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Russell Brand has been found guilty of rape and sexual assault, three days after his barrister asked jurors, "Why is it that only three rapes in 10 years?"

The 51-year-old comedian was convicted at Southwark Crown Court on Thursday of one count of rape and three of sexual assault, the Telegraph reported. The rape conviction relates to a young fan Brand met after one of his Hammersmith Apollo shows in 2009, and one of the sexual assaults to a woman at a Soho bar in 2004, according to GB News.

Brand had faced seven counts involving six women between 1999 and 2009, and pleaded not guilty to all of them. Reports did not immediately say whether the jury cleared him of the remaining three counts - two of rape and one of attempted indecent assault - or is still considering them.

Brand, who was accompanied to court by his wife Laura Gallacher, is expected to face a lengthy prison sentence.

As we reported on Wednesday, Brand's barrister, Ian Winter KC, closed the defense on Monday by turning his client's sex life into an argument for acquittal. "What matters is he had an immense amount of sex and none of it was unlawful," Winter told the jury of eight men and four women, which began deliberating on Tuesday.

Megyn Kelly, recapping the closing on her show, put the argument more bluntly: "He had a goal of 5,000, three women, three say he didn't consent out of 5,000. If this guy's running around just randomly raping women orally, vaginally, anally, wouldn't there be more?"

The 5,000 was never a count of partners. A former friend, Mark Pinheiro, testified that Brand once told him of an ambition to sleep with 5,000 women, which Brand denied on the stand: "No, not a goal."

Winter also told jurors the women "all came forward for reasons connected to the TV programme," arguing that the 2023 Channel 4 Dispatches investigation had "poisoned the well of justice." Scotland Yard opened its investigation in September 2023 after that program and the Sunday Times aired allegations from several women, and Brand was charged in April 2025 with five offenses against four women, all between 1999 and 2005.

The rape he was convicted of was not among those original charges. More women came forward after the publicity, and on Dec. 23 prosecutors added one count of rape and one of sexual assault, both from 2009, involving two more women.

Brand presented on BBC Radio 2 from 2006 until 2008, when he quit over his prank calls to actor Andrew Sachs, and the Telegraph noted the verdict adds to pressure on the BBC over how it policed its stars, after the Huw Edwards scandal and the Jimmy Savile affair.

Since leaving mainstream TV, Brand converted to Christianity, reinvented himself as an anti-establishment commentator and insisted the charges were politically motivated. Elon Musk publicly backed him when the allegations surfaced in 2023, and last year Tucker Carlson called on the Trump administration to "rescue" Brand from charges he described as "political and absurd," Variety reported.

Kelly broke with that camp from the start. When the allegations first aired, she told her listeners: "Could you please for a second stay open minded to the possibility that the women are telling the truth?"

Submitted by QTR's Fringe Finance

As I write this Thursday morning, Dow futures are green while Nasdaq futures are down roughly 0.5%. It’s a small but interesting divergence, and one that supports something I’ve been predicting for a while now: a rotation away from speculative technology and AI-related investments and toward established businesses with more predictable earnings and cash flows.

I continue to believe tech, particularly the more speculative corners of the AI trade, is headed lower over the short to medium term. Yesterday’s rally didn’t change that view. As I discussed yesterday, citing Gordon Johnson, I think much of the move could be attributable to VIX compression and the unwinding of election-related hedges. Once the election uncertainty disappeared, investors no longer needed as much protection, implied volatility fell, and the resulting repositioning helped push stocks higher.

That doesn’t mean there wasn’t genuine buying, or that the market can’t rally further. But I would be careful about mistaking a mechanical relief rally for a fundamental improvement in the outlook. Valuations remain stretched, financing costs remain a problem, and the economics of the AI infrastructure boom are increasingly difficult to justify. The election, in my opinion, added another layer of risk rather than removing one.

What interests me more than yesterday’s index performance is where money appears to be moving to.

For a few months, I’ve been arguing that 2027 could be characterized by a rotation away from speculative AI and technology investments and toward larger, established companies with real earnings and durable businesses.

The relative action in some names I’ve pointed out, including Nike (NKE), Costco (COST) Microsoft (MSFT), Uber (UBER), Consumer Staples (VDC) and McDonald’s (MCD), along with several other companies I’ve been watching, suggests that process may already be underway. Names like these are outperforming the NASDAQ and that outperformance appeared to accelerate during yesterday’s rally.

These businesses have very different exposures, but they share an important characteristic: investors can evaluate them based on existing operations and identifiable earnings power, rather than exclusively on extraordinary assumptions about future growth.

Microsoft, for example, may face legitimate questions about its AI spending, but it has the financial resources to fund those ambitions without continually returning to capital markets.

Interestingly, JPMorgan’s trading desk described a similar pattern yesterday. According to an X post by Zero Hedge, JPM’s Brian Heavey noted a clear preference for large-cap quality, particularly companies with access to financing and ownership of computing infrastructure. The desk observed demand for hyperscalers like Amazon, Microsoft, and Alphabet, while second-tier AI infrastructure names like CoreWeave (CRWV) and Nebius (NBIS), which are more dependent on continued capital raising, showed weakness.

As I noted on a brief X Spaces call yesterday, names with leverage (like CoreWeave) and inconsistent cash flows will be the first to be abandoned in the AI space. Quality like Google (GOOG), Amazon (AMZN) and the likes will be the beneficiaries, though I personally don’t love Apple (AAPL) here at 40x earnings.

JPMorgan also noted that AI data-center names were generally underperforming, while more cyclical analog semiconductor companies like Texas Instruments (TXN) and NXP Semiconductors (NXPI) were showing relative strength.

Matt Reiner, also from JPMorgan, described relatively subdued trading activity, with volumes running approximately 16% below normal early in the session today.

Long-only investors were buying, particularly cyclicals, while hedge funds were shorting technology into weakness. He also observed that investors were adding mega-cap technology exposure in relatively small size, while becoming more receptive to shorting the broader AI complex.

To me, the message is fairly straightforward: investors aren’t necessarily abandoning technology, but they appear to be becoming more selective about which parts of it they want to own. The distinction between companies that generate capital and companies that constantly need to raise it is becoming increasingly important.

I was also interested to hear about Citrini Research’s latest State of the Themes report, covered this morning by Dow Jones’ MarketWatch. The firm is now making an argument remarkably similar to one I’ve been discussing for roughly two months, when the Nasdaq was approximately 10% higher. But that’s great. Citrini does good work, there’s plenty of room in this lifeboat and I’m happy to see some validation on my thoughts from August, when I wrote: The Real AI Crash Will Start This Year

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Citrini’s central prediction is that we’re approaching peak growth in AI capital expenditures. The firm estimates that annualized hyperscaler investment is approaching $1 trillion, while annual recurring revenue across the AI ecosystem is roughly one-fifth of that amount. Those aren’t directly comparable financial measures, but the disparity highlights the fundamental question I’ve been asking: where are the returns on all this spending?

The firm argues what I have written about the last month or two…that capital markets cannot indefinitely accommodate the extraordinary financing demands of the hyperscalers and that spending growth will eventually have to decelerate. It also points to growing pricing competition between OpenAI and Anthropic, the potential commoditization of AI models, and the increasing risk that AI disrupts established software businesses without necessarily producing attractive returns for the companies building it. It’s Official: The AI Emperor Has No Clothes

This among other things, was also covered in an article I published in August reviewing 8 different bear cases facing the market by 8 well known respected investors: 8 Sharp Bear Cases You Must Read Today

Add the election’s potential implications for data-center permitting, energy infrastructure, and regulatory oversight, and the investment case becomes even more complicated.

Perhaps most interestingly, Citrini is also shifting attention toward relative value and overlooked parts of the real economy, including consumer businesses, traditional software, financials, entertainment, and energy. Its report highlights companies like Victoria’s Secret, e.l.f. Beauty, IMAX, Cinemark, and MGM Resorts, alongside relative-value trades within technology. I like their take a lot. Hopefully, we’re both right.

Their take fits with my broader expectation that the next phase of the market may favor established businesses over speculative promises. It doesn’t mean AI disappears or that every technology stock declines. It means the days of indiscriminately rewarding anything associated with AI may be ending.

Overnight trading in Asia also reflected that possibility. South Korea’s Kospi fell roughly 5%, with semiconductor names like Samsung and SK Hynix under significant pressure, while Hong Kong’s Hang Seng gained 3.6% as Tencent and Alibaba rallied more than 6%.

One session doesn’t establish a trend, but taken alongside JPMorgan’s observations and this morning’s Dow/Nasdaq divergence, the evidence of a potential rotation is becoming more interesting.

There’s another possible explanation for some of yesterday’s relative strength in large technology companies and data-center names like Microsoft. As I discussed yesterday, Elon Musk and his businesses could become particularly prominent targets for scrutiny under the new political environment.

If congressional attention initially concentrates on Tesla, SpaceX, Starlink, and Musk’s relationships with the federal government, other technology companies could enjoy some relative relief simply because investors perceive them as less immediately exposed. That’s speculative, but plausible, and it doesn’t mean the broader AI industry is out of the woods.

