Here’s My Plan If the Startled Market Is Overcome With Fear

Last week was one of the ugliest weeks that investors have endured so far in 2026. Wednesday, the September consumer price index reading came in stronger than expected. This was followed Thursday by the September producer price index report that showed the highest reading since March 2022. These elevated inflation levels are being driven by the impact of the conflict in the Middle East. Brent hit $110/barrel for the first time since May as several tankers were hit by drones in the Strait of Hormuz. The Houthis hit Saudi Arabia hard, raining missiles down on the international airport at Riyadh.

And there is no apparent credible path out of this quagmire. And the damage from hostilities is accumulating across the globe. Qatar’s revenues fell over 40% year-over-year in the first half of 2026 as but one example. Their economy is projected to contract by over 15% this year. Diesel prices hover near all-time highs in the U.S. while gasoline remains significantly north of four bucks a gallon. And this development looks like it could lead to a shellacking for the current administration in the fast-approaching mid-terms.

Neocloud provider CoreWeave, Inc. (CRWV) fell by a quarter last week on growing concerns around its debt load. Something that has been signaled via the surging credit default swap prices against its debt for months now. Other neocloud providers like Nebius Group N.V. (NBIS) sold off hard on empathy last week. I have avoided these names like the plague. Hyperscalers like Meta Platforms (META) and xAI are selling their excess compute capacity and are more well-capitalized than the neocloud sector.

That same observation was made by Gartner, who predicted that 80% of the neocloud providers will be gone by 2030. The marketing research firm also noted that there is a multi-trillion-dollar gap between what is being spent on AI Infrastructure and the revenues this effort will garner to justify the buildout by 2030.  A point I have many times in these pages over the past year.

The Nasdaq fell over 4% last week, its worse weekly performance since June. The Russell 2000 was off roughly 3% as high beta sectors of the market got hit hard. Looking at clinical stage biotech stocks last week results in something you expect to find in no man’s land in the Donbas, a lot of casualties due to a flight to safety.

The VIX surged on Friday to hit its highest level in four months as a whiff of panic moved into the market late in the week. There were some rumors on CNBC that a hedge fund had been blown out. Most investors had already forgotten about the implosion of Situational Awareness in July. This spike in volatility couldn’t come at a worse time for Anthropic. Its management was out in San Francisco last week meeting deep pocketed investors. It is seeking to raise roughly $100 billion at a $2 trillion market capitalization in the coming month.

There is already some talk that they made need to take valuation down by half a trillion dollars. A lower valuation is unlikely to be met with enthusiasm by the market as it could signal that AI growth is finally starting to meet substantial resistance. Of course, if they pull the IPO, investors might see circuit breakers being hit for the first time since the Covid-triggered lockdowns.

With Friday’s September option expiration, my allocation to cash and marketable securities is up to just over 40%. I will be looking to deploy some of that dry powder back into equities via covered-call orders. But I will do so very incrementally as valuation levels are still elevated. Now if last week’s whiff of panic becomes something more and feels like some real fear pushing the VIX up to 30, I will get more aggressive.

At the time of publication, Jensen had no position in any security mentioned.