All eyes are on! The 14 trading days that will determine the fate of the global stock market have arrived. The market is focused on AI, VIX, and the Federal Reserve's interest rate cuts

According to Zhitong Finance APP, in the coming weeks, it will become increasingly clear for top strategists on Wall Street and major global investment institutions whether the latest round of the global stock market's "super bull market" will continue, or if this epic bull market rally is destined to derail.

The U.S. non-farm payroll data report, key inflation readings, the earnings report from AI chip leader Broadcom, and the Federal Reserve's monetary policy decision will all be released in the next 14 trading days, setting the tone for global retail and institutional investors returning to the market after the summer holiday. Additionally, beneath the calm, the market volatility index is turbulent, and the "triple hit" of non-farm payrolls + CPI data + Federal Reserve interest rate decisions may trigger "stormy days" in the market.

The benchmark U.S. stock index—the S&P 500—has recently recorded its weakest monthly gain since July 2024, while September has historically been the worst-performing month for this index throughout the year. Meanwhile, China's stock market has seen the Shanghai Composite Index break a ten-year high, becoming the true protagonist of the global market this summer. The global stock market benchmark—the MSCI Global Index—has also repeatedly set new highs this year and is currently near its historical peak, suggesting that the global stock market is at a crucial crossroads, with the data to be released in the next 14 trading days being critical for investors to predict stock market trends.

The U.S. stock market is experiencing its most rugged month of the year—September has historically been the month with the worst investment returns over the past thirty years.

It is noteworthy that as the significant 14 trading days approach, volatility seems to have vanished. The Chicago Board Options Exchange Volatility Index (also known as the VIX Fear Index) has only exceeded the technically significant level of 20 points once since the end of June. The S&P 500 index has not seen a 2% sell-off for 91 consecutive trading days, marking the longest duration since July 2024. This benchmark index reached another historical high of 6,501.58 points on August 28, rising 9.8% year-to-date and soaring 30% since the low on April 8.

"It is correct for investors to maintain a cautious sentiment in September," said Thomas Lee, head of market strategy research at Fundstrat Global Advisors. "After a long period of inaction, the Federal Reserve is preparing to re-enter a dovish stance on the interest rate cut cycle. However, this series of significant data before the Federal Reserve's interest rate decision has a major impact on interest rate cut expectations, making it tricky for traders to adjust their positions."

Thomas Lee, a strategist known as the "Wall Street Oracle" who has been bullish on the stock market for a long time, expects the S&P 500 index to decline by 5% to 10% in the fall, followed by a rebound to between 6,800 and 7,000 by the end of the year, with the possibility of further breaking through the key milestone of 7,000 points A series of heavyweight data concerns "AI faith" and interest rate cut expectations

Following the performance announcement of AI chip leader NVIDIA (NVDA.US) last week, another leader in the AI chip field—Broadcom (AVGO.US), which ranks second in AI chip shipments after NVIDIA, will release its earnings report this Friday Beijing time. This year, Broadcom has significantly driven the global chip stocks and a wide range of tech stocks upward, making its performance crucial for global investors' "AI faith" and the upward trend of tech stocks.

Broadcom is one of the core chip suppliers for Apple Inc. (AAPL.US) and other large tech companies, and it is also a key supplier of Ethernet switch chips for large global AI data centers, as well as customized AI chips (AI ASICs) that are critical for AI training/inference. Broadcom, the strongest player in the AI ASIC field, has demonstrated through several quarters of strong performance and optimistic outlooks that under the "ultra-low-cost AI large model computing paradigm" led by DeepSeek, the demand for computing power at the AI inference end continues to show explosive growth, and the so-called "AI computing power surplus" is merely a market overreaction.

As American tech giants firmly invest heavily in the AI field, the biggest beneficiaries include not only NVIDIA but also AI ASIC giants like Broadcom, Marvell Technology, and Taiwan's Wistron. Microsoft, Amazon, Google, and Meta, as well as generative AI leader OpenAI, are all collaborating with Broadcom or other ASIC giants to update and iterate AI ASIC chips for massive deployment of inference-end AI computing power. Therefore, the future market share expansion of AI ASICs is expected to significantly outperform AI GPUs, moving towards parity in market share rather than the current situation where NVIDIA's AI GPUs dominate with a staggering 90% share of the AI chip market.

