What key signals did the U.S. "Sleepless Night" reveal to the market?

Original Title: "What Key Signals Did the U.S. 'Sleepless Night' Reveal to the Market?"
Original Author: 1912212.eth, Foresight News

On November 19, the U.S. stock and crypto markets were completely sleepless as the highly anticipated AI first stock, Nvidia, was about to announce its earnings report, which would greatly influence the subsequent market fluctuations. The Nasdaq briefly dropped to 22,231, the S&P 500 fell to 6,574, and Bitcoin plummeted from around $93,000 at 4 AM on November 19 to a low of about $88,600.

Fortunately, Nvidia's earnings report brought good news to the market.

Nvidia Q3 Revenue of $57 Billion, Exceeding Expectations

As the "shovel seller" of the AI era, Nvidia not only supports half of the Nasdaq but has also become a barometer for global risk assets. Data shows that over the past six months, the correlation between Bitcoin and the Nasdaq 100 Index (NDX) has remained high. The rise and fall of the Nasdaq largely depend on Nvidia's performance.

On November 20, Beijing time, Nvidia announced its Q3 earnings report (for the natural year from August to October) with revenue of $57.01 billion, exceeding the expected $55.19 billion; adjusted EPS was $1.30, surpassing the expected $1.26; and data center revenue was $51.2 billion, a year-on-year increase of 62%.

The performance remains unbeatable, with NVDA briefly rising to $187.

Nvidia CEO Jensen Huang stated in the earnings announcement that the sales of the company's latest generation Blackwell architecture chips "far exceeded expectations, and cloud GPUs are sold out," and that "the demand for training and inference computing continues to accelerate, both growing exponentially. We have entered a virtuous cycle of AI." He reiterated during the earnings call that the claims of an AI bubble are very different from their perspective.

Nvidia's earnings data reassured the U.S. stock market, halting the downward trend, and the crypto market also saw a rebound. BTC has now rebounded to around $92,000, fluctuating.

Internal Divisions in the Federal Reserve, December Rate Cut Uncertain

The minutes from the October FOMC meeting released yesterday showed rare divisions within the Federal Reserve regarding whether to continue cutting rates in December. Hawkish members clearly stated that "data dependence is stronger," expressing concerns about the risk of inflation rebounding; while dovish members emphasized that the labor market is rapidly cooling and that "preemptive rate cuts" are needed.

The current target range for the federal funds rate is 3.75%–4.00%, which is the level after the second rate cut of 25bp in 2025. However, the statement "a number of participants noted that it might be appropriate to pause" directly left the market in confusion.

The latest data from the CME FedWatch tool shows that the probability of a 25bp rate cut in December has plummeted from 95% two weeks ago to just 28%. The latest data from Polymarket indicates that the market's bet on the probability of a 25bp rate cut by the Federal Reserve in December has dropped to 30%, while the probability of no rate cut has risen to 67%.

Now, rate cut expectations have been halved, and the shadow of tightening liquidity looms again, putting pressure on the prices of risk assets.

To make matters worse, the U.S. November non-farm payroll report has been officially postponed to December 16 due to government funding expiration affecting the BLS (Bureau of Labor Statistics) work. The October non-farm data had already been significantly revised down due to factors like hurricanes, and the September data was also delayed; now the November data will have to wait nearly another month.

The market has completely lost its most critical anchor.

Goldman Sachs' latest forecast predicts that November non-farm payrolls will likely increase by only 50,000 to 80,000 jobs, far below the previous value of 220,000, and the unemployment rate may rebound to 4.3%. If the data turns out to be very poor, the hawks in the Federal Reserve will gain the upper hand, and the rate cut cycle may be paused directly in the first quarter of 2026. Conversely, if the data is unexpectedly strong, it will further reinforce the expectation of "no rate cuts."

Trump Slams Powell, New Federal Reserve Candidates May Be Announced Before December 25

Less than two hours after Nvidia's earnings report was released, Trump directly criticized Powell in an interview: "I would love to fire him (Powell), calling him 'extremely incompetent.'"

At the U.S.-Saudi Investment Forum held in Washington, D.C., Trump urged U.S. Treasury Secretary Yellen to expedite the search for Powell's successor. Trump told Yellen, who was sitting in the audience: "You need to work harder, Yellen. The only thing you messed up is the Federal Reserve."

Powell's term as Federal Reserve Chair will expire in May next year, while his term as a board member lasts until 2028. Trump also half-jokingly pressured Yellen:

"Interest rates are too high, Yellen. If you don't get it done quickly, I'm going to fire you."

He stated that Yellen has been privately advising him not to fire Powell, while Commerce Secretary Raimondo is "more inclined to fire" Powell.

Yellen, who is leading the search for the new Federal Reserve Chair, recently stated that Trump will meet with three final candidates after Thanksgiving on November 27, and the new candidate may be announced before Christmas on December 25. According to Polymarket data, the market currently bets that Kevin Hassett has the highest probability.

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