In fact, I expect news flow surrounding Tesla (TSLA) and SpaceX to be directionally negative for a while. Questions involving autonomous driving, government contracts, environmental permitting, subsidies, and political relationships could all attract greater attention. That doesn’t imply wrongdoing or guarantee enforcement action, but it introduces uncertainty into businesses whose valuations already reflect enormous expectations.

I also want to emphasize another risk I didn’t spend enough time discussing yesterday: prediction markets.

I think these platforms could come under serious congressional and regulatory scrutiny, particularly around the distinction between financial instruments and gambling, potential market manipulation, insider information, and contracts tied to political events.

Robinhood (HOOD) is the most obvious publicly traded name I associate with this exposure, although other public companies have interests in the broader ecosystem. Prediction markets generated $433 million in revenue in the first nine months of 2026, compared with just $40 million in the comparable 2025 period. That makes them one of Robinhood's most important growth engines

Prediction markets aren’t necessarily going away, but I suspect investors may be underestimating the political and regulatory risks associated with their rapid expansion.

I also wanted to, again, reiterate the sector postives and negatives I see from the election that I laid out yesterday. Here’s what sectors I think will face headwinds, and others I think will benefit from yesterday’s election outcome.

My outlook remains essentially unchanged…both since yesterday’s reaction, since last week’s speculation the election could crash markets, and since August when I first floated the idea of the AI crash.

I still expect technology, particularly speculative AI infrastructure, to move lower over the short to medium term. Yesterday’s rally looked to me like a significant amount of election-related hedging being unwound, not evidence that the fundamental problems facing the sector have disappeared.

At the same time, I think we’re beginning to see evidence of the rotation I’ve been anticipating for 2027. JPMorgan’s trading desk is observing demand for large-cap quality and more selective technology exposure. Citrini is now advocating a shift toward relative value and overlooked real-economy businesses. And this morning, Dow futures are outperforming Nasdaq futures, widening the spread between the two from the last month…

None of that guarantees the rotation will persist. A meaningful decline in interest rates, stronger-than-expected earnings, or convincing evidence of attractive returns on AI spending could change the outlook. And established large-cap businesses aren’t automatically cheap or immune to a broader market decline.

But the combination of stretched valuations, enormous capital requirements, sticky inflation, potentially higher-for-longer interest rates, and a more complicated political environment continues to make me cautious.

I don’t think the next phase of this market will necessarily be about abandoning equities altogether. I think it will be about abandoning the assumption that every speculative growth story deserves an extraordinary valuation.

I’ve been making that argument for two months, since the Nasdaq was roughly 10% higher. It’s encouraging to see more institutional commentary moving in the same direction, but I suspect the adjustment still has further to run.

The rally hasn’t changed my mind. If anything, the emerging rotation is making the underlying thesis more compelling. God bless and have a great Thursday.

--

QTR’s Disclaimer: Please read my full legal disclaimer on my About page here.

In a significant albeit underreported development for global energy, and for the US-Iran standoff in the Persian Gulf, Iranian parliament has this week announced it is exempting several key trading partniers from its oil transit restrictions in the Strait of Hormuz.

The move was first unvieled Tuesday by Ahmad Hayat-Moghaddam, Vice Chairman of the Iranian Parliament’s National Security and Foreign Policy Committee, at a moment Iranian export flows are struggling under the many months-long US naval blockade of the country's ports.

"We have currently exempted India, China, Iraq and Qatar from transit restrictions in the Strait of Hormuz. Ships from these countries pass freely," Hayat-Moghaddam stated in an interview to the Iranian Student’s News Agency (SNA).

His comments suggested further that the US Navy doesn't block these ships from passing, which could explain how Iran has continued to get oil and wares out to global markets despite the blockade. "The Americans do not interfere with them either," he claimed.

According to more of the remarks:

Elaborating on the rationale behind the decision, the lawmaker noted that the Islamic Republic does not levy transit tolls on Qatari vessels and that each exemption was granted based on specific considerations and agreements. Hayat-Moghaddam remarked: “We are conducting business, and each of these exemptions has a distinct reason.”

According to the MP, India’s exemption was designed to facilitate medicine imports into Iran, while China’s exemption aims to secure political backing from Beijing for the Islamic Republic.

October saw a record number of attacks on commercial vessels by Iran, keeping geopolitical risk elevated across the region; however, what was a near-daily pace of the attacks seems to have slowed, for now.

Even global media reporting has slowed in terms of an Iranian focus, having given way to the midterm elections and major Democratic gains in the US.

President Trump has still held off on prior threats to resume a major bombing campaign after the midterm elections - but this is a possibility still on the table. The Democratic sweep and impending control of the House and Senate might perhaps make renewed major war a more distant possibility.

Democrats are celebrating one of their biggest midterm victories in decades, but their historic triumph could come with a nasty political hangover.

The party's sweeping gains in Tuesday's elections delivered a major rebuke to President Donald Trump, as voter frustration over the Iran war, soaring gas prices and the cost of living fueled a nationwide Democratic surge.

However, the New York Post's Isaac Schorr argued in an op-ed that Democrats' biggest victory could quickly become their next political headache.

The problem is simple: Trump isn't going anywhere.

Schorr argues that even with Congress under Democratic control, Trump's veto power could prevent the party from delivering on its legislative agenda:

"With President Donald Trump in the White House and his veto pen in hand, they won't be able to push through any of their major agenda items"

However, there is another problem, according to Schorr:

"His caucus won't let him work with Trump during his waning days in the White House"

Schorr suggests Democrats could negotiate deals on energy production, immigration enforcement and government spending. Instead, the columnist predicts the party will prioritize confrontation:

"Alas, instead it'll be all talk and no work on behalf of their constituents."

Schorr also warned that Democrats could revive divisive battles over immigration, spending, climate policy and transgender participation in women's sports, while potentially pursuing another impeachment of Trump.

Schorr closed with a warning that could prove prescient:

"But they're equally likely to give themselves a years-long hangover - by reminding Americans of who they really are."

Republicans suffered a string of major Senate defeats in states long considered Republican strongholds. In Texas, Democrat James Talarico toppled Ken Paxton, while Adam Hamilton ousted Sen. Roger Marshall in Kansas. Moreover, the biggest shock came in South Carolina, where Annie Andrews defeated Sen. Darline Graham, the sister of the late Lindsey Graham.

Democrats also flipped House districts across the country, securing control of both chambers of Congress.

LAWYER UP.

— Congressman Robert Garcia (@RepRobertGarcia) November 4, 2026

Yet, in surprising twist that could complicate Schorr's argument, Trump revealed last night that he has already spoke with Democrat leaders and expressed a willingness to work together.

"Well, we're going to work with the Democrats to make sure things go well for our country. Very important. They've already called and they want to work with," Trump told POLITICO's Dasha Burns. "[I] have the right to veto everything, but I don't want to be just sitting there for two years vetoing everything. They want to see things happen, too."

However, Democrats now have the power to investigate the Trump administration and block legislation, and they're already talking tough. Rep. Robert Garcia (D-CA) wasted no time sending Trump and his Republican allies a blunt two-word warning: "Lawyer up."

For the first time in 1,190 days, the Bank of England has raised interest rates.

On Thursday the BoE's Monetary Policy Committee voted 8-1 to lift Bank Rate by 25bps to 4.00%, the first hike since August 3, 2023, when the BoE topped out at 5.25%. And the lone dissenter was no dove: external member Catherine Mann wanted a half-point move to 4.25%. Put differently, not a single one of the nine MPC members voted to keep rates on hold, which is a little more hawkish than consensus: Goldman and JPMorgan both expected a 7-2 vote (Goldman's STIR desk had Swati Dhingra and Alan Taylor as the holdouts), while Deutsche Bank's UK economists were looking for a 6-3 split.

Even the doves came along, if grudgingly. Alan Taylor, one of the most dovish members of the committee, called it "a risk management, 'one-for-now' insurance hike," while Governor Andrew Bailey, in his own written paragraph, went a step further:

"I can see the argument for a further increase in rates and thereafter taking a more conditional approach... Today's increase shouldn't be seen as the first in an inevitable long sequence of hikes. But, unless the conflict in the Middle East is resolved, neither does it seem to be the last increase."

In other words, December is live, and traders took the hint: according to Bloomberg, the market now prices roughly a 50% chance of another quarter-point hike next month, and almost three more 25bp hikes by the end of 2027. Two-year gilt yields rose 3bps to 4.77%, and the pound steadied around $1.3472.

Regular readers won't be surprised. Back in March, just weeks into the Iran war, a 9-0 "hawkish hold" sent UK gilt yields exploding higher on a surprise BoE rate-hike threat, with 2Y yields jumping 30bps in a day. And in September, when the BoE held at 3.75% in a 6-3 vote (Mann, Huw Pill and Megan Greene already voting to hike), we warned that the decision would "leave a near-term hike firmly in play," so we'll allow ourselves a modest victory lap.

With today's move, the BoE joins a club that is getting crowded: the Fed hiked for the first time since July 2023 back in September, the RBA has been hiking into a housing slump, and with Euro area headline inflation at a 3-year high of 4.0%, the ECB probably isn't far behind. Which, as Goldman put it last weekend, makes central banks the market's last "source of calm"... "good luck."

