Global equities have rebounded with fair bit of gusto over the last few weeks – give or take an impatient stumble – and once again, it’s been all about Wall Street’s Mega Tech bovine squad.

The FANG+ Index has run away with itself, jumping almost +18% in about 12 or so sessions of trade, ending the Friday session in New York at shiny, new all-time highs.

Not everyone feels the same outsized conviction for the rest of the market, with US indices closing mixed on Friday.

Nevertheless, after not knowing which way to run, the Dow Jones Industrial Average eventually closed with its nose inside positive territory, adding 1.8 points, or +0.01%.

The S&P 500 index crept ahead some 5.8 points, or +0.13% to close at 4,514, while the Nasdaq Composite Index found 11.8 points or +0.08%, to end the session at 14,125.5

Following the upward hoopla of an inflation free future last week, all three major US averages clocked a third straight weekly gain – the Nasdaq surged again, up +2.4% for the week. The S&P 500 added +2.2%, while the the Dow ended the week with a +1.9% rise.

Both the Dow and S&P 500 logged their first three-week win streak since July. And it was the Nasdaq’s first three-week streak since June.

For now at least, it seems “Big Tech” is bringing back the bulls

However, 2023 has only been about a handful of stocks, the “Magnificent Seven”, with 50% of the S&P500 struggling to stay in positive territory in a year where the S&P500 index is up a healthy +17.6%.

Year-to-date: NVIDIA (NVDA) +240%, Meta Platforms (META) +178%, Tesla (TSLA) 90%, Amazon (AMZN) +73%, both Netflix (NFLX) and Microsoft (MSFT US) +57%, and Mama Alphabet (GOOGL) +54%.

Father Christmas will be in New York

On the Santa rally, its chalk and chedder between us and the States.

Looking at the seasonality picture for US stocks over the last decade, it’s way different to that of the benchmark ASX200.

The S&P500 has stormed it home nine out of the last 10-years through November with an average win of +3.2%; conversely, the ASX200 has fallen 50% of the time with an average increase of a meagre +1.1%.

Alibaba is dipping, not everyone’s buying

And finally, it’s not all good news for the tech megafauna.

The market cap of Chinese e-commerce giant Alibaba is about 10% down what it was on Thursday morning, before Jack Ma’s former tech giant walked back on its headline move back in May to cut itself into six easy pieces and spin off its cloud computing business for listing on the NYSE.

In the States, investors voted with their feet, however Wall Street’s analysts are less convinced either way.

Morgan Stanley immediately dropped Alibaba as its top pick in the internet sector, saying the move was for all sorts of reasons, but apparently  the final straw was Thursday’s “negative surprise” on the potential IPO.

A little keener to buy the dip is Barclays, which said killing the spin-off and list plan for the cloud business was the “right decision” given the IPO climate and all the regulatory hurdles.

Barclays remains a fan of BABA’s gung-ho share repurchasing –  US$3bn in four months – reiterating its Overweight rating and US$138 price target on the stock, adding that the new focus on dividends and buybacks was welcome and can make BABA stock an attractive long-term option.


Elon Watch

Elon is in terrible trouble with the mouse and a bunch of other key X advertisers.

Disney is no longer advertising on X, the Elon toy formerly known as Twitter.

Disney’s decision follows an effectively damning report by the watchdog group Media Matters, which alleged that ads for brands like Apple, Bravo, and Amazon had appeared on X next to white nationalist hashtags such as #WLM (White Lives Matter) or #KeepEuropeWhite.

Following this splash, many of the megatron X advertisers – like Messrs Apple, Comcast/NBC Universal, and IBM – up and cut the cord with Elon’s once-was US$49bn platform.

In a statement, IBM said  something like ‘we have zero tolerance for hate speech and discrimination… we just hate it’.

The Week Ahead on Wall Street

Wall Street is closed on Thursday and shutters early on Black Friday for the mystery that is Thanksgiving.

There’s heaps of time, however, to do some damage, what with Nvidia dropping earnings on Tuesday and the Federal Open Market Committee releases its latest meeting minutes on the Wednesday.

Trading on the Nasdaq and New York Stock Exchange will end at 1pm in New York on Friday – to allow for an exodus to the various places Americans go for said vacation.

Inside this holiday-shortened week will be a mini-storm of earnings reports just before Thanksgiving.

The headliner sans doubt will be Nvidia (NVDA), which has been on an AI-fuelled rampage for much of the year, so let’s pause there for a moment.

Nvidia earnings preview

Nvidia will report Q3 earnings on Tuesday November 21 and the expectations are almost universally high.

The most recently minted 1 trillion dollar tech giant is expected to announce Q3 revenue of US$15.99bn and earnings per share (EPS) of US$3.37.

The Gatsby of AI  

Nvidia is the standout performer of 2023, here, there or everywhere.

NVDA has by a long measure, been the best performing stock in both the Nasdaq 100 and S&P 500 indices in 2023, with its price enjoying a massive rally on the back of the Artificial Intelligence (AI) mania.

The emergent chipmaker’s stock has way more than tripled since New Year, trading on the edge of another record high ahead of the earnings drop.

