China and the US may have reached a “substantial framework” of some kind of trade agreement, according to breadcrumbs laid over the weekend by Trump, who was scheduled to meet with Chinese premier Xi in Seoul later in the week. He teased a flurry of other Asian trade deals too and local stocks rocketed with more new all-time record highs for markets in Japan and South Korea.

The devil will be in the details of all these trade deals if they even pan out and those are notably lacking right now, but Wall Street still got swept up in the exuberance with the bulls taking complete charge as an event risk-laden week kicked off on Monday, partly bolstered by the stock price of Qualcomm which soared after the firm unveiled new AI chips to challenge Nvidia’s.

Of course, new all-time record highs in US stocks inevitably ensued but the gold price continued to crumble from its recent highs. Oil prices steadied.

A Japan trade deal, check. Trump offered new prime minister Takaichi “anything you want” on Tuesday and moved on to South Korea and a Thursday meeting with Xi. Apple CEO Tim Cook and Nvidia’s Jensen Huang were both wheeled out as performative arm candy.

Back home in the US, Wall Street mostly held its breath ahead of Big Wednesday (a Fed Funds Rate announcement and three Mag 7 earnings reports after the closing bell) but continued concentrated momentum in Tech/AI stocks caused a slow drift upwards and yet more new record highs for the S&P 500, despite the fact that 400 of the 500 stocks in the index were lower on the day.

We got the expected quarter point cut in the Fed Funds Rate on Wednesday, but there was dissent from both sides of the spectrum as Trump’s glove puppet, governor Stephen Miran, called for a bigger cut (shocker!) but governor Jeff Schmid counter-balanced that by voting for no cut at all, exposing widening divisions on the rate-setting committee.

In his dance with the financial press pack, a cautious chairman Powell seemed to cast doubt on the general assumption that a third consecutive rate cut on December 10th is already in the bag (“What do you do when you are driving in the fog? You slow down,”). Market expectations for a December cut were at 92% going into the press conference, but in the space of an hour had collapsed to 55% (see INTEREST RATE EXPECTATIONS below). Essentially a coin flip.

Wall Street reacted accordingly in real time with a drop-off in stock prices and a jump in interest rates and the indexes shifted from deep in the green to slightly in the red for the session.

Having said that, the fact is that the Fed is gaslighting markets by cutting interest rates while inflation is 3% and rising but still insisting that it has a 2% target (which hasn’t been hit in five years). Wall Street seems to have decided that it’s not going to fall for this nonsense any more and that 3% is very much the new 2% whatever the Fed may claim, anticipating at least three more cuts by July almost regardless of what happens with inflation.

Attention shifted to the post-market earnings reports. Alphabet/Google’s numbers were absolutely outstanding, blasting through estimates for revenue, earnings and any other metric you can think of. Microsoft’s were just meh and Meta’s were negatively impacted by a surprise one-time big tax charge and cash burn concerns. All three are maintaining enormous AI spending, $78 billion between them in Q3 alone (a 90% increase on the same period last year).

While Trump described his meeting with Xi on Thursday as a “12 out of 10” , all we really got was a tariff truce extension which was not enough for Wall Street to hang on to and stocks retreated, with Microsoft and especially Meta dampening index performance.

Two more Mag 7 names, Apple and Amazon, reported after the close. Apple came in pretty solid but without much of a wow factor and its Chinese revenue was problematic again. On the other hand, Amazon stock ripped higher in the after-market following spectacular numbers, particularly for its cloud unit, Amazon Web Services.

An early Friday rebound was heavily fueled by Amazon, which added $300 billion to its market value in the first minute of trading and reached its own all-time new record high and stocks comfortably completed a sixth straight month of gains, the first time that has happened since the V-shaped COVID recovery over five years ago.

Assuming it is still in place on Wednesday this government shutdown will become the longest in American history, but otherwise the US stock market is currently enjoying the best of all worlds.

It’s getting remarkable earnings (a high 80s percent of reports are beating estimates, many by a lot) and the Fed is choosing to react to something (the labor market) that Wall Street cares a lot less about by lowering interest rates and all the time the bond market is generally behaving itself by not freaking out. This is why stock indexes are scoring new high after new high. The question is, of course, how long can this sweet spot last?

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ARTICLE OF THE WEEK ..

There’s a lot of chatter out there about bubbles. But what exactly is a bubble?

.. AND I QUOTE ..

“More fiction has been written in Excel than Word.”

Anon.