From 3.2% To 4.9% In One Report

The reason for the hawkish turn is in the BoE's new November Monetary Policy Report. CPI inflation, which was 3.5% in September, is now projected to peak at 4.9% in Q2 2027, the highest since September 2023. Just three months ago, in the July forecasts, the BoE saw inflation peaking at a much more benign 3.2%. That's quite a revision for one quarter, even by central bank forecasting standards.

Most of the overshoot is mechanical: household utility bills and motor fuel accounted for around 60% of September's overshoot of the 2% target, and it's about to get worse. The Ofgem price cap is expected to rise to around £2,150 in Q1 2027 from £1,723 in Q4, a ~25% jump in household energy bills in January, with another increase likely in April. Direct energy effects alone are projected to add around 1.4 percentage points to CPI in Q1.

The BoE admits there is "limited evidence" so far of second-round effects in wages and prices, but it suspects that is a timing issue: firms have been shielded by "hedging and long-term fixed price contracts," and the MPC fears pass-through will come once those expire. And the scenarios are not pretty. In the adverse case of repeated escalations in the Iran conflict, CPI hits 6.2% in Q3 2027; in the "weaker demand" scenario, inflation instead collapses to 1.2%, which would, ironically, require rate cuts.

Meanwhile the economy has been more resilient than the BoE expected (or maybe just more resilient than it wanted): the 2026 GDP forecast was upgraded to 1.6% from 1.1%, and 2027 to 1.3% from 1.1%, although 2028 was cut to 1.2% from 1.7% on the assumption that the energy shock lingers. The MPC's verdict: while "policy was still restrictive" before Thursday's hike, "it was less clear that this would impart sufficiently disinflationary pressure to bring inflation back to target in a timely manner."

Bailey had been laying the groundwork for weeks. Here was the Governor a month ago:

Hiking Into An Oil Crash

There is just one small problem with the BoE's inflation math: the oil price it's built on no longer exists.

The MPR's projections are conditioned on energy futures averaged over the 15 working days to October 27, during which front-month Brent averaged $108 per barrel, around 70% above pre-war levels, while UK gas futures over the forecast horizon were some 120% above their pre-conflict levels.

Then the US midterms happened. As we detailed yesterday, crude crashed as the "Blue-nami" sparked market chaos, with Brent plunging 8.7% on Wednesday to close at $94.62, beneath $100 for the first time since September, after Vance boldly admitted that "the reason we lost is the war." Physical markets were already flashing the same signal, flipping from bidding war to fire sale as Gulf barrels flood back.

That's roughly 12% below the oil price the BoE plugged into its forecast (napkin math, and Brent is a moving target). Deutsche Bank's Jim Reid noted in his Early Morning Reid that the oil slide "significantly dampen[ed] fears over inflation," and the market agreed: the Euro 1-year inflation swap plunged 25.9bps on the day to a two-month low of 3.10%.

JPMorgan's Federico Manicardi was even more explicit in his morning briefing (available to pro subs), writing that the market reads the Democratic sweep as a "flatter geopolitical risk curve on Iran," and that "lower Brent/Gas risk premia with the global oil balance already back in surplus (+1.4 mbd in October vs ~+1.3 mbd on avg last year) should ease pressure on central banks."

Good news for UK households, maybe. Less so for the credibility of a forecast that was stale before it was even published. To be fair to the BoE, the MPR itself warns that inventories are thin, European gas storage is below average and a cold winter could send prices spiking again. And Iran just rejected the latest draft proposal to end the war, so nobody should be declaring the energy shock over just yet.

Goldman: One More In February, But The Market Is Getting Ahead Of Itself

So where does Bank Rate go from here? Going into the meeting, Goldman's European economists led by Sven Jari Stehn had already pencilled in a second hike, writing in their BoE preview, "A Hike with Noncommittal Guidance" (available to pro subs), that they "now expect a second Bank Rate hike to 4.25% in February given continued upward pressure on energy prices and the stronger recent activity and labour market figures." But there is a big caveat:

"We continue to think that market pricing for over 100bp of tightening over the next year looks too high given that second-round effects into wages look contained and consumer spending growth is likely to slow over the winter."

Goldman's STIR trader Daryl Li was even blunter in this morning's GS Morning note from Adam Crook (available to pro subs). With the December, February and March meetings pricing a cumulative 36bps (down from 41bps the day before), he thinks "this pricing has more to come out with or without de-escalation, mainly because the data has been good but not exponential - we should be pricing between 0-1 hikes per quarter, not 1-2." His take on December:

"With the war still unresolved, receiving it is a short vol trade and probably can only get down to a 4bps minimum. It feels like the right trade and we need a re-escalation, with gas pushing towards 120+, before Dec MPC is truly on the table."

Well, after Bailey's "neither does it seem to be the last" line, December pricing went the other way, to roughly a coin flip. Goldman FX salesman Matt Atherton had flagged exactly this risk in his FX Morning Update (also available to pro subs), writing that the desk saw "a greater risk of an 8-1 vote rather than a tighter call," and that the key tell would be in the individual paragraphs: "greater emphasis on risks points to a December hike while greater emphasis on evidence points to more gradual hiking." Bailey's paragraph leaned a lot more toward risks than evidence.

Here's the thing though: the BoE's own staff sort of agree with Goldman. The MPR's illustrative policy paths, which the BoE stresses do not "translate mechanically" into decisions, show that the central projection requires a restrictive stance, but that "a somewhat looser policy stance than implied by the market curve is appropriate on average." In fact, the BoE's own projections, which assume Bank Rate peaks somewhere in the 4.75% to 5% range, get CPI below the 2% target by 2029, implying just one or two more hikes are needed.

One-For-Now... Or The Start Of A Hiking Cycle Nobody Wants?

That leaves the BoE with a familiar dilemma. Hike too little, and the 2022 nightmare repeats, when an energy and food shock bled into wages and services prices and kept inflation above target far longer than the Bank expected (the MPR itself warns that five years of high inflation may have made firms and workers quicker to raise prices and demand higher pay this time around). Hike too much, and the MPC is tightening into a supply shock just as UK households absorb a 25% jump in energy bills, with the "weaker demand" scenario showing inflation crashing to 1.2%. We asked back in March whether an oil supply shock really warrants central bank hikes; eight months later, the BoE has decided it does, just as oil is collapsing.

Our take: Taylor's "one-for-now" label is probably closer to the truth than the market's three-more-hikes path. If Brent holds below $100 and the Middle East keeps de-escalating, the BoE's 4.9% peak will be revised down by February, and the second-round effects the MPC is insuring against may never show up in the size it fears. If, on the other hand, Iran re-escalates and gas heads to 120+, then Goldman's trader is right that December is truly on the table, and the BoE will look prescient for hiking before the second shock rather than after it.

Either way, Bailey has managed something quite impressive: hiking rates the day after Brent crashed below $100. Then again, after showing up famously late to the 2021-22 inflation party, maybe the BoE just decided that being early is the lesser evil.

Much more in the full Goldman BoE preview, "A Hike with Noncommittal Guidance," and the "GS Morning" note, both available to pro subs.

Nike's rally from roughly $34 a share in October to above $40 by midweek has done little to ease Wall Street analysts' skepticism about its turnaround strategy.

Earlier this week, UBS analyst Pilar Rocafort told clients, "It's still not time to buy Nike." Truist Securities reinforced Rocafort's caution on the stock in a note Thursday morning, downgrading the shares to Sell from Hold, citing "risks across the portfolio" and "an inflated valuation."

"NKE shares are up 19% over the past ~month (vs S&P flat), which we believe reflects positive sector rotations rather than an improvement in underlying fundamentals," Truist Securities retail analyst Joseph Civello wrote in a note.

Civello maintained a $29 price target and warned that fading Jordan demand, deepening weakness in China, and mounting competition threaten an already expensive stock.

How expensive is Nike at around $40 a share? 

Well, Civello said its valuation is currently around 27 times second-year forward earnings, compared with about 15 times for peers. He said prices look cheap after the multi-year bear market, but anyone buying the stock today is paying a steep premium for a turnaround whose timeline keeps slipping.

The Jordan franchise is a key problem, the analyst continued: 

For example, initial commentary on deliberate product pullbacks centered much more heavily on 3 classic franchises (AJ1, AF1 & Dunks) but has spread much more deeply & broadly across Sportswear and Jordan (60%+ of the overall business). We believe that hyped retro launches like the "Royal" AJ1, Jordan 14 Forest Green, and the Air Jordan 6 "White Infrared" (launching on 11/7), with five of seven recent Nike/Jordan launches all selling below retail, suggest meaningful brand pressure.

On top of this all, the analyst warned that the downturn in the Chinese market has yet to conclude:

We think visibility into where/when China bottoms is very limited – Despite recently becoming CFO on 8/17, Dave Denton materially slashed the China outlook, characterizing prior internal expectations as overly optimistic. Guidance now calls for the region to get worse through the year (vs F1Q's 26% CC declines) with the digital cleanup expected to take “multiple seasons.” 

