Back in Gibraltar, where the lighthouse casts its slow, reassuring blink across the straits, Sunday morning arrives with a warmth that feels almost scripted; each café table awash with sun and gossip in equal measure.
The chatter this week isn’t just about who’s braving the sea for a morning dip, but who’s braving Powell’s latest policy pivot or betting on semiconductors to supply the next breakfast boom! Markets, much like the tangy marmalade on my toast, have been strangely sweet and slightly unpredictable, layering Fed cuts and chip deals atop an already over-buttered global macro narrative.
If last week’s market lesson came with a sandcastle and salt air, this one feels more like a brisk walk on limestone, a little steadier, but not without the odd sharp edge.
Recap: Where We Left Off (Week 37)
Last week’s lesson plan centered on Oracle’s dramatic $244bn leap toward the trillion-dollar club and the “back-row rebellion” of small-caps like the Russell 2000, finally grabbing the institutional spotlight after years of neglect.
The classic September curse was absent, with major indices making fresh records, supported by near-certain Fed cut odds and resilient risk appetite. Yet, unresolved tensions lingered beneath the enthusiastic headlines: record PE dry powder still in search of value, digital infrastructure deals commanding nosebleed multiples, and the nagging question … can this late-cycle optimism really endure, or is it just the quiet before autumn’s volatility storm?
If you missed the last dispatch: Oracle’s Trillion-Dollar Tutorial & The Russell’s Back-Row Rebellion
This Week (Week 38) – Powell’s Pivot, Chips with Everything, and the Small-Cap Graduation Ceremony
Weekly Market Table
US & Global Equities
S&P 500 and Nasdaq: Both indices notched up their own respective sequences of record closes, the S&P 500 closing at 6,664 (+1.2%) and the Nasdaq at 22,631 (+2.2%). The market basked in the afterglow of Powell’s rate cut and chip-led optimism, as semiconductors and AI infrastructure names set the tutorial agenda. Notably, Nvidia’s alliance with Intel stole not just the headlines, but also plenty of trading flow, with large-cap tech leading the year’s persistent outperformance.
Russell 2000: Small caps got top marks, surging 2.2% for the week as investors rediscovered value in the market’s neglected “back benches.” Renewed flows and relative cheapness sent the Russell to its highest close in months, aided by a favourable macro script. With August’s momentum still echoing, the cohort’s rally was as much about opportunity as it was about overdue recognition.
Europe: Continental bourses managed modest gains: STOXX 600 up 0.7%, FTSE 100 adding 0.6%. European equities continued their newfound safe-haven habit, as US political and trade jitters nudged some capital eastward. While the DAX joined the rally (+2.0%), persistent growth doubts and ECB caution kept enthusiasm in check.
Gold, Digital Assets and Other Assets
Gold: After a remarkable summer run, gold cooled a little, ending at $3,660/oz ( down 0.4% for the week). Year-to-date gains near 40% still make it the teacher’s pet for defensive allocations, particularly for euro-based investors wrestling with currency swings.
Bitcoin & Digital Assets: Bitcoin (CME) closed the week at $116,650 (+1.8%), its wild mood swings now as much a Sunday brunch staple as the Federal Reserve’s rate commentary. Risk sentiment and institutional volumes remain in focus, with digital asset flows hinting at a modest return of animal spirits.
Oil: WTI pulled back 1.4% to $62.68/bbl, as persistent questions of slack demand overshadowed tightening supply, and China’s economic “bounce” stayed mostly rhetorical. European energy names watched nervously as the summer rally in oil prices faded.
Macro & Policy
Fed Policy: Powell’s much-telegraphed 25bp cut answered September’s expectations, flattening the US curve and sending the 2-year yield beneath 3.6%; the latest chapter in 2025’s dovish storyline. Markets quickly priced in another cut for October, translating monetary accommodation into broad risk appetite and a new cycle of record closes across risk assets.
ECB & Central Banks: Markets quickly priced in another cut for October, translating monetary accommodation into broad risk appetite and a new cycle of record closes across risk assets.
September’s US CPI/PPI data delivered just enough intrigue for both doves and hawks to justify their dissertations … no one at the macro brunch table left unsatisfied.
Geopolitical Analysis
US-China dialogue shifted from icy to tepid, with the TikTok détente and tariff negotiations offering a pause rather than a peace; algos cheered but strategists squinted.
Ukraine and the Middle East faded into background noise, with markets showing scant concern for new shocks and risk premia stayed glued to low simmer.
For European investors, the real geopolitics were at the intersection of currency volatility and rates, with political noise mostly an afterthought amid the broader risk rally.
What’s Pertinent This Week (Week 38)?
Rate Cuts & Record Highs: Dovish Central Bankers Lead the Conga Line
If there was one narrative ringing across trading floors, it was the Federal Reserve’s 25bp rate cut and the monetary move that markets demanded and swiftly celebrated. The result: a fresh series of all-time highs for the S&P 500 and Nasdaq, with the rally spilling decisively into smaller caps and cyclicals. Leaders included semiconductors, AI infrastructure, and the “Magnificent Seven,” but risk appetite was the real winner as investors rotated out of defensive plays and into neglected corners of the market.
