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Happy Thanksgiving!
We’re very grateful to have you as a reader of Grit Capital’s Rate of Return Newsletter. Read on for everything you need to know as we begin this shortened week in the markets.
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As a heads-up, there will not be a Week in Review post next Sunday due to the holiday.
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Key Earnings Announcements:
Earnings are winding down during this shortened trading week for Thanksgiving.
Monday (11/24): America Airports, BiolineRx, Jinko Solar, PennantPark Floating Rate Capital, PennantPark Investment Corporation, Semtech, StoneX, Symbotic, WeRide, Zoom
Tuesday (11/25): Alibaba, Ambarella, Analog Devices, Anavex, Amentum, Burlington, CleanSpark, Kohl's, NIO, Nutanix, PagerDuty, Pony.ai, Urban Outfitters, Verizon, Visa, Workday, Zscaler
Wednesday (11/26): EHang, Haidilao, John Deere, NetApp, StoneCo
Thursday (11/27): Markets Closed for Thanksgiving Holiday
Friday (11/28): N/A – U.S. Stock Market closes at 1:00 PM
What We’re Watching:
Alibaba (BABA)
Alibaba Group (+80% YTD) reports Q3 FY2025 earnings Thursday before the open, with investors focused on whether China’s largest e-commerce and cloud platform can reaccelerate growth amid a fragile domestic economy and ongoing restructuring across its business units. Alibaba remains a barometer for Chinese consumer demand – but macro softness, intense competition, and regulatory pressure have kept expectations muted.
Last quarter, Alibaba posted RMB 241.2 billion in revenue (+8% YoY) and RMB 15.1 in adjusted EPS (+12% YoY), with strength in Taobao & Tmall Group and improving profitability in its Cloud Intelligence segment. Cloud revenue grew +12%, supported by enterprise AI adoption, while International Commerce (+19%) continued to scale on the back of AliExpress Choice and Lazada.
For this quarter, I’ll be watching GMV trends across Taobao/Tmall, cloud growth tied to China’s AI rollout, and the pace of cost optimization under the company’s simplified six-business-group structure. Management’s commentary on consumer sentiment, competitive intensity, and capital return plans will also be critical for investor sentiment.
“We are simplifying our organization and focusing on our core businesses so we can return Alibaba to sustainable, high-quality growth.”
Alibaba Group Holding Limited (BABA) Stock Performance, 5-Year Chart, Seeking Alpha
Dell (DELL)
Dell Technologies (+6% YTD) reports Q3 FY2025 earnings Thursday after the close, with investors focused on whether the company can maintain momentum in AI-driven server and storage demand while stabilizing softer PC shipments. Dell has become one of the biggest hardware beneficiaries of the AI buildout, but questions remain around margins and how quickly new AI-optimized servers convert to revenue.
Last quarter, Dell delivered $23.5 billion in revenue (+7% YoY) and $1.89 in adjusted EPS (+12% YoY), beating expectations as AI-server orders surged more than 100% YoY and backlog expanded sharply. Infrastructure Solutions Group revenue climbed +15%, while Client Solutions (PCs) showed early signs of recovery but remained choppy due to weak commercial demand.
For Q3, I’ll be watching the AI server backlog and conversion rate, margin trends in Infrastructure Solutions, and whether PC demand stabilizes into year-end. Commentary on supply constraints, pricing, and the pace of enterprise AI adoption will be key for the next leg of the stock.
“AI servers continue to drive exceptional demand – and we’re only in the early innings of modernization.”
Dell Technologies, Inc. (DELL) Stock Performance, 5-Year Chart, Seeking Alpha
Investor Events / Global Affairs:
AI bond surge pressures credit & tech markets, Michael Burry teases new disclosure, and markets reprice December rate-cut odds.
AI Bond Surge Pressures Credit & Tech Markets
Wall Street is absorbing a flood of new debt from AI-heavy tech companies, creating unexpected strain across credit markets. Since early September, Amazon, Alphabet, Meta, and Oracle have issued nearly $90B in investment-grade bonds – more than the previous 40 months combined. AI data-center developers like TeraWulf and Cipher Mining have added another $7B in high-yield issuance.
The surge has pushed borrowing costs higher, driven newly issued bonds lower in secondary trading, and increased credit-default-swap pricing as investors reassess leverage tied to massive AI spending. Equity markets are feeling the pressure too, with the Nasdaq down ~3% this month, as weakness in AI credit spills over into tech stocks.
