 billion year-over-year

• Interest on the debt: $91 billion for the month

• Tariff revenue: $33 billion, up 316% from last year

AI Executive Order

Trump signed the "Genesis Mission" order to dominate AI. He compared it to the Manhattan Project. This comes right after Zuckerberg said Meta will spend $600 billion on AI through 2028.

International

Ukraine agreed to a peace deal framework with Russia, per a U.S. official. Details are still being worked out.

Treasury Secretary Bessent said Trump and Xi could meet four times next year. Trump will visit Beijing in April. Xi visits the U.S. later in 2026.

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What to Watch

PCE Inflation Data Wednesday

The Fed's favorite inflation gauge drops Wednesday. A hot number kills the December rate cut immediately. The market is positioned for a cut, so any surprise moves fast.

30-Year Treasury Auction Wednesday

Today's 10-year auction went fine. Tomorrow's $22 billion 30-year sale shows whether bond buyers actually believe rates are coming down.

Dell Technologies Earnings

Watch for comments on corporate IT spending and AI server demand. The PC recovery story lives or dies on enterprise budgets.

Thanksgiving Schedule

Markets closed Thursday. Friday closes early - NYSE and Nasdaq at 1pm, bonds at 2pm. Volume dies Wednesday afternoon, expect choppy moves on thin liquidity.
Thanks for reading 🙂

- John

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