Trump Puts Pakistan Back On World Stage As Ties With India Fray

Justin

Forex

Political

Economic

Summary:

Standing before US-based Pakistanis in June at a dinner in Washington, Asim Munir beamed after meeting US President Donald Trump in the Oval Office.

Pakistan's most powerful army chief in decades told attendees that Trump had saved South Asia from catastrophe, crediting him with brokering a ceasefire that stopped a May clash with fellow nuclear power India, according to a person at the event, who asked not to be identified because it was private. Munir said he told Trump that Pakistan was ready for a new era of cooperation in areas like critical minerals and cryptocurrency after relations hit a fresh low under President Joe Biden, the person added.

A year ago, India was a central piece of the US's strategy to work with allies and partners to pressure China, with Pakistan largely an afterthought. Now US-Pakistan relations are on the rise as Trump hits India with high tariffs, upending more than two decades of US policy aimed at improving relations with the world's biggest democracy.

As Trump spars with Indian Prime Minister Narendra Modi, he's embraced Munir, the formerly obscure commander elevated to a national hero in the wake of the India clash. Pakistan lawmakers this month passed a constitutional amendment granting Munir, who holds the title of Field Marshal, lifelong immunity and control over all of the nation's armed forces, cementing his position as its strongest military leader since former dictator Mohammed Ayub Khan in the 1960s.

Trump now regularly praises Munir when he speaks about the India-Pakistan conflict, calling him a "great guy" and putting him on equal footing with Modi, who has rejected the US president's claims that he helped broker a ceasefire.

The shift in stance has revived Pakistan as a geopolitical power in the region. A close partner with China, which has poured money into the South Asian nation over the past decade, Pakistan signed a mutual-defense pact with Saudi Arabia in September and has mulled sending troops to the peacekeeping effort in Gaza.

Trump's shift more broadly has driven a wedge into what had been a largely bipartisan consensus in Washington to court India as a counterweight to China. Kurt Campbell, US deputy secretary of state in the Biden administration, told Bloomberg Television this month that "almost all of our strategic interests lie with India" and the "wholesale collapse" of relations between Trump and Modi would likely lead to some lasting damage.

At the same time, a healthy US-Pakistan relationship could also give the US leverage over India, according to Nisha Biswal, partner at The Asia Group and former US assistant secretary of state for South and Central Asian Affairs during the Obama administration. Ultimately, she said, "both relationships have to stand on their own merits."

"The extent to which the US can exert leverage and pressure on Pakistan, and has the relationship to do so in times of crisis, is an important aspect," she said. "You don't want a Pakistan that is impervious to US influence."

Across Pakistan, the shift in the nation's mood since the clash is palpable. Heroic portraits of Munir and other leaders adorn billboards, banners and magazine covers. Images of triumphant Pakistani aircraft downing Indian fighters are on display in government buildings in Islamabad as well as the atrium of the State Bank of Pakistan museum in Karachi. An artist's depiction of Pakistani warplanes zooming over a trio of battered Indian Rafale jets sits alongside historic rupee notes and portraits of graying central bankers.

In recent interviews with Bloomberg News, Pakistani officials in the government, the military and businesses described a sense of national renewal. Many see the India fight as an unqualified victory, backed by Islamabad's claims — denied by New Delhi but acknowledged by Trump — to have downed seven Indian fighters. The clash, they said, has united Pakistan, brought global prestige and opened new doors in world capitals.

"We defended ourselves and we won," Bilal Azhar Kayani, Pakistan's state minister of finance, said in an interview in Islamabad. "But in addition to that, the way we have conducted ourselves diplomatically in a changing and fluid global landscape has been commendable."

One outcome of the May clash has been even firmer alignment between Pakistan's military and civilian leaders, according to Jay Truesdale, chief executive at geopolitical risk consulting firm TDI and a former chief of staff at the US Embassy in Islamabad. That dynamic was underscored in September, when Trump hosted both Munir and Prime Minister Shehbaz Sharif in the Oval Office at the same time.

"The way the Americans intervened and the outcome that took place, the Pakistanis can claim that they had a victory, and this has further galvanized the unity of effort," Truesdale said.

