Data Center Growth Adds to US Onshoring Momentum and GDP Strength

The good news is that approximately 20% of the stocks in the S&P 500 will report this week, so I am expecting wave after wave of positive third-quarter sales, earnings, surprises, and guidance. This is just one reason why the second half of October is seasonally strong. The other reason is that the holidays are fast approaching, and since the holidays are a happy time of year when we all get together with family and friends, this positive sentiment tends to boost investor sentiment.
The 10-year Treasury bond remains at 4% and yields have softened all across the yield curve, so the Fed is expected to cut key at their on October 29th and December 10th. I suspect the Fed will also continue to cut key interest rates in 2026, since I am expecting global interest rates to continue to collapse, as Asia and Northern Europe remain in a recession, due largely to aging demographics and shrinking households.
I am expecting the U.S. to hit 5% growth in 2026, due largely to all the onshoring. Speaking of onshoring, announced that the Blackwell GPU wafer has now been manufactured by at its Arizona plant. Currently, the Blackwell wafers have to be sent to Taiwan to become finished GPUs, but clearly, TSMC is making progress.
The pharmaceutical onshoring is also accelerating and hindering Ireland’s and Switzerland’s respective economies. The automotive industry continues to expand in five southern states, especially for part suppliers. announced a while ago that it was diverting some production from Mexico and investing $4.5 billion in three U.S. plants. Finally, the data center boom is simply incredible and will also help boost GDP growth.
Deflation continues to envelop China. The latest evidence was that the National Bureau of Statistics announced that home prices declined 0.41% in August, which represents the biggest decline in 11 months. Additionally, the value of home resales declined 0.64% in August, which is the biggest monthly decline this year. China has been in the midst of a housing collapse in the past four years, and prices have declined in all 70 markets surveyed. Due to shrinking households from an aging population, there is no end in sight to China’s housing collapse.