The ongoing explosive growth in global AI computing power demand, coupled with the increasingly large AI infrastructure investment projects led by the U.S. government, and the continuous massive investments by tech giants in building large data centers, largely indicates that for long-term investors who are fond of NVIDIA and the AI computing power industry chain, the sweeping "AI faith" around the world has not yet concluded its "super catalysis" on the stock prices of computing power leaders. They bet that the stock prices of companies in the AI computing power industry chain led by NVIDIA, TSMC, and Broadcom will continue to exhibit a "bull market curve," further driving the global stock market to continue its bull market trend.

It is precisely under the epic stock price surge of AI computing power industry chain leaders like NVIDIA, Google, TSMC, and Broadcom, along with their consistently strong performance this year, that an unprecedented AI investment boom has swept through the U.S. stock market and global stock markets, driving the global benchmark index—the MSCI World Index—up significantly since April, recently setting new historical highs.

Also, this Friday Beijing time, the U.S. non-farm payroll data will be released, and the ADP employment data will be announced on Thursday. These two data points are crucial for market interest rate cut expectations, especially the non-farm data, which could even determine whether the market further prices in a potential 50 basis point rate cut by the Federal Reserve in September to initiate a new round of rate cuts. Economists currently expect that the increase in non-farm jobs will remain below 100,000 for four consecutive months, with an expected increase of only 75,000 jobs in August, marking the weakest employment data since 2020; The unemployment rate is expected to rise slightly in August.

The non-farm payroll data released in early August painted a picture of an extremely weak U.S. labor market: in July, businesses added only 73,000 jobs, far below economists' expectations of around 110,000; meanwhile, the initial figures for non-farm employment in the previous two months were unexpectedly revised down by nearly 260,000, a downward revision of an unprecedented 90%. The latest unemployment rate rose from 4.1% in June to 4.2%. This is the largest downward revision over two months since the peak of the COVID-19 pandemic in 2020, fundamentally changing perceptions of the trajectory of the U.S. labor market and the path to a "soft landing" for the U.S. economy.

Goldman Sachs' strategist team stated that Federal Reserve Chairman Jerome Powell has given the green light for a rate cut in September, but the August non-farm employment data will be a key factor in determining the magnitude and pace of the rate cut. If job growth is below 100,000, it will help confirm a rate cut in September. Powell's remarks at the Jackson Hole central bank annual meeting, particularly his reiteration of "downside risks to the labor market," can be said to pave the way for the Fed's shift towards rate cuts, echoing his heightened concern for the U.S. job market during the press conference following the last FOMC monetary policy meeting.

The CPI and PPI to be released next week could directly "set the tone for Fed monetary policy" before the Fed's rate decision on September 18. A CPI and PPI inflation that is weaker than market expectations, combined with persistently weak non-farm data, means that a rate cut in September is "just waiting for the official announcement." However, if non-farm data shows unexpected resilience in labor market growth, combined with unexpected inflationary pressures, the prospect of rate cuts in September or for the remainder of the year would be called into question. This is why Wall Street financial giant Bank of America has maintained a hawkish monetary policy expectation of no rate cuts this year.

The strange and calm VIX is indeed abnormal and requires vigilance against sudden large-scale sell-offs.

"Wall Street's oracle" Lee is not the only one skeptical about the short term. Some of Wall Street's most optimistic bulls are increasingly worried that this strange calm is sending a contrary negative signal in the face of seasonal weakness, especially concerned that this strange and calm VIX trend may signal sudden short-term volatility. Data compiled by Bloomberg shows that over the past thirty years, the S&P 500 index has averaged a decline of 0.7% in September, and in the past five years, four of those years recorded monthly declines.