While cash-rich giants like Amazon and Alphabet are better positioned, Meta and Oracle may need to rely more heavily on debt to fund ambitious AI buildouts – raising questions about balance-sheet durability and long-term returns on these investments.
“The markets are very interconnected now. It will be hard for the credit markets to do well if AI stocks are selling off – and vice versa.”
Markets Reprice December Rate-Cut Odds
Rate-cut expectations flipped sharply this week, with markets now assigning meaningfully higher odds to a 25bps cut at the December FOMC meeting — a major reversal from just days ago when a hold was overwhelmingly expected.
The shift came as a widely circulated post on X claimed that several senior banking executives had contacted Fed Chair Jerome Powell to express “grave concerns” about global financial risks tied to Japan’s monetary trajectory and urged the Fed to move sooner on easing. While unconfirmed, the timing aligned closely with the sudden repricing in Fed funds futures.
If the market continues to price in a December cut, it could accelerate a risk-asset rebound sooner than expected. A rate cut also complicates prior expectations of a possible retest of the major indices’ 200-day moving averages — a scenario that looked more likely before this shift in policy odds.
“A larger-than-usual number of US data releases have been bunched together due to the government shutdown. Furthermore, the December Fed meeting remains pivotal, with markets split between a cut and a hold. That pricing is likely to shift decisively, potentially even on the day of the meeting. All told, that makes for elevated market anxiety deep into the festive season.”
Major Economic Events:
The Producer Price Index (PPI) and retail sales headline the short week.
Monday (11/24): N/A
Tuesday (11/25): Business Inventories (Delayed Report), Consumer Confidence, Core PPI, Core PPI Year Over Year, Pending Home Sales, PPI Year Over Year, Producer Price Index (Delayed Report), S&P Case-Shiller Home Price Index (20 Cities), U.S. Retail Sales (Delayed Report), U.S. Retail Sales Minus Autos
Wednesday (11/26): Durable Goods Minus Transportation (Delayed Report), Durable Goods Orders (Delayed Report), Initial Jobless Claims
Thursday (11/27): None Scheduled – Thanksgiving Holiday
Friday (11/28): Chicago Business Barometer (PMI)
What We’re Watching:
Producer Price Index
U.S. producer prices fell 0.1% in August, a sharp downside surprise versus expectations for a +0.3% increase and marking the first decline in four months. The drop was driven by a 0.2% fall in services prices, the biggest slide since April, led by a 3.9% drop in machinery and vehicle wholesaling margins. Several other service categories – including commercial equipment, chemicals, furniture, food retailing, and data processing – also weakened.
Goods prices edged +0.1% higher, supported by a 2.3% jump in tobacco products and increases in beef, poultry, printed circuit assemblies, and electric power.
Year-over-year, headline PPI slowed to +2.6% (down from 3.1% prior), while core PPI also declined 0.1% MoM, pulling the annual core rate down to 2.8%, underscoring easing upstream inflation pressures.
Economists expect the following this week:
Headline PPI (MoM): -0.1% vs. +0.3% expected
Core PPI (MoM): -0.1% vs. +0.3% expected
Headline PPI (YoY): +2.6% vs. +3.1% prior
“Producer inflation is losing momentum, signaling that pipeline price pressures are softening even before they reach consumers.”
Retail Sales
U.S. retail sales rose 0.6% MoM in August, matching July’s upwardly revised gain and handily beating expectations for a 0.2% increase. The report shows consumers are still spending despite higher prices and weaker sentiment, with strength concentrated in categories tied to online shopping, discretionary goods, and dining.
Non-store retailers led the month (+2.0%), followed by clothing (+1.0%), sporting goods & hobbies (+0.8%), restaurants & bars (+0.7%), and gasoline stations (+0.5%). Auto sales also firmed (+0.5%). Weakness showed up in miscellaneous stores (-1.1%), furniture (-0.3%), and general merchandise (-0.1%).
Core retail sales – the category used in GDP calculations, excluding autos, gas, food services, and building materials – jumped 0.7%, beating expectations and marking a second straight month of strong underlying demand.
Economists expect the following this week:
Headline Retail Sales (MoM): +0.6% vs. +0.2% expected
Core Retail Sales (MoM): +0.7% vs. +0.4% expected
“Consumer spending isn’t booming, but it’s proving far more resilient than many feared heading into the second half of the year.”
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