Week 45 Recap & Week 46 Outlook: Chip Flush

Week 45 Recap

US Equities: A Blue Wave, a Relief Rally, and a Chip Flush

The trading week ending November 6th played out in three acts. After a quiet Monday and Tuesday, Wednesday's post-election relief rally lifted the S&P 500 roughly 1.6% and the Dow nearly 3%. Thursday then delivered the most violent session of the year: the S&P 500 fell 4.36% to 7,353.73 (its worst day since April 2025), the Nasdaq Composite plunged 5.52% to 24,315.00 and officially entered correction territory, and the Philadelphia Semiconductor Index collapsed 12.25%, its worst day since March 2020. The VIX jumped nearly 70% in a single session, from 16.61 to 28.18, its third-largest one-day percentage gain since 1990. Friday brought only a partial repair. For the week, the S&P 500 lost 2.7% to 7,376.86 (its fourth consecutive weekly loss and its worst week since April 2025), the Nasdaq dropped 3.4% to 24,579.43, and the Dow slipped 0.9% to 51,285.73.

The Midterms: Divided Government and a Data-Center Backlash

Democrats captured both the House and the Senate, handing President Trump a divided government from January 3rd, 2027. The market's first read was relief: gridlock caps fiscal expansion, so Treasuries rallied, the dollar slid to a one-month low, and healthcare and financials led. Defense contractors fell on both sides of the Atlantic on expectations of tougher budget scrutiny.

Within 24 hours, however, the market found a second, far more expensive read. Data-center expansion had become a genuine ballot issue, most visibly in Texas, a cornerstone of planned US AI capacity, where governor-elect Gina Hinojosa campaigned on a temporary data-center moratorium and the removal of related tax incentives. Investors repriced the entire AI infrastructure complex for regulatory, power-grid, and permitting risk in one session: SanDisk fell roughly 22%, Micron, AMD, and Western Digital each lost roughly 17%, and Nvidia dropped 9.3% to $181.60, erasing roughly $450 billion of market value in a day. Even after Friday's bounce, Nvidia closed at $186.64, its fifth consecutive weekly loss, leaving it roughly 22% below its early-October record.

Earnings: Beats Everywhere, Rewards Nowhere

This was a week in which delivering the numbers was not enough:

Apple (AAPL): John Ternus's first quarter as CEO was a clean beat. Revenue rose 12% to $114.5 billion (versus $113.4 billion expected), and EPS of $2.10 topped the $1.99 consensus (including a $0.05 tariff-refund benefit). iPhone revenue hit a September-quarter record of $57.6 billion (+17%), Services reached an all-time high of $31.57 billion, and Mac revenue jumped 24%. The new foldable iPhone Duo is supply-constrained, which pushes its contribution into the holiday quarter. The guide disappointed: December-quarter gross margin of 45–46% (versus roughly 46.3% expected), Services growth slowing to 8–9%, and management warned of an “unprecedented” surge in memory-chip costs as AI data centers absorb supply. Shares fell 1.9% on Tuesday to $331.90.
Palantir (PLTR): Its first $2 billion quarter: revenue of $2.31 billion (+96%) versus $2.18 billion expected, adjusted EPS of $0.44 versus $0.41, and US commercial revenue up 148% to $984 million, overtaking US government revenue for the first time. Full-year guidance was lifted to roughly $8.5 billion. The stock still slipped about 3% after hours on valuation fatigue.
AMD (AMD): A perfect example of this week's tape. Revenue of $13.4 billion (+45%), non-GAAP EPS of $2.09 (versus $1.95 expected), a record $8.5 billion in Data Center revenue (+97%), and a Q4 guide of roughly $17 billion, well ahead of the $16.2–16.3 billion consensus, on the ramp of Helios rack-scale systems and Venice server CPUs. The stock rose about 7% after hours, then lost roughly 17% on Thursday, then gained 11% on Friday. The fundamentals did not change in those three days. Only the mood did.
DigitalOcean (DOCN): Our newest position delivered the best print of the week (details below). Revenue grew 40% to $321 million, about $14 million above consensus, and non-GAAP EPS came in at $0.45 versus $0.32 expected. Management raised its 2027 growth outlook to above 60%. The stock still fell roughly 19% on the week, swept up in Thursday's neocloud rout.