US officials say they aren't prioritizing Pakistan over India, and officials in Washington and New Delhi appear close to reaching a trade deal that would lower tariffs from 50% — among the highest rates in the world. "I don't think anything we're doing with Pakistan comes at the expense of our relationship or friendship with India, which is deep, historic and important," Secretary of State Marco Rubio told reporters last month.

Still, Rubio acknowledged an opportunity with Pakistan. "Our job is to try to figure out how many countries we can find, how we can work with on things of common interest," he said.

Pakistan and the US have been on-and-off partners since the Cold War, when Washington was looking for allies to stop the spread of communism. In 1971, Secretary of State Henry Kissinger used a Pakistani plane from Islamabad for a secret diplomatic mission to China. In the 1980s, Pakistan cooperated with the US to funnel support to Afghan insurgents battling the Soviet Union. Pakistan later provided logistical support in the US's so-called war on terror.

As China emerged as Washington's chief rival, successive administrations drew closer to India, and ties with Pakistan — a longtime friend to Beijing — fell by the wayside. US-Pakistan ties further soured after the discovery of Osama bin Laden in a Pakistani compound, leading to his death in a daring American operation in 2011.

This year saw a sudden reversal. In a speech to Congress in March, Trump praised Pakistan for arresting the alleged mastermind behind a bombing in Kabul in 2021 that killed 13 US troops. Then in May, when tensions between India and Pakistan exploded into a four-day armed conflict, Trump claimed he intervened and brokered a ceasefire, a boast that left Pakistan elated, but Indian officials fuming. Pakistan went on to nominate Trump for a Nobel Peace Prize, while Trump referred to Munir as "my favorite field marshal."

Officials in Islamabad meanwhile prioritized areas close to Trump, including cryptocurrency and counterterrorism.

During his June visit to Washington, Munir said he would work with the White House on cryptocurrency. Just months earlier, officials of World Liberty Financial Partners — a crypto venture with ties to the Trump family — signed an initial cooperation agreement. In July, Pakistan and the US reached a trade agreement that left the nation's goods with a 19% tariff, lower than other countries in Asia and well below India's levy.

Pakistan has been shoring up its security on other fronts. Sharif signed an economic pact with Saudi Crown Prince Mohammed bin Salman last month, shortly after reaching a mutual-defense pact with the nation.

"Not only the Americans, but the world everywhere, they find in Pakistan right now a leadership that — despite all the challenges — is handling the affairs in a great manner," General Ahmed Sharif Chaudhry, Pakistan's top military spokesman, said in an interview in Islamabad.

A challenge for Pakistan is whether it can trust Trump and balance relations with the US and China, Islamabad's top supplier of weapons, infrastructure and aid. Sharif met with Chinese President Xi Jinping in Beijing during a regional summit in September, while Foreign Minister Wang Yi also met with Munir a few months earlier.

"China has been a longstanding partner, so has the US," Finance Minister Muhammad Aurangzeb said in an interview in Islamabad. "They both know that we are well engaged on both ends."

Among the most touted sectors for investment have been Pakistan's resource wealth. Trump in July touted Pakistan's "massive" oil reserves, and a top US diplomat in Pakistan in August said US firms are showing interest in the sector, which has seen production fall for years.

A more promising sector is minerals. One prominent new US partner to date on this front is US Strategic Metals, a Missouri-based firm that in September signed a memorandum of understanding with an army-owned firm to develop Pakistan's rare earth resources.

The deal came together after an August meeting with Munir with other business executives in Florida, according to the company's commercial director, Mike Hollomon. Munir urged him to visit Pakistan "as fast as you can," he said.

Weeks later, Hollomon and other executives were in Islamabad meeting with Pakistani port operators. In October, the company began taking deliveries of small quantities of minerals for quality checks. The longer-term plan is to build rare-earths refining capacity in Pakistan, Hollomon said.

"We'd like this to become a political win for America," he said.

Source: Bloomberg Europe

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James Whitman

Political

Russia-Ukraine Conflict

The United States has drafted a 28-point peace plan for ending the war in Ukraine which is being studied by Kyiv, Moscow and interested countries in Europe.

