AI’s Reckoning to Define Investing in 2026 — and It Starts Now

Economic

Summary:

AI’s two-year momentum phase is ending as markets demand real earnings, not promises. Nvidia’s results will set the tone, driving a 2026 shift toward profitability, discipline, and selective winners across the AI ecosystem.

The past four trading sessions have delivered a stark message that investors can no longer ignore.

Heavy selling across global indices, the Nikkei’s 3% slide, and the broad retreat across US benchmarks show a decisive shift in the psychology that has shaped markets for two years. The AI-driven rally that powered an extraordinary run in equities has reached a point where momentum is no longer a substitute for proof.

This moment has arrived faster than many expected, and it carries far-reaching implications for how investors position themselves for 2026. AI has remained the central engine of market performance, but the foundation beneath it is entering a defining test.

The catalyst is Nvidia’s (NASDAQ:NVDA) earnings report on Wednesday, which has become more than another corporate update. It is now a gauge of whether the most powerful force in the market still commands the conviction that pushed valuations to historic extremes.

I see investors reassessing their assumptions with a level of precision that has been missing during the past two years of relentless enthusiasm.

The world has moved through a phase in which the scale of AI investment mattered more than the financial outcome. That period is ending. Markets now demand visibility, consistency and accountability. The companies offering that clarity will secure capital next year, while those relying on distant projections will find conditions far more challenging.

The latest earnings cycle laid the groundwork for this shift. Results from major technology firms showed a widening gap between businesses that can convert AI infrastructure into measurable gains and those still relying on promise-driven stories.

Alphabet (NASDAQ:GOOGL) and Amazon (NASDAQ:AMZN) demonstrated how disciplined investment linked to identifiable monetisation can outperform even in an environment crowded with competing narratives. In contrast, Meta and Microsoft met immediate resistance when spending rose ahead of revenue potential. Tesla’s (NASDAQ:TSLA) soft margins intensified the sense that the industry is confronting rising costs and slower demand at the same time.

This divergence matters because it is shaping how investors appraise every part of the AI ecosystem. Market participants are watching strategy execution in real time. They are scrutinising operating efficiency with a sharper lens.

They want to see how companies justify their investment intensity when funding becomes more selective. Margin strength, not headline revenue growth, is becoming the measure that determines whether a business has a future at the core of the AI economy.

Nvidia’s upcoming numbers carry outsized weight because they anchor global expectations. Forecasts for another powerful jump in revenue and earnings have pushed the valuation into territory that tolerates no hesitation. Any sign of slowing customer absorption, weaker Blackwell momentum, softer hyperscaler orders, or pressure created by export restrictions will immediately influence market direction.

Investors want assurance that profitability is expanding at a pace that matches the scale of spending. Without that alignment, the assumptions attached to the entire AI complex will come under review.

This reassessment is unfolding alongside an important geopolitical backdrop. President Donald Trump’s tech and industrial priorities are driving companies to rethink their global exposure, supply-chain design and capital-allocation plans. Washington’s export controls are reshaping the competitive environment for advanced computing in China.

At the same time, sovereign AI ambitions are accelerating in regions seeking strategic autonomy. These forces are reshaping demand patterns, risk considerations, and long-term planning across the industry. Nvidia’s guidance will influence how investors interpret these currents through next year.

The pullback across global equities during the past several days is a reminder that markets remain vulnerable to concentration. Gains built on a narrow group of leaders can reverse quickly when confidence wavers. The S&P 500 closing below a key level on Monday reinforced the idea that investors are rediscovering the importance of diversification, valuation discipline, and cash-flow durability.

But this moment is not a setback for AI. It is an essential recalibration of expectations that have reached levels impossible to maintain without consistent evidence. The technology remains transformative. Adoption continues across every sector. Productivity gains are accelerating, not fading.

What is changing is the threshold investors apply when assessing which companies will dominate the next stage of this transition.

As I look ahead to 2026, I expect a market defined by sharper selection. Capital will concentrate in businesses that can demonstrate earnings power tied directly to AI deployment. Investors who focus on durability instead of size, and on monetisation instead of scale, will be best placed for the opportunities emerging from this global adjustment.

