Sunday morning at Exeter University brings its own particular ritual: as I perform the delicate choreography of dropping off a daughter for her first term. The ancient sandstone buildings of Devon's finest institution stand as reassuring as ever, weathered by centuries of parental anxiety and student ambition, yet somehow still radiating that timeless confidence that comes from having seen it all before.

But between the ceremonial unpacking of fairy lights and the awkward farewell at the residence hall door, there's something oddly comforting about watching markets from the university café. Here, surrounded by fresh-faced students clutching coffee and course schedules, the week's extraordinary market narratives feel both urgent and eternal – much like the academic cycle itself. This week's lesson plan? Oracle's stunning ascension to near-trillion-dollar heights, small caps finally raising their hands in class, and September's seasonal curse getting marked absent without leave.

As I watch these bright young minds prepare for their own tutorials and lectures, I'm struck by how markets, too, are perpetual classrooms, full of surprise pop quizzes, unexpected star pupils, and the occasional rebellious outburst from the back row. Pour that strong campus filter coffee, brewed through late nights, and let us review this week's most instructive market moments.

Where We Left Off (Week 36)

Week 36 delivered September's opening act with characteristic theatrical flair. Markets defied seasonal scepticism as the S&P 500 and Nasdaq achieved fresh records, while the Fed's 99% certain rate cut probability sat like a perfectly circled answer on the monetary policy whiteboard. Tech names suffered brief detention as AI darlings faced profit-taking, yet the broader rally continued its summer term extension.

Gold claimed new academic honours at $3,395/oz, Bitcoin lounged through another lazy week above $111,000, and geopolitical tensions remained more lunchroom gossip than exam-threatening headline material. The real story was September's refusal to follow its own historical syllabus was surely a theme that would dominate the week ahead.

This Week 37, 2025: Oracle's Trillion-Dollar Tutorial and the Russell's Back-Row Rebellion

Weekly Market Table

US & Global Equities

·       S&P 500 and Nasdaq: Fresh all-time highs became the new normal as both indices notched their second and third consecutive record closes respectively. The S&P advanced 1.6% to 6,104, while the Nasdaq climbed 1.8% to 21,886. Oracle's stunning 36% single-day surge provided the week's marquee performance, adding $244 billion in market cap and propelling the database giant to $922 billion valuation – tantalizingly close to the trillion-dollar club.

·       Russell 2000: A new item on the syllabus as small caps finally finding their voice. The Russell 2000 surged 3.2% for the week, with August's 7% gain continuing to reverberate as rate cut expectations emboldened investors to rotate into the previously neglected back benches

·       Europe: Continental markets managed modest gains with the STOXX 600 up 0.8% and the FTSE 100 adding 0.5%. European bourses continued their safe-haven theme as political uncertainty across the Atlantic drove some capital eastward, though enthusiasm remained tempered by persistent growth concerns.

Gold, Digital Assets and Other Assets

·       Gold: The precious metal maintained its teacher's pet status, advancing 0.7% to $3,641/oz and extending year-to-date gains to over 41%. Despite brief profit-taking earlier in the week, structural safe-haven demand and dollar weakness kept gold near its academic record highs.

·       Bitcoin & Digital Assets: Bitcoin climbed 2.1% to $115,503, shrugging off earlier week volatility and whale selling pressure. The digital asset's year-to-date performance of 101.3% continues to outpace traditional risk assets, though ETF outflows of $383 million signal some institutional cooling. Smaller crypto names stole the show, with tokens like MYX Finance posting 974% weekly gains.

·       Oil: Brent crude managed a modest decline of 0.3% to $75.80, as swelling inventories and muted geopolitical premium kept energy markets in a holding pattern despite Middle Eastern sabre-rattling.

Macro & Policy

·       Fed Policy: September rate cut odds remained locked at 99% probability following weak labour data, with markets now pricing 25 basis points as certain and 50 basis points carrying 23% odds. The Fed's dovish trajectory provided the foundational support for risk asset rallies across the board.