In our view, mgmt's historical optimism that trends in the country would eventually improve led to them getting complacent in the region, which when combined with broadly stale innovation/marketing has driven meaningful pressure on brand equity. We struggle to identify a clear catalyst path for reaccelerating demand in the region in the NT/MT, especially as competition from local & other western brands continues to get more intense.

To sum up the note, these mounting pressures suggest Nike's latest rally has outpaced its underlying recovery. Civello maintained his $29 price target, signaling the turnaround timeline could be longer than expected. 

US futures are mixed, with the Nasdaq lagging as the post-midterm rotation out of chipmakers and the AI complex enters a second day, after the Democratic sweep raised fears of a data center backlash, Qualcomm tumbled on a weak forecast and the Kospi crashed almost 6%, while oil rebounded modestly from Wednesday's plunge and the BoE hiked rates for the first time in three years; as a result the 10Y yield touched 4.83%, the lowest since Sept. 10. As of 6:20am ET, S&P futures are 0.1% higher while Nasdaq futures are down 0.5%, Russell 2000 futures add 0.4% and Dow futures are 0.7%; this follows Wednesday's session when the S&P jumped 1.6% for its best day since August and the Dow soared 3%. In premarket trading, semis are again getting hit (the SOXX ETF was down 2% premarket per Bloomberg) with Qualcomm sliding 10% after a lackluster forecast, continuing the hyperscalers vs semis split we flagged yesterday, while the Mag 7 is mixed with Amazon and Meta higher and Tesla and Nvidia lower; AppLovin soars 16% on blowout guidance. The day's driver is the blue wave (again): with Democrats set to control both chambers, traders are pricing tighter regulation of data centers (Goldman sees moratoria potentially hitting about 45% of planned US data centre capacity expansion), a quicker end to the Iran war and less fiscal largesse, which is why hyperscalers that own compute are bid and everything that builds, powers or supplies it is offered. Treasuries are extending their rally, with the 10Y at 4.87% after earlier touching 4.83%, as the midterm result fuels expectations that the administration's tax and spending plans will be contained and after the Treasury's refunding hinted at less long-end issuance. The dollar is flat after its worst day in two months, cable erased losses after the BoE hiked 25bps to 4% in an 8-1 vote (Mann wanted 50bps) and Bailey warned it was unlikely to be the last hike unless the Iran war is resolved. In commodities, Brent rebounds 1.6% to $96.15 after crashing almost 9% on Wednesday, as Iran claims tankers hit mines near Hormuz and Ukraine struck Russia's Ryazan refinery; gold extends its post-midterm rally above $4,100 and silver trades around $52.7. Bitcoin is little changed. US economic data slate includes Challenger job cuts (already out: 43,994 in October, down 71.3% y/y), initial jobless claims, Q3 nonfarm productivity and unit labor costs (all 8:30am ET). Fed speaker slate includes Hammack (8:50am), Barkin (9:10am) and Logan (7:00pm). The Treasury sells $115bn of 4-week and $110bn of 8-week bills at 11:30am.

In premarket trading, Mag 7 stocks are mixed: Elon Musk-led stocks are set to extend declines after the electric-carmaker and SpaceX lost a combined $130 billion in market value Wednesday following Democrats’ lanslide win. Tesla (TSLA) -2%, Amazon (AMZN) +1.6%, Meta Platforms (META) +1%, Alphabet (GOOGL) +1.2%, Apple (AAPL) +0.7%, Microsoft (MSFT) -0.06%, Nvidia (NVDA) -1.3%

• Adma Biologics (ADMA) is up 20% after the biotech boosted its adjusted Ebitda guidance for the full year.
• Albemarle (ALB) rises 3% after the lithium producer reported third-quarter adjusted earnings per share that beat the average analyst estimate as energy storage and specialties segments benefited from higher pricing.
• AppLovin (APP) is up 19% after the mobile-app marketing company’s third-quarter results beat expectations and it gave an outlook that is above the analyst consensus estimate.
• Caris Life Sciences (CAI) slumps 14% after providing results and guidance; analysts note a lack of volume upside for the fourth quarter as a key concern.
• Cava (CAVA) sinks 8% on concern the company’s momentum is slowing despite the popularity of new dishes such as salmon bowls and barbecue pita chips.
• Celsius (CELH) rises 6% after the energy drink’s revenue and adjusted Ebitda for the third quarter handily beat Street estimates.
• Dutch Bros (BROS) falls 14% after the coffee chain cut its adjusted Ebitda forecast for the full year.
• Expedia (EXPE) is down 6% after the online travel agency provided guidance, with the midpoint of its fourth-quarter gross bookings forecast trailed the average analyst estimate,
• Elf Beauty (ELF) climbs 5% after the cosmetics company boosted its net sales forecast for the full year.
• Fastly (FSLY) falls 13% after the cloud-platform provider posted quarterly results and provided guidance.
• Goodyear Tire (GT) falls 4% after third quarter results disappointed.
• LegalZoom (LZ) tumbles 17% after posting third quarter results and a fourth quarter forecast.
• Molson Coors (TAP) falls 4% after the company cut its annual guidance for EPS and net sales, citing persistent softer global beer industry trends.
• MNTN (MNTN) falls 45% after the advertising and marketing platform posted disappointing third-quarter results and appointed a new CEO.
• Nike (NKE) is down 1% after Truist Securities downgrades the stock to sell, saying the company has “risks across the portfolio and an inflated valuation.”
• Sezzle (SEZL) climbs 28% after financial technology company posted third quarter results.
• Sunrun (RUN) rises 24% after the solar company reported third-quarter revenue that beat the average analyst estimate. Analysts also note that free cash flow is expected to improve in 2027.
• Tapestry (TPR) gains 11% after the accessories company’s first-quarter results topped Wall Street expectations, and management boosted its annual guidance, as well as its capital returns projection.
• Veracyte (VCYT) tumbles 31% after the diagnostics company’s full-year revenue forecast fell short of Wall Street estimates.
• Wendy’s (WEN) slips 1% after the company rejected the takeover proposal from a Trian Partners-led group.
• Zillow (Z) falls 14% after the digital real estate company reported adjusted earnings per share and revenue for the third-quarter that missed the average analyste estimate.

In other corporate news, the AI capex hangover continues to spread: Micron paused work on a $4.5 billion Taiwan chip plant after a labor row, and China blocked the roughly $5.4 billion sale of ABB's robotics unit to SoftBank. Meanwhile the hyperscalers that "won" the election are busy raising cash anyway: Meta raised €9 billion in its first euro bond on a record €53 billion of orders, and Microsoft raised $25 billion in a 10-tranche bond offering. Goldman and Apollo are in talks with investors to start selling portions of a roughly $40 billion chip financing deal for SpaceX, and Apple is cutting employee budgets for AI usage as part of a cost-cutting effort. Wendy's rejected a takeover proposal from a Trian Partners-led group; DTE Energy agreed to sell its DTE Vantage business for about $3 billion; SS&C priced an upsized $1.05 billion of convertible notes.

The global framing is unchanged from yesterday: the midterm-fueled rotation out of the AI trade is entering a second day, with previously unloved markets and economically sensitive stocks outperforming at the expense of chipmakers. Asia took the semi pain overnight, with the Kospi tumbling almost 6% (and triggering a trading halt) as SK Hynix and Samsung slumped, while Hong Kong was the other side of the trade, with the Hang Seng Tech index up more than 5%. Europe, the market with the least AI in it, extended its outperformance with the Stoxx 600 surpassing its August closing record.

“Chip names are under pressure because traders see Democrats as bad news for data centers and thus demand for compute,” said Hao Hong, chief investment officer at Lotus Asset Management. “Some money is rotating into consumer names in Korea, China and elsewhere now.”

As Bloomberg's Jan-Patrick Barnert notes, Wednesday's post-vote bounce was fairly ordinary by historical standards: the Dow jumped 3%, the S&P rose 1.6% and the Nasdaq 100 closed up just 0.9% after rising as much as 2.3%, while semis fell 3.1%, energy lost 4.8% and a Goldman basket of AI data-center names sank 5.4% on a day consumer discretionary stocks gained 6.1% (as we noted yesterday). In other words, a typical bounce in a market that is still rotating, rather than healing.

The options market tells the same story: every broad volatility gauge fell (the VIX by 4.2 points to 16.6), but single-stock volatility eased far less and the Cboe dispersion index did not budge, while implied correlation dropped almost 7 points to below 10. That is what a rotation looks like in the options market.

Bloomberg macro strategist Simon White adds that semis are the sector most exposed to a liquidity-driven flattening of the yield curve, with the 3m-10y curve having flattened over 40 bps since early October, at a time when the sector is still crowded despite nursing a drawdown of 30%. "Post midterm fears of data-centre approvals are the sort of trigger that could cajole the crowd to the exits, just as the yield curve flattening exerts extra pressure," he writes.

