U.S. equity investors are eagerly awaiting the NVIDIA earnings announcement this afternoon, the potential impact on investor sentiment overshadowing macroeconomic and geopolitical concerns. Consensus estimates call for CEO Jensen Huang to forecast more than $37 billion in earnings for the fourth quarter. Critically, investors will seek guidance on any production delays for the company’s Blackwell chip.
From a big picture standpoint, forecasts from NVIDIA NVDA will reverberate throughout the board market and economy as a whole. Investors have fully bought into the promise of AI to increase productivity and to drive increased corporate investment. This spills over into many different aspects of the stock market — energy for instance, with demand for fossil fuels and renewable technologies hinging on the need for massive data centers.
In a note to clients today, the UBS macro research team, including macro strategist Elena Amoruso, summed up the situation. In a report entitled “The productivity paradox and AI,” the analysts note that decades of digital transition have yet to realize their full potential boost in productivity — at least based on traditional economic measures. While surveys show rapid adoption of AI products in the workplace, often by individuals on their own initiative, the speed of the technologies impact on growth remains unknown.
Trump trades lose steam
Traders have continued to factor the impact of a Trump administration across global markets in recent days.
Bitcoin broke new highs over $94K on Tuesday, lifting ETFs including the iShares Bitcoin Trust IBIT . The upswing came following the announcement that Trump Media, the corporation behind Trump’s Truth-Social media platform, is in talks to buy the crypto trading venue Bakkt Holdings as a sign that the new administration will loosen regulations on the sector.
While digital investors cheered the incoming administration, bullish trends in other markets have moderated or reversed in recent sessions. A steepening of the yield curve has yet to materialize in treasury markets, while spot gold prices have slipped lower following the election with the SPDR Gold Trust GLD off by almost 4% since Nov. 5.
The general consensus among strategists has been that Trump 2.0 will mean much stronger dollar supportive policies than during his first administration. The threat of massive tariffs, besides creating incentives for trading partners to devalue their currencies further, is a hit to an already weakened Chinese economy. Most economists predict that a slowdown in the world’s second largest economy will be a big hit to global growth with many lower forecasts for 2025 and 2026.
Specifically, the idea that import tariffs can play a more substantial role in trade and fiscal policy should be consistent with USD appreciation via reduced imports as well as an incentive for the U.S. trading partners to weaken their currencies.
Real estate markets, meanwhile, are also bracing for a shift in policy. Bloomberg reported Wednesday that 30 mortgage rates have risen above 7% as potential homebuyers face the specter of inflation resulting from tariffs. The mortgage data from Redfin raised forecasts for average mortgage rates from 6.1% to 6.8% following the election. Critically, the impact of deportation on the construction industry could spill into a housing market already facing shortages.
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