·       ECB & Central Banks: The European Central Bank held rates steady at 2.15%, with President Lagarde emphasizing data dependence while continental growth concerns persist. The policy divergence between Fed easing and ECB caution continued to drive cross-Atlantic capital flows.

Geopolitical Analysis

·       China-Russia Axis: Beijing's military parade featuring Xi Jinping, Putin, and Kim Jong Un provided more theatre than market impact, though defence stocks in Europe saw modest upticks following Poland's successful interception of Russian drones. Markets treated the authoritarian summit as background noise rather than immediate risk.

·       Middle East: Oil markets barely registered ongoing tensions as ceasefire speculation offset supply concerns. The conflict remains a simmering risk rather than active market driver, with traders more focused on inventory levels than geopolitical premium.

·       US Political Landscape: Constitutional concerns over Fed independence continued to bubble beneath the surface, but Powell's dovish guidance overwhelmed political noise as markets prioritised monetary accommodation over democratic principles.

What Was Pertinent This Week (Week 37)?

Oracle's Trillion-Dollar Tutorial: When the Quiet Student Becomes Head Boy

If there was one lesson that echoed through every trading floor this week, it was Oracle's stunning transformation from enterprise software stalwart to AI infrastructure kingpin. The company's 36% single-day surge – its largest since 1992 – represented far more than a quarterly beat; it was a masterclass in how artificial intelligence demand is reshaping corporate valuations.

Oracle's $455 billion remaining performance obligations, up 359% year-over-year, sent shockwaves through Wall Street's collective consciousness. This wasn't just another tech company riding the AI wave; this was infrastructure demand validation on an unprecedented scale. The company's partnerships with OpenAI and other AI giants suddenly looked less like opportunistic deals and more like strategic moats around the digital economy's most valuable real estate.

Larry Ellison's net worth surge to near $400 billion territory, briefly making him the world's richest individual, provided the human drama, but the real story was institutional recognition that AI infrastructure may be as transformative as the internet itself. When a 47-year-old database company can add $244 billion in market cap overnight, traditional valuation metrics clearly need updating.

The Russell 2000's Back-Row Rebellion: Small Caps Finally Raise Their Hands

For months, small-cap stocks sat at the back of the classroom while their large-cap counterparts dominated the AI discussion. This week, the Russell 2000's 3.2% advance and August's 7% surge finally gave the neglected cohort its moment in the spotlight. The rotation wasn't just about Fed rate cut expectations – though lower borrowing costs certainly help debt-laden smaller companies – it was about recognition that valuation gaps had reached historically attractive levels.

Bank of America reported the second-largest weekly inflows to small-cap ETFs since 2008, suggesting institutional capital was finally taking notice of the Russell 2000's relative cheapness. With second-quarter earnings expected to surge 69% year-over-year for small caps versus more modest large-cap growth, the fundamental case for rotation gained credibility alongside the technical breakout.

The key question remains durability. Small-cap rallies have false-started before, particularly when macro uncertainty returns. But with private equity dry powder exceeding $2.5 trillion and seeking attractive deployment opportunities, the bid beneath smaller, undervalued companies may prove more resilient than previous cycles.

Private Equity's Macro Insights

September Effect Goes Truant: When History Skips Class

Perhaps the week's most significant development was what didn't happen. September's reputation as the market's cruellest month – historically posting negative returns 61% of the time with an average decline of 1.1% – was nowhere to be found as major indices continued setting records. The S&P 500's fresh highs and the Nasdaq's third consecutive record close suggested that 2025's market dynamics were writing their own curriculum.

The defiance of seasonal patterns reflects several unique factors: unprecedented Fed dovishness, AI infrastructure validation, and the rotation trade finally gaining momentum. When fundamental drivers align this strongly, historical precedents often become academic footnotes rather than trading guides.