Over at JPMorgan, Andrew Tyler's Market Intelligence desk says futures point to a continued rotation / Momentum unwind, with "Semis and Memory sell off" continuing, Mag 7 names mixed and defensives leading ex-AI cyclicals premarket. Equity derivatives specialist Christina Jones cautions that the move "feels more positioning-driven versus a true fundamental rotation", adding that "Conviction is low across the board." JPM positioning strategist Arun Jain notes the post-hyperscaler selloff was the second -6z move in Momentum in a week and the largest single-month underperformance in more than 40 years at -5.8z. Tyler remains Tactically Bullish and expects a Tech rebound, arguing that the Blue Wave "has created another wrinkle" for those waiting to re-risk into AI, and that "it tough to see the bottom ahead of capital markets events occurring, though the setup is increasingly attractive."

JPM's credit research team, looking at the data center fallout, says the market will now pay a premium for capacity that is already built: "we used to pay a premium for IG leases, now we are going to pay a premium for stuff that is already built". They don't expect material changes to 2027 capital plans, but see some impact in 2028 and beyond, flagging Texas (about 27% of the MW of data center capacity funded in the HY project finance market) as the primary focus, and expect weakness in IPPs such as VST, TLN and CEG.

Goldman's desks are saying much the same. Rich Privorotsky writes that "The market bought the election dip… thank heaven for everything that wasn't semi-related", and that "This is rotation, not wholesale liquidation." John Flood's "standout theme on our trading desk right now is buying Hyperscalers vs Selling Semis", while Ismail Abbas sums it up: the "new political backdrop is good for those who own compute (hyperscalers) and bad for those who have to build out, sell into, or power datacenters (neoclouds, semis, power, etc)". GS political economist Alec Phillips expects Democratic state and local wins to bring short-term moratoria on data centres, though "these moratoria will not be long-lived" (more in our note from last night). Flood also points out that since 1952 the S&P has averaged +7.5% through year end after midterms and was higher 6 and 12 months later in all 18 cases.

On the macro side, the collapse in the Iran war risk premium remains the other big story: Brent is down about $18 over the last five days (one of its biggest 5-day declines in recent history per Goldman) after Vice President Vance said "The reason we lost is the war" and Trump said it was "largely true" that Republicans lost because of the war, as we discussed yesterday. Lower oil means lower inflation expectations: the 1yr US inflation swap fell to a two-month low of 2.16% on Wednesday, per DB. In Europe, France braces for a day of strikes and demonstrations over the cost of living as budget talks remain deadlocked, while it sells €12 billion of long-dated bonds in a test of demand.

In Europe, the Stoxx 600 rises 0.5% to 660.5 and hit a fresh record, surpassing its August closing high, as the region extends its outperformance driven by the rotation out of the global AI trade and a strong earnings season. Miners are the best performers while telecoms and defense fall as Rheinmetall and Deutsche Telekom results disappoint; Rheinmetall plunged as much as 18% after cutting its sales outlook, extending the post-midterm defense rout. JPM's desk notes Resources, Construction, Banks and Retail are among the top sectors with Telecom and Staples sold, and Beta and Momentum leading. Here are the biggest European movers:

• Air France-KLM shares surged as much as 14% after reporting better than expected third quarter earnings and efficiency measures, notably at its Dutch unit.
• Lanxess shares soar as much as 20% after results from the German specialty chemicals maker showed improving free cash flow.
• Diageo shares rise as much as 5.2% after the spirits maker’s first-quarter update showed what analysts said was a stronger-than-expected start to the year.
• JCDecaux rises as much as 8.5% after a third-quarter report in which revenue and organic growth exceeded expectations.
• HelloFresh rises as much as 15% after the food subscription firm reported adjusted Ebitda for the third quarter that beat the Bloomberg consensus estimate.
• Yubico surges as much as 33% as DNB Carnegie says the Swedish cybersecurity company delivered “total blowout numbers” in the third quarter.
• Rheinmetall shares fall as much as 18% after the German defense firm cut its full-year sales outlook, citing likely delays in the Arminius contract.
• Maersk shares fall as much as 12% after analysts flagged a miss on third-quarter earnings and said an uplift in the shipping company’s guidance disappointed investors who were hoping for more.
• Deutsche Telekom shares fall as much as 3.4% after the telecom operator projects as much as €2b worth of shares to be bought back next year, a target that analysts say could disappoint investors after already tracking behind a shareholder return goal this year.
• Siemens Healthineers drops as much as 4.6% after the German medical technology firm lowered its sales outlook for next year.
• Commerzbank shares fall as much as 3.5% after the German bank disappointed investors by lowering its outlook for lending income this year.
• Kontron declines as much as 8.9% as Jefferies says the IT services firm had “another underwhelming quarter.”

Asian stocks were split down the middle by the rotation. The Kospi plunged 5.79% to 5,383.80, its biggest drop since Oct. 15, with Samsung down 7.6% and SK Hynix down as much as 10% intraday, and the Taiex fell 3.2% as foreigners dumped Taiwan stocks (the Taiwan dollar slid to its lowest in over a year). Japan's Nikkei fell 1.8% as Ibiden, Kokusai and Murata each dropped more than 15%, while Toyota surged 16.7% after expanding its buyback to ¥1.3 trillion. On the other side, the Hang Seng jumped 3.7% to 24,796.98, its best day since February 2025, with the Hang Seng Tech index up 5.6% (Goldman was pitching China AI last night), while India's Nifty rose 2.5%, Australia's ASX 200 gained 2.6% and Indonesia's JCI added 2.3%. China's CSI 300 rose 0.3%. As Goldman's Jeremiah Khong put it, "the post US midterm rotation accelerated, with investors moving away from AI and semiconductor hardware and towards value, cyclical and domestically oriented markets."

In FX, the Bloomberg Dollar Spot Index steadied after the midterms broke the greenback out of one of its tightest ranges in years and sent it to its worst day in two months; DXY trades in a 101.20-101.47 range. EUR/USD pared a 0.4% gain to trade little changed around 1.1235, while GBP/USD erased losses after the BoE hike to trade around $1.3471 (the pound's effective exchange rate earlier hit the highest since 2016). USD/JPY is slightly lower around 158 with the yen getting mild support from lower oil, NOK saw little reaction as Norges Bank held at 4.50% and said it is prepared to hike if needed, and SEK slipped after a cooler CPIF print. In EM, the Philippine peso jumped 1% on the oil slump while Taiwan's central bank sold the most dollars since June.

In rates, Treasuries headed for a second day of gains, with the 10-year yield touching 4.83%, the lowest since Sept. 10, before paring the move to trade around 4.87%; JPM's desk says the curve is twisting flatter, led by the long end. The bid comes from the Democratic sweep fueling expectations that tax and spending plans will be contained, the plunge in oil and the Treasury's refunding hint of less long-end issuance. Gilts rallied as much as 66 ticks into the BoE before paring gains after the 25bps hike, with the UK 10-year now about 1bp higher at 5.14% and money markets pricing a 50% chance of another hike in December. Bunds are also bid, with the 10Y at 3.27%, the lowest since Aug. 28, while French OATs underperform (10Y up 2bps to 4.79%) ahead of strikes and a long-dated bond sale, keeping the OAT-Bund spread around 150bps. Today's US supply is limited to $115bn of 4-week and $110bn of 8-week bills, while South Korea is reportedly weighing large-scale purchases of long-term USTs (Seoul says the report "differs from facts"). Fed speaker focus is on Hammack and Barkin, though Friday's payrolls (consensus 65k) is the week's real test.

Not everyone buys the rally. “I do not think that we’re at the beginning of a 100-basis-point rally in US Treasuries,” said Amy Xie Patrick, head of income strategies at Pendal. Brandywine’s Tracy Chen sees a window instead: “We’re in a honeymoon period of this expectation of gridlock or divided government to rein some of the fiscal spending,” adding “This time window is great for the bond rally. We like the belly of the curve from five-year to seven. That’s the sweet spot.”

In commodities, oil is bouncing after Wednesday's rout: WTI for December gained 0.8% to $88.84 and Brent for January rose 1.6% to $96.15 by 6:25am ET, still down over 18% from last Friday's close. Supply headlines are piling up again: Iran's navy claimed a tanker hit a mine in Hormuz on Thursday morning (the IRGC said two tankers caught fire after hitting mines), UKMTO said a tanker was struck by two projectiles north of Qatar late Wednesday, and Ukraine confirmed a strike on Russia's Ryazan refinery ahead of next week's talks; on the other hand, Iran and Oman's foreign ministers discussed arrangements to secure sea routes, and US crude output hit a record 14mln bpd. US natgas trades around $2.94. Spot gold extends its post-midterm rally above $4,100/oz (range $4,057.84-4,146.99) on lower yields and a weaker dollar, silver is firmer around $52.7, and LME copper is higher in a $13,940-14,136/t range.

US economic data slate includes initial jobless claims (est. 196k), continuing claims, and Q3 nonfarm productivity and unit labor costs (all 8:30am ET). Fed speaker slate includes Hammack (8:50am), Barkin (9:10am) and Logan (7:00pm). Banxico decides at 2pm; BoC Governor Macklem speaks to the Senate at 10:30am. Notable earnings before the open include ConocoPhillips, Zoetis, Cigna, Duke and Southern; after the close, Airbnb, DraftKings, Cloudflare, Axon and Lumentum.