The reckoning has arrived. It is not a pause in progress. It is the point at which performance, discipline, and strategic clarity determine the winners of the next phase of the AI era.

Source: investing

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James Whitman

Central Bank

Economic

Bank of England Chief Economist Huw Pill said that UK price pressures are not as strong as headline inflation estimates suggest, though signaled policymakers should not cut interest rates again just yet.

Pill said on Tuesday that a raft of one-off impacts on inflation will likely be temporary but also reiterated concerns that a series of economics shocks to households and firms may have changed price and wage-setting behavior.

"I think underlying inflationary dynamics in the UK are probably not as strong as current spot headline inflation suggests, but that doesn't mean I think that I embrace that story completely," he said in a fireside chat hosted by Natixis Corporate and Investment Banking. He said that the current momentum in domestic prices and wages is "not fully compatible with the inflation target," adding that "there's still work to do."

Pill's comments came ahead of inflation figures on Wednesday that could be crucial in determining whether the BOE resumes cutting interest rates in December. Economists expect the data to show inflation cooling to 3.5% in October, the lowest in five months, after hitting almost double the BOE's 2% target over the summer.

Recent data showing price pressures weaker than thought and the economy softening have fueled expectations of a rate reduction in December. Markets put the chances of a move next month at around 80%.

However, it is expected to be a tight decision with the government's budget looming on Nov. 26. Pill was part of the 5-4 majority that voted to keep rates at 4% earlier this month, slowing the pace of the BOE's easing cycle. He said on Tuesday his views had not changed much since then.

While Pill highlighted that temporary factors such as tax changes and good bills are pushing up inflation, he also remained worried over structural shifts in the economy that could mean price pressures persist.

"That accumulation of structural shocks to the economy could certainly plausibly have had an impact on the structure of price setting and wage setting," he said. "Now that's a view probably I'm more associated with... I think there is some evidence for that view."

Pill played down divisions on the MPC and said Governor Andrew Bailey sits "in between" the two broad camps on the panel, with signs of slack opening in the labor market pitted against concerns about above-target inflation. Policymakers are in a series of "finely balanced" decisions, he said.

He also pushed back against claims he is the most hawkish member of the MPC and said he prefers a gradualist approach to policy over an activist stance that advocates more aggressive moves in rates.

Source: Bloomberg

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Adam

Stocks

Economic

Three prominent investors with almost nothing in common are dumping their shares of Nvidia, the computer chip juggernaut that went from relative obscurity to the world’s first $5 trillion valuation in just three years.

It’s hard to overstate Nvidia’s superlatives. On its own it makes up 8% of the total value of the S&P 500. Its annual net income grew more than 580% between 2023 and 2024. It’s become almost a joke on Wall Street that the company consistently blows past expectations, notching quarter after quarter of financial gains, thanks to seemingly bottomless demand for Nvidia’s sophisticated chips, which are key to building artificial intelligence models like OpenAI’s ChatGPT or Anthropic’s Claude.

So why sell now? Isn’t betting against Nvidia now a bit like betting against the 1995 Bulls? (As in, you’d be out of your mind to do so)?

Maybe not. There are any number of reasons why investors would sell Nvidia, but the timing of these recent moves is fueling concerns that the company — and by extension, the entire AI industry — is part of a speculative bubble that’s bound to burst.

On Monday, a regulatory filing showed tech billionaire Peter Thiel’s hedge fund had, sometime in the three months ending in September, sold its entire stake in Nvidia — all 537,742 shares, which would be worth about $100 million as of September 30, the last day of the quarter. The disclosure, three days ahead of Nvidia’s upcoming earnings release, rattled investors, who are already nervous about when, or whether, they’ll see a return on their AI investments.

Thiel’s revelation came days after Japanese conglomerate SoftBank said it had sold all of its Nvidia holdings for $5.8 billion. And earlier this month, Michael Burry — the “Big Short” investor who anticipated the housing market’s collapse in 2008 — disclosed that his hedge fund had bought more than $1 billion in “put” options against Nvidia and Palantir, another AI darling, essentially wagering that their stocks will fall.

