Proflex Market Update - Wk 09

Welcome to another weekly update from Proflex! Markets are volatile as we failed to sustain at all-time-high levels last week for S&P500.

With NVDA earnings poised to determine the next major move for AI stocks. While macro conditions remain in a wait-and-see mode, multiple narratives—including AI trade sustainability, inflationary risks, and corporate debt refinancing concerns—are shaping market sentiment.

AI Trade: Make or Break Moment with NVDA Earnings

The AI trade remains the dominant force in this bull market, but investor confidence has been shaken since DeepSeek’s launch. Questions surrounding sustained AI spending have kept AI stocks subdued in recent weeks, and NVDA earnings this week will be the defining moment for the next move in this sector.

• Rumors surfaced over the weekend about Microsoft canceling new data center leases, raising fears of a slowdown in AI infrastructure expansion.

• Musk’s xAI countered with bullish news, launching Grok3 and announcing plans to expand GPU clusters by 4x—confirming his aggressive AI roadmap.

• Meta and Google reaffirmed their AI expansion plans, with Salesforce making a multi-billion dollar deal with Google Cloud to accelerate AI adoption and cloud monetization for hyperscalers.

Macro Outlook: Stability in Bond Yields, Tariff Concerns Growing

• The U.S. 10-Year Treasury yield is stabilizing in a neutral zone (~4.5), indicating no major tailwinds or headwinds until new inflation data emerges.

• Trump’s trade policies are taking shape, reinforcing a deglobalization trend that could fuel inflation risks—a potential long-term bullish driver for precious metals and Bitcoin as inflation hedges.

• Short-term market sentiment remains risk-off, with investors waiting for clearer macro trends before making major allocation shifts.
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We had a great discussion around macro factors in our last weekly community call for our WhatsApp group.

New Coronavirus Variant: Potential Market Reaction

🚨 Last week, reports surfaced about a newly discovered, potentially deadlier strain of the coronavirus—HKU5-CoV-2—from Wuhan, China.

• The virus is being compared to early COVID-19 mutations, but as of now, it remains an academic concern rather than a tangible economic risk.

• Market sentiment is fragile, and given stretched valuations, any negative headlines (even minor ones) are triggering outsized reactions.

Looking Ahead: Sideways Trading with Short-Term Corrections

• The market sits near all-time highs, but without a clear reason to push higher in the short term.

• Short-term corrections are likely, but investors should view them as buying opportunities rather than signs of a major downturn.

• NVDA earnings will dictate the next move—if guidance is strong, AI stocks may lead another leg higher; if not, we could see a broader pullback.

📢 Join the Discussion in Our Macro WhatsApp Group!​
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Proflex Subscribers – Staying Ahead of the Curve 📈

✅ Jan 13th – A Major Turning Point: We alerted subscribers about a key market bottom, leading to strong recoveries in select stocks.

✅ AI Trade Meltdown (Late Jan) – A Buying Opportunity: Our call to buy the dip in AI stocks is already paying off, as leading chip stocks rebound.

✅ Separating Noise from Signal: In volatile markets, we help subscribers stay disciplined and focus on strategic long-term opportunities.

Best regards,

Raman Bindlish

Editor-in-Chief,

Blockstart Research

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