Midweek Thoughts
NVDIA Earnings, FED Minutes, Bank of Japan
What a week (yes, its only Tuesday)
Big day ahead. Tomorrow we get a rare triple witching of risk events:
NVIDIA earnings after the close – the single most important stock in the world right now. Any whiff of slowing inference capex or margin compression and the Nasdaq could drop 3–5% in the blink of an eye.
2:00 pm ET – Release of the October FOMC minutes. Markets are currently pricing ~70% odds of a December cut, but if the minutes reveal even mild hawkish surprises (“transitory” inflation concerns, worries about fiscal blowout under the new administration, etc.), rate-cut expectations get repriced fast. 10-year yields are already flirting with 4.50%; a hawkish minutes print could shove them toward 4.70–4.80% in a hurry.
Bank of Japan / Yen carry trade watch – USD/JPY is back above 155 and the BoJ is openly signaling discomfort. Governor Ueda and deputies have been jawboning all month. If we get another verbal intervention overnight or (worse) an emergency rate hike or yield-curve-control tweak, we could see a violent yen short squeeze. Reminder: the August 5 unwind was triggered by a mere 10 bp BoJ hike and shaved ~8% off the S&P in two days. We’re arguably more leveraged now than we were then.
These three events are not independent:
A hot NVIDIA print → more multiple expansion → higher yields → stronger dollar → more pressure on yen carry.
Hawkish Fed minutes → higher yields → same vicious loop.
Any BoJ pushback → forced unwinds of the single most crowded trade on the planet.
There were signs we might have some drama like this coming, see post from end of October
