The Worst Day Since April Had No Catalyst. The Credit Market Did.

Friday, November 6, 2026, written at 8:15 a.m. Eastern, fifteen minutes before October payrolls. Thursday was the worst session for American equities since April 2025, with the S&P 500 down 4.36% to 7,353.73, the Nasdaq Composite down 5.52% to 24,315.00 and the Nasdaq 100 down 6.36% to 26,629.81, its worst day since March 2020. This morning the chips are bid again, with Nasdaq 100 futures up 1.30% against Dow futures down 1.07%. Everything in this note is written before the 8:30 print and may be obsolete by the open.

Top Call: The Session Had No Catalyst. The Loan Auction Did.

Start with what did not happen on Thursday. No company reported. No official spoke. The midterm result that supposedly caused the selloff was two days old and had been traded in both directions already, up 1.58% on Wednesday and down 4.36% on Thursday. A market that moves 6% on the Nasdaq 100 without new information is not revaluing anything. It is liquidating.

The mechanics confirm it. Exchange traded funds were roughly a third of a near record 27 billion shares, which is what forced selling looks like when the seller does not care which name it hits. Liquidity at the best quoted prices sat 65% below the year to date average, so the same size moved the tape much further than it would have in September. Goldman’s trading desk has net sold about $27 billion of technology since this unwind started, against $21 billion in the whole of the July episode. Long short equity funds lost 1.3% in one day, a two standard deviation result, and technology focused funds lost more than 4%, taking them to roughly flat on the year against about plus 24% before the summer drawdown. Margin calls were reported from Taiwan to Hong Kong. The VIX rose 69.7% to 28.18. None of that is an opinion about artificial intelligence. It is a crowded book being closed.

Now the thing that did happen, and that almost nobody traded. Bloomberg reported that ING is auctioning roughly $500 million of data centre loans through a bids wanted in competition process, a dozen loans, minimum ticket $10 million, bids due November 19. The package includes debt tied to Vantage and CyrusOne, and one $25 million slice secured on the New Mexico site inside the Stargate venture that OpenAI, SoftBank and Oracle built together. Oracle has sent the developer of that site a force majeure notice.

That is the sentence to carry into next week. Force majeure is not sentiment, not a downgrade and not a broker note. It is a contractual assertion that Oracle may be excused from obligations it has already signed, on a site that Oracle described on its September call as definitely on track. Five weeks later the lender is trying to sell the paper. We have spent six weeks arguing that the constraint on this build migrated from demand to the cost of capital, and the honest weakness in that argument was always that we were reading it off spreads and equity raises rather than off documents. A bank running a BWIC on a project loan is a document. It tells you the holder wants out before the November 19 bid date rather than after, which is a view about how the next few weeks go for data centre credit specifically.

So our read of Thursday splits in two. The equity move was mechanical and is probably mostly done, which is what the chips bouncing 5% to 11% this morning is telling you. The credit datapoint underneath it is real, is new, and did not bounce.

The Bounce Is Hostage to 8:30

October payrolls land in fifteen minutes and the dispersion in forecasts is unusually wide. Consensus is 65,000 with the Dow Jones version at 59,000. Goldman is at 75,000, Deutsche Bank at 55,000 and Bloomberg Economics at 26,000, against a three month average of 51,000 and a September print of 29,000. Unemployment is expected to hold at 4.2% and average hourly earnings at 0.3% month over month.

December hike pricing fell to 68% from about 82% on Thursday. Read how that happened, because it matters more than the level. It did not fall on labour data or on an official changing their mind. It fell because equities dropped 4%, which means the market is pricing the Fed reacting to the stock market rather than to the economy. That is a reasonable thing to price when a central bank is cutting. It is a strange thing to price when a central bank is hiking into inflation, has two voters publicly pushing for more tightening, and is looking at a four week average of jobless claims at the lowest level since 1969, September job openings of 7.52 million against 7.16 million expected, a quits rate at the highest since June 2025 and third quarter productivity running at 3.6% annualised.

Our view is that the front end has the causation backwards and a print above 70,000 rebuilds hike pricing quickly. The awkward part for anyone long the bounce is that this is the same print that kills the bounce. Chips are rallying on oversold mechanics while rates are rallying on growth fear, and only one of those can be right by 8:31.

