Investors will want to see real AI productivity gains to keep momentum

EU mid-market update: Market cheers Nvidia results as it insists AI is not in bubble but investors will want to see real AI productivity gains to keep momentum; Patience at current valuations runs thin.

Notes/observations

- Nvidia stepped up to the moment, doubling down on rhetoric that demand is exceeding expectations and backed it up with results that once again beat consensus, including guidance (Q4 Rev $65.0B v $60.3Be). Recent sentiment that kept markets subdued, flipped, led by tech and Nvidia, pushing US futures higher and subsequently Asian and EU markets. Jensen pointed to sold out Cloud GPU’s and still in ‘early innings’ of AI cycle, noting Nvidia is uniquely positioned to benefit from entire sector.

- Nvidia management stressed that guidance assumes no China data center compute revenue and that geopolitics blocked sizeable China orders this quarter, even as agentic AI shows strong customer ROI and landmark “AI factory” deals with AWS/Humane, KSA, Anthropic, and OpenAI support a $3–4 trillion annual AI infra build opportunity by 2030. They argued this is not an “AI bubble,” pointing to rising hyperscaler capex toward ~$600 billion in 2026, a multi-year lead in inference, extended GPU lifetimes, and continued buybacks plus expected strong returns from strategic AI investments.

- Sporadic catch up of US data is likely to disrupt thinking of Fed, as we get the delayed Sept US jobs report today, then the Nov report in mid-Dec (after Fed decision). Oct release is being skipped.

- Kremlin spokesperson Peskov said there are currently no Russia-US consultations on Ukraine, signaling no active bilateral diplomatic track from Moscow’s perspective. This comes as reports suggest the Trump administration is working on a new 28-point plan with Russia to end the war, highlighting a growing gap between public Kremlin messaging and behind-the-scenes peace-plan chatter.

- More details are dripping out for Japan's FY2026 budget, while in Europe, UK Autumn Budget next week aims to tackle a £30-40B fiscal shortfall through potential tax hikes and growth measures.

- Ahead of Walmart results this morning, Bank of America card data show total spending growth slowed to +1.6% y/y in the week ending Nov 15 vs +4.2% the prior week and +2.4% on average in October, but per-household spending on holiday items is running well ahead of 2023 and 2024. The sharp drop in y/y airline and lodging spend appears linked to flight cancellations around the government shutdown, rather than a broader demand rollover.

- Elon Musk announced that Grok 4.20 upgrade with a major improvement might be ready by Christmas.

- Asia closed higher with Nikkei225 outperforming +2.7%. EU indices +0.6-0.8%. US futures +0.4-1.4%. Gold -0.4%, DXY +0.1%; Commodity: Brent +1.0%, WTI +1.0%; Crypto: BTC +0.4%, ETH -3.0%.

Asia

- China PBOC monthly loan prime rate (LPR) setting: leaves rates unchanged (as expected).

- China said to weigh new property stimulus with mortgage subsidies as part of a 'slew' of options.

- Japan $127.0B stimulus plan to include payouts to children.

- NHK says Japanese economic package to be ~¥21.3T (prior ">¥20T" expected).

- Japan BOJ's Junko Koeda (hawk): Must normalise interest rate to avoid causing distortion in future - meeting with local leaders in Niigata.

- Japan's total economic package said to be ¥42.8T (~$272B) if including private-sector investments.

- Japan 40-year JGB yields rises to fresh record high of 3.774% (life of contract since 2007).

- Shanghai Gold Exchange said to issue 'alerts' to investors on the risks related to gold trading.

Europe

- ECB's Makhlouf (Ireland): Comfortable where policy is; Need compelling evidence to change view.

- German Fin Min Klingbeil: German firms to get access to Chinese financial markets.

- Belgium Budget Min seen as the 'likely' candidate for Eurogroup Chief.

- Norway Central Bank (Norges) Q4 Expectations Survey: Inflation views mixed across groups.

- London Metals Exchange (LME); Suspends all trading in metals options in currencies other than USD.

Americas

- White House said to be planning for an Executive Order to preempt state AI regulations - The Information.

- Pres Trump confirmed to have signed bill to release Epstein files.

Trade

- US Commerce Dept plans to approve export of 70K advanced AI chips to UAE and Saudi Arabia; Deal includes security agreements to deny China access to these advanced chips - WSJ.

- White House: No Venezuela negotiations currently occuring.

