"I have to empty my head of the words. Something has happened. Something is not right."
The Madness Of King George, Alan Bennett
That was quite a week. In summary:
Trump smashed by his own voters
After initial fall, the US stock market rose…
…and then collapsed again due to AI datacentre concerns.
The Dollar fell
Gold went up
Oil down
UK interest rates up
Sterling up
Biggest theft ever (Binance)
Let’s look at these and (try to!) stick to the investment implications of each.
Mad King Don was given a good kicking by his own voters, and in the wake of his crushing defeat, his mental state was laid bare (again) for all to see. Look out for a move under section 4 of the 25th Amendment of the US Constitution, which gives the power to remove the president due to physical or mental incapacity. It sounds like that could be positive for markets, but resistance from Trump combined with concern over the quality of his replacement will stall celebrations.
Excepting action under the 25th Amendment, the implications of the stalemate from January, when the newly elected Democrats take their seats, will depend on whether Trump is a lame duck or a wounded lion. If he really has convinced himself that the Iran war is an absolute priority, at the price of a blip in the cost of living, we should expect the oil price to go higher, and shortages of refined products, including petrol, to become more critical.
If that is the case, the fall in the oil price in recent days is another buying opportunity.
The reaction of the US stock market has been mixed, understandably as no one has a clue how Trump will work with Congress. Any initiatives by Congress can be vetoed by Trump. But Congress can’t do similar, for example, stop more foreign adventures by Trump. There are theoretical ways to stop funds for the war – but it’s not so easy in practice.
It’s pointless trying to rationalise why the dollar went down and gold up, beyond the fact that if the dollar falls the gold price tends to go up. Ignoring the election, the dollar appeared to be having a breather recently and is set to start moving up again. If so, gold will continue to new lows within this downturn since the heady peak in January. Eventually there will be another very profitable opportunity to buy gold – be patient for now.
The US stock market falls yesterday (and in Asia overnight) were all about AI and their data centres. The data centres are such a big local issue in the US that some Democrats undoubtedly benefitted from resistance to plans to build more – notably in Texas. What is a data centre, why should you not want one on your doorstep, and how does this impact the advance of AI generally, and the immediate investment risks?
A data centre is basically a huge building full of powerful computers. In the AI world, these are the factories. The chips inside them do the immense amount of computing needed to train AI models, run them every time somebody asks a question or requests an image, or otherwise use an AI tool.
That makes data centres critical to the AI boom. Smarter and more widely used AI needs more chips, more electricity, more cooling and more buildings. But these centres are not invisible. They can consume extraordinary amounts of power and water, put pressure on local grids and create noise and disruption. It is not hard to understand why some communities are asking why they should carry those costs on behalf of giant technology companies.
If the build-out slows because of planning objections, power shortages or simple economics, AI itself does not stop, but its progress will slow.
For investors, the shorter-term risk is very uncomfortable. Vast sums have already been committed, years before they know how much money the AI services will eventually make. So even a modest slowdown makes the whole investment story look quite flaky. This is more so the case with so much of the boom now being financed with debt. The interest on those huge debts has to be paid today – but no one knows when the income will arrive to pay that bill.
It is difficult to see a solution that doesn’t involve pain. Perhaps ask AI for an answer?
This week the Bank of England raised rates from 3.75% to 4%, tucking in behind the herd of central banks around the globe. I struggle with the logic. Britain’s immediate inflation problem is largely an energy problem, caused by the war in Iran pushing up oil and gas prices. Increasing mortgage rates in Chislehurst will not bring down the price of a barrel of oil in the Gulf.
If oil stays high, Britain becomes poorer. Higher interest rates risk making us poorer twice.
Expensive energy already depresses activity. Households have less to spend elsewhere, while businesses face higher costs and thinner margins. Beyond the initial inflationary shock, that is economically contractionary – dare I say deflationary. Raising rates adds an unnecessary additional squeeze.
The UK is poorly served by the Bank Of England.
The Binance theft of 29th October 2026 may be the largest single theft in recorded history, not merely the largest cryptocurrency theft. The estimated amount is $6.3–6.4 billion, which is roughly 65–70 times the size of the Great Train Robbery, adjusted for inflation
What does this tell you about investment opportunities in cryptocurrencies?
Crypto attracts a bizarre mix of criminals, anti-establishment idealists, young investors drawn to the unconventional, and those seduced by a compelling story and the prospect of getting rich quick.
But beneath the noisy excitement crypto has no reliable underlying basis for valuation, its prices are driven by sentiment and speculation, and its much-vaunted security has repeatedly been exposed as an illusion.
The latest debacle with Binance is a timely reminder that crypto is neither stable, nor reliably secure, nor a safe haven. It is an extraordinary speculative phenomenon, and speculation should never be confused with investment.
Over the week, India and China held up best, up around 5% (with stimulus in China, to which we will return next week). UK indices were just into positive territory. Japan, Brazil and the S&P 500 fell around 4-5%, and the tech-centric Nasdaq slumped nearly 10%.
As we peer into 2027, there might be some telling trends emerging, good and bad.