Syz the moment

The last five trading days of the year plus the first two trading days of the new year are known as the "Santa Claus rally". Since 1980, there have been positive returns 73% of the time, with average S&P 500 upside of 1.1%. Source: Edward Jones thru Markets & Mayhem

It's not about the current earnings—it's about the Capex future. And if that future changes, the market is in for a shock. Goldman Sachs just dropped a massive warning. The Core Risk: AI Spending Reversal They say that our current S&P 500 valuation is priced for an incredible, long-term AI Capex boom (spending on AI infrastructure). What if that boom stalls? If AI capex growth expectations revert to early 2023 levels, GS estimates the S&P 500 valuation multiple could see a 15-20% DOWNSIDE. That's a huge potential correction driven only by multiple compression. The Extreme Scenario (The Nightmare Fuel) -> Imagine the Hyperscalers slamming the brakes on spending. 🔴 The expected Capex for 2026 is approximately $433 billion. A reversion to the 2022 Capex level of $158 billion would result in a massive reduction of $275 billion—the "Lost Capex." 🔴This $275 billion shortfall represents a 30% reduction to the consensus estimate of $1 trillion in S&P 500 sales growth. Consequently, the expected S&P 500 revenue growth rate would drop sharply from the consensus of 6% to approximately 4%. ➡️ Ultimately, this decrease in spending would pose a substantial downside risk to both the AI investment trade and the broader S&P 500 market. The Takeaway for investors: This isn't about today's P&L. It's about the market's perception of tomorrow's AI-driven growth. A dramatic cut in capex would signal the long-term AI earnings thesis is broken, leading to a much steeper decline in stock valuations than a simple revenue reduction would suggest. 🔑 Don't miss this point: Near-term revenues might only drop modestly, but the hit to long-term earnings growth expectations will crush valuations. Source: Goldman Sachs, Neil Sethi @neilksethi

Source: J-C Parets, TrendLabs

Source: Guilherme Tavares i3 invest

The consensus among major investment banks surveyed by the FT sees the S&P 500 soaring past 7,500 by the end of 2026—a roughly 10% increase from current levels. What's fueling the bull market? 📌 The Triumvirate: Analysts at Morgan Stanley point to "easy fiscal, monetary and regulatory policy," including the estimated $129bn in corporate tax cuts from the Trump administration. 📌AI Tailwinds: The market believes it has shrugged off recent jitters over Big Tech valuations. Companies like Nvidia, the world's first $5T company, continue to power the index. 📌Rate Cuts: Investors are pricing in 3-4 quarter-point Fed rate cuts by the end of next year, boosting sentiment. The Great Debate: 🐂 Most Bullish (Deutsche Bank): Sees the S&P hitting a massive 8,000, betting on corporate earnings broadening out beyond tech. 🐻 Most Cautious (Bank of America): Forecasts just 7,100, warning that AI spending and data center build-out have yet to appear in better earnings. "For now investors are buying the dream." Note however that while such gains would mark the seventh year of double-digit gains in the past eight, they would represent a slowdown from the 16.6 per cent rise so far in 2025 and the average over the past decade - see chart below https://lnkd.in/eKYt6PK7 Source: FT

Source: The Market Ear, LSEG Workspace

As shown below, bitcoin has a high correlation with unprofitable tech stocks and the Nasdaq.

We think Nvidia has a different profile. Still, this is a scary one...