Conflict/Tensions

- Pres Trump said to have approved a peace plan between Russia and Ukraine earlier this week - NBC.

- Russia Kremlin Spokesperson Peskov: No Russia-US consultations on Ukraine for now.

- Poland Foreign Min Sikorski: To send $100M to US weapons plan for Ukraine.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.56% at 565.48, FTSE +0.56% at 9,561.00, DAX +0.52% at 23,325.65, CAC-40 +0.64% at 8,004.58, IBEX-35 +0.48% at 16,002.58, FTSE MIB +0.72% at 42,959.00, SMI +0.15% at 12,563.69, S&P 500 Futures +1.05%].

Market focal points/key themes: European indices opened higher across the board and advanced through the early part of the session; Nvidia’s earnings resorting confidence in the AI trade seen supporting risk appetite; technology and industrial sectors among those leading the way higher; lagging sectors include real estate and consumer discretionary; focus on delayed US NFP coming out later in the day; earnings expected in the upcoming Americas session include Gap, Walmart, Warner Music and Intuit.

Equities

- Consumer discretionary: JD Sports Fashion [JD.UK] -1.5% (trading update), Swatch [CFR.CH] -0.5% (Swiss watch exports).

- Financials: UBS [UBSG.CH] +1.0% (conf presentation), BNP Paribas [BNP.FR] +5.5% (CMD).

- Healthcare: Novartis [NOVN.CH] +0.5% (CMD).

- Technology: ASML [ASML.NL] +2.5% (Nvidia earnings and guidance).

Speakers

- ECB's Makhlouf (Ireland): Comfortable where policy is; Need compelling evidence to change view.

- Sweden Central Bank (Riksbank) Dep Gov Seim: Higher October inflation was a surprise.

- RBA Assist Gov (Econ) Hunter: Monthly inflation data can be volatile, won't be jumping at one month of data - fireside chat at the Australian Industry Group.

- Japan Chief Cabinet Sec Kihara: Reiterates recent FX moves are sharp, one-sided.

- Japan Fin Min Katayama: Hard to strike balance between price and rates, weak Yen; Will Not make direct comment on market moves.

Economic data

- (EU) Euro Zone Sept Construction Output M/M: -0.5% v -0.2% prior; Y/Y: -0.3% v 1.0% prior.

- (BE) Belgium Nov Consumer Confidence: 2 v 0 prior.

- (PL) Poland Nov Consumer Confidence: -9.9 v -10.9e.

- (HK) Hong Kong Oct CPI Composite Y/Y: 1.2% v 1.2%e.

- (TW) Taiwan Oct export orders Y/Y: 25.1% V 28.0%E.

- (ES) Spain Sept Trade Balance: -€6.0B v -€6.0B prior.

- (TR) Turkey Nov Consumer Confidence: 85.0 v 83.6 prior- (DK) Denmark Nov Consumer Confidence: -20.1 v -19.5 prior.

- (DK) Denmark Q3 Preliminary GDP Q/Q: 2.3% v 1.2% prior; Y/Y: 3.9% v 1.6% prior.

- (DE) Germany Oct PPI M/M: 0.1% v 0.0%e; Y/Y: -1.8% v -1.7%e.

- (CH) Swiss Oct Trade Balance (CHF): 4.3B v 2.8B prior.

- (NL) Netherlands Oct Unemployment Rate: 4.0% v 4.0%e.

- (NL) Netherlands Nov Consumer Confidence: -21 v -27 prior.

- (CN) China Oct Swift Global Payments (CNY): 2.5% v 3.2% prior.

Fixed income issuance

- UK DMO sells £300M in 0.25% Mar 2052 I/L gilts; real yield: 2.370% v -1.770% prior; Bid-to-cover: 3.65x V 3.12x prior.

- France Debt Agency (AFT) sells total €12.0B vs. €10.0–12.0B indicated range in 2028, 2031 and 2033 bonds (4 tranches).

- Spain Debt Agency (Tesoro) sells total €4.921B vs. €4.5–5.5B indicated range in 2033, 2035 and 2054 SPGB bonds.

Looking ahead

- 05:30 (CH) Switzerland to sell 3-month and 6-month bills.

- 05:40 (UK) BOE 7-day short term repo operation (STR).

- 05:50 (FR) France to sell €0.5-1.0B in 2036, 2040 and 2053 inflation-linked bonds (3 tranches).

