Image Source: PexelsU.S. stocks staged a modest comeback Monday, clawing back some of last week’s steep losses. The S&P 500 gained 0.4%, snapping a two-day losing streak, while the Nasdaq Composite added 0.6%. The Dow Jones Industrial Average, however, bucked the trend with a slight dip of 0.1%, as cautious optimism permeated the marketsThis modest recovery came on the back of easing Treasury yields and a renewed focus on earnings, with all eyes turning to Nvidia’s (NVDA) much-anticipated report, a potential make-or-break moment for the market’s AI-fueled optimism.Overal the rebound reflects growing confidence in U.S. markets, as Trump’s economic playbook—centred on domestic stimulus—offers an initial boost to earnings growth through solid economic channels. Meanwhile, the looming spectre of punitive trade tariffs keeps investors wary of international markets, making U.S. equities appear more attractive by comparison.The broader market sentiment remains cautious, with futures showing resilience even as reasonable fears of a looming global trade war cast a shadow over bolder directional moves.All eyes are laser-focused on Nvidia as the tech titan gears up for its blockbuster earnings report on Wednesday. With its towering presence in both market cap and artificial intelligence, Nvidia has become the ultimate market heavyweight. Boasting an astonishing 7% weight in the index and nearly 800% stock gains over the past year, its results are set to either crown AI as the undisputed king or trigger a dramatic rethinking of the sector’s sky-high valuations.According to projections, the $3.5 trillion juggernaut is expected to post net income of $18.4 billion, fueled by an 80% revenue surge to $33 billion. Nvidia’s results will likely steer broader tech market sentiment, underscoring its pivotal role as a bellwether for tech and AI-related stocks.Treasury markets offered some respite, with 10-year yields holding steady well below 4.5%. Rate traders showed holiday some holdiy spirit , as futures pricing suggests a 62% probability of a Federal Reserve rate cut in December. The market has now baked in 75 basis points of easing through the end of next year, offering a slight tailwind for sentiment.Bullish for stocks but less promising for the dollar, recent Fed commentary softend fears of a pause in monetary easing. Austan Goolsbee highlighted that if inflation keeps trending down, rates could be significantly lower within the next 12–18 months.The confluence of earnings optimism, AI sector resilience, and potential Fed easing provides a tentative foundation for recovery. Still, with geopolitical uncertainties and tariff risks lingering, markets remain on edge, awaiting clarity on the direction of Trump’s trade and economic policies.
WIDE GOAL POSTAs if the markets weren’t confusing enough, we’re entering that time of year when Wall Street banks flood client inboxes with their infamous year-ahead forecasts. If someone bothered to tally up a Brier score on these, they’d quickly discover just how notoriously inaccurate they tend to be.Case in point: Morgan Stanley’s Mike Wilson—once a proud bearer of bearish sentiment—has flipped his script. His year-end 2025 bull case for the S&P 500 now stands at an eyebrow-raising 7,400, projecting a potential 26% surge. But don’t put all your chips on the table just yet. Wilson’s hedged bets include a worst-case scenario where the index sinks to 4,600—a steep 22% drop.

So, where does that leave us? Somewhere between boundless optimism and cautious despair, which is exactly why these forecasts should always be taken with a hefty salt. After all, the market rarely plays by anyone’s neatly written script.
ASIA MARKETSInvestors are cautiously navigating the week, regaining their footing after last week’s market turbulence. With a noticeable void in high-profile economic data from both East and West, global cues are taking center stage, all while the specter of looming tariffs hums ominously in the background.Following last week’s stomach-churning sell-off, this week begins with a rare sense of calm—volatility subsided, bond yields eased, and the dollar softened, opening the door to a modest yet much-needed recovery in Asia risk assets.
COMMODITIESCrude oil roared to life, surging nearly 3%, as geopolitical tensions reignited with the U.S. greenlighting Ukraine’s use of long-range missiles against Russia. This escalation has thrown fuel on the fire of an already volatile energy market. Brent crude led the charge, as traders recalibrated for heightened risk in the region, while a slightly softer U.S. dollar added momentum to the rally.Gold, meanwhile, caught its own spark, riding the wave of geopolitical anxiety and a weakening greenback. The precious metal’s safe-haven allure is glowing brighter with the specter of an intensified trade war on the horizon.Gold, as always, thrives on uncertainty, shining brighter as the world grows darker.But for gold bulls, the real question looms large: when the U.S. dollar inevitably strikes back on the heels of higher yields, will gold once again defy its textbook inverse relationship with real yields and the dollar? Or will this delicate dance unravel, testing the resilience of gold once again?As December rate cut probabilities linger, NFP ranks high as does the interplay between a strong dollar and gold’s shine will define the coming weeks. For now, the yellow metal has managed to keep its glow, but the real test lies ahead.