Chips with Everything Please: The Semiconductor Supremacy
The marquee corporate news was the Nvidia-Intel pact, a headline-grabber that sent both stocks and sector sentiment soaring. Investors took the baton from June’s AI hype and sprinted into September with renewed enthusiasm for advanced manufacturing, R&D, and platform “moats.” For now, chipmakers and their ecosystem partners are the market’s unchallenged head boys.
Europe’s Defensive Poise: Safe Haven, Shaky Growth
Over in Europe, the STOXX 600 and FTSE 100 posted positive, if modest, gains. The policy backdrop remains one of ECB and BoE caution, with capital selectively gravitating toward industrials and exporters as financials and energy lag.
Political angst and lacklustre growth data kept enthusiasm contained and still defence and luxury sectors remain the continent’s portfolio darlings.
Macro & Market Risk: Mind the Curve
Yields flattened globally as policy accommodation found renewed favour. Fed futures now imply an 86% probability for another October rate cut. But with U.S. inflation not quite tamed, curve flattening and rate volatility are the new “pop quizzes” for would-be risk takers.
The biggest risk? A premature policy reversal or resurgence in inflation, particularly as supply-driven sectors like energy start to wobble.
Opportunities in Rotation: From Tech Titans to Digital Diversification
With the animal spirits stirring in small caps, and digital assets like Bitcoin catching institutional flows, the opportunity set is broadening.
Gold, after a meteoric summer, continues to anchor defensive strategies, while commodity-driven plays remain sensitive to shifting global demand. Sector rotation and leadership churn are not just background noise …
… they’re a clear test of portfolio agility as autumn’s uncertainties loom.
Private Equity’s Macro Insights
Powell’s Master Class: When Monetary Policy Becomes Market Psychology
Perhaps the week’s most significant lesson wasn’t found in any earnings report or sector rotation, but in the Federal Reserve’s decision to finally deliver its first rate cut of 2025! A tutorial in how monetary policy transcends mathematics to become pure market psychology.
The first cut is the deepest
For private equity, first cuts carry weight beyond their numerical impact; they represent the professor’s signal that the easy money curriculum has resumed, transforming deal economics as surely as any textbook revision. The 25 basis points matter less than the precedent: when central banks move, patient capital suddenly finds itself with both the finest pencil case in class and finally some worthwhile assignments to complete.
To Private Equity (PE) this isn’t simply about borrowing costs dropping by a quarter-point. It’s about the behavioural shift that accompanies monetary easing: management teams more willing to consider strategic alternatives, public companies facing pressure from impatient shareholders to optimize capital allocation, and institutional investors rotating toward higher-yielding private alternatives like dutiful students following the new syllabus.
The opening bell for playtime
For the best PE firms, first cuts historically represent the opening bell of a deployment cycle … not because assets become cheaper overnight, but because the entire ecosystem of buyers, sellers, and intermediaries recalibrates expectations around what constitutes reasonable returns.
The patient capital that waited through the hiking rate cycle finds itself rewarded not just with lower rates, but with more attractive entry points across sectors previously deemed untouchable. This is the private equity equivalent of being called to the front of the class: when volatility eventually returns … as September’s historical patterns suggest it must … those with dry powder and unhurried mandates will find themselves best positioned for the semester’s most important examinations.
Chips with Everything: When the Foundation Course Becomes the Major
Hardware fights software for head boy
The Intel-Nvidia partnership exemplifies a broader truth that should resonate across every PE lecture hall: in an AI-driven economy, infrastructure providers often outperform the applications they enable, much like how the university’s foundations outlast the fashions of any particular academic year.
This week’s semiconductor surge wasn’t just about chip company valuations, well, it was a masterclass in how operational excellence and strategic positioning create sustainable competitive advantages that financial engineering alone cannot replicate, no matter how sharp the pencils in the toolkit.
Picks and shovels principle
For private equity, the lesson extends far beyond technology: whether in data centres, logistics networks, or healthcare platforms, the best returns increasingly belong to those who control the underlying infrastructure rather than merely participate in its utilization. The deployment opportunity lies not in chasing headline-grabbing AI startups (the equivalent of auditing popular electives) but in identifying and operationally improving the companies that make AI transformation possible.
Digital infrastructure, cloud enablement, automation platforms: these represent the “picks and shovels” investments that benefit from technological advancement without bearing its speculative risk.
Teaching vs. Taking the course
The Intel-Nvidia deal validates what experienced allocators have suspected during their quieter study sessions: in transformative technology cycles, sustainable value creation happens at the infrastructure layer, where operational improvements compound over time and competitive moats resist disruption.
It’s the difference between teaching the subject and simply taking the course.