Earnings: The Build Reported Good Numbers and Still Got Sold

Our take: IREN is the print that matters and it is the cleanest illustration of the whole problem. The company delivered AI cloud revenue of $200 million, up 183% sequentially, at an 86% gross margin before depreciation, with a backlog above $20 billion of which two thirds is investment grade counterparties including Microsoft and Nvidia. It also spent roughly $5 billion in the quarter and plans about $15 billion more this fiscal year, and it pushed its $4 billion annualised revenue target from year end into January or February. The stock fell 16.95%. The market is not disputing the demand. It is disputing the delivery date, and a company spending $20 billion to earn revenue it keeps moving one quarter to the right is exactly the exposure the permitting story attacks.

Lam Research is the counter example and the better business model. An $8.22 billion quarter at a 40% operating margin with a fresh $25 billion buyback authorisation is a company converting the build into cash today rather than capitalising it, and it still fell 16.36% because the index does not currently distinguish. That is the inefficiency we would expect to resolve first. Cloudflare and Airbnb are the reminder that the parts of technology that are not building power plants are doing fine, with Cloudflare putting up a record operating margin and a 39% growth rate and Airbnb raising its year.

Asia: Japan in a Bear Market, Korea Halted, China Least Bad

The Nikkei fell 5.96% to 57,434.77 and is now more than 20% below its June record, a bear market in an index that was the best developed market story of the year. The Kospi fell as much as 8.8% intraday to 4,911.28, triggered a full circuit breaker, and closed down 6.02% at 5,059.69. Samsung fell more than 6% and SK hynix more than 10%. For context on how violent this has been, the Kospi was up more than 116% on the year in late June and is now up just over 22%. Taiwan was dragged down roughly 4.7% with TSMC.

China was the outlier for a fourth consecutive week and the pattern is now too persistent to keep calling a coincidence. The CSI 300 fell 1.44% to 4,054.28, the Shanghai Composite 1.1% to 3,649.18 and the Hang Seng 1.3% to 24,481.86, all of which is a third of the damage done in Seoul and Tokyo, and the CSI 300 is still on track to snap a twelve week losing streak. Hua Hong Grace rose 7.1% on strong results in the middle of a global chip rout. We made this argument on Wednesday and it keeps holding: a semiconductor complex whose demand is set by industrial policy does not care what a county commission in Texas decides, so it is becoming the natural low correlation expression of the same theme. The caveat is that Chinese names with real United States revenue exposure were hit as hard as anyone.

Europe Follows, With Its Own Rate Problem

The Stoxx 600 is down 1.76% at 643.33, the DAX down 2.37% at 25,701.09, the FTSE 100 down 2.19% at 10,546.43 and the CAC off a similar amount. There is nothing European about this move, it is a beta trade, and the index composition explains the ranking with the DAX carrying the most industrial and semiconductor weight.

Worth separating from the tape is that the European rate picture has turned in the same week. The Bank of England hiked to 4.00% on Thursday with every member voting for an increase and one pushing for 50 basis points, and now sees inflation near 4.9% in the second quarter of 2027. Markets price a 76% chance of a December hike from the European Central Bank. Deutsche Bank already thinks February is a slightly better bet than December for the next Bank of England move. The point for equities is simple and uncomfortable: there is no central bank anywhere in the developed world currently positioned to cushion a drawdown, which is a genuine difference between this episode and every tech selloff since 2018.

Oil, Iran and a November 9 Date

Brent closed up 3.88% at $98.29 on Thursday, traded above $100 overnight and sits around $98.81 this morning, with WTI near $90.22. Both are still down roughly 12% on the week, which tells you how much diplomatic premium came out early. The Revolutionary Guard said two tankers and a tugboat caught fire after using unauthorised routes, the UKMTO has logged several attacks since Sunday, Saudi Arabia issued warnings around the Red Sea export hub at Yanbu, and the strait is now on day 249 of closure.

The item to put in the diary is a Fox News report that United States Central Command is finalising preparations for a possible resumption of military operations against Iran as soon as Monday, November 9, with no directive yet issued. Axios reports the administration weighing three paths, forcing a deal, resuming strikes, or a peace agreement, with the CIA director and the Treasury Secretary pushing to keep the blockade in place. Eurasia Group puts Brent at $110 to $125 on escalation. A market that just spent a week selling the war premium on the theory that a politically weakened administration wants out is carrying a reasonably large short volatility position into a weekend with that headline in it.

