To The Moon

🐯Hi Tigers,

Below is a summary of the key takeaways from the live session held on November 6, where Grace Chiu, Direxion Managine Director Asia , walked us through the highlights of the U.S. 2025 Q3 earnings season, current market narratives, a refresher on leveraged and inverse ETFs, and recent trading trends.

1. Snapshot of the U.S. 2025 Q3 Earnings Season

So far, 317 companies in the $S&P 500(.SPX)$ —representing 69% of the index’s market cap—have reported Q3 earnings. Last week was the busiest week of this earnings cycle, with 174 companies reporting. $NVIDIA(NVDA)$ , currently the largest constituent by market cap, will report on Nov 19.

According to Goldman Sachs Global Investment Research, here are the key points from Q3 2025 earnings reports: :

1) Record-high earnings beats (except for pandemic periods)

Source: FactSet, Goldman Sachs Global Investment Research

This season’s earnings have consistently exceeded expectations, with the magnitude of the beats reaching historical highs. Among companies that have reported, 64% delivered EPS at least one standard deviation above market expectations—a level rarely seen outside the pandemic years.

2) Earnings beats driven by both Sales and Margins

• S&P 500 companies reported 6% YoY revenue growth, above the 4% expected at the start of earnings season.

• 52% beat revenue estimates (vs. the long-term average of 37%).

• While the index’s net margin is projected at 11.8%, down 21 bps from Q2, margins would actually be +12 bps QoQ if excluding $Meta Platforms, Inc.(META)$ and $Boeing(BA)$ , which were affected by one-off non-cash charges.

3）Earnings beats aren’t translating into stronger stock performance

On the day after reporting, earnings-beat stocks outperformed the S&P 500 by only 32 bps, compared with the historical average of 98 bps.

A key explanation: Investors view this quarter's results as less informative in forecasting future profitability, given the backdrop of:

• macro volatility

• renewed trade policy uncertainty

• concerns about bank lending

• broader macro headwinds

Sector-wise, Utilities and Financials saw the weakest median performance among earnings-beat stocks.

4) Earnings growth is slowing

Q3 EPS growth for the S&P 500 is tracking +8% YoY, above the +6% expected at the start of earnings season. However, this is slower than Q2’s +11% and below recent quarters’ momentum—indicating a continued deceleration.

5) Corporate guidance and analyst revisions remain solid

Of the 49 companies issuing Q4 guidance so far, 43% guided EPS above consensus—higher than the 10-year average of 40%. This suggests management teams are still optimistic about near-term earnings prospects.

6) AI-related capex by mega-cap tech continues to exceed expectations

$Alphabet(GOOGL)$ , $Microsoft(MSFT)$ , $Amazon.com(AMZN)$ , $Oracle(ORCL)$ , $Meta Platforms, Inc.(META)$

Hyperscalers’ capital expenditures are running ahead of forecasts, both in absolute dollars and expected future growth.

• Consensus now expects +29% growth in hyperscaler capex in 2026, up from +19% at the start of earnings season.

Investor reactions depend heavily on:

• strength of earnings growth, and

• confidence in monetizing AI investments.

For example:

Both Google and Meta guided 2026 capex above consensus. However, $Alphabet(GOOGL)$ ’s shares rose because its 2025 results beat expectations； $Meta Platforms, Inc.(META)$ ’s shares fell because its 2025 results missed

7) Large U.S. corporations are increasingly focused on labor efficiency

In the past two weeks, 9 S&P 500 companies announced layoffs, bringing the total to 17 since early September.

Although most announcements were not explicitly AI-related, clients are increasingly asking whether AI adoption signals broader labor market disruption.

8) Bank lending and the corporate credit cycle are under close watch

Banks’ lending to non-depository financial institutions (NDFIs)—including private equity and private credit funds—has become a critical topic this earnings season.

Goldman Sachs’ analysts believe recent loan losses are idiosyncratic, not systemic. Given current leverage and collateral structures, expected loss rates on NDFI loans should remain relatively low.