The Russell’s Tutorial: When the Back Benches Graduate to the Front Row
For months, small-cap stocks sat at the back of the classroom while their large-cap counterparts dominated headlines and capital flows, much like overlooked students whose time has finally come. This week’s Russell 2000 surge represents more than sector rotation, it signals a fundamental shift in where institutional capital seeks growth and value, transforming PE’s traditional hunting ground from neglected territory to prime real estate almost overnight.
Treasure at the end of the rainbow
The strategic opportunity extends beyond simple multiple expansion. When public markets rediscover overlooked segments, private equity’s competitive advantages become most pronounced: operational expertise, patient capital, and the ability to execute complex transformations that quarterly earnings pressure makes impossible for public companies.
The Russell’s rally doesn’t eliminate private equity opportunity, no instead, it illuminates where that opportunity has been hiding, like discovering a forgotten library where the best books were always kept.
The best GPs will use this public market enthusiasm not as validation for higher entry multiples, but as confirmation that systematic undervaluation in mid-market segments has finally begun its inevitable correction. As any seasoned academic knows, the most rewarding discoveries often happen not in the crowded lecture halls of popular topics, but in the quieter seminars where careful preparation meets unexpected opportunity.
“Up”tober?
As markets enter October with momentum behind both policy accommodation and sector rotation, those who prepared during the quiet periods—maintaining dry powder discipline, building operational capabilities, and resisting the temptation to chase overvalued assets …
… now find themselves best positioned for the autumn term’s most important examinations.
Closing Thoughts & Week Ahead
Back in Gibraltar’s familiar rhythms, the memories of Exeter farewell feel both distant and immediate; much like this week’s market lessons, which arrived with the subtle weight of significance only fully appreciated in reflection. The campus bells and sandstone buildings have given way to the lighthouse’s steady beacon across the straits, but the academic metaphors that defined this week’s extraordinary narrative remain remarkably apt.
The Fed’s first cut, Intel and Nvidia’s infrastructure validation, and small caps’ long-awaited recognition; the chapters in the ongoing education that defines patient capital allocation. Like watching those bright-eyed students navigate their first week of term, I’m reminded that markets too operate on learning cycles: periods of quiet preparation followed by sudden breakthroughs, patient study sessions that culminate in unexpected honours.
The road ahead brings October’s /”up”tober traditional tests: earnings season’s geopolitical tensions that refuse to stay relegated to background reading, and the ever-present question of whether September’s missing volatility was postponed or simply cancelled altogether. Fed futures may price in 86% certainty for another October cut, but experienced allocators know that markets’ most instructive lessons often arrive unscheduled.
For those managing patient capital the current environment demands the kind of intellectual discipline any good university would recognise: rigorous preparation combined with tactical flexibility, strong conviction tempered by healthy scepticism, and the wisdom to distinguish between genuine opportunity and mere market fashion.
Ed’s Final Word
As ever, these thoughts are my own and not the views of Beaufort Capital or anyone sensible enough to keep their opinions to themselves. I hope my thoughts have educated you a little, but the best education is in making your own research and reaching your own conclusions and consult your financial advisor if uncertain.
Markets can change direction faster than a Mediterranean wind, and don’t let it blow off your shirt and lose it. So, if someone is convinced, they know what happens next, they don’t. Neither do I. And that’s what makes it interesting reading!
Stay curious, keep your analytical pencils sharp, and remember … October’s most important pop quizzes are just beginning.
Further Reading
Best enjoyed beside Gibraltar’s lighthouse with a strong coffee and the weekend papers.
Federal Reserve September 2025 FOMC Statement
https://federalreserve.gov/monetarypolicy/fomcstatement20250918.htm Powell’s first rate cut and the new monetary curriculum — lessons in policy evolution.
“The Semiconductor Infrastructure Thesis” – McKinsey Quarterly
https://www.mckinsey.com/industries/semiconductors/our-insights/the-infrastructure-advantage Why infrastructure projects like data centres and supply chains are the true ‘picks and shovels’ in tech cycles.
“Small Caps, Big Opportunity: Russell 2000 Renaissance” – Barron’s
https://www.barrons.com/articles/russell-2000-small-caps-renaissance-2025 The back benches are graduating to the front row — a sector to watch.
“Private Equity’s $3.8 Trillion Question” – Financial Times
https://www.ft.com/content/private-equity-dry-powder-2025 Market conditions, deployment discipline, and the long-term playbook.
“Intel-Nvidia: When Competitors Become Partners” – Wall Street Journal
https://www.wsj.com/articles/intel-nvidia-partnership-2025 Hardware diplomacy in action, transforming the AI infrastructure landscape.
“The Academic Calendar of Market Cycles” – CFA Institute Report
https://www.cfainstitute.org/en/research/industry-research/market-cycle-calendar Why seasonality and volatility patterns matter — especially in September.
Enjoy your reading beside a sun-dappled terrace or over a relaxed weekend! At least, for the moment, markets are closed on a Sunday …..
Week 38, 2025: From Exeter’s halls to Gibraltar’s straits, autumn’s lessons arrive unscheduled… stay prepared, keep your pencils sharp, and remember that the best education often comes from the most unexpected tutorials.