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AI markets face scrutiny as Nvidia eyes a massive $100 billion investment in OpenAI, while some analysts suggest the sector may be overvalued and due for correction. Meanwhile, alternative assets like crypto could be coming to your 401(k).

With markets riding peaks and valleys and gold’s surge setting new records, are we on the cusp of transformative financial shifts, or merely navigating an increasingly complex market environment?

In today’s financial recap:

  • AI Market Rally: Warning Signs of Overheating and $100B Nvidia-OpenAI Deal

  • Crypto & Alternative Assets in 401(k)s: Trump-Backed Reform Gains Momentum

  • Gold Surges to Record Highs Amid Market Uncertainty

  • Morgan Stanley to Unlock $1.3 Trillion Crypto Trading with E-Trade in 2026

AI Market Rally: Warning Signs of Overheating and $100B Nvidia-OpenAI Deal

The TradeWatch: Experts are cautioning that the AI-fueled market surge is exhibiting signs of inflated valuations, while Nvidia’s significant $100 billion investment in OpenAI highlights substantial capital flowing into AI infrastructure.

Unpacked:

  • RSM chief economist Joe Brusuelas told Yahoo Finance that markets are showing signs of frothiness and a healthy correction could be coming.

  • Nvidia’s plan to invest up to $100 billion into OpenAI to build out AI infrastructure raises questions about the sustainability given the size of the investment.

  • A recent MIT Media Lab study suggests that 95% of current AI projects may not deliver a measurable financial return, indicating potential risks in the AI sector.

Bottom line: The AI sector may be overvalued and due for a correction, although timing the market is difficult. Investors should prioritize risk management to remain cautious about the markets, given the speculative interest across markets.

Crypto & Alternative Assets in 401(k)s: Trump-Backed Reform Gains Momentum

The TradeWatch:

A policy shift, supported by GOP lawmakers and SEC Chair Paul Atkins, may soon allow alternative assets like cryptocurrencies and private equity in U.S. 401(k) plans, potentially unlocking billions in capital.

Unpacked:

  • House Financial Services Committee Chairman French Hill and other GOP lawmakers are urging the SEC to revise regulations to align with President Donald Trump’s executive order to enhance retirement savings through alternative investments.

  • SEC Chairman Paul Atkins aims to broaden access to private market investments for ordinary investors, highlighting the need for diversification in portfolios currently dominated by a few tech stocks, referencing the so-called “Magnificent Seven”.

  • Trump’s executive order directs the Department of Labor to revisit ERISA guidelines, which could open up a slice of the $43.4 trillion US retirement market to alternative assets, marking a potential game-changer for crypto adoption if it makes its way into 401(k)s.

Bottom line: These regulatory changes, if implemented, could reshape retirement portfolios, granting retail investors access to previously restricted asset classes. Ultimately, it will change the direction of the $43.4 trillion US retirement market to alternative assets.

Gold Surges to Record Highs Amid Market Uncertainty

The TradeWatch: Gold prices have soared to unprecedented levels, reaching $3,791, as the Federal Reserve’s cautious approach to interest rate cuts and ongoing geopolitical instability drive safe-haven demand.

Unpacked:

  • Gold prices are skyrocketing due to expectations of further Federal Reserve interest rate cuts, with traders anticipating potentially two more reductions before the end of the year, increasing its attractiveness as a safe haven investment.

  • Geopolitical tensions, including escalating Russia-NATO frictions and renewed pressure on Iran over its nuclear program, are reinforcing safe-haven flows into gold, influencing risk sentiment across markets.

  • Wall Street analysts anticipate further upside for gold, with Goldman Sachs forecasting $4,000 by mid-next year and UBS predicting $3,900 during the same period, driven by expectations of falling real interest rates and elevated inflation.

Bottom line: Gold’s record-breaking rally highlights its enduring role as a safe-haven asset in times of economic and geopolitical uncertainty. Investors should closely monitor Fed policy and global events to gauge potential future movements in gold prices and their impact on portfolio diversification.

Morgan Stanley to Unlock $1.3 Trillion Crypto Trading with E-Trade in 2026

The TradeWatch: Morgan Stanley is set to launch cryptocurrency trading for E-Trade clients in 2026, potentially unlocking $1.3 trillion in trading volume and partnering with Zerohash for liquidity and custody, signaling a major move into digital assets.

Unpacked:

  • Morgan Stanley plans to offer direct trading of Bitcoin, Ether, and Solana to E-Trade clients, starting in the first half of 2026, marking a significant expansion into digital assets.

  • The initiative includes a partnership with Zerohash, valued at $1 billion, to manage liquidity and custody, and according to Bloomberg, this collaboration is aimed to ensure that the platform can manage large-scale trading while meeting regulatory standards for custody and settlement.

  • Jed Finn, Morgan Stanley’s head of wealth management, describes this initial offering for spot trading as “phase one,” with future plans including a digital wallet for clients to directly manage digital assets alongside traditional investments.

Bottom line: Morgan Stanley’s move signals growing institutional interest in crypto and is positioned to give the bank a competitive edge in wealth management, as it draws more institutional and retail investors into cryptocurrencies. This launch represents a crucial step toward integrating traditional finance with emerging digital asset markets, potentially reshaping how wealth management firms operate in the future.

The Shortlist

  • 3 Tricky Decisions for Every Retirement Plan – Approaching or managing retirement? Morningstar breaks down the top choices you’ll need to make for your financial future. options.

  • Sempra Sells Stake to Fund US Utility Growth – Sempra announces a strategic sale to power future utility investments across America.re

Cheers,

— Michael & the TradeWatch.io editorial team