Yet September's historically choppy reputation hasn't vanished; it may simply be running fashionably late to this year's market party. The VIX's decline to 15.04 suggests broad complacency that experienced allocators know typically presages rather than prevents turbulence. Seasoned market observers understand that September's reputation wasn't built on myth – the month's volatility typically stems from pension fund rebalancing, option expiries, and post-summer trading desk repositioning.

This year's calm may simply reflect timing, with the real volatility yet to arrive as autumn progresses and political uncertainties intensify. For private equity, this creates both opportunity and obligation: opportunity lies in potentially acquiring quality assets if public market volatility does eventually materialise, forcing traditional sellers to consider private capital solutions. The patient capital that defines institutional private equity becomes most valuable precisely when public markets lose their patience.

The obligation involves maintaining sufficient reserves and flexibility to capitalise on such opportunities without becoming over-leveraged to current market optimism. The firms that thrive in late-cycle environments are those that resist the temptation to deploy capital simply because it's available, waiting instead for truly compelling risk-adjusted returns.

As university students across the country settle into their autumn term routines, private equity professionals might take inspiration from the academic calendar: the best learning often happens not during the crowded lecture halls of popular topics, but in the quieter moments when careful preparation meets unexpected opportunity.

The Deployment Paradox: When Cash is King but Kingdom Awaits

The Patient Capital Conundrum

This week's market strength illuminated private equity's central challenge: possessing unprecedented firepower while facing a target-rich environment that remains frustratingly expensive. Record dry powder levels exceeding $2.5 trillion represent both opportunity and burden, the equivalent of having the finest pencil case in class but struggling to find worthwhile assignments to complete.

Behind the headline-grabbing equity rallies, private equity firms continued wrestling with deployment opportunities that remained frustratingly scarce even as this week's market strength may finally be opening the deployment valve. Oracle's stunning valuation leap to $922 billion exemplifies the challenge: AI infrastructure deals that looked reasonably priced six months ago now trade at multiples that would make even growth-hungry GPs pause. Yet the fundamental thesis … that artificial intelligence represents a generational investment opportunity … has only strengthened with each quarterly validation.

The rotation into small caps offers more promising hunting grounds. Russell 2000 companies, traditionally private equity's natural habitat, finally appear to be receiving institutional attention after years of neglect. This convergence of public market recognition and private capital availability creates potential deployment opportunities that didn't exist during the large-cap-only rally of recent years.

Quality Over Quantity: The New Deployment Discipline

The current environment demands a more nuanced approach to capital deployment than simply following dry powder weight. The best-performing PE firms are those demonstrating surgical precision rather than broad-based aggression, targeting specific sectors where AI transformation creates genuine value rather than merely riding the narrative wave.

Infrastructure plays, particularly in data centres and cloud services, continue to attract premium pricing but also offer the most defensible competitive positions. Oracle's partnership announcements with OpenAI and other AI leaders highlight how crucial positioning along the AI value chain has become for long-term returns.

Conversely, traditional growth strategies that relied purely on multiple expansion face harder questions. With public markets already pricing in considerable optimism, private equity's value-add must increasingly come from operational improvement rather than market timing – a return to the asset class's fundamental value proposition.

The Financing Environment Awakens

The Oracle rally validated AI infrastructure as a legitimate investment theme, while small-cap strength suggested opportunities in the traditionally PE-friendly middle market. More importantly, the combination of lower rates and stable markets creates the financing environment that makes complex deals feasible again.

The real test will come in Q4 earnings season, when portfolio companies must demonstrate that the current market optimism translates to operational performance. For now, the patient capital that characterises the best PE firms appears well-positioned to capitalise on improved deployment conditions, provided they resist the temptation to deploy capital simply because markets appear accommodating.

As university students across the country settle into their autumn term routines, private equity professionals might take inspiration from the academic calendar: the best learning often happens not during the crowded lecture halls of popular topics, but in the quieter moments when careful preparation meets unexpected opportunity.