The plan, seen by Reuters, gives Russia - which is inching forward on the battlefield and controls almost one-fifth of Ukraine - much of what it wants.

But it also contains some unappetising proposals for Moscow which would leave it short of fully achieving its stated war aims and require its forces to pull back from some areas that they have captured.

Following are some of the points that are likely to prove contentious.

TERRITORY

Under the proposals, Ukraine would have to cede the rest of the Donetsk region to Russia, a large area including the fortress cities of Sloviansk and Kramatorsk, which Ukraine still controls.

Ukrainian President Volodymyr Zelenskiy has previously ruled out gifting Moscow any territory.

The agreement would also permanently lock in Russia's battlefield gains since February 2022 in the four Ukrainian regions it claims as its own - Luhansk, Zaporizhzhia, Kherson and Donetsk. Russia's 2014 annexation of Crimea would become permanent too.

Ukraine would also have to compromise on the status of the Russian-controlled Zaporizhzhia nuclear power station, which would be restarted and its power shared 50-50 between Russia and Ukraine.

But recognition of those territories as Russian would be "de facto" - a status that Moscow might not want to accept.

Russia would be left without full control of Kherson and Zaporizhzhia, where a line would be drawn along the current front line freezing the status quo.

Russian troops would not be allowed to garrison the part of Donetsk that Ukraine would hand over. This would become a neutral demilitarised buffer zone controlled by and belonging to Moscow.

Russian forces would also have to withdraw from two other regions where they have taken territory - Kharkiv and Dnipropetrovsk.

Moscow says its forces have captured the city of Kupiansk in the Kharkiv region although Kyiv has denied this. Under the U.S. proposals, Moscow would have to retreat from Kupiansk.

MONEY

Western governments have frozen about $300 billion of Russian assets, mostly in Europe, to punish Moscow for the war.

Russia wants those assets unfrozen and has threatened action against the European Union, which has produced a plan to issue a loan to Ukraine using cash balances accrued from the frozen securities.

But under the U.S. plan, Russia would have to hand over $100 billion to Washington which would lead an effort to rebuild Ukraine, with the U.S. reaping 50% of the profits from that work.

Another chunk of the frozen Russian assets would be ploughed into a joint U.S.-Russia investment vehicle, from which Moscow would get some benefit.

But the plan would give neither Russia nor Ukraine an entirely free hand when it comes to spending the frozen funds.

It could also torpedo EU plans to use the frozen funds to help Kyiv, though Russia would not get immediate relief from international sanctions: sanctions would be lifted in phases and on a case-by-case basis after discussions.

Ukraine would be forced to swallow a bitter pill by not being able under the plan to seek reparations for war damage from Russia through the courts.

SECURITY

Under the plan, Zelenskiy would have to permanently drop one of his most cherished ambitions - for Ukraine to join the U.S.-led NATO military alliance. NATO would agree to never admit Ukraine and the Ukrainian constitution would be amended to reflect that.

NATO itself would commit not to expand further, a key Russian demand, while there would be an "expectation" that Moscow would not invade its neighbours, cemented in a non-aggression pact between Russia and Ukraine and Europe.

Ukraine is likely to be disappointed by the vague language on the security guarantees it would receive from Washington. Beyond calling them "robust" and saying Kyiv would have to pay for them, there is no mention of what they might entail.

NATO troops could not be stationed in Ukraine, and Kyiv would have to commit to not becoming a nuclear-armed state under the proposals.

Ukraine would also be forced to cap the size of its army at 600,000 troops. It has previously resisted suggestions the size of its military should be limited.

The 600,000 figure is considerably less than the roughly 1 million people Ukraine says it has under arms. Russia has previously demanded Ukraine's army be cut to below 100,000 troops.

JUSTICE

Ukrainian politicians have long talked about holding Russia accountable for its actions, but under the plan Kyiv would have to drop plans to pursue any legal cases seeking to prove that Moscow committed war crimes, something Russia denies.

