Thoughts from Themes: Steady Data, Shaky Nerves

Markets are navigating disconnect heading into the Thanksgiving holiday: powerful fundamental signals on one side and increasingly fragile sentiment on the other. Nvidia’s blowout earnings offered the clearest validation yet that AI demand is real, durable, and still accelerating — record revenue, sold-out product lines, and guidance that exceeded even bullish expectations. But instead of fueling a sustained rally, the broader market response leaned cautious, with volatility rising and investors wavering despite the evidence in front of them.

This hesitation is amplified by the return of key economic data after the government shutdown. The first releases show a labor market that’s cooling but stable, and an inflation trajectory that keeps the Fed’s December decision firmly in focus. While technicals suggest oversold conditions and potential opportunity, sentiment has turned defensive as markets digest delayed data, shifting macro expectations and uneven risk appetite. This week’s through-line: fundamentals are improving, but conviction hasn’t caught up.

So please enjoy a day where the markets are closed and have a very happy Thanksgiving!  We will be back for a half-day on Friday after the holiday and then a highly anticipated December when we return next Monday.

Nvidia Clears the Air on AI

Nvidia’s blowout earnings have helped deflate fears of an AI bubble, at least for now, while reinforcing confidence in the broader market’s AI-driven growth narrative. However, after a post earnings spike, and a strong consumer indication from strong Walmart results, broader market fear and an appetite to sell loomed large on the broader markets.

That said, it's important to note that Nvidia’s latest quarterly results shattered expectations, with record-breaking revenue and a bullish forecast. CEO Jensen Huang emphasized that demand for its Blackwell AI chips is “off the charts,” and key product lines are already sold out. This performance directly challenges the notion that the AI boom is overhyped or nearing exhaustion. Instead, it suggests that enterprise adoption of AI infrastructure remains in its early innings, with capital expenditures still ramping across cloud, data center, and hyperscaler verticals. But the earnings report arrives at a moment of heightened anxiety. Nearly half of fund managers recently cited an AI bubble as the top market risk, and the CBOE Volatility Index spiked to its highest level since May. Nvidia’s results do offer a

stabilizing force. As the largest component of the S&P 500 and a $4.6 trillion market cap bellwether, its performance has an outsized influence on both tech sentiment and broader equity benchmarks.

In the short term, Nvidia’s earnings may catalyze a relief rally, particularly in AI-adjacent names that had sold off amid bubble concerns. Longer term, the report reinforces the view that AI is not a speculative mania but a secular transformation with durable earnings power. While valuations remain elevated, Nvidia’s fundamentals – including strong margins, robust demand, and clear product leadership – support the thesis that this is not 1999 redux.

A bigger issue for the broader market may be the looming Fed decision and its impact on Bitcoin and the crypto market. After fairly balanced labor statistics were finally announced on Thursday, November 20th with no "there, there," it seems that the inflation component of its dual mandate may have a bigger influence on a decision whether or not to reduce rates at its December meeting, perhaps leading investors to believe that it’s more likely the Fed decides to hold rates where they

are. This sentiment caused a further decline in Bitcoin and crypto markets, which reversed the broader markets in afternoon trading last Thursday.

For long-term investors, the takeaway should be clear: AI remains a credible growth engine, and Nvidia’s execution provides a reality check against bubble narratives. Market sentiment, while still cautious and somewhat fearful, may now shift toward selective optimism, especially if macro conditions stabilize into 2026. How the market shapes up into the Thanksgiving holiday week will be telling as to whether a year-end rally is in the cards. As we stand now, investor sentiment and profit-taking are getting the better of the market.

Post-Shutdown Pulse Check

The first official macroeconomic data released post-shutdown reveals a mixed but resilient U.S. economy, offering critical insights into labor market dynamics, inflation pressures, and the Fed’s policy path.

After a 43-day data blackout, the September jobs report, delayed nearly seven weeks, showed that U.S. employers added 119,000 jobs, more than double

economists’ expectations of 50,000. However, the unemployment rate ticked up to 4.4%, and August’s job gains were revised downward from +22,000 to a loss of 4,000. This suggests a labor market that is cooling but not collapsing, aligning with the Federal Reserve’s goal of achieving a soft landing.

The data also underscores the challenge of interpreting economic momentum after a prolonged statistical blackout. Analysts caution that the shutdown may have distorted data collection, and upcoming releases such as CPI, retail sales, and Q3 GDP will be crucial in confirming trends.

Key Takeaways:

• Labor market resilience: Job growth remains positive, though slower, indicating continued demand for workers.
• Rising unemployment: The uptick in joblessness may reflect delayed layoffs or reclassification effects from the shutdown.
• Fed implications: The data supports a “wait-and-see” stance, with markets now pricing in a potential rate cut in early 2026 if inflation continues to moderate.

It seems the flood of delayed data and potential uncertainty around its accuracy is creating short-term volatility as markets recalibrate expectations. However, the initial reports suggest the economy remains on stable footing. For investors, this reaffirms the importance of staying focused on fundamentals and watching how upcoming inflation and consumption data shape the Fed’s next moves.

Macro Minute

Something has started to drive near-term market sentiment into a fearful, risk-off mode. However, it’s not apparent what is driving this, as many indicators support the idea that the economy is stable, and earnings results have been good. Maybe we need to start looking at the credit markets, leverage in the system, and the ever-

growing debt by central banks across the globe to discover how that is overriding what has been very strong economic performance by companies this earnings season.

Many technical indicators are showing that we are hitting major support levels, and that markets are in oversold territory, but trying to predict where we will bounce is too tough to call. The Fed decision in December will be a big trigger for direction, however depressing that may sound. And long-term investors may be wise to begin to dip their toes into what may be a buying opportunity.

This Week’s Major US Economic Reports & Speakers

Monday, November 24

None scheduled

Tuesday, November 25

8:30 AM US retail sales (delayed report)

9:00 AM S&P Case-Shiller home price index (20 cities)

10:00 AM Business inventories (delayed report)

10:00 AM Consumer confidence

10:00 AM Pending home sales

Wednesday, November 26

8:30 AM Initial jobless claims

8:30 AM *GP (first revision)

8:30 AM *Advanced US trade balance in goods

8:30 AM *Advanced retail inventories

8:30 AM *Advanced wholesale inventories

8:30 AM Durable-goods orders (delayed report)

8:30 AM Durable-goods minus transportation (delayed report)

10:00 AM *Personal income

10:00 AM *Personal spending

10:00 AM *PCE index

10:00 AM *PCE (year-over-year)

10:00 AM *Core PCE index

10:00 AM *Core PCE (year-over-year)

Thursday, November 27

Thanksgiving Holiday, none scheduled

Friday, November 28

9:45 AM Chicago Business Barometer

* Data may be subject to delay due to government shutdown from Oct 1- Nov 14

Disclosures:

All data sourced from Bloomberg as of November 21, 2025, unless otherwise cited.

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