- 06:00 (IL) Israel Sept Manufacturing Production M/M: No est v 5.5% prior.

- 06:00 (UK) Nov CBI Trends Total Orders: -33e v -38 prior; Trends Selling Prices: No est v 16 prior.

- 06:00 (CZ) Czech to sell CZK 5.0B in 9-month bills.

- 06:00 (RO) Romania to sell RON 500M in 6.85% 2030 bonds.

- 06:30 (IN) India Oct Eight Infrastructure Industries: No est v 3.0% prior.

- 07:00 (CA) Canada Nov CFIB Business Barometer: No est v 46.3 prior.

- 08:00 (RU) Russia Gold and Forex Reserve w/e Nov 14th: No est v $719.8B prior.

- 08:00 (ZA) South Africa Central Bank (SARB) Interest Rate Decision.

- 08:00 (UK) Daily Baltic Dry Bulk Index.

- 08:30 (CA) Canada Oct Industrial Product Price M/M: 0.3%e v 0.8% prior; Raw Materials Price Index M/M: 0.6%e v 1.7% prior.

- 08:30 (US) Initial Jobless Claims: 226Ke; Continuing Claims: 1.945Me.

- 08:30 (US) Sept Change in Nonfarm Payrolls: 54Ke v 22K prior; Private Payrolls: 65Ke v 38K prior; Manufacturing Payrolls: -5K v -12K prior.

- 08:30 (US) Sept Unemployment Rate: 4.3%e v 4.3% prior; Underemployment Rate: No est v 8.1% prior; Participation Rate: 62.3%e v 62.3% prior.

- 08:30 (US) Sept Average Hourly Earnings M/M: 0.3%e v 0.3% prior; Y/Y: 3.7%e v 3.7% prior; Average Weekly Hours All Employees: No est v 34.2 prior.

- 08:30 (US) Nov Philadelphia Fed Business Outlook: +1.0e v -12.8 prior.

- 08:45 (US) Fed’s Hammack.

- 10:00 (MX) Mexico Central Bank (Banxico) Nov Minutes.

- 10:00 (US) Oct Leading Index: No est v -0.3% prior.

- 10:00 (EU) Euro Zone Nov Advance Consumer Confidence: -14.0e v -14.2 prior.

- 10:00 (US) Oct Existing Home Sales: 4.08Me v 4.06M prior.

- 10:00 (MX) Mexico Central Bank Monetary Policy Minutes.

- 11:00 (US) Nov Kansas City Fed Manufacturing Activity: 3e v 6 prior.

- 11:30 (US) Treasury to sell 4-week and 8-week bills.

- 12:00 (CA) Canada to sell 30-year bonds.

- 12:00 (US) Weekly DOE Oil Inventories.

- 13:00 (US) Treasury to sell 10-year TIPS reopening.

- 13:30 (UK) BOE’s Dhingra.

- 13:40 (US) Fed’s Goolsbee.

- 16:00 (KR) South Korea Oct PPI Y/Y: No est v 1.2% prior.

- 16:45 (NZ) New Zealand Oct Trade Balance (NZD): No est v -1.4B prior; Exports: No est v 5.82B prior; Imports: No est v 7.18B prior.

- 17:00 (AU) Australia Nov Preliminary PMI Manufacturing: No est v 49.7 prior; PMI Services: No est v 52.5 prior; PMI Composite: No est v 52.1 prior.

- 18:30 (JP) Japan Oct National CPI Y/Y: No est v 2.9% prior; CPI Ex Fresh Food Y/Y: No est v 2.9% prior; CPI Ex Fresh Food, Energy Y/Y: No est v 3.0% prior.

- 18:45 (US) Fed’s Paulson.

- 19:00 (KR) South Korea Nov Exports 20 Days Y/Y: No est v -7.8% prior; Imports 20 Days Y/Y: No est v -2.3% prior.

- 19:01 (UK) Nov GfK Consumer Confidence: No est v -17 prior.

- 19:30 (JP) Japan Nov Preliminary PMI Manufacturing: No est v 48.2 prior; PMI Services: No est v 53.1 prior; PMI Composite: No est v 51.5 prior.

- 21:00 (KR) South Korea to sell KRW 800B in 1-year bonds.

- 22:30 (JP) Japan to sell 3-month bills.

- 23:00 (MY) Malaysia Oct CPI Y/Y: No est v 1.5% prior.