Gold Sold With Everything Else

Gold fell about 1% to roughly $4,072 while equities dropped 4%, which is the wrong direction for a hedge and the right direction for a margin call. Goldman cut its end 2026 target to $4,150 from $4,650 and its end 2027 target to $4,800 from $5,400, citing a more hawkish Fed path, while keeping its structural case on central bank buying. Silver is near $51.84. Bitcoin fell about 5% to $75,810 with more than $1 billion of leveraged positions liquidated, having printed $81,004 on election night.

We flagged in late October that gold’s collapse then was forced selling rather than a change of view, and that it had fully retraced by Wednesday. Thursday partially undid that. The cleanest reading is that gold is currently trading as a liquidity asset rather than a hedge, which means it will keep telling you about the state of leverage in the system and nothing at all about inflation.

Also On The Tape

• AppLovin rose 31.04% on Thursday, the best performer in the S&P 500 on its worst day in eighteen months, after $4.30 against $4.04 and a strong fourth quarter guide, and is indicated another 16% higher
• Vistra and Moderna report before the open, with Vistra the one to watch given it fell 6.15% on Thursday as an independent power producer caught in the data centre backlash
• Atlassian guided December quarter data centre revenue down about 14%, which is a different data centre to the one in every other headline this week and is worth not confusing
• DraftKings fell about 24% after the close on a miss and a cut to full year revenue, Five9 fell about 19% and Axon about 14%, so the damage outside artificial intelligence was real and specific
• Anthropic has not priced, with the earliest roadshow date under SEC practice November 10 and reporting pointing to a listing the week before Thanksgiving as ANT. A market in this condition is a poor venue for the largest technology listing ever attempted
• Viatris is buying Pacira BioSciences for $36.50 a share in cash, about $1.65 billion of equity value, expected to close by the end of November
• Retail traders sold $257 million of stock on Thursday, the fifth largest selling day since 2020, which is an unusual tell given that cohort has bought every decline this year

The Record

Both of yesterday’s tests have now resolved and one of them went badly against us.

We asked whether the construction and power equipment names would separate from the neoclouds, arguing that if they did, physical construction risk and compute rental credit risk were two different trades. They did not separate even slightly. Everus, Sterling, Vertiv, GE Vernova, Quanta down about 12%, Rockwell down 14.15%, Vistra down 6.15%, Caterpillar down 6.37%, IREN down 16.95% and Nebius down 14.94% all went down together, and so did the four companies we had just finished describing as insulated owners of existing compute. Microsoft fell 3.58%, Meta 3.9%, Alphabet 2.2%, Amazon 2.2% and Apple 1.5%. The owners and builders distinction we drew on Wednesday survived exactly one session. We still think the distinction is economically correct over a quarter, and we were wrong to present it as something that would hold through a liquidation, because in a forced unwind correlations go to one and taxonomy is worthless. That is a familiar lesson and we should not have needed to relearn it this week.

The second test was payrolls and December pricing. It resolves in fifteen minutes, but note that the setup already moved against our framing, since hike odds fell to 68% from 82% without any labour data at all. We said the two year was too complacent at 4.59%. It is now 4.46% and we think that is worse, not better.

One test for Monday. Watch whether the ING loan auction clears near par on November 19 or at a visible discount, and watch whether a second bank follows with its own BWIC before then. One seller is a portfolio decision. Two is a market, and if data centre project loans start trading at a discount in the secondary, the equity multiple on everything that funds itself with that paper has to come down regardless of how good the backlog looks.

Key Events Today

• 8:30 a.m.: October non-farm payrolls, consensus 65,000, unemployment 4.2%, average hourly earnings 0.3% month over month
• 10:00 a.m.: University of Michigan preliminary November sentiment, expected 47.3 after 48.0, with one year inflation expectations last at 4.7%
• Pre-market: Vistra, Moderna, Enbridge, Brookfield Asset Management, Humana, Charter Communications, Ubiquiti and Franklin Resources
• November 9: Reported earliest date for a resumption of United States military operations against Iran
• November 10: Earliest permissible Anthropic roadshow date, and Russia and Ukraine talks in Abu Dhabi
• November 19: Bid date on the ING data centre loan auction