Possible ouster of Jensen Huang drags Nvidia lower and weighs on the ES

Key takeaways

• Nvidia flips the tone: according to The Wall Street Journal, Nvidia's (NVDA) board of directors is preparing to oust Jensen Huang, its CEO and co-founder. The stock is down 6.5% at $162.44 in overnight trading at 09:23 Paris time, after gaining 2.87% on Wednesday: with a weight of about 6.4%, that takes nearly 0.4 percentage point off the S&P 500, or around 30 index points.
• A concentrated decline: at 09:27, the ES is down 0.45% and the NQ 0.89%, while the YM and the Russell 2000 hold steady and the DAX gains 1.28%.
• What the market is pricing in: Polymarket gives an 83% probability that Jensen Huang leaves by year-end, according to Reuters. According to OptionCharts, options price a ±0.53% move (about 40 points) for the S&P 500 over the session and ±0.80% through Friday's PPI.
• The Fed in the background: according to CME FedWatch, a 25 bp hike on December 9 is priced at 88.8% and a 50 bp hike at 11.2%, ahead of six Fed speeches, from Beth Hammack (15:00) to John Williams (00:30).
• Tonight: Cisco (CSCO) and Applied Materials (AMAT) report, with implied moves of 7.9% and 10.2%.

Overnight and Europe

Prior session (Wednesday, November 11). The S&P 500 gained 1.31% to 7,619.38, trading between 7,571.88 and 7,647.20 and finishing 28 points below its high: it broke above Monday's high (7,577.39) and is back to about 2.6% from its October record. The Nasdaq-100 rose 2.28%, the Dow 0.49% and the Russell 2000 0.88%. The equal-weight RSP gained only 0.80%: market breadth was positive (1.48 advancers for every decliner on the NYSE), but the rally was led by technology (+2.7%, semiconductors +5.6%) and energy (+1.8%); only consumer discretionary declined (−0.05%). Nvidia, Micron (MU, +11.9%), AMD (+7.32%) and Broadcom (AVGO, +3.99%) contributed about 40 of the 98 points; Apple (AAPL), the largest weight (7.8%), rose 2% to a record close.

Last night. The New York Times reported a second affair involving Jensen Huang, with Kimberly Powell, vice president of health care, after the one he acknowledged on November 8 with a woman suspected of working for Chinese intelligence. The board met Wednesday evening, according to Reuters, with no decision announced; according to Semafor, some directors favor Colette Kress, the chief financial officer, as interim CEO. The stock fell as much as 10% after hours, according to Bloomberg. Nvidia reports earnings on November 17.

Asia (closes). The Taiex fell 2.63% to 43,091.87, with TSMC, Nvidia's chip foundry, down 2.30%. The Nikkei lost 0.70% to 60,819.36 while the Topix gained 0.20%: the decline is limited to AI-linked stocks. The Kospi slipped 0.61% to 5,342.73, the Hang Seng 1.26% to 24,008.55 and Shanghai 0.67% to 3,655.83.

Europe. At 09:41, the Euro Stoxx 50 is up 0.39% at 6,418.05, the DAX 1.28% at 26,984.00 and the CAC 40 0.66% at 8,387.60; the Stoxx 600 has topped its August record, according to Reuters.

US futures. At 09:27, the ES is at 7,606.25, down 34.25 points (−0.45%) from the 7,640.50 settlement; around 09:33, the NQ is at 28,221.25 (−0.89%), the YM at 52,572 (−0.01%) and the Russell 2000 at 2,850.70 (−0.11%). In overnight trading, Nvidia has narrowed its loss to 6.5%.

Today's calendar

• Jobless claims: below 185,000, the 50 bp scenario would gain ground and the 2-year yield would climb above 4.80%; above 205,000, the 2-year would ease, benefiting rate-sensitive stocks.
• Existing home sales: below 3.80 million, it would confirm the impact of a 7.21% mortgage rate (MBA); limited impact on the ES.
• EIA: after a 9 million barrel build according to the API, a build of that size would send Brent below $92, a draw above $94.
• 30-year: on Tuesday, the 10-year note auction drew the weakest demand since early June, according to Saxo; a 30-year auction clearing above 5.40% would signal stress at the long end.