Market Snapshot

Top Overnight News

• Getting data centers built is “going to be harder” after the midterm elections, said Meta Platforms President Dina Powell McCormick—but perhaps not as hard as it now appears. WSJ
• Micron Technology Inc. has suspended plans for a memory chip plant in Taiwan due to a labor dispute, throwing into question the fate of a major production base for crucial AI components. BBG
• President Trump has conceded that the Iran war cost Republicans dearly in the midterms. Now he must decide whether to cut his losses and reach a deal — or double down and go back to bombing.
• House could vote to impeach Hegseth as soon as next week as Republicans turn against the Def. Sec. CNN
• Iran’s navy claimed a tanker hit a mine in Hormuz on Thursday morning, IRNA reported; UKMTO separately said a tanker was struck by two unidentified projectiles 50NM north of Qatar late Wednesday. BBG
• Iran and Oman’s foreign ministers discussed arrangements to secure sea routes and measures to keep trade and energy flowing. BBG
• After Yemen’s Iran-backed Houthi rebels attacked Saudi Arabian oil tankers in the Red Sea and seized territory commanding the strategic Bab al-Mandeb chokepoint, the kingdom reached out to the group to see what it would take to arrive at a negotiated halt to the hostilities. The answer it got back: $51 billion. WSJ
• The oil industry is bracing for Democrats to use their newfound political muscle to push for a deal with Donald Trump to impose a windfall tax on surging crude prices, people familiar said. BBG
• BOE Hikes rates as expected, 8-1. BBG
• BOE Governor Bailey said the hike is unlikely to be the last unless the Iran war is resolved; Catherine Mann dissented in favor of a 50bps hike, and traders now see a 50% chance of another hike in December. BBG
• Gold’s fortunes may be about to turn. Speculators are returning after two months of pullback as the Democratic sweep raises hopes for an end to the Iran war and tempers Fed rate-hike expectations.
• China’s considering selling dollar and offshore yuan denominated bonds as early as this month, people familiar said, as Beijing seeks to deepen its presence in international debt markets. BBG
• China blocked the sale of ABB’s robotics unit to SoftBank, dealing a blow to the Japanese investment firm’s plans to expand into physical AI. BBG
• Ukraine confirmed a strike on Russia’s Ryazan refinery, one of the country’s largest, as it steps up attacks on Russia’s oil industry ahead of trilateral talks next week. BBG
• Wendy’s rejected a takeover proposal from a Trian Partners-led group. BBG
• DTE Energy agreed to sell its DTE Vantage business for about $3 billion. BBG
• Taiwan’s central bank sold the most foreign exchange since June as the Taiwan dollar slid to its lowest in over a year on equity outflows. BBG
• South Korea’s Finance Minister said to closely monitor changes in US policies on AI and tariffs, as well as Middle East conflict after the midterm elections, while they will be prepared for the possibility of increased market volatility. Newsquawk
• Japan said that US midterm election results will not affect the strength of the bilateral alliance: Kyodo
• Democratic state and local wins are likely to lead to short-term data centre moratoria, potentially affecting about 45% of planned US data centre capacity expansion, though GS expects these moratoria will not be long-lived. GIR (Phillips)
• JPM credit research: no material changes expected to 2027 data center capital plans, but some impact in 2028 and beyond; Texas, where ~27% of HY project-finance-funded data center MW are being built, is the primary focus. JPM

A more detailed look at global markets courtesy of Newsquawk

APAC stocks were ultimately mixed after the rally on Wall Street as yields declined and oil slumped in the aftermath of the blue tsunami in the US Midterms, while a rotation out of chip stocks was evident overnight. ASX 200 rallied as gains were led by strength in mining and tech, with gold miners boosted by the surge in the precious metal to above USD 4,100/oz, while energy and financials were at the other end of the spectrum following a slump in oil prices and a drop in NAB's FY profit. Nikkei 225 wiped out its opening gains and more, amid weakness in electronics and tech stocks, while the drop in oil prices ultimately failed to provide a cushion despite Japan's heavy reliance on oil imports. KOSPI underperformed with a sidecar triggered amid a rotation out of semiconductor stocks after the blue wave in the US Congress raised concerns over the AI buildout. Hang Seng and Shanghai Comp were mixed as the mainland was constrained, while the Hong Kong benchmark surged as hyperscalers and ecommerce stocks benefited from the rotations out of semis.

Top Asian News

• Chinese Foreign Minister Wang Yi met with North Korean delegation in Beijing, while he stated China is ready to advance deeper, practical and positive development of China-North Korea ties and seeks deeper and more constructive relations with North Korea.
• Foxconn (2317 TT) Oct (TWD): Revenue 1.31tln (+45% Y/Y).
• Sony (6758 JT) H1 2026 (JPY): Operating profit 1.10tln (prev. 768.93bln Y/Y), Revenue 6.27tln (prev. 5.73tln Y/Y); sees FY operating profit at 1.87tln (prev. guidance 1.72tln).
• Nintendo (7974 JT) Q2 2026 (JPY): Operating Income 73.9bln (exp. 88.1bln). Total Unit Sales. Switch 2, hardware: 26.35mln. Switch 2, software: 73.21mln.
• Toyota (7203 JT) H1 (JPY) net 2.24tln (prev. 1.77tln Y/Y), rev. 26.96tln (prev. 24.63tln Y/Y), raises FY net forecast to JPY 3.57tln from 3.25tln, but cuts FY rev. forecast to 53.5tln from 54.0tln, raises share buyback to JPY 1.3tln. Toyota sees FY global auto sales 10.99mln units vs. prev. forecast of 11.18mln. Will set up a robotics department under Takefumi Shiga.

European equities (STOXX 600 +0.4%) are entirely in the green, continuing to build on the strength seen in the prior session. Gains across major indices vary between 0.2-1.2%; the FTSE MIB lags vs peers, whilst the CAC 40 outperforms. European sectors hold a strong positive bias; Basic Resources benefit from the risk tone, and underlying strength in metals prices whilst Energy lags given the recent sell off in oil. Key movers: Evotec (+6.9%, Q3 rev. falls but moves forward with restructuring), ArcelorMittal (+4.9%, tops Q3 estimates), Diageo (+3.0%, organic sales beat and holds guidance), Rheinmetall (-16.3%, cuts 2026 sales outlook and order delays), Deutsche Telekom (-2.1%, decent results and announces share buyback), Commerzbank (-1.9%, rev. missed expectations). Hefty selling across major tech/memory names overnight, saw the KOSPI close with losses in excess of 5%. Heavy constituents such as SK Hynix (-5%) and Samsung (-7.5%) fell, with the pair hit in catch-up play to action seen stateside, amidst growing woes of increased AI regulation following the Democratic sweep; Japan’s Kioxia slumped c. 13%. And whilst the recent sell-off can be attributed to the US midterms, it comes despite a slew of positive demand-related comments from several memory firms; Kioxia recently mentioned that clients are negotiating contracts extending into 2029, whilst Samsung expects tight supply through 2027 and 2028. US equity futures are mixed, with underperformance in the NQ (-0.5%), as the AI/memory sell-off continues into today. ARM Holdings (-3.2%): Reported weaker than expected royalty revenue, partly pressured by memory-related smartphone market weakness, and only modestly upbeat quarterly guidance. Qualcomm (-9.2%): Reported weaker than expected smartphone chip sales, driven by sluggish handset demand, rising memory costs and declining Apple-related revenue, alongside disappointing margin and earnings guidance.

Top European News

• Numerous reports of bomb threats on planes across Europe across the European morning, resulting in several diversions and landings, no confirmed bombs/devices on any craft as things stand.
• German Chamber of Commerce forecasts German GDP growth of 1% in 2026 (prev. saw 0.3%), and expects 1% growth in 2027.
• UK Chancellor Healey pledged to overhaul public spending controls and vowed that new rules to ringfence “preventative” programmes would save money in the future, according to FT.

FX

• DXY is flat within a 101.20-101.47 range, having pared its overnight post-midterm losses. Modest upside was seen in early European trade as T-note futures waned slightly from their best levels, while crude rose more than USD 1/bbl in the space of 15 minutes this morning despite a lack of headlines. The index sits above its 50DMA at 101.02, but remains beneath its 21DMA at 101.96.
• EUR/USD is flat/firmer within a 1.1223-1.1268 range. German Factory Orders came in slightly below expectations at 4.4% M/M (exp. 4.8%), while French Industrial Production unexpectedly contracted 0.5% M/M (exp. +0.3%). No reaction was seen to the data with the USD the main driver of the day.
• GBP/USD is flat/subdued within a 1.3459-1.3501 range, having failed to sustain a move above 1.3500 ahead of the BoE, where a 25bps hike to 4.00% is expected, with the vote split on watch as always (full Newsquawk preview available). The pair holds above its 50, 100 and 200 DMAs (1.3364, 1.3390 and 1.3420). Yesterday's high printed at 1.3503. UK Construction PMI disappointed at 43.6 (exp. 46.1). EUR/GBP trades within a 0.8327-0.8349 range, beneath its 21DMA at 0.8393.
• USD/JPY is lower within a 157.78-158.43 range, with the yen getting mild tailwinds from lower oil prices. The pair is capped by its 200DMA at 158.63. Japanese PM Takaichi said she will continue to cooperate with Trump to strengthen US-Japan ties.
• Antipodeans are mixed: NZD/USD outperforms within a 0.5615-0.5658 range, around its 21DMA at 0.5638, while AUD/USD is little changed within a 0.7000-0.7025 range, despite a much wider-than-expected Australian trade surplus.
• NOK saw little reaction as Norges Bank held at 4.50%, as expected, reiterating that "it will likely be necessary to keep the policy rate elevated for a time, and we are prepared to raise the policy rate if needed". SEK saw modest pressure after Swedish CPIF came in cooler at 1.1% Y/Y (exp. 1.4%).