Market Resilience Meets Reality Check

While this week's performance impressed with its breadth and persistence, several undercurrents warrant attention. Bitcoin's ETF outflows of $383 million despite price gains suggest institutional appetite may be cooling. The VIX's continued decline below 15.5 indicates complacency that historically presages rather than prevents volatility spikes.

Most tellingly, the rotation trade's success depends heavily on continued Fed accommodation and stable economic growth – two assumptions that face testing in the coming months as labour market data and inflation trends evolve. The market's current confidence in monetary policy easing may prove well-founded, but the margin for error has narrowed considerably.

Closing Thoughts & Week Ahead

As Sunday morning settles over Exeter's campus and I prepare for the journey back to Gibraltar's familiar rhythms, this week's market lessons feel particularly resonant. Oracle's trillion-dollar tutorial reminded us that in markets, as in university, the quiet achievers often provide the most dramatic surprises. The Russell 2000's back-row rebellion proved that patient capital eventually finds its voice, while September's truancy from its own historical patterns showed that even the most reliable seasonal guides can skip class when fundamental forces align differently.

The week ahead brings the Fed's highly anticipated rate decision, ECB policy updates, and the usual array of economic data that will test whether this week's optimism can withstand closer scrutiny. Markets have priced in considerable accommodation and continued growth – assumptions that demand validation rather than faith.

For investors, the current environment offers both opportunity and obligation: opportunity to participate in what appears to be a broadening rally, and obligation to maintain the kind of sceptical discipline that distinguishes sustainable returns from temporary excitement. As any seasoned academic will attest, the most valuable lessons often come not from the courses that promise easy grades, but from those that demand rigorous thinking and careful preparation.

Ed's Final Word

As ever, these observations reflect my views alone, not those of Beaufort or anyone sensible enough to keep their market commentary confined to the coffee shop rather than the Sunday morning dispatch. Like dropping off a daughter at university, markets require a delicate balance of confidence and humility, preparation and flexibility, optimism tempered by realistic expectations.

No matter how confidently Oracle's management discusses trillion-dollar opportunities, or how convincingly small-cap advocates argue for rotation trades, the future remains fundamentally unknowable. That uncertainty isn't a bug in the market system; it's the feature that creates opportunity for those willing to do their homework without pretending to know the answers in advance.

So as fresh quarters commence and new term challenges emerge, remember that the best investors, like the best students, combine intellectual curiosity with practical discipline. They prepare thoroughly but adapt quickly, maintain strong convictions while remaining open to new evidence, and never forget that today's certainty often becomes tomorrow's most valuable lesson in humility.

Stay inquisitive, keep your pencils sharp, and don't forget your coffee – the autumn term is just beginning.

For Further Reading – Like Extra Credit in Ed's Lecture Room

If today's tutorial left you seeking additional coursework, here's your weekend reading list – no detention slip required:

Oracle's AI Infrastructure Revolution
"When database companies become trillion-dollar darlings – the infrastructure story Wall Street finally understands." Reuters

Small-Cap Renaissance: The Rotation Finally Arrives
"Russell 2000's 7% August surge asks whether this time is different for the back-row rebellion." Reuters

September Effect Defied: Markets Write New Seasonal Rules
"When history skips class – why 2025's September defies its own reputation." AI Invest

Fed Rate Cut Certainty: The 99% Probability Trade
"September's monetary policy math: when 99% certainty still leaves room for surprise." Reuters

Private Equity's Dry Powder Challenge
"$2.5 trillion in patient capital seeks worthy deployment – the ultimate first-world problem." McKinsey

Bitcoin's Institutional Crossroads
"ETF outflows meet price gains – when institutional appetite cools despite performance." CoinDesk

Week 37, 2025: When Oracle teaches trillion-dollar tutorials and Russell 2000 stages back-row rebellion, even September's seasonal syllabus gets marked absent – sharpen those pencils, the autumn term promises more surprises than the summer reading list ever suggested!