Rest of the week.

A core PPI above 0.3% would strengthen the 50 bp scenario; at 0.2% or less, it would bring relief to the 2-year.

Fed and rates

Last decision. On October 28, the FOMC chaired by Kevin Warsh held rates at 3.75–4.00% in a 10–2 vote; Lisa Cook, governor, and Beth Hammack, president of the Cleveland Fed, wanted a hike. The next meeting is December 8 and 9.

Recent remarks. Christopher Waller, governor, would support 50 bp in December if the data justify it; Lorie Logan, president of the Dallas Fed (voter), wants "at least two" 25 bp hikes; Austan Goolsbee, president of the Chicago Fed, called the October CPI "borderline disturbing."

Today. Beth Hammack (voter, dissented in April, July and October) at 15:00; Michael Barr, governor, on AI and inequality at 16:00; Austan Goolsbee at 17:15; Mary Daly, president of the San Francisco Fed, at 19:10; Jeffrey Schmid, president of the Kansas City Fed, at 19:30; John Williams, president of the New York Fed and vice chair of the FOMC, at 00:30. Friday: Susan Collins, president of the Boston Fed (15:10), Michelle Bowman, vice chair for supervision (16:50), Mary Daly (18:00) and Philip Jefferson, vice chair (01:00 overnight).

Probabilities. According to CME FedWatch, after Tuesday's CPI, a 25 bp hike is priced at 88.8% and a 50 bp hike at 11.2%; a week earlier, the 25 bp hike stood at around 72%. According to MUFG, contracts price 28 bp of hikes in December and 43 bp by January.

Yields. At 09:39, the 2-year yield is at 4.77% (+4 bp), after rising 17 bp on Tuesday to 4.73%; the 10-year is at 4.99% (−1 bp) and the 30-year at 5.34% (−1 bp). The 2s10s spread narrows to 22 bp, from 25 bp on Tuesday. Oil carries little weight: the 2-year jumped on Tuesday despite the drop in Brent, as the market reads core inflation.

Earnings

According to FactSet (November 6), 88% of S&P 500 companies have reported third-quarter results: 84% beat the EPS consensus estimate, for aggregate earnings growth of 31.4%. No S&P 500 company reports before the open.

Reported

Vylor beat the consensus estimate despite a 1% drop in sales, hurt by its licensing model for soybeans in Brazil. Negligible impact on the ES.

Expected tonight

• Cisco guided to revenue of $18.0 billion to $18.2 billion and a gross margin of 65% to 66%; the market will watch its AI orders ($4 billion in the prior quarter).
• Applied Materials guided to $10.25 billion and $4.02; its guidance for the January quarter will test memory spending (HBM) and set the tone for Lam Research (LRCX), KLA (KLAC) and Micron.
• Moves of the size implied would together be worth about 0.1 percentage point, or seven index points, excluding spillover effects.

Geopolitics and conflicts

US–China: Nvidia and export controls

Latest development. According to Reuters, Northwestern Polytechnical University, which is linked to the Chinese military and has been on a US blacklist since 2001, bought two Nvidia H200 chips in October. Chuck Schumer, the Senate Democratic leader, and John Moolenaar, the Republican chairman of the House Select Committee on China, are pushing for chip restrictions, the latter through the defense bill (NDAA). Donald Trump is due to meet Xi Jinping at the APEC summit in Shenzhen on November 18 and 19; the trade truce runs until January 10, 2027.

Indicator. Nvidia has lost more than $450 billion in market value since November 8, according to CBS News.

Channel and tipping point. Nvidia, Broadcom, AMD and Micron together account for about 11% of the index, and each percentage point on Nvidia is worth nearly 5 S&P 500 points. An extension of the truce in Shenzhen would support these stocks; controls written into the NDAA or Chinese retaliation on rare earths would hit them first.

US–Iran: Hormuz and the blockade

Latest development. Marco Rubio, secretary of state, considers new major military operations "unnecessary" as long as the blockade of Iranian ports is working. Mohsen Rezaei, secretary of Iran's Supreme National Security Council, denies any negotiations and refuses to let enriched nuclear material leave Iran; Washington insists that the nuclear issue be part of any initial negotiation, according to Reuters.