Ukraine may also dislike proposals that would see Russia readmitted to the Group of Eight nations and re-integrated into the global economy.

Another clause talks of large-scale investment and business cooperation between the U.S. and Russia in areas such as rare earths, energy and the Arctic.

The plan also says Ukraine must be "de-Nazified," a reference to what Moscow says are nationalist anti-Russian military units and politicians. Kyiv says this portrayal is bogus.

The plan, without referencing Ukraine, says "all Nazi ideology or activity should be renounced or forbidden."

Source: Reuters

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Adam

Forex

The yen found some support on Friday as Japanese officials stepped up their verbal intervention to stem the currency's decline, while the dollar was a touch softer but on track for its first weekly rise in three weeks.

The yen popped higher after Japanese Finance Minister Satsuki Katayama said intervention was a possibility to deal with excessively volatile and speculative moves, leaving traders on alert for signs of yen buying from Tokyo.

"The warning overnight from the Japanese government was certainly a step up from what we've seen recently," said Lee Hardman, senior currency economist at MUFG.

"That's helping provide more support for the yen in the near term."

The Japanese currency rose 0.4% to 156.92 per dollar, though it remained close to Thursday's 10-month trough of 157.90 and was still on track to lose 1.5% for the week.

Much of the focus in currency markets this week has been on the yen, which has plumbed fresh lows as investors worry about the nation's worsening fiscal position brought about by Prime Minister Sanae Takaichi's lavish spending policies.

Takaichi's cabinet approved a 21.3 trillion yen ($135.40 billion) economic stimulus package on Friday.

"The elephant in the room now is mounting intervention risks," said Vishnu Varathan, head of macro research for Asia ex-Japan at Mizuho. "Interventions are likely to be opportunistic and short-lived. Essentially, speed bumps, not barricades."

Tokyo last spent 5.53 trillion yen, or nearly $37 billion, in July 2024 to intervene in the foreign exchange market to haul the yen away from 38-year lows.

Against the euro, the yen was pinned near its lowest since the introduction of the single currency and last stood at 181.04.

FED CUT BETS RECEDE

In the broader market, the dollar was set for a weekly gain as investors trimmed bets on further policy easing from the Federal Reserve next month.

The release of a delayed U.S. nonfarm payrolls report on Thursday painted a mixed picture of the country's labour market, showing employment growth accelerated in September, though the jobless rate rose to 4.4%, its highest level in four years.

That reinforced the view that the Fed is likely to refrain from cutting rates at its December meeting, as policymakers continue to navigate through an economic fog brought about by the U.S. government shutdown.

"This was the last payroll report before the December Fed meeting and the report did not provide enough clarity for the Fed to cut in December," said Jefferies economist Mohit Kumar.

Kumar added that he expects the Fed to "skip" the December meeting but remain on an easing path.

Markets are now pricing in just a 27% chance of the Fed easing rates next month.

The euro stood at $1.1538 and was on track for a weekly decline of 0.7%.

It held steady after preliminary PMI data showed euro zone business activity grew steadily this month, even as manufacturing activity slipped into contractionary territory.

Sterling rose 0.2% to $1.3092, though it was set to lose 0.8% for the week, with investors anxiously awaiting Britain's upcoming budget, a major test for the nation's currency and bond markets.

The dollar index , which measures the greenback against a basket of other major currencies, flirted with a 5-1/2-month peak and last stood at 100.13.

The Australian dollar was up 0.1% at $0.6447 after sliding 0.6% on Thursday on a broad risk-off mood in markets. The New Zealand dollar rose 0.4% to $0.5605, having also lost 0.4% on Thursday.

The two Antipodean currencies were set for weekly losses of more than 1%.

In cryptocurrencies, bitcoin fell to a seven-month low of $82,032.

Source: reuters

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Gerik

Economic

Cryptocurrency

Bitcoin Enters Crisis Mode Amid Steep November Losses

Bitcoin is now poised for its worst month in over three years, shedding 23% of its value in November and falling as low as $81,629 on Friday before rebounding modestly to $84,166. Ether followed suit, dropping below $2,700 at one point. The sharp drawdown mirrors the volatility seen during the 2022 crypto crash, when the TerraUSD stablecoin collapse triggered a chain reaction of bankruptcies culminating in the fall of FTX.