The main market catalyst will begin with Friday's monthly non-farm employment report. At the beginning of August, this data became the focus of global attention: the U.S. Bureau of Labor Statistics revised down the total non-farm employment figures for May and June by nearly 260,000. This adjustment drew fierce criticism from U.S. President Donald Trump, who fired the agency's top statistician and accused it of manipulating data for political purposes.

In addition, the Bureau of Labor Statistics will also release expected revisions to the Current Employment Statistics (CES) business survey on September 9, which may further adjust market expectations for U.S. non-farm employment growth Next, inflation data will take the stage next week: the Consumer Price Index (CPI) report will be released on September 11. On September 18, Beijing time, the Federal Reserve will announce its policy decision and quarterly interest rate expectations, followed by a press conference by Federal Reserve Chairman Jerome Powell. Investors will be looking for any roadmap Powell provides for the trajectory of interest rate expectations. Pricing in the swap market shows a roughly 90% probability of a rate cut at this meeting; by September 2026, the swap market pricing indicates expectations of easing policies of up to 125 basis points.

Immediately following the interest rate decision, the "Triple Witching" will occur, known as the "Triple Witching Day" for U.S. stocks, where a large number of stock-related options expire simultaneously, potentially amplifying volatility.

There is a lot of uncertainty to digest. However, traders seem surprisingly unconcerned about this critical period of data and decision-making. Stuart Kaiser, head of U.S. equity trading strategy at Citigroup, noted that hedge funds and large speculators are shorting the VIX at a pace not seen in three years, betting that market calm will persist. The forward implied volatility on the day of the non-farm payroll data release is only 85 basis points, indicating that the market is underpricing this risk.

Turbulent Market Risks

The core issue is that this calmness combined with extreme positions historically often signals a spike in the VIX volatility index. This is exactly what happened in February: the S&P 500 index peaked amid concerns over the Trump administration's tariff plans, and volatility surged, catching professional traders who had bet on low volatility through 2025 off guard. In July 2024, traders were also shorting the VIX at extreme levels, and the subsequent unwinding of yen carry trades in August completely disrupted global markets.

The VIX climbed to nearly 16 last Friday, having briefly touched its lowest level for 2025, but this Wall Street "fear index" remains about 19% lower than its one-year average.

Of course, the bullish expectations for the S&P 500 index also have fundamental reasons. Despite facing Trump's tariff measures, the U.S. economy remains relatively resilient, especially with strong profit growth among U.S. companies. The latest global fund manager survey from Bank of America shows that investor bullishness on U.S. stocks is at its highest level since the peak in February, with cash levels dropping to a historic 3.9%.

But the problem presents a cycle: as the S&P 500 index continues to rise, concerns about its overvaluation are also increasing. The index is currently trading at a 22x expected price-to-earnings ratio. Since 1990, the market has only been more expensive at the peak of the internet bubble and during the tech frenzy following the COVID-19 pandemic low in 2020.

"We are buyers of large tech giants," said Tatyana Bunich, president and founder of Financial 1 Tax. "But these stocks are very expensive right now, so we are holding some cash, waiting for any appropriate pullback to add to our positions." Another well-known bull, Ed Yardeni, founder of Yardeni Research, questioned whether the Federal Reserve would really cut interest rates in September. If the rate cut does not happen as scheduled, it would at least hit the stock market in the short term. His reasoning is that inflation remains a persistent risk.

"I expect this stock market rebound will soon stall," Yardeni said. "The market is pricing in a lot of good news in advance, and once the CPI is hot and employment data is strong, traders may suddenly conclude that a rate cut is not a certainty, leading to a brief sell-off. But when traders generally realize that the Federal Reserve cannot sustain rate cuts, the underlying reason is actually a good thing— the U.S. economy remains strong, and the stock market will regain its upward momentum."

If employment data unexpectedly comes in strong, and although inflation indicators remain above the Federal Reserve's targeted 2% goal, they do not show significant warming under tariff pressures, it will undoubtedly boost investors' expectations for a "Goldilocks" soft landing for the U.S. economy. The so-called "Goldilocks" macroeconomic environment in the U.S. refers to an economy that is neither too hot nor too cold, just right, maintaining moderate growth in GDP and consumer spending along with a long-term stable low inflation trend