By Louis Navellier

I wrote this last weekend aboard the forty-fourth Forbes Cruise for Investors, where there was a high level of anxiety about a feared “AI bubble,” but I did my best to assure investors that unscrupulous short sellers are merely trying to ruin the market’s party. In the end, these short sellers will be buried by strong revenues and earnings, positive surprises and guidance – and 2026 is likely to deliver more of the same.

After nearly all (97%, or 484) of the stocks in the S&P 500 have announced third-quarter results, revenues are up 8.2% (a 12-quarter high) and earnings are up 16.5% (a 16-quarter high) with the average earnings surprise a whopping 9.6% (a 16-quarter high), and 2026 revenues and earnings are now forecasted to accelerate, with higher guidance, especially from data center companies with growing order backlogs.

Here are the most important developments recently and what they mean:

– This week will be all about the Federal Open Market Committee (FOMC) statement on Wednesday. It is anticipated that the Fed will not be telegraphing further key interest rate cuts in the FOMC statement, no matter what their dot plot signals, since the Fed remains very uncomfortable with the delay in economic data from the federal government shutdown.

– ADP’s latest weekly private payroll data showed that 4,750 jobs per week are being created based on a four-week moving average. This anemic job growth is not strong enough to significantly change the unemployment rate, so unemployment and weak job growth are expected to remain the Fed’s top priority.

– The Trump Administration approved Nvidia’s H200 chip sales to China with a 25% tariff. This is a big deal for Nvidia and could account for up to $8 billion in quarterly sales. The analyst community had been estimating no sales to China due to a trade spat, but now that Chinese sales have been approved, the analyst community will be revising their consensus earnings estimates higher for Nvidia.

– Interestingly, China’s worldwide trade surplus for the first 11 months this year rose to a record $1.076 trillion. This record surplus has occurred despite a 29% drop in exports to the U.S. A weak Chinese yuan is fueling this export surge, so if China devalues its currency, its exports are anticipated to continue to rise.

– The Wall Street Journal featured an article entitled “China’s Growth Is Coming at the Rest of the World’s Expense.” The U.S. is still dominating worldwide GDP growth, but China’s soaring exports are curtailing GDP growth with almost all of its trading partners. Specifically, the WSJ said, “China is swallowing up a growing share of the world’s market for manufactured goods. This reveals an uncomfortable truth: Beijing is pursuing a ‘beggar thy neighbor’ growth model at everyone else’s expense.”

The bottom line is there is no reason for the Fed to remain restrictive when the U.S. economy is not creating many jobs, so in my opinion, the Fed has to cut key interest rates two more times after the December 10th cut and move to a “neutral” rate. Furthermore, the inflation risk has fizzled, and due to falling home prices, excess rental properties, and falling crude oil prices, so if anything, there is a potential deflation risk that the Fed must consider.

*Views expressed in this article are opinions of the author and do not necessarily reflect the views of USNN World News.