The severity of this month’s plunge signals more than routine volatility it reflects a loss of structural confidence in key segments of the crypto ecosystem, particularly in leveraged derivatives markets and institutional flows.

Liquidations Spark Systemic Deleveraging Cycle

The causal driver of this month’s collapse was a massive wave of forced liquidations. On October 10 alone, $19 billion in leveraged crypto positions were unwound, triggering an estimated $1.5 trillion loss in the broader digital asset market. The momentum has only worsened: within the past 24 hours, an additional $2 billion in leveraged positions were wiped out, according to CoinGlass.

This unwinding points to a cascading deleveraging loop, where declining prices trigger margin calls, which in turn force further selling especially in perpetual futures markets. Open interest in these futures contracts has now fallen 35% from its October peak of $94 billion.

The correlation between leveraged position collapses and Bitcoin's price decline is causal: as liquidity is drained and traders are flushed out, market depth weakens, amplifying price sensitivity to new selling pressure.

Institutional Outflows Undermine 'Buy the Dip' Thesis

Despite favorable regulatory sentiment under the Trump administration and previous enthusiasm for institutional adoption, recent behavior from large players has been cautious. A consortium of 12 U.S.-listed Bitcoin ETFs saw net redemptions of $903 million on Thursday the second-largest daily outflow since these products launched in early 2024.

This reluctance from institutional investors to “buy the dip” reflects a shift in risk appetite, likely tied to concerns over liquidity, valuation, and exposure to further downside. Hedge fund managers and ETF strategists appear unwilling to step in amid uncertainty over where the liquidation wave may bottom.

Broader Market Volatility Compounds Crypto Pressure

The crypto rout is also unfolding in an unsupportive macro environment. U.S. equities, which had been buoyed by Nvidia’s strong earnings and AI-related optimism, reversed gains as concerns mounted over stretched tech valuations and doubts resurfaced about a possible December rate cut by the Federal Reserve.

This macro backdrop of elevated volatility and monetary tightening uncertainty is particularly damaging for risk assets like Bitcoin, which are often treated as high-beta proxies for market sentiment.

Strategic Holders Face New Pressure

MicroStrategy, one of Bitcoin’s largest corporate holders, closed 5% lower on Thursday. According to IG Australia analyst Tony Sycamore, the market may be deliberately testing MicroStrategy’s pain threshold, especially given its leveraged exposure. A further slide could bring Bitcoin closer to the firm’s average cost basis, potentially triggering margin calls and another wave of forced selling.

If the market breaches this threshold, the effects could ripple across investor psychology and corporate balance sheets, further undermining support levels.

A Structural Test of Crypto Market Resilience

Bitcoin’s November collapse illustrates a confluence of factors: cascading liquidations, institutional exit, macro fragility, and the fragility of leveraged crypto infrastructure. While comparisons to 2022 are becoming increasingly apt, today’s decline is compounded by the fact that even under a supportive political climate, structural demand has failed to absorb selling pressure.

Unless volatility stabilizes and institutional confidence returns, the downward momentum could deepen further into December. In this context, the crypto market is undergoing not just a technical correction, but a confidence stress test one that may determine the viability of its post-FTX recovery narrative.

Source: Bloomberg

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Gerik

Forex

Economic

Yen Slips Toward 38-Year Low, Prompting Intervention Signals

Japan is inching closer to a third round of currency intervention in as many years as the yen trades near 156.7 to the dollar, approaching the 160–162 threshold that triggered past interventions. Finance Minister Satsuki Katayama issued the strongest warning yet, threatening action should movements become “disorderly or excessive.” Yet many analysts question the likely effectiveness of any intervention, citing both structural and cyclical challenges that limit the potential for a lasting rebound in the yen.