What do Thiel, Burry and SoftBank know about Nvidia that the rest of us don’t? What are they seeing that the rest of Wall Street can’t (or doesn’t want to) see?

To be sure, these folks all had their reasons, and not all of them are directly betting against Nvidia or AI.

SoftBank and its CEO, Masayoshi Son, remain fully aboard the AI hype wagon. But they also needed to gin up a bunch of cash soon to complete a nearly $23 billion investment in OpenAI, prompting them to take their Nvidia profits.

Burry’s position is a much more skeptical one. In a post on X, Burry wrote that he believes Big Tech companies are “understating depreciation” around Nvidia’s core product — essentially, they’ll soon be sitting on a bunch of equipment that’s obsolete, and they’re undervaluing how much that will hurt their bottom line.

Representatives for Thiel, a co-founder of surveillance software giant Palantir and a guy who reportedly believes that strictly regulating AI tech will hasten the arrival of the Antichrist, did not respond to a request for comment. Thiel has previously staked out a fairly conservative position on AI, telling the New York Times’ Ross Douthat that the technology is “more than a nothing burger” but “less than the total transformation of our society.”

The timing of these moves — coming the same quarter that Nvidia hit $5 trillion in market value (it’s now back down to a measly $4.5 trillion) — may be purely coincidental. But they’re not helping soothe any nerves on Wall Street.

“I don’t read a lot into people’s timing with respect to this stuff,” Paul Kedrosky, a partner at SK Ventures, told CNN. “But I do think that there’s been a kind of Gestalt shift in terms of how people think about this entire area and what are reasonable assumptions about future growth.”

Nvidia sank 2% Monday, even as analysts expected the company to once again deliver a solid earnings report on Wednesday. Other tech stocks and crypto followed, dragging the broader market down. Wall Street’s fear gauge, the VIX, jumped 13%. CNN’s Fear and Greed index traded in “extreme fear” and hit its lowest level since early April.

“I think we’re at a tipping point of this bubble,” Mike O’Rourke, chief market atrategist at JonesTrading, told CNN Monday. “And then you have all these other things that were just massively speculative this year,” he added, citing the crypto rally and the expansion of digital asset treasury companies. “Now you’ve seen that very speculative aspect start to unwind, and I wouldn’t be surprised if it bleeds over and people get a little more cautious.”

Source: cnn

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Warren Takunda

Cryptocurrency

The number of Bitcoin whale wallets has spiked as the crypto markets struggled this week, with Bitcoin sinking as low as $89,550 on Tuesday.

Data from the crypto analytics platform Glassnode shows that whales have been accumulating since late October, with a notable spike in the number of Bitcoin whale wallets holding above 1,000 BTC starting Friday.

Whale wallets’ numbers fell to a yearly low of 1,354 on Oct. 27 — when BTC was trading at around $114,000 — but as of Monday, this number has spiked 2.2% to sit at 1,384, in levels not seen in four months. Bitcoin Whales Switch to Buying Amid ‘Extreme Fear’_1

Bitcoin Whales Switch to Buying Amid ‘Extreme Fear’_1

Source: Glassnode

At the same time, Glassnode data indicate that holders with 1 BTC or more have been feeling the pressure of the recent price slump.

The total number of these wallets has decreased from 980,577 on Oct. 27 to hit a yearly low of 977,420 on Nov. 17. Bitcoin Whales Switch to Buying Amid ‘Extreme Fear’_2

Bitcoin Whales Switch to Buying Amid ‘Extreme Fear’_2

Wallets with 1 BTC or more have tanked in 2025. Source: Glassnode

This data contradicts a recent narrative around “OG dumping,” which argues that older investors have been driving the price of Bitcoin down lately by taking profits.Commenting on these dynamics, 10X Research‘s Markus Thielen told Cointelegraph that there is some whale selling still going on, as he stressed that Oct. 29 FOMC meeting from the US Federal Reserve has had a huge impact on what we are seeing now.

“His message decisively broke the fragile balance that had existed between market sellers and buyers – between the OG mega whale sellers (1,000-10,000 BTC) and the whale buyers (100-1,000 BTC).”