Indicator. According to the Washington Institute, 37 ships were attacked in October, a monthly record; according to Saxo, Saudi Arabia and Iraq told OPEC that their October output had returned to pre-war levels.

Channel and tipping point. A deal to reopen Hormuz would send Brent below $91.20, at the expense of ExxonMobil (XOM) and Chevron (CVX), 1.7% of the index combined, and to the benefit of rate-sensitive stocks; new strikes, which Mohsen Rezaei vows to answer against US bases, would push it above $93.90.

Russia–Ukraine: refineries and talks

The Abu Dhabi talks ended Wednesday with a prisoner exchange and no territorial agreement; Ukrainian drones have been disrupting about 30% of Russian refining since late October. The channel is diesel, with heating oil at $4.2497 a gallon (+0.91%); a ceasefire would ease inflation expectations.

Oil and commodities

• Brent (January): $93.44 at 09:41, up 0.73% from the $92.76 settlement, in a $91.20 to $93.90 range overnight. WTI (December): $87.15, up 0.72%, settlement at $86.53.
• Drivers: Brent has erased a drop of more than $1 in Asia, which Reuters attributed to hopes for talks on Iran and Ukraine, OPEC+ output and API inventories.
• Natural gas: $3.284 (+2.15%). Gold: $3,946.82 an ounce (−1.34%).
• Impact on the ES: above $93.90, Brent would support energy, Wednesday's second-best sector, but would feed inflation expectations and the 2-year yield; below $91.20, it would ease rates to the benefit of growth stocks.

Dollar and volatility

• Currencies (09:41): DXY steady at 102.82, after a year high of 103.08 on Wednesday according to MUFG; EUR/USD at 1.1088 (−0.01%); USD/JPY at 159.73 (−0.04%), after 159.95. According to MUFG, Japan's Ministry of Finance considers the moves "too fast": an intervention beyond 160 would push the dollar lower.
• VIX: 18.34 at 09:41 (+4.86%), versus a 17.49 close; the November future is at 18.61, and the curve remains in contango. According to Saxo, the SKEW is at 149.09 and implied correlation has fallen below 10.
• Implied moves (OptionCharts, based on Wednesday's close): ±0.53% for the session, ±0.80% (61 points) through Friday, ±1.43% through November 18, the day after Nvidia's earnings.
• Sentiment: a stock-specific risk, not broad risk aversion: NQ −0.89% against a flat YM, a Russell 2000 at −0.11% and Europe higher. A VIX above 19.46 (Tuesday's close) would signal renewed hedging; below 17.49, the shock would remain confined to Nvidia.

What to watch in today's session

• At any time: an announcement from Nvidia's board. A quick appointment of an interim CEO would reduce uncertainty; a departure with no successor would take the stock back toward last night's −10%.
• 14:30 and 15:00: jobless claims, then Beth Hammack; support from her for 50 bp would lift the FedWatch probability above 11.2%.
• 15:30, open: a sell imbalance is expected on Nvidia. If AMD, Micron and Broadcom follow, the decline will spread to the 11% of the index tied to semiconductors; if the RSP stays positive, the rest of the index absorbs the shock. S&P 500 reference levels: 7,647.20 (Wednesday's high) and 7,619.38 (close) above; 7,577.39 (Monday's high) and 7,571.88 (Wednesday's low) below. On the ES: 7,640.50 (settlement).
• 19:00, 30-year: the first test for the reopened cash bond market, on the eve of the PPI; threshold at 5.40%.
• After 22:00: Cisco and Applied Materials; futures will trade the numbers in the electronic session until 23:00, then after the midnight restart, ahead of John Williams at 00:30.

Morning tone: a pullback concentrated on Nvidia after the report on Jensen Huang's ouster, with a Fed priced for a hike in the background; a negative RSP, a VIX above 19.46 or a 2-year yield above 4.80% would turn it into a broad decline, while a quick appointment and resilient semiconductors would reduce it to an isolated shock.