Central Banks

• White House delays hearing on Fed Governor Cook to December 14th, according to New?York?Times.
• BoJ September meeting Minutes stated members agreed it was appropriate that the bank continue to raise the policy interest rate and adjust the degree of monetary accommodation.
• ECB's Moulin said elevated yields present a fresh challenge for the financial sector.
• ECB's Schnabel summarises her history at the ECB. Takeaway one: preserve room for manoeuvre by avoiding commitments. Takeaway two: what matters is how shocks affect the inflation outlook. Takeaway three: protect monetary dominance. Takeaway four: implement monetary policy efficiently.
• RBA's Hauser said some people's confidence in policy delivery, particularly on inflation, has fallen; adds that monetary policy works with lag, pain often precedes gain. Last meeting had a lively discussion.
• Norges Bank maintains its Key Policy Rate at 4.50%, as expected; " It will likely be necessary to keep the policy rate elevated for a time, and we are prepared to raise the policy rate if needed".
• SNB Chairman Schlegel said the central bank would intervene if price stability were at risk; there have not yet been any significant second-round effects.
• SNB Chairman Schlegel said inflation in Switzerland has risen and October reading was higher than expected, with the central bank to watch the situation closely, particularly for second round inflationary effects.
• BCB holds rates at 13.75% as expected; decision unanimous.
• PBoC set USD/CNY midpoint at 6.7156 vs exp. 6.6783 (prev. 6.7180).

Fixed Income

• A bullish session for fixed income, as the energy pull back and the AI/tech sell off lead to a reassessment of inflation and growth views for the near term, and by extension are causing market pricing for interest rates to pare.
• This is perhaps most evident in the UK, with Gilts higher by some 66 ticks at best, hitting 87.35 with the 10yr yield now at its lowest since early-September and just under 5.1%, vs a 5.53% recent peak. Action that is slightly less pronounced at the short-end, given the long-end has also benefited from the DMO pivoting further away from that area of the curve and the general global shift on that as well; for example, the 20yr yield is at its lowest since early-July, and some 50bps off the 6% October peak.
• For the UK, today’s main event is the BoE. The first hike of the Middle East cycle is expected, though likely subject to 7-2 dissent but with 6-3 a possibility and Breeden the one to watch for that. Further, while tightening today, the hike may have a dovish feel vs market pricing now of c. 75bps of tightening, against the recent +100bps peak, given the WTD energy moves and the pushback Governor Bailey has previously given to pricing, and as even the hawks (e.g. Pill) have described it as excessive.
• Elsewhere, USTs are bid by a couple of ticks, but off the 107-07 overnight peak. Focus for the US is on today’s data, Friday’s payrolls and then developments around/during the weekend in the Middle East. Updates on that a little light in recent trade, as the midterms continue to be digested; but, pressure around War Secretary Hegseth remains.
• Bunds also bid, with the themes very much the same. No move to ECB’s Schnabel this morning, with her speech looking back on her time at the ECB, as December is her final meeting. Currently, above 123.00 with gains of 30 ticks, but around 10 off the session high. Supply features, and the French outing is in focus as an appetite test after the recent sovereign adjustments, and into a weekend of more planned domestic protests. Currently, the OAT-Bund 10yr yield spread is around 148bps, and a touch narrower on the session.
• South Korea is planning a "large scale" acquisition of US Treasuries, Korea Economic Daily reported citing sources.
• Spain sold EUR 5.466bln vs exp. EUR 4.5-5.5bln 3.10% 2031, 3.40% 2036, 3.50% 2041 Bono.
• Japan sold JPY 1.97tln 10yr JGBs, b/c 3.21x (prev. 3.76x), average yield 2.768% (prev. 3.101%).
• Meta Platforms (META) files pricing term sheet for up to EUR 9bln senior notes in six tranches.
• Microsoft (MSFT) raises USD 25bln in a 10-tranche bond offering.

Commodities

• Crude benchmarks are steadier after Wednesday's slump of more than 8%, which came as the Democratic sweep reduced the likelihood of an extended US/Iran war. Prices rose over USD 1/bbl for Brent in early European trade despite a lack of fresh headline catalysts. Since then, UKMTO reported a tanker was struck by two unidentified projectiles 50NM north of Qatar's Madinat ash Shamal late yesterday. On diplomacy, Iran's Foreign Minister and the Sultanate of Oman discussed regional developments and political efforts to achieve peace and stability in the region in a telephone call. Note, there is a wider spread between WTI Dec and Brent Jan quotes, potentially as US crude production hit a new record of 14mln bpd in yesterday's EIA data.
• WTI Dec'26 trades firmer within a USD 86.65-88.54/bbl range, while Brent Jan'27 is also stronger within USD 93.44-95.91/bbl. Dutch TTF is slightly lower but well off worst levels, tracking the price action in crude oil counterparts.
• Spot gold extends its post-midterm rally above USD 4,100/oz, within a USD 4,057.84-4,146.99/oz range (vs yesterday's USD 3,919.93-4,070.53/oz range), amid softer yields and the weaker overnight dollar and potentially some geopolitical hedging. It has reclaimed its 21DMA at USD 4,078/oz, with the 50 and 100DMAs (USD 4,206/oz and USD 4,203/oz) the next upside levels. Spot silver is firmer within a USD 52.21-53.48/oz range (vs yesterday's USD 48.97-52.46/oz range), while platinum and palladium futures are also higher.
• 3M LME copper is firmer within a USD 13,940.08-14,136.18/t range, with demand subdued alongside the mixed risk appetite in Asia, potentially as the AI/memory sell-off continued after the Democratic sweep. The KOSPI closed more than 5% lower, with Samsung and SK Hynix hit.

Trade/Tariffs

• Japanese Prime Minister Takaichi said she will continue to cooperate with US President Trump to strengthen US-Japan ties.
• China's MOFCOM to maintain anti-dumping duties on US-origin n-propanol imports for five years from November 6th.
• Chinese Vice Premier Ding Xuexiang said at CIIE that China's overall tariff has been reduced to 7.3% and that China will import more fine products and services.

Geopolitics: Iran

• Iran and Oman Foreign Ministers discussed arrangements to secure sea routes.
• Iran's IRGC Ground Forces Commander declares a full readiness to respond decisively to any hostile action, Sepah News reported.
• Iran Foreign Minister and the Sultanate of Oman discuss regional developments and political efforts to achieve peace and stability in the region in a telephone call, Al Alam reported.
• UKMTO reported a tanker was struck by two unidentified projectiles 50NM north of Madinat ash Shamal, Qatar, on November 4 at 23:20 UTC.
• IRGC announced that two oil tankers suffered fires after hitting mines last night as they attempted to pass through the 'illegal' passage south of the Strait of Hormuz. A tugboat that approached the supertanker to fight the fire also caught fire. It seized two drones after intercepting them. Affirms that it maintains control of navigation in the Strait of Hormuz.

Geopolitics: Ukraine

• Russian Kremlin spokesperson Peskov said Russian President Putin may hold international talks today; Peskov adds diesel shipped under a deal with the US will find buyers, TASS reported.
• Ukraine confirmed a strike on Russia's Ryazan refinery.
• Russia strikes logistics centre in Ukraine's Kharkiv region and a power plant in Dnipropetrovsk region, according to the Russian Defence Ministry.
• Explosion reported in oil refinery in Russia's Ryazan after it was attacked by Ukrainian drones, according to IRIB.
• Multiple Ukrainian drone attacks target industrial zone of Russia's Ryazan oil refinery.

Geopolitics: Other

• Israel conducts artillery shelling on areas in southern Lebanon, according to SNN.
• Top Democrat on the House Armed Services Committee called for probes into the Iran war and US military strikes in the Caribbean and Latin America, according to WSJ.
• Yemeni armed forces announced a series of successful military operations against Saudi military targets, causing significant damage, according to Press TV.
• Yemeni missile attacks reportedly target Yanbu in Saudi Arabia, Fars News reported citing Arab sources.
• Saudi Civil Defense noted an early warning activated in Sharurah.
• Israeli forces reportedly raid Nablus in the West Bank, according to Al Alam.
• North Korea said the EU should mind its own business instead of criticising North Korea human rights issues, according to KCNA.
• South Korea's Defence Ministry reported suspected multiple missile launches by North Korea.
• South Korea's Cheonghae Navy unit will expand operations into sea near the Strait of Hormuz, according to Yonhap.
• North Korea test-fired a newly designed advanced air-defence missile system, KCNA reported.

Crypto

• South Korea plans to delay the introduction of digital asset taxes by two years to 2029, according to the Finance Ministry.

