Whistling Past The Graveyard...
- Marc Bentin
- Nov 3, 2025
- 8 min read
BentinPartner Weekly
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Please find below our latest Weekly Trend Report.
Have a nice start of the week.
Marc Bentin,
Bentinpartner GmbH
Over the past wee, the SP500 added 0.7%, driven by the overall performance of the AI and MAG7 segment while semis surged 3.6%. That said, the equally weighed SP500 dropped -1.7% on the week, trending lower, showing the narrow nature of the outperformance as the same time as Nvidia became the first USD5trn market cap company. At the level of the SP500 itself, only 40% of the index components are still tending higher. In contrast and as per the end of last week, the Nasdaq posted its best run in 8 years (since April lows).
On Wednesday, the Fed delivered the goods, as expected, with a 25bps rate cut, also signaling that it would “phase out” QT (balance sheet contraction) on December 1st.
A little spoiler came during J. Powell’s press conference when he said that that a December rate cut was “not a foregone conclusion, far from it”, as the Fed faces the challenge of its dual mandate, being confronted to upwards pressure on inflation and downward pressure on employment.
No particular mention was made about potential Fed concerns with bank exposure to “non-depository financial institutions.”
Still, in a third warning following that of JPM CEO D. Dimon and the Governor of the BoE, the BIS was the third body issuing a warning on private credit last week (see FT article) saying that the number of insurance securities rated by Moody’s, S&P and Fitch has been largely flat in recent years, while the quantity rated by smaller providers has grown rapidly. At the same time, smaller groups face commercial pressure to assign more favorable scores which could “lead to inflated assessments of creditworthiness” and “obscure the true risk of complex assets”, the BIS said. The lack of transparency and liquidity of private loans makes them tricky to value accurately, increasing the risk of “fire sales which can amplify price movements during periods of economic stress”, the report also noted.
Adding to the drumbeat of concern after the $12bn collapse of US auto parts giant First Brands, Fitch said that if a crisis took hold in the private credit market, then it could ripple out to fund managers, banks and insurers who bankroll the market.
Another sign of “market based” concern regarding private credit was KKR share price dropping another 2.4% last week, now down 22% from September highs. Blackstone sank 5.1% this week and Blue Owl 5.5% (more on Blue Owl below).
Despite the generally good performance of Mag7 last week, Meta stood out as the underperformer, dshedding -12% due to a massive and unexpected $15.9bn tax charge which reduced earnings and build investor concerns over soaring AI-related spending and debt. Revenues were up 26% yoy but EPS was lower by 83% vs. expectations. Meta is also among firms popularizing a way for debt to sit completely off-balance sheet, allowing enormous sums to be raised while limiting the balance sheet impact, Bloomberg reported. Morgan Stanley structured a $30 billion deal — the largest private capital transaction on record — where the debt would sit in a special purpose vehicle tied to Blue Owl Capital which made it easier for Meta to raise another $30bn last week, the usual way, in the corporate bond market. Off-balance-sheet debt, through an SPV or a joint venture tied to assets like chips or real estate, is becoming the go-to for AI data center deals, bankers say (Morgan Stanley estimates that tech firms and others will need as much as $800 billion from private credit in deals tied to specific assets, including in SPV format, by 2028).
Even if the guarantees provided to Blue Owl for its Meta partnership are solid, the performance of the hedge fund specialized in private credit is subpar (-30% ytd, -5% last week). It still trades at a significant premium vs. its peers, based on discounted cash flow models, reflecting investors’ confidence in Blue Owl’s model, AI infrastructure exposure, and dominance in private credit. However, the valuation disconnect sparked debate about sustainability and whether the stock is overvalued.
Tech Credit default swap (CDS) prices have also started moving higher on mounting concerns with Oracle CDS jumping another 10 bps this week to 86 bps – having now doubled since mid-September after Oracle just tapped the debt markets for $38 billion (following Meta latest borrowing).
As spending skyrockets, big tech’s big cash positions are insufficient and need to be complemented with heavy borrowing, adding weight to global debt markets’ woes (which are not really reacting to lower short term rates).
10Y treasury notes gained 8 bps last week to 4.08%. US treasuries were not helped by the IMF forecasting that General government gross debt in the US will rise by more than 20 percentage points from now to reach 143.4% of the country’s GDP by the final year of the decade, more than Greece or Italy. The IMF also estimated that that the US budget deficit will hover above 7% of GDP.
Signs of tighter liquidity have also been flashing across markets including with gauges of secured borrowing that increased the US and UK, reaching levels not seen in years, Bloomberg noted.
