AI Valuations, September Jobs, Expiry Volatility

Against this backdrop, global liquidity continues to quietly dominate.
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The BofA data showing 316 cumulative rate cuts globally (the highest since 2010) show a clear macro theme: monetary policy worldwide is turning synchronously supportive.

Historically, peaks in global rate cuts overlap with the most powerful equity cycles — a trend now appearing again.

The December FOMC will be the market’s critical junction. With QT ending, disinflation visible, and policy becoming more accommodative, this meeting will shape expectations for 2026.

Key Drivers This Week

Macro Shift & Fed's New Tone

The delayed September jobs report finally landed, painting a picture of a cooling labor market.
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The U.S. added 119,000 jobs, more than doubling expectations, yet the unemployment rate rose to 4.4% – its highest since late 2021.

Crucially, inflation data remained constrained, with the October CPI cancelled. This means the Fed heads into the December 9–10 FOMC meeting without fresh inflation figures, relying heavily on the sticky September CPI at 3.0% YoY and the evolving employment picture.

A clear dovish shift emerged from Fed officials by week’s end. NY Fed President John Williams openly discussed a December rate cut, citing risks tilted towards employment weakness.
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Markets reacted sharply: the probability of a 25 bps cut in December surged from ~35% to ~75% by 10Y Treasury yield towards 4.05–4.10%, its lowest since late October.

AI Sector Update: Nvidia’s Beat, Healthy Reset After Euphoria

Nvidia delivered another flawless quarter — a major beat on both revenue and EPS, with Data Center growth remaining exceptionally strong and Blackwell demand still far above supply.

Q4 guidance came in meaningfully ahead of expectations, reaffirming that the AI capex cycle remains nowhere near peaking.

Yet despite the strength, NVDA slipped the next day. This wasn’t about fundamentals — it was the market digesting stretched valuations and the impact of the $3T options expiry positions as well as algorithmic resets.
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Hyperscalers continue to signal the same thing: they are still compute-constrained. That means the spend continues, the cycle is intact, and the structural AI runway remains long.

This pullback looks more like a valuation reset than a change in narrative, a necessary breather after months of one-way upside.

Bitcoin Update: Sharp Correction with Critical Inflection Point

Bitcoin endured a sharp correction this week, sliding from the $100K+ zone into the 80-85Ks.
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​Catalysts behind the sudden drop included a stronger U.S. Dollar at six-month highs, Mt. Gox wallet movements (~$956M) triggering supply fears, forced liquidations from overleveraged traders, and broader risk-off sentiment as semiconductors and AI corrected.

Sovereign adoption continues to stay steady, with EM central banks and state funds gradually increasing BTC exposure as part of their long-term reserve diversification.
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This is happening exactly as global liquidity begins turning upward — Japan’s stimulus, China’s heavy weekly injections, and EM easing cycles collectively soften dollar pressure and support risk assets.

Crucially, sentiment washed out: positioning, leverage, and funding flipped from overheated to reset territory. When BTC sells off on already-known catalysts (Mt. Gox, USD strength, AI correction), it often signals peak pessimism being priced in, not new downside.

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🧭 Proflex Playbook – Stay Agile, Stay Alert

We are at a critical inflection point where central bank dovishness meets genuine economic deceleration and stretched valuations.
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The market is not yet pricing the full implications of a weaker macro environment, creating both risk and opportunity.

Our stance remains clear and decisive:

• Focus on Structural Growth: Continue to overweight the secular AI theme, recognizing its multi-year runway.
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• Anticipate Shallow Corrections: Use dips as accumulation opportunities, not reasons for fear, understanding that "none of the corrections stick."
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• Diversify Thoughtfully: Recognize the "decorrelation" across asset classes; consider gold and Bitcoin for portfolio resilience.
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• Develop Mental Models: Prioritize long-term planning (6-12 months out) over short-term news, aiming for consistent, incremental gains.

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If you're an All-Access or Managed Portfolio subscriber, our positioning has already shifted ahead of this moment—scaling up asymmetric hard asset plays while hedging for earnings volatility and geopolitical tail risks.

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Until next week,

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— The Proflex Team
​ Trusted Macro Insights. Calm Investing. Tactical Trades.

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