GOLDMAN LIKES GOLDGoldman Sachs has struck a golden chord in its 2025 commodity outlook, boldly projecting gold to shine at $3,000 per ounce by year-end. Their call isn’t just a stab in the dark—it’s a “high-conviction” view anchored by structural support from relentless central bank buying and cyclical tailwinds from a Federal Reserve rate cutsGoldman analysts Daan Struyven and Samantha Dart highlight that the swirling vortex of U.S. policy uncertainty under President-Elect Donald Trump—especially his trade, and fiscal shake-ups—makes gold an essential portfolio hedge. Trade wars with ruinous global economic implications? Check. A Fed easing cycle to stave off any economic fallout? Double check. And let’s not forget that recent market consolidations have carved out what Goldman calls an “attractive entry point”( last week’s low) for savvy gold bulls. Triple CheckWith Trump’s unpredictable policy playbook keeping markets on edge, gold might just be the insurance every portfolio needs. Goldman’s bullish call isn’t just a forecast—it’s a dare to investors: bet on gold, or risk missing out on the metal’s moment to shine. FOREX MARKETSThe recent EUR/USD moves defy logic, particularly with Eastern European tensions flaring up. The U.S. administration’s green light for Ukraine to deploy American missiles against Russian targets has amplified geopolitical risks—a scenario that often puts downward pressure on the euro.Adding fuel to the fire, oil prices have jumped $2.00, further tilting the scales against the euro. Yet, the market narrative seems stubbornly resilient to these headwinds, but heavy short euro positions are always precarious setups.Why so in this case ?Markets are barely pricing in 15 basis points of Fed rate cuts, leaving plenty of room for a dovish repricing that could weaken the dollar. Still, let’s be real: the Fed isn’t likely to sit on its hands with President-elect Trump preparing to take office. Rate cuts ahead of the inauguration seem almost inevitable. Still, the real action in rates likely won’t kick in until after the jobs data drops in two weeks—a veritable eternity in FX trading. NFP will give either the doves or hawks all the ammunition they needThe long-dollar “Trump trade” remains the go-to strategy for medium-term FX plays, with traders likely stepping in as buyers on any dips. However, with euro shorts heavily loaded, the possibility of a squeeze looms in the background, adding an air of unpredictability to the market.For those planning a re-entry, keeping an eye on EUR/USD climbing into the 1.0650–1.0700 range could offer the ideal mix of strategy and opportunity. It’s a delicate balance, but one that could pay off—fingers crossed.
BLOOMBERG KISS OF DEATHIn trading circles, we jokingly call it the “Bloomberg kiss of death”—when they gather a cadre of analysts to proclaim the “New Big Call,” it’s often a cue to reassess. This time, the spotlight is on the euro parity narrative, crowned as the market’s favourite way to play the so-called Trump trade. ( I think that was my favourite way 6 weeks ago)But here’s the reality: sharp traders were already riding this wave well before election night, front-running the move based on election odds on platforms like Polymarket. Election night only fueled the fire, short Euro traders doubled their bets after the Trump win. Fast forward, and we’ve now hit a critical juncture. As the euro hovered around 1.05, a chorus of advice emerged for big-ticket bank clients to lock in profits or buy Euro’s if need to.Why?Seasonal trends favouring a softer dollar are coming into play, the Fed will likely cut in December and the full brunt of Trump’s policy arsenal won’t hit until early to mid-2025. Even then, the specifics remain murky. After breaking through 1.06 overnight, it’s time for traders to recalibrate, rerun their probability matrices, and carefully pick their reentry points.The game has taken a soft turn. The easy money is firmly in the rearview mirror, leaving behind a tactical grind to seize those elusive golden opportunities amid swirling uncertainty. As for the euro parity party, the guest list is far from finalized, but it’s wise to keep the champagne on ice until later in 2025.More By This Author:As Financial Conditions Tighten, Global Stock Outflows Typically Heighten
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