The sharp decline of the currency, combined with sliding government bonds and wobbly equity markets, has developed since Prime Minister Sanae Takaichi took office. Her administration’s aggressive fiscal policy including a newly approved ¥21.3 trillion ($135 billion) stimulus package has amplified investor fears of expanded debt issuance and undermined confidence in Japan’s financial stability. As bond yields surged, foreign exchange markets began testing the government's willingness to tolerate further yen depreciation.

Why Intervention May Fall Short This Time

Unlike past episodes, the yen’s current weakness lacks an obvious speculative buildup that authorities could flush out through direct market action. Bo Zhuang, global macro strategist at Loomis Sayles, noted that speculative positioning is light, meaning there are no crowded trades to unwind. As a result, initial intervention might backfire by encouraging new short positions once the immediate impact fades.

Historical patterns show that Japanese authorities usually escalate verbal warnings before acting, culminating in rate checks with banks and, eventually, direct yen purchases. Analysts say the 160 level is a psychological and tactical line in the sand. If that threshold is breached without intervention, markets may interpret it as a sign of policy inaction, risking further depreciation toward 165.

Structural Drivers Still Favor Yen Weakness

Beyond short-term market dynamics, the root causes of yen weakness remain unchanged. Japan’s interest rate differential with the U.S. is still wide, and the Bank of Japan has signaled only a slow and cautious path to normalization. BOJ Governor Kazuo Ueda raised rates to 0.5% in January but has maintained a wait-and-see approach since. With the Federal Reserve maintaining high rates, yield-seeking capital continues to flow away from the yen.

Long-dated Japanese Government Bonds (JGBs) have also come under selling pressure, with 30-year and 40-year yields hitting all-time highs this week. This reflects investor discomfort with the rising fiscal burden and uncertainty over the BOJ's policy path. The bond selloff, in tandem with yen weakness, has created a feedback loop that further complicates intervention efforts.

Market Sentiment and Volatility Remain Muted for Now

Despite recent declines, options markets do not suggest strong demand for yen upside protection. Implied volatility remains low, indicating that traders are not positioning aggressively for a sudden rebound. This reinforces the notion that any intervention could have only transient effects unless backed by broader macro policy shifts.

Still, some observers believe the BOJ may step in more decisively. Rong Ren Goh of Eastspring Investments argued that a meaningful and credible rate hike possibly as early as December would do far more to stabilize the yen than intervention alone. The last time the BOJ and the government coordinated action, in July 2024, a simultaneous rate hike and $40 billion intervention did help lift the currency, albeit briefly.

Time to Act, But Risks Remain High

The yen’s current slide is testing the credibility of Japan’s new leadership and the resilience of its monetary policy framework. While intervention may offer short-term relief and signal intent, it is unlikely to provide durable support without complementary action from the Bank of Japan. As markets eye the critical 160 threshold, authorities face a delicate balancing act: move too soon, and they risk emboldening speculators; wait too long, and they risk losing control of the narrative.

In a landscape dominated by rising global rates, aggressive fiscal spending, and fragile investor confidence, only coordinated policy tightening not isolated currency support is likely to offer Japan a sustainable path to yen stability.

Source: Reuters

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Michelle

Forex

Economic

Federal Reserve Bank of Dallas President Lorie Logan said it would likely be appropriate to hold interest rates steady at the central bank's December meeting to ensure policymakers don't ease too aggressively only to reverse course later.

"With two rate cuts now in place, I'd find it difficult to cut rates again in December unless there is clear evidence that inflation will fall faster than expected or that the labor market will cool more rapidly," Logan said Friday at an event in Zurich.

"In the absence of clear evidence that justifies further easing, holding rates steady for a time would allow the FOMC to better assess the degree of restriction from current policy," she said, referring to the central bank's rate-setting Federal Open Market Committee.

Having to reverse rate cuts that turned out to be policy errors could generate "unwanted financial and economic volatility," Logan added in remarks that echoed ones she made last month.

Fed officials lowered interest rates at each of their last two meetings, after cutting them by a full percentage point in the last few months of 2024. They're now split on whether to do so again at the December meeting.

Several policymakers have expressed concern about inflation that's still well above the Fed's 2% target, while others see greater risks to the labor market amid weakened hiring.