“Super-whales and mega-whales are absorbing some of the whale selling, but the 30-day net-flow ratio between these cohorts still shows decisive net selling,” he added.

Bitcoin drops below $90K

Bitcoin dipped below a crucial psychological level on Monday, and is currently trading at around $89,900. This has seen the Crypto Fear & Greed Index drop down to the “extreme-fear” zone with a score of 11 out of 100.

While some may be feeling the pressure, executives from firms such as Bitwise and BitMine have tipped BTC selling pressure to subside and hit a bottom this week.

Speaking with CNBC on Monday, Bitwise Asset Management chief investment officer Matt Hougan argued that current price levels are a “generational opportunity.”

“I think we’re nearing a bottom. I look at this as a great buying opportunity for long-term investors. Bitcoin was the first thing to turn over before this broader market pullback. It was sort of the canary in the coal mine signaling that there was some risk in all sorts of risk-on assets,” Hougan said.

Elsewhere, while “working at McDonald’s” memes are making a comeback on X, execs like Gemini crypto exchange co-founder Cameron Winklevoss have taken a more positive spin, posting that this “is the last time you’ll ever be able to buy Bitcoin below $90k!”

Another crypto analyst on X, including TheCryptoDog, has also argued that BTC is due “for a bounce soon” given current metrics.

“If things play out clear and simple, $BTC tags ~87.7k - Some high TF MA support & horizontal support from previous resistance (the break of which triggered a rally in May),” they wrote.

Source: Cointelegraph

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Adam

Economic

The S&P 500 fell by about 1% on the day, reversing the recent string of Monday rallies. Not surprisingly, the index attempted to rally in the mid-morning as volatility declined. However, the market had already opened lower, and while we saw a brief rebound around 10 a.m., those gains faded quickly, as Monday was a Treasury settlement date.

Today is also a Treasury settlement date, and we’re already seeing repo rates move back above 4% for Monday. For now, the S&P 500 continues to hold around 6,750, which remains the key sticking point. Every time the index gets there, it bounces off that level or near it, but at some point, that region is likely to break.

Given the small end-of-day surge, it wouldn’t be surprising if we gap lower today, undercut the 6,640 low, and continue to see pressure throughout the day—potentially even testing 6,600 or moving below it.

S&P 500: Bears Emerge as Funding Stress and Credit Risks Deepen_1

Also, we’ve seen the dispersion trade continue to unwind, with three-month implied correlations rising faster than the dispersion index on Monday, further narrowing that spread. This unwind should only grow strong after Nvidia (NASDAQ:NVDA) reports.

S&P 500: Bears Emerge as Funding Stress and Credit Risks Deepen_2

The average repo rate at DTC on Monday was around 4.04%, suggesting we’ll see SOFR push above 4% today as well. With another settlement date today, there’s a chance funding conditions will tighten further and those rates move even higher.

Wednesday should bring some relief since there are no settlements, and midweek typically sees a bit of easing. But by Thursday, I would expect rates to tighten again, with repo potentially pushing back toward that 4% corridor. That would also put upward pressure on usage of the Standing Repo Facility.

S&P 500: Bears Emerge as Funding Stress and Credit Risks Deepen_3

The CDX High Yield credit spread index also moved higher on Monday and appears to have broken a downtrend. It’s now approaching a resistance level around 342, which was last seen in mid-October.

A breakout above 342 would likely signal even wider spreads ahead, and that wouldn’t be surprising given the rise we’re already seeing in CDS spreads for companies like Oracle (NYSE:ORCL), Meta (NASDAQ:META), and CrowdStrike (NASDAQ:CRWD). We’re even seeing similar moves in names like SoftBank in Japan.

So it wouldn’t be surprising at all to see credit spreads widen more broadly across the market—and that would clearly be negative for equities overall.

S&P 500: Bears Emerge as Funding Stress and Credit Risks Deepen_4

The final piece of the puzzle may actually be coming from Japan, where rates are rising rapidly amid concerns over new stimulus proposals, making markets increasingly nervous. This has pushed yields sharply higher across the curve, with the 10-year rising to 1.73%—the highest level since 2008. More importantly, there appears to be room for yields to move even higher in the near term, with the next potential resistance level likely somewhere around 1.90%.