European bonds fared better last week with German bund yields adding only 1 bp to 2.63% while French and Italian bonds outperformed. 10Y JGB yield added 1bp as well to 1.67%.
In currencies, the dollar gained close to 1% (-8% YTD).
Although gold dropped last week, Central banks accelerated gold purchases in Q3 buying 220 tons the July-September period, marking a 28% increase over the preceding quarter and reversing a slowdown in the early part of the year, according to the World Gold Council. The National Bank of Kazakhstan was the largest single buyer, while Brazil’s central bank bought gold for the first time in more than four years, Bloomberg reported.
Commodities were mostly unchanged last week (although copper briefly reached a record high on Wednesday on disruptions at major mines and weaker forecasts from leading producers in London) before correcting to unchanged on the week.
On the geopolitical side, Russia intensified its offensive in eastern Ukraine as US-led peace efforts falter, with some of Moscow’s forces entering the stronghold of Pokrovsk.
On internal US politics, the government shutdown continued and is expected to reach a record length this week. The WSJ published an enlightening article (“How a Billionaire Felon Boosted Trump’s Crypto Company en route to a Pardon”) on the context surrounding the Presidential pardon granted to Zhao (the former CEO of Binance) after facilitating a USD2bn purchase of World liberty’s stablecoin (owned by Trump’s family) and building its technology, enabling the Trump family to raise its crypto related wealth above all else.
The BoE will meet this Thursday and is expected to skip cutting rates while Australia, Sweden and Brazil are expected to do the same.
Over the past week, the S&P500 added 0,7% (16,4% YTD) while the Nasdaq100 gained 1,9% (23,1% YTD). The US small cap index dropped -1,3% (11,4% YTD). AAPL rallied 2,9% (8,0%).
The Equally Weighed SP500 dropped -1,7% (7,2% YTD), underperforming the S&P500 by-2,5%. The median SP500 YTD return closed the week at 5,0%.
The proportion of stocks in the SP500 index trading above their medium- and long-term trend stand at 40,7% and 53,9% respectively.
Cboe Volatility Index rallied 6,5% (0,5% YTD) to 17,44.
The Eurostoxx50 dropped -0,1% (18,6% ), underperforming the S&P500 by-0,8%.
Diversified EM equities (VWO) dropped -0,4% (24,8%), outperforming the S&P500 by -1,1%.
The Dollar DXY Index (UUP) measuring the USD performance vs. other G7 currencies gained 1,1% (-4,1% , Z-score 2,4) while the MSCI EM currency index (measuring the performance of EM currencies vs. the USD) gained 0,1% (6,6%).
10Y US Treasuries underperformed with yields rising 8bps (-49bps) to 4,08%. 10Y Bunds climbed 1bps (27bps) to 2,63%. 10Y Italian BTPs dropped -3bps (-14bps) to 3,38%, outperforming Bunds by -4bps.
10Y French OAT's rallied -1bps (23bps ) to 3,42%, outperforming Bunds by -2bps.
US High Yield (HY) Average Spread over Treasuries was unchanged (-6bps) to 2,81%. US Investment Grade Average OAS climbed 4bps (-2bps) to 0,85%.
In European credit markets, EUR 5Y Senior Financial Spread dropped -1bps (-5bps) to 0,59%.
Gold sold off by -2,7% (52,5%) while Silver gained 0,1% (68,5%). Major Gold Mines (GDX) dropped -1,0% (112,5%).
Goldman Sachs Commodity Index gained 0,1% (7,0%). WTI Crude dropped -0,8% (-15,0%).
Overnight in Asia…
Ø S&P future +11 points; Hong Kong +0.6%; Nikkei closed ; China -0.4%
Ø US futures are opening higher following a generally good week on the earnings side while Beijing also signaled plans to suspend new export controls on rare earth and end investigations on US firms in the semiconductor supply chain.
Ø Berkshire reported over the week end a 34% increase in operational earnings but showed only modest revenue growth and a growing cash pile as the company refrained from buying shares for the fifth consecutive quarter.
Ø Gold briefly dipped overnight after China said it was suspending a tax break to buy gold while oil is trading higher after OPEC announced it would pause output increases after making a modest increase next month. Although still down -10% over the past 3 months, oil has made a comeback recently after the US increased sanctions on Russia.
Ø A Mexican mayor who pleaded with President Claudia Sheinbaum to take a harder line against drug cartels was assassinated in a brazen public shooting Saturday night, the latest sign of the power of organized-crime groups that hold sway over much of the country, the WSJ reported. In recent months, Manzo had taken to national media to ask the federal government for more help in fighting gangs that ran extortion rackets across western Mexico for years.
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