That had reduced the odds investors see of a cut in December, based on federal funds futures pricing. But expectations swung back up earlier Friday after New York Fed President John Williams said he sees room for another rate reduction in the near term.

Logan said rates likely aren't holding back the economy much right now, and continued pressure may be needed to moderate the effects of a rapidly rising stock market.

"Elevated asset valuations and compressed credit spreads aren't just indications that policy most likely isn't very restrictive," Logan said. "They're also indications that the fed funds rate needs to offset tailwinds from financial conditions."

The Dallas Fed chief, who spent the bulk of her career on the markets desk at the New York Fed, said it probably won't be long before the Fed needs to resume asset purchases to ensure the smooth functioning of funding markets. Policymakers announced in October they would stop shrinking the central bank's balance sheet next month amid pressures in those markets.

"I expect it will not be long before it is appropriate to resume balance sheet growth so that money market rates can average close to, but perhaps slightly below, IORB," Logan said, referring to the rate of interest the Fed pays on reserve balances. "Those reserve management purchases will be technical steps. By no means will they represent a change in the stance of policy."

Source: Bloomberg Europe

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Adam

Stocks

Economic

Reports of the death of the AI trade were greatly exaggerated, Nvidia (NVDA) and its bullish analysts want you to know.

Instead of showing AI growth flatlining, Wall Street saw the company deliver AI-infused vindication.

Investors on Thursday appeared to agree before igniting a sell-off that led to a 3% drop for Nvidia and 1.6% for the S&P 500 (^GSPC). But for now, Wall Street and the rest of the market will have to agree to disagree, because the vibes in analyst commentary and those red numbers simply do not match.

Similar to the newly released jobs numbers that, in at least the hiring dimension, surprised markets, Nvidia bulls seized on the company's earnings beat and CEO Jensen Huang's triumphant commentary as a definitive marker of the direction the AI trade is headed. That is, the one with more money.

"Nvidia answered the 'AI Bubble' question loud and clear with a drop the mic quarter," said analyst Dan Ives in a note Thursday.

While Huang addressed the criticisms of an AI bubble head-on, perhaps with the appropriate level of confidence after a stellar quarter, it's worth revisiting the bumpy road that led to this moment. As Ives summarized months of drama, from the shake-up triggered by DeepSeek and US-China trade worries to tariffs and questions over the sustainability of Big Tech's massive capex, tech bulls have had to navigate through waves of naysaying.

This, as he puts it, was the earnings call that tech bulls "needed to hear."

"Nvidia’s breakout earnings reminded investors where the strength still lies," said Gina Bolvin, president of Bolvin Wealth Management Group, in a note on Thursday.

Huang and his lieutenants delivered a full-throated message that the market is too concerned with bubble talk and not enough with Nvidia's own vision of investment and industry demand.

As UBS analyst Timothy Arcuri said in a note after earnings, "Ultimately, the AI infrastructure tide is still rising so fast that all boats will be lifted, but NVDA seems to be actually tightening its grip on broadly enabling AI across modalities (text, video, etc.) and industries."

Yes, Wall Street thinks the quarter should calm AI jitters and give backers more reasons to cling to the stock. But even analysts who reiterated their Buy ratings can still see the risks that Nvidia's critics are focusing on. Risks that ultimately turned a big day in green into a big day in red on Thursday.

Those include the investments into customers that aren't profitable, chiefly OpenAI, whose financial conundrum of committing more than $1 trillion to build out data centers without generating positive cash flow helped kick-start the most recent bout of AI skepticism.

As Bank of America analysts led by Vivek Arya wrote in a note, the move toward more debt financing of AI capex is a risk to Nvidia. So are the constraints of data center space and their power demands, which several other observers see as a new political risk — not just an economic one.

Nvidia's bulls say, sure, let the bears sit this AI-fueled bull market out, and they'll miss the next great transformation — as they have other monumental moments.

But for all the doubts Nvidia may have quieted this week, it's worth emphasizing that it isn't the AI industry's failures that have injected so much disbelief into the market. It's Nvidia's continued success, and the industry's lopsided victories, that raise so much suspicion.