On Tuesday morning, the mood was distinctly autumnal. The culprit, once again, was uncertainty. Futures sagged - blame it on the deteriorating fiscal situation - the $36 trillion elephant in the room. Moody’s has taken away the government's Aaa pacifier, and the bond market is still teething. Investors, it seems, are beginning to reacquaint themselves with caution. 

And still, life in the markets goes on - if with a slight limp. UnitedHealth gained. Nvidia dipped. Home Depot floated upward on a 3% lift after beating expectations in the quarter, a faint cheer for anyone who hoped that Americans, in a moment of collective therapy, would start sanding decks and replacing faucets instead of fleeing to Florida or buying meme stocks. Yet that optimism is brittle. Home Depot’s numbers are not a harbinger of renewed consumer fervor but rather a holdover of deferred projects and pandemic-era excess.

The most theatrical drama unfolded far from Wall Street, in Hong Kong, where Chinese battery juggernaut CATL made a muscular debut, up 17% and newly garlanded with the title of “year’s biggest equity offering.” 

The Federal Reserve, meanwhile, continues its modern role as both oracle and scapegoat. A parade of its officials was scheduled to speak Tuesday - seven voices from a choir that rarely sings in tune. The market will hang on their every note, parsing phrases like "neutral policy stance" or "inflation expectations" with the obsessiveness of Talmudic scholars. 

Volatility is rife in this climate of uncertainty. Yesterday, American indices brush off gloomy headlines with ease, while European bourses are enjoying a robust run - and in some cases, outpacing their transatlantic peers. Germany's DAX notched a fresh record high yesterday and is up more than 20% in 2025, making it the best-performing major index this year. 

The outspoken CEO of JPMorgan Chase, Jamie Dimon, warned yesterday of the complacency on Wall Street regarding the economic outlook. But what could derail investors' confidence? There are two fairly consensual answers. The first is macroeconomic indicators showing a deterioration in the situation linked to tariffs. Admittedly, the world has emerged from the excessive escalation of early April, but most trade is more heavily taxed than it was at the beginning of the year. At some point, this will have an impact somewhere. The second source of doubt stems from US debt. We saw an example of this with Moody's downgrade of the US credit rating, which reawakened some old demons. The problems facing the US administration seem difficult to resolve: how can it reconcile a spiraling budget deficit, huge debt, high interest rates and generous fiscal policy? The White House hopes that cuts in federal spending and additional customs duties will eventually turn the tide. But the amounts being discussed are far from sufficient to meet the challenges. The third risk looming on the horizon is a widespread fear that professionals mention very regularly. This is a major event in the world of US shadow banking, which would cause this segment of the market to collapse. More specifically, in the private credit sector, i.e. players such as hedge funds, private equity and securitization vehicles, which perform financing functions in place of traditional banks without being subject to the same regulatory constraints. This is a very large market that flies under the radar. In the latest monthly survey conducted by Bank of America among large fund managers, shadow banking is cited as the second most likely trigger for a crisis, behind the trade war but ahead of US debt. That shows how important it is. I am tempted to say that it occupies the collective imagination of professionals, since so far nothing has gone wrong in this area, or at least nothing that has entered the media spotlight. In this sector, as in others, people prefer to wash their dirty linen in private to avoid contamination. To be complete, behind the three major risks mentioned above, we find US commercial real estate, the bursting of the AI bubble and Chinese real estate, but very, very far behind.
 
In Asia-Pacific, the People's Bank of China and the Reserve Bank of Australia cut rates by 10 and 25 basis points, respectively. The moves were widely expected, but they underscore a broader reality: unlike its peers, the Federal Reserve lacks the latitude to loosen.
Today's economic highlights:

Today: the Producer Price Index (PPI) and existing home sales in the United States; the industrial production report in Germany. See the full calendar here.

  • Dollar index: 100,400
  • Gold: $3,239
  • Crude Oil (BRENT): $65.26 (WTI) $61.95
  • United States 10 years: 4.45%
  • BITCOIN: US$104,690

In corporate news:

  • JPMorgan Chase anticipates increased charge-offs in its card portfolio by 2026, with its CEO warning against complacency in credit risk management.
  • FedEx has appointed insider John Smith as CEO and Chairman of the newly independent FedEx Freight following its spinoff.
  • General Motors has halted vehicle exports to China amid regulatory and market challenges.
  • Moody's downgrades the credit ratings of JPMorgan Chase, Bank of America, and Wells Fargo following the downgrade of the US credit rating.
  • Regeneron acquires bankrupt 23andMe and pledges to use its customers' DNA data ethically.
  • Pfizer enters into an exclusive licensing agreement with 3SBio.
  • Delta Air Lines can sue CrowdStrike for a computer failure that led to the cancellation of 7,000 flights.
  • American Water to acquire Nexus Water Group Systems in eight states.
  • Nike cuts jobs in its technology division.

Analyst Recommendations:

  • Aes Corporation (The): Jefferies downgrades to underperform from hold with a target price reduced from USD 10 to USD 9.
  • Air Lease Corporation: Citi upgrades to buy from neutral with a price target raised from USD 45 to USD 68.
  • Ati Inc.: KeyBanc Capital Markets downgrades to sector weight from overweight.
  • Blue Owl Capital Inc.: Keefe Bruyette & Woods upgrades to outperform from market perform with a price target raised from USD 20 to USD 23.
  • Celanese Corporation: BMO Capital Markets upgrades to market perform from underperform and raises the target price from USD 46 to USD 55.
  • Kinetik Holdings Inc.: Citi upgrades to buy from neutral with a price target reduced from USD 58 to USD 55.
  • Nutanix, Inc.: Raymond James downgrades to market perform from outperform.
  • Onto Innovation Inc.: Jefferies downgrades to hold from buy with a target price reduced from USD 135 to USD 110.
  • Txnm Energy, Inc.: Mizuho Securities downgrades to neutral from outperform with a price target raised from USD 56 to USD 61.25.
  • Westlake: Wells Fargo downgrades to equalweight from overweight with a target price reduced from USD 95 to USD 76.
  • Applovin: Daiwa Securities maintains its outperform recommendation and reduces the target price from 550 to USD 405.
  • Doximity, Inc.: Baird maintains its outperform recommendation and reduces the target price from USD 87 to USD 65.
  • Hewlett Packard Enterprise: Morgan Stanley maintains its market weight recommendation and raises the target price from 14 to USD 22.
  • Metlife, Inc.: BMO Capital Markets maintains its market perform recommendation and raises the target price from 73 to USD 90.
  • Micron Technology, Inc.: Guotai Haitong Securities maintains its overweight recommendation and reduces the target price from 162 to USD 125.
  • Netapp, Inc.: Morgan Stanley maintains its market weight recommendation and raises the target price from 84 to USD 106.
  • Pure Storage, Inc.: Morgan Stanley maintains its market weight recommendation and raises the target price from 40 to USD 62.
  • Sarepta Therapeutics, Inc.: JP Morgan maintains its overweight recommendation and reduces the target price from 169 to USD 84.
  • The Mosaic Company: BNP Paribas Exane maintains its outperform recommendation and raises the target price from USD 35 to USD 43.
  • UnitedHealth Group Inc.: Wolfe Research maintains its outperform recommendation and reduces the target price from USD 501 to USD 390.