Good morning investors,
Markets are delivering the November chop I've been warning about, with the S&P 500 down 2% this week as AI valuations face scrutiny and October layoffs hit their worst level since 2003. But while everyone panics about bubbles and crashes, I see opportunity. This selloff in quality names is exactly the entry point patient investors should embrace and take advantage of. When everyone is talking about the same thing, and it's negative, its normally a good or the start of a good period to buy equities as a long term investor.
Opening Bell: Fear Creates Opportunity
Dow ($DIA ( ▲ 1.36% )) futures fall 106 points with S&P 500 ($SPY ( ▲ 0.23% )) and Nasdaq ($QQQ ( ▼ 0.32% )) futures down 0.3% as tech weakness persists. Nvidia drops another 1% premarket, extending its 7% weekly decline, while Oracle and Palantir also slide. The Nasdaq's 1.9% Thursday plunge pushed weekly losses to 2.8%, the worst stretch since April's correction.
October layoffs hit 153,074, the highest for any October since 2003, making 2025 the worst year for job cuts since 2009. Yet ADP showed modest gains, creating the mixed signals that keep the Fed paralyzed. Cleveland Fed President Beth Hammack joined the hawkish chorus, calling policy "barely restrictive" and questioning December cuts. Still, layoff fears pushed December cut odds back above 70%.
Tesla's Trillion-Dollar Vote
Shareholders overwhelmingly approved Elon Musk's compensation package worth up to $878 billion over the next decade, with 75% support. The largest corporate pay package in history validates Musk's vision of transforming Tesla from an EV maker into an AI and robotics juggernaut.
Musk also expects Full Self-Driving approval in China by early next year and mused about building a "gigantic chip fab" potentially with Intel. The vote proves Tesla bulls prioritize visionary leadership over dilution concerns. At these levels, betting against Musk has been a losing proposition for years.
Airbnb's International Surge
Airbnb crushed Q3 with revenue up 9.7% to $4.10 billion and gross bookings jumping 14% to $22.9 billion. Q4 guidance of $2.66-$2.72 billion topped estimates as Latin America and Asia Pacific bookings grew twice as fast as core markets.
The results validate Airbnb's expansion strategy beyond saturated Western markets. With international travel recovering and emerging market middle classes growing, Airbnb has years of runway ahead. The stock's 15% year-to-date gain understates the growth potential.
GTA VI Delay: The Wait Continues
Take-Two pushed Grand Theft Auto VI to November 19, 2026, the second delay for gaming's most anticipated title. Yet the company raised annual bookings guidance to $6.40-$6.50 billion from $6.05-$6.15 billion on strong mobile and premium spending.
The delay disappointment is noise. GTA V has generated over $8 billion in revenue across a decade. GTA VI will likely double that. Take-Two can afford to perfect the game rather than rush it. Patient shareholders will be rewarded.
AI Chip Restrictions Tighten
The White House blocked Nvidia from selling even scaled-down AI chips to China, with CEO Jensen Huang confirming "no active discussions" about Blackwell sales. This follows Intel and Tesla's potential partnership discussions as the U.S. semiconductor industry realigns around national security priorities.
The restrictions create artificial scarcity that benefits Nvidia pricing power while forcing China to develop inferior alternatives. Every restriction strengthens Nvidia's moat in non-China markets. The stock's 7% weekly decline on these headlines misses the bigger picture for the company.
Bitcoin Tests $100K Support
Bitcoin slipping below $100,000 for the second time this week, down 20% from October's $126,000 peak, adds to risk-off sentiment. The crypto selloff mirrors high-multiple tech weakness as leveraged positions unwind and Fed cut odds diminish.
But perspective matters: These 20% corrections are normal in crypto cycles, and investors should not be exposed to crypto if they aren't ready to hold through more volatile times. The correlation with tech stocks means when one bounces, both likely will. Watch for Bitcoin reclaiming and bouncing off of $100,000 as a signal tech pessimism is exhausting.
Housing: The Overlooked Opportunity
While everyone obsesses over AI valuations, housing stocks are quietly setting up for a major move. With the Fed likely cutting despite hawkish rhetoric, mortgage rates should drift lower into 2026. Homebuilders, suppliers, and mortgage lenders offer compelling risk/reward away from crowded tech trades.
I particularly like the setup in building products, home improvement retailers, and regional banks with mortgage exposure. These names haven't participated in the AI rally, creating attractive entry points for the next leg higher.
Final Thought
This week's selloff fits the narrative we have been discussing - November chop creating opportunity, not catastrophe. When October layoffs hit 20-year highs while Challenger data shows AI replacing workers, the productivity gains will eventually show up in margins. When everyone's talking about bubbles, they rarely pop on schedule.
The S&P 500 down 2% this week feels painful but it's noise in a bull market. Nvidia at 7% off highs, Oracle down similarly, and quality tech names on sale won't last. Earnings remain strong with 80% of companies beating estimates. The underlying trend hasn't broken.
Cleveland Fed's Hammack calling policy "barely restrictive" with unemployment rising and layoffs surging , I think the Fed will be forced to act, even if the policy isn't restrictive. I believe the December cut will happen because the data demands it, even without official jobs reports.
I'm using this weakness to add to positions in the Magnificent 7, particularly Google and Amazon. Housing stocks offer a second wave opportunity as that sector recovers. Small and mid-caps could outperform once rate cuts resume.
Let others panic about crashes while you stay consistent with quality names. The year-end rally setup is strengthening, not weakening. In two weeks, Nvidia reports earnings that will likely reignite the AI narrative. Combined with a December Fed cut and potential tariff rollback from the Supreme Court, the catalysts for a strong finish are aligning.
Stay patient, stay invested, and use fear to your advantage. This is opportunity knocking.
Have a great weekend, and as always, feel free to reach out with questions about positioning for the weeks ahead.
Best regards,
Dan Sheehan
This newsletter is for informational purposes only and should not be considered as investment advice. Please consult with your financial advisor about your specific situation.