US Event Calendar

• 5:30am: Oct. Challenger Job Cuts YoY, prior -19.9% (actual: -71.3%; 43,994 cuts)
• 8:30am: Oct. 31 Initial Jobless Claims, est. 196k, prior 194k
• 8:30am: Oct. 24 Continuing Claims, est. 1710k, prior 1701k
• 8:30am: Oct. 31 Initial Claims 4-Wk Moving Avg, prior 196.75k
• 8:30am: 3Q P Nonfarm Productivity, est. 2.7%, prior 1.4%
• 8:30am: 3Q P Unit Labor Costs, est. 0.4%, prior 1.2%
• 10:30am: EIA weekly natural gas storage
• 11:30am: US to sell USD115 Bln 4-Week Bills
• 11:30am: US to sell USD110 Bln 8-Week Bills

Central Bank Speakers

• 8:50am: Fed’s Hammack Speaks on Panel in Zurich
• 9:10am: Fed’s Barkin in Moderated Conversation
• 7:00pm: Fed’s Logan Moderates Discussion

DB's Jim Reid concludes the overnight wrap

In virtually every US election, there is usually some reason why markets are concerned going into it, which then magically fades afterwards. The 2026 midterms seem no different, as yesterday the S&P 500 (+1.58%) posted its best day in three months, whilst bond yields fell sharply around the world. This was mainly driven by relief that the political uncertainty was over, but we also saw concerns ease across the whole range of risk factors that have dominated recent weeks. For instance, Brent crude oil prices (-8.67%) closed beneath $100/bbl for the first time since September, significantly dampening fears over inflation. Similarly, the Franco-German 10yr spread (-11.8bps) tightened sharply, which led to a bit more optimism on Europe. And we even saw a decent rebound in tech stocks, with the NASDAQ (+1.44%) recovering despite fears 24 hours earlier that tech might see a fresh slump.

However as we'll see below some parts of the tech space traded poorly yesterday amid uncertainty as to what the election result will mean for regulation of things such as data centers. This uncertainty has accelerated overnight with Nasdaq futures back down -1.18% and the KOSPI -5.68% lower dragged down by SK hynix (-9.60%) and Samsung (-7.57%). The Korean index triggered a 5 minute trading halt just before I finished typing this.

Elsewhere in Asia, the Nikkei (-1.24%) is also under pressure, as chipmakers and AI-related stocks extended the previous session's declines. In contrast, Chinese equities are outperforming the region in what is developing into a big global rotation over the last 24 hours. The Hang Seng (+3.09%) is benefiting, after also being helped by Beijing unveiling fresh support measures that boosted sentiment toward domestic semiconductor companies. Meanwhile, Australia's S&P/ASX 200 (+2.61%) is also trading significantly higher. S&P 500 futures are down -0.28% so holding on to most of yesterday's gains so far with Stoxx futures (+0.11%) just about maintaining its big boost from yesterday.

This has capped off a remarkable 24 hours for financial markets, with huge moves as investors reacted to the midterm elections. Just to bring you up to speed, it was apparent pretty soon after the counting began that the Democrats were on course to control both the House of Representatives and the Senate in the new Congress, with stronger-than-expected margins in both. Indeed, we’ve already started to see the political consequences, with widespread reports that Republican House Speaker Mike Johnson will step down from leading the House Republicans next year. Meanwhile, CBS reported that Trump had asked advisers if Defense Secretary Hegseth should go. He has been at the hawkish end on the war with Iran, and much of the rally yesterday was linked to a reappraisal of the likelihood of imminent strikes on Iran in light of the election result.

When it came to the market reaction, there was relief among investors that the results weren’t disputed, which helped to reduce political uncertainty. Moreover, the prospect of divided government also eased concerns about the fiscal trajectory, given it’ll now be more difficult to pass tax cuts or spending packages. That helped to bring down Treasury yields, which in turn offered further support to risk assets. In terms of the outcome, it was already expected in polls and prediction markets that the Democrats would win at least one chamber, whilst it was always known that Trump would retain his veto power as well. We did also see a narrative emerge that the scale of the Democratic Party’s win would reduce the leverage of its leftist wing over policy. But when it comes to the headline result, it’s not too different from investor expectations beforehand, even if the scale of the Democratic victory was bigger than expected. In many respects, the overall rally fits into the classic midterm pattern we’ve previously highlighted. After all, in 20 out of 20 midterm elections since WWII, the S&P 500 has been higher one year later. And as I pointed out in my CoTD yesterday, the Republican losses in the House were basically on the historical trendline for what would be expected given President Trump’s approval rating. So it was a very normal election with a very normal market reaction before and after the vote, despite fears that this time would be different.

Nevertheless, there were several equity segments where we did see a specific midterm reaction. For example, Trump Media & Technology Group (-24.54%) had its worst daily performance since 2024. Moreover, some of the most AI-exposed stocks struggled, with CoreWeave (-9.90%) and the Philly semiconductor index (-3.13%) also losing ground. Another underperformer was defence stocks, with the Aerospace & Defense subcomponent of the S&P 500 down -1.25%. But while chips stocks struggled, the Mag-7 (+2.24%) outperformed, led by outsized gains for Microsoft (+6.68%), Amazon (+6.12%) and Apple (+5.31%), with the latter reaching a new all-time high. So sizeable differentiation playing out in the tech space.

The general optimism helped the S&P 500 (+1.58%) to its best day since August, with the gains led by the more cyclical sectors. And the moves received a further boost from another batch of strong US data. For instance, the ADP report on private payrolls showed a +86k increase in October (vs. +67k expected), which added to the optimism before tomorrow’s jobs report. Meanwhile, the ISM services index also came in broadly around consensus at 54.5 in October (vs. 54.8 expected), though encouragingly its prices paid index saw an unexpected decline (73.0 vs 74.0 prev, 74.6 exp.).

Otherwise, markets also got a tailwind from another sharp decline in oil prices, with Brent crude (-8.67%) plummeting again to $94.62/bl. That helped to ease concerns about inflation and saw investors dial back the chance of rapid rate hikes. In part, that followed comments from Vice President JD Vance on X that “The reason we lost is the war”, which implicitly pointed away from a further escalation. And in turn, that led to a huge decline in inflation expectations, with the Euro 1yr inflation swap (-25.9bps) down to a two-month low of 3.10%, whilst the 1yr US inflation swap (-24.9bps) hit a two-month low of 2.16%.

That backdrop led to a big rally for sovereign bonds on both sides of the Atlantic. Treasury yields fell across the curve, with the 2yr yield (-4.9bps) down to 4.58%, whilst the 10yr yield (-7.6bps) fell to 4.89%. They are another -4.3bps lower this morning. And in Europe there were even sharper moves given the continent’s exposure to energy prices. Yields on 10yr bunds (-5.8bps) fell to 3.27%, whilst 10yr OATs (-17.6bps) saw their biggest daily decline since April, falling to 4.77%. That also pushed the Franco-German 10yr spread down by -11.8bps to 150bps, marking its tightest level in the last couple of weeks. And it wasn’t just European bonds that outperformed, as European equities also put in a very strong day. In fact, the STOXX 600 (+1.82%) had its best day since June and the DAX (+2.22%) had its best day since April. European banks (+4.62%) also had their best day since April. So crudely a big rotation from data centres to everything else across the globe.

Looking forward, one of the main highlights today will be the Bank of England’s latest decision at 12:00 London time. They’re widely expected to deliver their first rate hike since 2023, with a 25bp move that takes their policy rate up to 4%. In their preview, our UK economists expect there to be a 6-3 vote tally in favour of a hike, and they think the big changes will come in the form of the BoE’s updated forecasts. Their view is that the Bank will show peak CPI nearer 4.25% in Q1 2027, although they also expect an upgrade to the 2026 growth forecast to 1.4%. For more information, see their full preview here.

There wasn’t much other data yesterday, although we did get the Euro Area flash CPI print for October. That came in as expected by the consensus, with headline inflation up to a 3-year high of +4.0% in October, whilst core inflation remained at +2.5%. Otherwise, the US trade deficit was a bit smaller than expected in September, at $105bn (vs. $107.9bn expected).

Earlier this morning, data showed Australia's seasonally adjusted trade surplus surged to A$2.83bn in September from A$184mn in August, comfortably exceeding economists' expectations of A$940mn and marking the highest surplus in seven months.

In central bank news, minutes from the BOJ's September meeting reinforced the case for further policy tightening. Policymakers generally agreed that interest rates should continue to rise, with one member highlighting the possibility of a faster pace of hikes. Another noted that while there was no need for immediate action, the BOJ should continue to calibrate policy carefully to prevent excessive and persistent inflationary pressures.

Looking at the day ahead, we’ll get the Bank of England’s latest policy decision, and hear from ECB President Lagarde, the ECB’s Cipollone, Moulin, Schnabel, Zigman, Lane, Nagel and Dolenc, and the Fed’s Hammack and Barkin. Otherwise, data releases from Europe include German factory orders and Euro Area PPI for September, along with the October construction PMIs from Germany and the UK. In the US, we’ll also get the weekly initial jobless claims, and nonfarm productivity for Q3.