S&P 500: Bears Emerge as Funding Stress and Credit Risks Deepen_5

If concerns over the government’s spending plan persist and Japanese rates continue to rise while the yen weakens, it could trigger a flight to safety into the dollar. That would likely lead to a materially stronger dollar against the yen and to higher dollar funding costs. In that scenario, the Japanese yen five-year cross-currency basis swap would move lower—becoming more negative—widening the spread and making it more costly for Japanese investors to fund U.S. dollar trades.

This would obviously suck even more liquidity out of the market.

S&P 500: Bears Emerge as Funding Stress and Credit Risks Deepen_6

Finally, the 1966 analogue continues to track the S&P 500’s present moves. For whatever it is worth.

S&P 500: Bears Emerge as Funding Stress and Credit Risks Deepen_7

Source: investing

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James Whitman

Economic

US companies shed 2,500 jobs per week on average in the four weeks ended Nov. 1, according to data released Tuesday by ADP Research.

The decline suggests the labor market lost momentum in late October. ADP's monthly jobs report, which was released Nov. 5, showed private employment increased 42,000 after declining in the prior two months.

The ADP snapshot of the labor market has helped bridge the gap with official employment data delayed by the longest government shutdown in history. While funding to official statistics agencies has been restored, it's still unclear when October economic data will be issued.

On Thursday, the Bureau of Labor Statistics will issue its September jobs report, which is expected to show total US payrolls rose 55,000 from the prior month.

The weekly ADP figures follow a number of large companies announcing job cuts during the month, including Amazon.com Inc. and Target Corp. Planned layoffs were the highest for any October in more than two decades, according a report from outplacement firm Challenger, Gray & Christmas Inc.

Meanwhile, Americans have grown increasingly concerned about job security. A Harris Poll for Bloomberg News conducted on Oct. 23-25 showed 55% of employed Americans are worried about losing their job.

Source: Bloomberg

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Justin

Political

The House on Tuesday is expected to vote to order the Department of Justice to release all of its files on notorious sex offender Jeffrey Epstein, two days after President Donald Trump abruptly dropped his opposition to the bipartisan bill.

The measure is set to come up during the chamber's first vote series of the day around 2 p.m. ET, NBC News reported.

"Almost everybody" will vote to pass it, House Majority Whip Tom Emmer, R-Minn., told NBC on Monday night.

That wasn't always the case. The push to release the Epstein files had faced opposition from GOP lawmakers, following the lead of Trump, whose White House had warned that backing the effort would be considered a "hostile act."

A discharge petition that would have forced a vote on the bill was jammed up during the government shutdown, as House Speaker Mike Johnson, R-La., kept representatives out of session for nearly eight weeks. The prolonged absence delayed the swearing-in of Democratic Rep. Adelita Grijalva of Arizona, the final signature needed to move the petition forward.

The shutdown ended last Wednesday and Grijalva, after being sworn in, signed the discharge petition. But, with pressure mounting, Johnson said he would bring the Epstein bill to a vote earlier than expected.

The bill from Republican Rep. Thomas Massie of Kentucky and Democratic Rep. Ro Khanna of California is being brought to the floor under a procedure that will require a two-thirds majority to pass. If it succeeds, it will head to the Senate.

Trump, a former friend of Epstein's who had a falling out with him years earlier, said on the campaign trail that he would support releasing the government's files from its investigations into the wealthy and well-connected financier. Epstein died in jail in 2019 while facing federal sex trafficking charges.

But Trump's DOJ said in a July 6 memo that it had conducted an "exhaustive review" of Epstein-related matters and determined "that no further disclosure would be appropriate or warranted."

That determination, and Trump's repeated insistence that the focus on Epstein was a Democratic "hoax," has spurred outrage across the political spectrum, including from some of Trump's own supporters.

The House Oversight Committee last week released thousands of documents from Epstein's estate, including emails appearing to show Epstein discussing Trump.

Trump on Sunday night abruptly reversed course, urging House Republicans to vote in favor of the Epstein files bill.