LAST WEEK BY THE NUMBERS:

Last week’s market color courtesy of finviz.com

Last week’s best performing US sector: Technology (two biggest holdings: Nvidia, Microsoft) ⬆︎ 2.4% for the week

Last week’s worst performing US sector: Real Estate (two biggest holdings: Welltower, Prologis) ⬇︎ 4.1% for the week

* SPY, a US Large Cap ETF, tracks the S&P 500 index, made up of 500 stocks from a universe of the largest US companies. Its price rose 1.5% last week, is up 16.4% so far this year and ended the week 0.8% below its all-time record closing high (10/29/2025).

* IWM, a US Small Cap ETF, tracks the Russell 2000 index, made up of the bottom two-thirds in terms of company size of a universe of 3,000 of the largest US stocks. Its price fell 0.1% last week, is up 11.4% so far this year and ended the week 1.6% below its all-time record closing high (10/15/2025).

* VXUS, a Global Non-US ETF, tracks the MSCI ACWI Ex-US index, made up of over 8,500 of the largest names from a universe of stocks issued by companies from around the world excluding the United States, in both developed and emerging markets. Its price fell 1.2% last week, is up 28.6% so far this year and ended the week 1.2% below its all-time record closing high (10/27/2025).

INTEREST RATES:

* FED FUNDS * ⬇︎ 3.875% (4.125% a week ago)

* PRIME RATE ** ⬇︎ 7.00% (7.25% a week ago)

* 3 MONTH TREASURY ⬇︎ 3.89% (3.93% a week ago)

* 2 YEAR TREASURY ⬆︎ 3.60% (3.48% a week ago)

* 5 YEAR TREASURY ⬆︎ 3.71% (3.61% a week ago)

* 10 YEAR TREASURY *** ⬆︎ 4.11% (4.02% a week ago)

* 20 YEAR TREASURY ⬆︎ 4.65% (4.56% a week ago)

* 30 YEAR TREASURY ⬆︎ 4.67% (4.59% a week ago)

Data courtesy of the Federal Reserve and the Department of the Treasury as of the market close on Friday

* Decided upon by the Federal Reserve Open Market Committee at periodic meetings 8x a year. Used as a basis for overnight interbank loans and for determining high yield savings interest rates.

** Wall Street Journal Prime Rate as of Friday’s close. Used as a basis for determining many consumer loan interest rates such as credit cards, personal loans, home equity loans/lines of credit, securities-based lending and auto loans.

*** Used as a basis for determining mortgage interest rates and some business loans

AVERAGE 30-YEAR FIXED MORTGAGE RATE:

* ⬇︎ 6.17%

One week ago: 6.19%, one month ago: 6.32%, one year ago: 6.72%

Data courtesy of Freddie Mac Primary Mortgage Market Survey

INTEREST RATE EXPECTATIONS:

Where will the Fed Funds interest rate be after the final rate-setting meeting of the year on December 10th?

* Unchanged from now .. ⬆︎ 37% probability (8% a week ago)

* 0.25% lower than now .. ⬇︎ 63% probability (92% a week ago)

Data courtesy of CME FedWatch Tool

All data based on the Fed Funds interest rate (currently 3.875%). Calculated from Federal Funds futures prices as of the market close on Friday.

PERCENT OF S&P 500 STOCKS ABOVE THEIR OWN 200-DAY MOVING AVERAGE:

* ⬇︎ 54%

One week ago: 63%, one month ago: 64%, one year ago: 69%

Data courtesy of MacroMicro as of Friday’s market close

This widely-used technical measure of market breadth is considered to be a robust indicator of the overall health of the S&P 500 index.

A high percentage (above 70%) generally suggests broad market strength and a bullish trend, while a low percentage (below 30%) may indicate market weakness and a bearish trend.

FEAR & GREED INDEX:

“Be fearful when others are greedy and be greedy when others are fearful.” Warren Buffet.

Data courtesy of CNN Business as of Friday’s market close

The Fear & Greed Index from CNN Business can be used as an attempt to gauge whether or not stocks are fairly priced and to determine the mood of the market. It is a compilation of seven of the most important indicators that measure different aspects of stock market behavior. They are: market momentum, stock price strength, stock price breadth, put and call option ratio, junk bond demand, market volatility and safe haven demand.

Extreme Fear readings can lead to potential opportunities as investors may have driven prices “too low” from a possibly excessive risk-off negative sentiment.

Extreme Greed readings can be associated with possibly too-frothy prices and a sense of “FOMO” with investors chasing rallies in an excessively risk-on environment . This overcrowded positioning leaves the market potentially vulnerable to a sharp downward reversal at some point.

A “sweet spot” is considered to be in the lower-to-mid “Greed” zone.

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