Alphabet Nipping at Nvidia's Heels

Markets enjoyed a broad rally while political uncertainty and growing stress in leveraged loans threaten to heighten volatility.

Key Takeaways

• Stocks Bounce on Thanksgiving Week: Nothing too surprising about yesterday. Over the past quarter-century, the S&P 500 has rallied three-quarters of the time in the Thanksgiving week. Month-end window dressing is also coming into play. Technically, what really happened was that the S&P 500 found key support right at the 100-day trendline and bounced off that moving average.

• Dovish Fed Signals Push Rate-Cut Odds Up: Adding fuel to the fire were FRB Governor Waller voicing his support, once again, for a December 10^th rate cut, and San Francisco Fed President Mary Daly casting her vote early as well. Market-based odds for another round of rate relief next month have doubled in the past week to 88%.

• Leveraged-Loan Market Shows Cracks as Selling Intensifies: One bubble that does seem to be in the process of bursting is the market for leveraged loans — average prices have deflated for six days in a row, and investors have been net sellers in five of the past six weeks. How many losses are piling up here, along with the crypto space, and when can we start to see spillovers into other risk assets when the margin calls come rolling in?