Key Points

• China’s 2026 Flashpoints – Property, Consumption, Deflation: Beijing heads into its year-end policy meetings with deep property stress, weak household demand and lingering deflation risks still weighing on China’s growth outlook.
• Anthropic’s Mega-IPO Ambition: Claude’s parent Anthropic is reportedly exploring an IPO and new funding at a valuation north of $300 billion, testing investor appetite for high-burn AI infrastructure plays amid bubble concerns.
• Market Signals Google as AI Front-Runner: Alphabet and Broadcom now trade at a premium to Nvidia-linked peers as Gemini 3 and Google’s TPUs drive a market narrative that Google is pulling ahead in the AI race.
• Risk Assets Rise on Dovish Fed Bets: Expectations that Kevin Hassett will succeed Powell and prioritize rate cuts are weakening the dollar, steepening yield curves and supporting equities, copper, oil and a rebound in bitcoin.

China 2026 Flashpoints

China heads into 2026 with stronger global standing but lingering domestic frailties centered on property, consumer demand and deflation.

Deepening real estate stress, highlighted by Vanke’s bond repayment troubles and double-digit declines in new home sales, continues to erode household confidence.

Beijing is pushing a supply-side strategy to build trillion-yuan consumer industries and integrate AI, yet weak income growth and rising household bad loans constrain spending.

Persistent near-zero inflation, with underlying price gains flattered by gold, underscores deflation pressure that is discouraging private investment and keeps expectations high for more policy support next year.

Anthropic Eyes Mega-IPO Amid Surging AI Valuations

Anthropic is reportedly preparing for one of the largest tech IPOs on record while simultaneously exploring a private funding round that could value the Claude-maker above $300 billion, with about $15 billion in fresh backing from Microsoft and Nvidia under discussion.

The company has engaged Wilson Sonsini and held early talks with major banks, signalling advanced listing preparations even as management insists no decision on timing has been made.

A potential Anthropic IPO, alongside a future OpenAI float, would test investor appetite for high-burn AI platforms at peak valuations and intensify scrutiny of whether current AI pricing reflects sustainable cash-flow prospects or bubble dynamics.

Market Signals Favor Alphabet in Intensifying AI Race

Alphabet’s latest Gemini 3 launch and its custom Ironwood TPU chip have shifted market perception of who leads in AI, with investors now pricing Google as the sector frontrunner.

Since Gemini 3’s November debut, Alphabet and chip partner Broadcom have sharply outperformed Nvidia and Microsoft, whose fortunes are more tightly tied to OpenAI’s ChatGPT and GPU demand.

Wells Fargo notes that “Gemini/TPU” exposed names now trade at a valuation premium to “ChatGPT/GPU” peers for the first time in nearly a decade, underscoring a more selective AI trade where leadership, proprietary silicon and ecosystem depth increasingly determine winners.

Risk Assets Firm as Markets Price in a Dovish Fed Pivot

Global markets steadied on Wednesday, with equities, copper and oil advancing as investors doubled down on expectations that a Kevin Hassett-led Federal Reserve would favor lower rates.

The dollar weakened for a ninth straight day, yield curves steepened, and U.S. 10-year Treasurys hovered just above 4% while two-year yields slipped to 3.5%, reinforcing the softer-rate narrative.

Bitcoin rebounded above $92,000 after a sharp autumn drawdown, and copper hit a record high, underscoring renewed risk appetite.

Oil rose about 1% as fragile Russia-Ukraine peace prospects kept supply risks in focus, while the yen stayed firm amid elevated Japanese government bond yields.

Conclusion

Markets are ending the week with a complex mix of exuberance and fragility. China enters 2026 with unresolved stress in property, consumer demand and prices, even as its tech ecosystem regains global credibility.

In contrast, the United States is doubling down on AI, with private valuations and prospective mega-IPOs such as Anthropic testing the boundary between structural growth and speculative excess.

Public markets are already distinguishing winners, rotating toward perceived AI leaders like Alphabet and Broadcom.

At the macro level, expectations of a more dovish Fed continue to support risk assets, but concentration and policy risk remain elevated for now.

Investment Insights

• China: focus on resilience, not rebound. Persistent pressure in property, household balance sheets and prices suggests China remains a structural “value trap” in some segments. Investors may want to be selective.
• AI: separate infrastructure from speculation. Anthropic’s potential mega-IPO and soaring private valuations reinforce the need to distinguish between durable AI infrastructure (chips, cloud, data centers) and high-burn, unproven business models.
• Platform rotation inside ‘Big Tech’: Market pricing now implies Google has pulled ahead in the AI race, with TPUs and Gemini reshaping expectations.
• Macro backdrop still risk-supportive, but narrow: Expectations of a more dovish Fed and a weaker dollar continue to underpin global risk assets and commodities.

Economic Calendar