Macro: Hot Hiring, Sticky Prices, and Hawkish Central Banks

ISM Manufacturing (Monday): Rose to 55.5 from 54.5, its tenth straight month of expansion, with the production index jumping to 59.0, its highest since late 2021. Prices paid eased to 75.2 from 77.9, but no industry reported paying lower prices for raw materials.
ISM Services (Wednesday): Edged down to 54.5 from 54.9 (versus 54.8 expected). New orders cooled sharply to 55.9 from 59.8, prices held at an elevated 73.0, and employment improved to 51.4 from 50.1.
October Payrolls (Friday): A blowout. The economy added 165,000 jobs against a consensus near 65,000, unemployment fell to 4.1% from 4.2%, and August and September were revised up by a combined 84,000, lifting the three-month average to 137,000. Average hourly earnings rose 0.4% on the month and 3.1% year-over-year, still below inflation. Futures-implied odds of a December 9th rate hike jumped to roughly 78% from about 67% the day before.
Treasuries: The 10-year yield dipped toward 4.90% on Wednesday's gridlock rally and settled Friday at roughly 4.86%, up 2 basis points on the day after the payrolls beat but about 7 basis points lower on the week.
Global Central Banks: Rate hikes are spreading. The Bank of England raised Bank Rate by 25 basis points to 4.00% on Thursday in an 8–1 vote (Catherine Mann wanted 50), its first hike since 2023 and a surprise against the hold we flagged last week. The Bank now forecasts UK inflation near 5% by mid-2027. On Tuesday, the Reserve Bank of Australia hiked to 4.85% in a 6–3 vote, its fifth increase of 2026, taking the cash rate to its highest level since 2008.

Commodities: Oil's War Premium Cracks, Metals Rebound

Brent crude fell roughly 15% on the week to about $98, one of its steepest weekly declines in years. Two forces unwound the risk premium together: Qatar- and Oman-mediated back-channel talks between Washington and Tehran on a phased framework to reopen commercial traffic through the Strait of Hormuz, and post-election signals favoring diplomatic restraint over escalation. Sporadic tanker incidents kept the market from pricing in a full peace. Precious metals reversed last week's liquidation: gold rebounded roughly 4.5% to around $4,050–4,075 (its best week since August) after touching $4,130 mid-week on the weaker dollar, before Friday's payrolls beat trimmed the gains. Silver recovered to roughly $52, up from about $49.

Europe: A Record High, Then a Reversal

The STOXX 600 touched a record high near 662 mid-week, helped by the US election relief rally and strength in luxury names such as LVMH. It then fell about 1% on Friday to 648.33 as the Wall Street chip rout and the hot US payrolls report spilled across the Atlantic, finishing roughly flat on the week. Its light exposure to megacap AI is now a feature rather than a flaw. The DAX dropped about 1.9% on Friday toward 26,000, weighed down by broker downgrades of Munich Re and Hannover Re and a guidance cut at Rheinmetall, while in Paris, Teleperformance plunged more than 15% after slashing its revenue outlook.

China/HK: The Rotation Finally Arrives

This was the week our patience in Hong Kong paid off. The Hang Seng rose 5.1% to 24,481.86, its strongest week since March. The Hang Seng China Enterprises Index gained 5.2% to 8,274.10, and the Hang Seng Tech Index surged roughly 8.6%. Thursday's 3.67% jump, the index's best session since early 2025, came on heavy volume and a sizable short squeeze as global investors trimmed AI hardware exposure in the US, Japan, and Taiwan and rotated into Chinese internet platforms whose valuations had been compressed through October. Friday's 1.27% dip, a spillover from Wall Street's Thursday rout, gave back only a fraction of the gains.

Our holdings led the move. Alibaba's Hong Kong shares reclaimed HK$100, and its US-listed ADR gained roughly 11.4% on the week to $109.45. Tencent climbed back above HK$400, a level it had briefly lost during October's capex scare, and Baidu's ADR closed Friday at $81.87, up 3% on the day.

UBTECH Robotics: Humanoids Take the Anchor Desk

UBTECH (9880.HK) had the most eventful run of all. After closing the week near HK$64.50, the stock gained more than 8% in Monday's Hong Kong session, closing around HK$70.55 (roughly +9.4%) after trading as high as HK$73.55, up about 14% intraday. Three catalysts drove the move:

The world's first bionic humanoid news anchors: On Friday, November 6th, at the 7th World Media Summit, UBTECH and Xinhua News Agency unveiled “Xin Yan” and “Xin Yu”, life-sized humanoid anchors with character design by filmmaker Zhang Yimou. UBTECH supplied the full hardware and software stack, and the robots read Xinhua's news on air through its AI agent built for government and policy coverage. For a sector often dismissed as trade-show demos, having China's state news agency trust a humanoid with its brand on camera is a meaningful signal of commercial credibility.
A sector-wide physical AI bid: Apple researchers published a paper on HALO, an autonomous humanoid control system tested on Unitree robots running local AI models, including Alibaba's Qwen. When the world's most valuable consumer hardware company publishes humanoid research on Chinese hardware and Chinese models, it validates the whole Chinese robotics supply chain, and UBTECH, as the sector's flagship listed name, was a natural beneficiary. UBTECH also expanded its software platform with Thinker-Sim, a Real2Sim2Real simulation environment that speeds up training and closes the data loop between virtual and factory-floor deployments.
Fundamentals catching up with the story: First-half 2026 revenue more than doubled (+104.2%) to roughly RMB 1.27 billion, driven by full-size humanoid sales, as the business shifts from one-off projects to volume deliveries of its Walker S industrial line to automakers and electronics manufacturers. Losses continue to narrow, and international expansion into Japan, South Korea, Europe, and the Middle East is broadening the customer base beyond China.

The rotation out of US AI hardware into Chinese technology is exactly the setup we positioned for when we doubled our UBTECH stake in October. We see the stock's volatility as the price of owning the category leader in physical AI.

Week 46 Outlook

Key Events

Monday, November 9th: China's October inflation data is already out and highlights a margin squeeze: factory-gate prices (PPI) accelerated to 5.7% year-over-year (versus 5.3% expected), the highest since June 2022, while consumer prices (CPI) slowed to 0.7% (versus 0.8% expected). Producers are absorbing energy and AI-component costs they cannot pass on to shoppers just before Singles' Day. In the US, Fed Governor Bowman, Chicago Fed President Goolsbee, and Richmond Fed President Barkin are all scheduled to speak.
Tuesday, November 10th: The October CPI report is the last inflation print before the December 9th FOMC. Consensus looks for headline prices to rise 0.3% month-over-month (down from September's 0.6%) and core prices to rise 0.2% (down from 0.3%). One quirk: because October 2025 prices were never collected during last year's government shutdown, the BLS will not publish year-over-year rates this month, so the market will trade entirely on the monthly figures. A hot core number on top of Friday's payrolls would all but lock in a December hike.
Wednesday, November 11th: Veterans Day: the US bond market is closed, while equities trade normally. In China, the Singles' Day shopping festival peaks, offering a real-time read on consumer demand for Alibaba and JD.com, and October trade data is due, with consensus looking for another powerful export gain (around 33.5% year-over-year) that keeps China's year-to-date trade surplus on track to top $1 trillion.
Thursday, November 12th: The UK's first Q3 GDP estimate arrives a week after the Bank of England's hike. JD.com reports, and Cisco reports after the close, the first major read on AI networking demand since Thursday's chip flush. Weekly jobless claims will also be released.
Friday, November 13th: October PPI, with headline producer prices expected to cool to 0.4% from September's 1.3% surge.
Looking Ahead: Our China earnings window opens next week. Baidu reports before the open on Monday, November 16th. Nvidia follows after the close on Tuesday, November 17th, alongside October retail sales that morning, in what will be the defining test of whether Thursday's AI capitulation was justified. Tencent reports on Wednesday, November 18th, and Alibaba before the US open on Thursday, November 19th.

Positioning Into Week 46: We Hold, and We Stand Behind DigitalOcean

One week after we sold leveraged December $100 puts on DigitalOcean, the stock closed Friday at $72.48, below our break-even.

Look at what DigitalOcean actually reported on Tuesday morning, though, and the gap between price and business has never been wider. Revenue accelerated to 40% growth (from 28.6% last quarter). ARR reached $1.285 billion on a record $160 million of net new ARR. AI customer ARR grew 288% to $376 million, and ARR from customers spending more than $1 million a year grew 273% to $386 million. Management raised its Q4 exit growth rate to 44–45% and its 2027 growth outlook to more than 60%, up from 50%. The headline GAAP net loss of $42.6 million came from induced-conversion expenses on its convertible notes, a financing charge with no operational significance. The stock fell 7% on Wednesday to $84.02, then roughly 16% on Thursday, along with every other company that touches a data center. The repricing came from Washington, not from DigitalOcean's results.

The rest of the book is unchanged. Our China tech positions (Alibaba, Tencent, UBTECH) just had their best week since our October rotation, exactly as the money began rotating out of US AI hardware. The metals rebound has eased the pressure on our December GLD and SLVP put sales, and our December IBM and EWZ puts remain in place.

In a week when the market punished beat-and-raise reports from AMD, Palantir, and DigitalOcean alike, we are staying anchored to the fundamentals. Prices can disconnect from businesses for a while, but they tend to reconnect eventually. We are positioned to be there when they do.