In its 2x previous quarterly reports, Nvidia whacked expectations out of the park,, sending the broader stock market into overdrive and solidifying that AI is the next big growth lever within the tech sector. Besides strong fundamentals, the firm provided rosy guidance for the upcoming quarters as the demand for advanced GPUs is forecast to keep growing.

Considering that the majority of AI and cloud projects are powered by Nvidia’s advanced chips, the firm’s financial figures are likely to be perceived as a proxy for the health of the tech sector moving forward. This week, the firm reported that its latest GPU H200 will be available in the second quarter of 2024, which is mainly designed to power AI systems as interest in the sector has surged globally.

Risks, what risks?

Of course, Nvidia is also facing some downside risks and remains under pressure to deliver solid results to justify its outperformance. Firstly, up until now, markets seem to be solely focused on the demand side of the GPU market, neglecting whether Nvidia has the capacity to keep meeting the constantly increasing demand.

If this adverse scenario materialises, many tech giants might quickly turn to Nvidia’s competitors that are waiting around the corner to steal market share. Moreover, to reduce their reliance on Nvidia many big-tech companies have already started in-house development of chips, but they are still in embryonic stages.

Finally, the leading chipmaker is also caught in the US-China crossfire as the Biden administration has imposed hard restrictions to prevent Chinese access to advanced semiconductors.

Fabulous fundamentals

Strong financial performance is expected for Nvidia as more and more tech firms that have entered the AI race are in need of its advanced chips to cope up with competition.

The semiconductor designer is expected to post revenue of $16.12 billion for the third quarter of 2023 according to consensus estimates by Refinitiv IBES, which would represent a massive year-on-year growth of 171.8%. Additionally, earnings per share (EPS) are estimated at $3.36, marking a huge 479.3% increase on an annual basis.

Valuation corrects but markets seem unimpressed

Nvidia had worn the crown of the most expensive chipmaker for quite a long time, but things seem to have changed lately. Slightly after its Q1 earnings call, analysts started revising forward earnings expectations higher and higher.

Meanwhile, since early July, Nvidia’s stock has been stuck in a consolidation period, which in combination with the increasing forward estimates send its price-to-earnings (P/E) ratio significantly lower.

Despite the latest rally towards its record high, Nvidia’s 12-month forward (P/E) ratio, which denotes the dollar amount someone would need to invest to receive back one dollar in annual earnings, currently stands at 31.4x. In comparison, AMD’s P/E ratio is currently at 32.90x, while the tech-heavy Nasdaq’s fluctuates near 25.4x.

The Santa Clara-based company will be the impact of China export controls, the product roadmap, the update on the data center supply chain, hyperscale commentary, and colour on AI services revenue. Ahead of the report, Morgan Stanley noted that the gap between supply and demand has been so wide for the company that even shaving off peak demand has had no impact.

Nvidia heads into Q3 earnings with shares up an acceptable 240% year-to-date.

Wall Street Earnings This Thanksgiving Week

Lowe’s (LOW), Analog Devices (ADI), Autodesk (ADSK), Best Buy (BBY), Baidu (BIDU), Deere (DE), and DICK’S Sporting Goods (DKS) are some of the other notable companies that will enter the earnings confessional.


Monday, November 20 – Zoom Video (ZM) and BellRing Brands (BRBR).

Tuesday, November 21 – Nvidia (NVDA), Lowe’s (LOW), Medtronic (MDT), Analog Devices (ADI), Autodesk (ADSK), Best Buy (BBY), Baidu (BIDU), DICK’S Sporting Goods (DKS), Burlington Stores (BURL), HP (HPQ), Nordstrom (JWN), and Jack in the Box (JACK).

Wednesday, November 22 – Deere (DE).

The Economic Calendar

Monday November 20 – Friday November  – 24

Source: Westpac, Commsec, Trading Economics, S&P Global Research, AMP 


China (Mainland) Loan Prime Rate (Nov)
Thailand GDP (Q3)
Malaysia Trade (Oct)
Germany PPI (Oct)
Taiwan Export Orders (Oct)

Canada Inflation (Oct)
Canada New Housing Price Index (Oct)
United States Chicago Fed National Activity Index (Oct)
United States Existing Home Sales (Oct)
United States Fed FOMC Minutes

United Kingdom CBI Industrial Trends Orders
United States Durable Goods Orders (Oct)
Eurozone Consumer Confidence (Nov, flash)
United States University of Michigan Sentiment (Nov, final)

United States, Japan Market Holiday
UK S&P Global/CIPS Flash PMI, Manufacturing & Services*
Germany HCOB Flash PMI, Manufacturing & Services*
France HCOB Flash PMI, Manufacturing & Services*
Indonesia BI Interest Rate Decision
Taiwan Industrial Production (Oct)
Taiwan Retail Sales (Oct)

United States, India (Partial) Market Holiday
Japan au Jibun Bank Flash Manufacturing PMI
US S&P Global Flash PMI, Manufacturing & Services
Mexico GDP (Q3, final)
Canada Retail Sales (Sep)