MARKET RECAP
😍 S&P 500 Rebounds After US-China Trade Concerns Ease

😰 Last week was rough, with the S&P 500 posting its biggest decline since May after Trump’s tweets about reigniting the trade war with China.

📈 Well, this week, worries cooled off a bit as Trump said he will be meeting with Chinese President Xi Jinping later this month, driving a strong recovery across the markets:

• The S&P 500 rose +1.7%

• The Nasdaq-100 rose 2.5%

• The Canadian TSX index rose 0.9%

🪙 Despite the market recovery, Bitcoin and crypto continued its ‘flash crash’, with Bitcoin now down ~13% since Oct 7 (although it’s worth noting it’s still up 59% over the past year), with one commentator saying:

😰 But while concerns swirl in crypto, the banking industry also wasn’t doing so hot this week, as fears of bad loans spooked investors… so let’s talk about what’s going on, and what it means for your portfolio and the market at large…

🏦 Bank Stocks Fall As Concerns Grow Over 'Bad Loans'

⚠️ Ok, if you’re like me, anytime you hear the word ‘bad loans’, you might think immediately of 2008, when the subprime mortgage crisis tanked the markets. And while this time around doesn’t seem to be anything close to that, it’s worth paying attention to some early warning signs:

• 😥 In September, the bankruptcy of auto parts supplier and subprime lender First Brands and Tricolor sparked initial fears about loose lending practices

• 👀 This week, two regional banks, Zions and Western Alliance, heightened worries by saying they expect a ‘sizable charge because of bad loans’, with Western Alliance stating that a borrower had committed fraud.

• 🪲 JPMorgan CEO Jamie Dimon added to the fears in his earnings call this week, saying:

🔴 All this drove the regional banks to have their worst day since April on Thursday, with the SPDR S&P Regional Banking ETF (KRE) falling 6.2% with its biggest outflow in 4 years.

📉 Zions ($ZION) and Western Alliance ($WAL) were hit even harder, falling 13% and 11%.

🤔 How Concerned Should You Be?

So is this a real risk for the industry at large? Well, one analyst says no, saying that these exposures are ‘well-contained’ and ‘have limited financial impact’, and that:

🤑 So if anything, this could be another example of investors overreacting to news and creating a buying opportunity for the rest of us!

✨ Bank of America, Morgan Stanley, and Amex Jump on Earnings

🔥 While regional banks took a bit of a beating, the major players actually crushed it this week:

• Bank of America ($BAC) jumped 5.4% after crushing earnings estimates with a 43% surge in investment banking revenues as M&As and IPOs activity heats back up

• Amex ($AXP) soared 9.6% after recording record revenue, with higher spending among affluent customers and strong demand for its refreshed Amex Platinum cards.

• Morgan Stanley ($MS) rose 4.5% after profit jumped 19% from last year, easing fears of an economic slowdown

⭐️ JPMorgan ($JPM) also recorded strong earnings, with earnings per share coming in 5% over analyst estimates, with the company’s ‘Markets’ and ‘Asset & Wealth Management’ segments posting their best quarter ever. Despite these strong restults, the stock fell 2.8% this week.

💡 From what I can gather though, this had little to do with the regional bank credit jitters and more due to ‘valuation resistance’ against the stock’s impressive rally so far this year. Compared to Amex and BofA, JPMorgan is still outperforming, up 24% year-to-date compared to ~16% for the others

📊 What’s All This Mean for the Broader Market

💡 To wrap up, here are my quick thoughts on what all this means for the market-at-large:

• The fears about the bad loans seem largely overblown and mostly contained to a few regional banks. There’s little evidence I can find that this is a widespread risk, and most experts beleive the sell-off is overdone.

• The stellar earnings across the big banks are a great sign and ease fears of an economic slowdown, although it is strongly correlated with the AI-driven market hype, as much of the earnings/revenue beats were driven by IPO and trading activity, which are up during a bull market.

✨ All right, enough about banks, let’s talk about some of the other major headlines this week. But first, a quick word from this week’s sponsor, Harvest ETFs!

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IN OTHER NEWS
🗞️ Top Headlines This Week

📈 ASML Jumps 10% After Strong Earnings

• ASML, the world’s biggest supplier of computer chip-making equipment, reported third-quarter revenue of €5.40 billion, above the analyst consensus of ~€5.36 billion, driven by both smartphone chips and the advanced memory chips needed for AI.

• Management flagged continued strong demand from AI-related chip production, noting “continued positive momentum around investments in AI.”

• However, the company also warned of a significant drop in Chinese demand in 2026, as US-led expert restrictions mean ASML can’t sell its most advanced tools in China. This was a big hit for the company, with China making up nearly half of its 2024 sales.

• Despite this, the stock jumped 10% this week as the market stays bullish on ASML’s growth opportunities amid the AI hype.

🤖 Walmart Up 6% After Announcing Shoppers Will Be Able to Buy Products with ChatGPT

• Walmart ($WMT) revealed an exciting new partnership with OpenAI to enable customers to shop directly via ChatGPT using an “Instant Checkout” feature, no website redirect needed.

• CEO Doug McMillon said “For many years now, e-commerce shopping experiences have consisted of a search bar and a long list of item responses. That is about to change.”

• Analysts called the move a step toward “agentic commerce,” where AI assistants handle entire transactions, though adoption and execution risks remain.

• Walmart also reported Q3 earnings of $1.83 per share on revenue of $171.6 billion, both above expectations, driven by +4.2% comparable sales growth and strong grocery demand.

💰 Quantum Stocks Jump After JPMorgan Announces $1.5T Security & Resiliency Initiative

• JPMorgan rolled out a decade-long “Security and Resiliency Initiative” valued at $1.5 trillion, aimed at financing and investing across key sectors such as supply chain, energy resilience, defense, and “frontier technologies” like quantum computing.

• The bank said it will inject up to $10 billion of its own capital into select U.S. companies in the high-priority sectors, including quantum computing firms.

• The news gave a boost to quantum stocks, with the Defiance Quantum ETF jumping 3.7% (now up +72% in the past year)

🤝 Broadcom Up 8% After Announcing Deal with OpenAI to Deploy Custom AI Accelerators

• Broadcom ($AVGO) and OpenAI unveiled a strategic collaboration to deploy 10 gigawatts of custom AI accelerators, with initial rollout planned in the second half of 2026 and completion by the end of 2029.

• Financial terms weren’t fully disclosed, but analysts estimate the deal could be worth multiple billions of dollars and has already driven Broadcom’s stock up ~9%.

• The deal signals a shift away from reliance on standard GPUs toward custom silicon, potentially a major revenue lever for Broadcom and a strategic infrastructure move for OpenAI.

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^{*See CIBC Asset Management Disclaimer at the end of the newsletter}

FROM THE BLOSSOM COMMUNITY
⭐️ Featured Discussions this Week

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