2. Key Market Themes

1) Fed Chair Powell: A December rate cut is “far from a done deal”

Powell’s hawkish tone pushed the 10-year Treasury yield back above 4%, challenging Monday’s early decline.

2) Notable stocks: $Palantir Technologies Inc.(PLTR)$ , $Berkshire Hathaway(BRK.B)$ /B, $Shopify(SHOP)$ , $Advanced Micro Devices(AMD)$ , $Qualcomm(QCOM)$

3) Biggest one-day U.S. stock drop in a month—Is the bull market at risk?

The recent market selloff has revived concerns about:

• stretched tech valuations

• narrow market leadership

• economic uncertainty

With market gains overly concentrated in a handful of mega-cap tech stocks, any disruption in the AI narrative could have outsized impact.

4) Tech giants, AI, and nuclear energy applications in AI infrastructure

Recent headlines include:

• $NVIDIA(NVDA)$ becomes the first company ever to surpass $5 trillion market cap

• $Amazon.com(AMZN)$ signs a $38B agreement with OpenAI to supply Nvidia chips

• U.S. signs an $80B deal to promote nuclear energy applications in AI

• $Tesla Motors(TSLA)$ to hold its shareholder meeting this Thursday

3. Characteristics & Key Considerations of Leveraged / Inverse ETFs

Before discussing trading trends, Grace revisited the foundational concepts behind leveraged and inverse ETFs (L&I ETFs).

Key Characteristics

• Low investment threshold, no minimum holding period

• Traded on exchanges like regular stocks

• Tactical tools that adjust quickly to market conditions

• Enable:

  • Bullish leveraged plays to amplify potential gains

  • Bearish or hedging strategies via inverse ETFs

  • Long/short relative value trades without borrowing

• Best suited for short-term trades, not long-term investing

• No margin call or forced liquidation risk; max loss = initial investment

• Daily reset structure works best in trending markets, not choppy ones

Risks of Using Leveraged & Inverse ETFs

Suitable for users who:

• Understand the risks and mechanics of daily reset

• Have an informed market view

• Actively monitor and manage positions

Not suitable for:

• Investors unfamiliar with daily rebalancing

• Long-term buy-and-hold investors

Operational Principles

• Trending markets benefit L&I ETFs

  • When the underlying index trends strongly upward or downward, the compounding effect may enhance returns for investors who get the direction right.

    

• Sideways or highly volatile markets hurt L&I ETFs

  • Frequent fluctuations without direction cause compounding decay, reducing long-term returns.

  

  Best for short-term tactical trades

  • Longer holding periods increase exposure to volatility drag.

4. Popular Trading Trends

1) Chipmakers & Semiconductor Sector

$NVIDIA(NVDA)$ , $Advanced Micro Devices(AMD)$ , $Palantir Technologies Inc.(PLTR)$ ,

2) AI / Chip-related Individual-Stock L&I ETF Trades

$NVIDIA(NVDA)$ , $Qualcomm(QCOM)$ , $Taiwan Semiconductor Manufacturing(TSM)$ ， $Micron Technology(MU)$ , $Broadcom(AVGO)$ , $Advanced Micro Devices(AMD)$ , $Palantir Technologies Inc.(PLTR)$

3) Major tech names with listed leveraged and inverse ETFs.

$Tesla Motors(TSLA)$ , $Apple(AAPL)$ , $Alphabet(GOOGL)$ , $NVIDIA(NVDA)$ $Amazon.com(AMZN)$ $Microsoft(MSFT)$ $Meta Platforms, Inc.(META)$ ， $Netflix(NFLX)$

4) Gold miners — amplified play on gold

$NYSE(NYSE)$

Traders often use gold-mining ETFs as short-term tools because gold miners have:

• high correlation to gold prices

• greater volatility, offering leveraged exposure even before applying ETF leverage

😎📈These are the key highlights from Grace Chiu’s session, and we hope they help you better understand the major themes in U.S. Q3 earnings, market trends, the basics of leveraged and inverse ETFs, and recent trading activity.