Make no mistake: This week is Nvidia’s stage

Markets

The Nasdaq Composite soared in early-afternoon New York trading, powered by a 3% leap in Nvidia’s stock as anticipation builds for the chipmaker’s eagerly awaited earnings report on Wednesday. After stumbling out of the gate, tech stocks regained their stride, with Nvidia reaffirming its position as the undisputed heavyweight champion of the AI revolution.

Across the pond, European markets initially buckled under the weight of mounting geopolitical tensions. Ukraine’s bold decision to deploy U.S.-supplied long-range missiles against Russian targets marked a dramatic escalation in the conflict. Adding fuel to the fire, Russian President Vladimir Putin signed an ominously expanded nuclear doctrine, sending a pointed warning to the West. Investors wasted no time seeking refuge in safe-haven assets, with gold prices climbing and government bonds finding eager buyers as the spectre of heightened conflict rattled sentiment.

U.S. Treasuries briefly basked in a rare rally on Tuesday, fueled by whispers that President-elect Donald Trump might choose former Fed Governor Kevin Warsh as his Treasury Secretary. The prospect of a more market-friendly pick to steer U.S. fiscal policy lit a spark in the bond market. Still, the geopolitical "safe-haven bid ” truly set the tone, as nuclear sabre-rattling from Moscow added a dramatic twist.

European markets picked up the safety baton early in the session after Russia’s fiery response to Washington’s decision to greenlight Ukraine’s use of U.S.-supplied long-range missiles against Russian targets. Sovereign bonds, gold, and Japan’s yen all surged as investors sought refuge, while the euro drifted lower under the weight of heightened uncertainty.

However, as is often the case, escalations in the Ukraine-Russia conflict had little staying power in financial markets. Risk assets shrugged off the latest geopolitical drama in Eastern Europe with remarkable composure, as traders interpreted the maneuvers as desperate gambits rather than deliberate strategic escalations. The market's resilience underscores a calculated bet that, despite the heightened rhetoric, neither side appears ready—or able—to significantly shift the conflict’s trajectory, particularly Russia in the nuclear arena. Investors are banking on brinkmanship, holding the line over outright catastrophe and keeping risk markets afloat.

Given the gravity of the nuclear threat, the market’s muted response underscores just how tame these moves were perceived—primarily because Putin has earned the moniker of the "Boy Who Cried Wolf."

Meanwhile, on the home front, U.S. housing starts posted a sharper-than-expected 3.1% decline, likely skewed by hurricane disruptions that traders shrugged off as yet another weather-distorted macro signal. The focus remains squarely on the resilience of tech stocks and the global chessboard of geopolitical maneuvering, all set against President-elect Donald Trump’s impending wide-sweeping tariffs, which could come into play as early as the new year.

But make no mistake—this week is Nvidia’s stage. The AI chip titan has been unstoppable, its stock skyrocketing more than ninefold since the end of 2022, earning it a seat in the prestigious Dow Jones Industrial Average and the title of the world’s most valuable public company. With Wednesday’s quarterly earnings report, Nvidia has the chance to solidify its dominance further or spark a market reappraisal that could ripple across the tech sector and beyond.

The numbers are staggering. This year, Nvidia’s rise has added a jaw-dropping $2.2 trillion to its market value, a feat matched only by giants like Apple and Microsoft. For context, only one other U.S. company—Microsoft—has ever managed to add more than $1 trillion in market value in a single year, which was back in 2023.

Nvidia isn’t just a stock; it’s a bellwether for the AI revolution. Its influence extends beyond Silicon Valley, reshaping expectations and rewriting records across the global markets. As investors hold their breath for Wednesday’s report, Nvidia’s performance will set the tone for tech’s trajectory and market sentiment heading into 2025. Whatever happens, one thing is clear: the stakes couldn’t be higher.

The Lutnick effect

President-elect Donald Trump has tapped Cantor Fitzgerald CEO Howard Lutnick to lead the Commerce Department, cementing his administration’s hardline trade agenda. Lutnick, known for his aggressive leadership style and deep financial expertise, is set to play a key role in executing Trump’s sweeping tariff plans, which aim to upend global trade dynamics and bring manufacturing back to U.S. shores.

Central to Trump’s strategy are bold proposals, including baseline tariffs of 10% to 20% on all imports and an eye-popping 60% on Chinese goods. These measures target key trading partners like Mexico and others perceived to undermine the U.S. dollar’s dominance. The message is clear: Trump’s presidency will prioritize American interests, even at the cost of rattling international markets.

Lutnick’s appointment reinforces the president-elect’s commitment to this economic overhaul. With a seasoned negotiator like Lutnick at the helm, the administration is doubling down on its promise to level the playing field for U.S. industries while taking a no-nonsense approach to trade imbalances.

This is more than a personnel decision—it’s a bold declaration that Trump’s vision for U.S. trade will take center stage. The world is bracing for a seismic shift in economic policy, with Lutnick poised to lead the charge.

So, back to the Trump Trade?

Rightout of a Tom Clancy novel

In a bold yet controversial move, President Biden authorized Ukraine to deploy U.S.-supplied ATACMS missiles against Russian targets, marking a dramatic escalation in the conflict. However, the advanced notice gave Russia ample time to relocate critical resources out of harm’s way.

This escalation comes against the backdrop of a Tom Clancy-esque geopolitical chess game. Last month, Vladimir Putin called in his strategic favour from North Korea, reportedly securing thousands of troops to bolster Russian forces in Ukraine. Some estimates suggest that as many as 100,000 North Korean soldiers could eventually join the fray, adding another layer of complexity to an already volatile situation.

The cost of this spiralling conflict is mounting. Reports indicate at least 10 fatalities and 39 injuries, including seven police officers, a medic, and several children. These grim statistics highlight the devastating toll of a war that shows no signs of abating.

As President-elect Donald Trump prepares to take office, the timing of this escalation raises eyebrows. Trump has vowed to broker peace in Ukraine within 24 hours of assuming the presidency, but Biden’s move may complicate that path. By upping the ante, the current administration risks entrenching positions and making future diplomacy more challenging.

This latest chapter in the conflict underscores the high stakes and global ramifications of decisions made in Washington, Moscow, and beyond. Whether this bold gambit shifts the balance or deepens the dilemma remains to be seen, but one thing is clear: the geopolitical landscape has never been more precarious.

And no, The Kremlin isn’t about to nuke Ukraine. Deploying a nuclear weapon would spell the beginning of the end for Russia as we know it, a move that would unravel the fragile power Putin holds. The reality is stark: Putin doesn’t have the strategic capacity, nor the military hardware, to sustain a war against the United States—let alone against the combined might of Allied forces. And let’s not forget, in the face of such reckless escalation, even some of Russia’s so-called "friends" might flip sides to preserve their own futures.

Putin’s sabre-rattling feels more like desperation than strategy. The costs of crossing this line aren’t just geopolitical—they would likely fracture his grip on power internally. History reminds us that dictators who gamble with global annihilation often find themselves outmaneuvered not just abroad, but at home.

Ironically, while the deployment of ATACMS missiles was initially seen as a direct challenge to President-elect Donald Trump’s peace ambitions, it might actually work to his advantage. Trump, ever the deal-maker, is unlikely to reverse this Biden-era move without extracting significant concessions from Russia in return. Starting with a unilateral concession would be a classic case of poor negotiation—a misstep Trump is unlikely to entertain. Instead, the situation might provide him with added leverage to strike a deal that balances strength with diplomacy, potentially setting the stage for a more favourable negotiation framework