So let’s think. It was a harsh month. The S&P 500 companies announced strong earnings: earnings growth came in at an impressive 13.4% for the entire index. Health care, financials and consumer discretionary were leading sectors, along with technology, of course.

Most Big Tech names reported better-than-expected earnings and stronger-than-expected guidance – including Nvidia. But instead of being the best day of the earnings season, Nvidia’s earnings day turned into drama.

Investors – too used to blockbuster results – decided to dig into the reports. And the gap between accounts receivable and incoming cash, along with swelling inventories, became the focal point and added to circularity worries around the latest AI deals.

Nvidia’s earnings – which were supposed to give comfort to tech investors – had the exact opposite effect. The bad press took over, and things have been quite downhill since.

Earlier this week, Nvidia was trading up to 20% lower than its latest peak a month ago. Meta is accused of offloading its debt to private equity companies to keep its books clean, and the circularity of the deals around OpenAI – and OpenAI itself – is under heavy criticism.

The good news is that the Fed doves jumped in at the right time – last Friday – to make sure that the tech-led rally didn’t reverse and take global stocks down with it. The probability of a Fed cut went from below 30% to 85%, giving the world space to breathe as the US left for Thanksgiving.

Since then, nothing much. European stocks barely moved yesterday, while Asian tech stocks looked bleak, with Alibaba finding no support despite strong results and news that it has already introduced AI glasses to compete with Meta.

In vain, the HSI looks uninspiring to global investors, and the Korean Kospi and Japan’s SoftBank – a few names I watch to feel the heat in technology – are struggling.

For the S&P 500, expectations for future quarters have softened. Projections are pointing at lower revenue growth over the next five quarters, ranging between 5% and 8%. In contrast, according to FactSet, analysts expect higher earnings growth for the Mag 7 over the next four quarters, between 18% and 25%.

Meanwhile, valuations are high (above 5 and 10-year averages), and we would need a drop of a bit more than 5% to call it a correction.

So here we are. I’m already being asked whether we will see a Santa Rally. And my answer is: hard to tell. Really hard to tell because there is so much uncertainty in the market right now: uncertainty around AI valuations, uncertainty around Japanese yields as Takaichi pushes for higher spending and higher borrowing in Japan, and uncertainties, of course, regarding what the Federal Reserve (Fed) will do – and what the Fed should do.

Even though I believe the best thing for the Fed would’ve been to wait a month and deliver a rate cut when the sky is clear and the data is out, truly, given the Fed probabilities – and the wild swings we’ve seen – it would be dramatic for expectations to snap back to ‘no cut’. It would inject an incredible amount of volatility into the market and make the Fed look foolish – and they really don’t need that right now.

So, we will probably get that 25bp cut. The question is: what happens after? If the inflation report (due the week after the decision) remains as subdued as it has been for the rest of the year, the way could be cleared for a Santa Rally – because no one wants to book profits after such a stellar year, right?

We could see some profit-taking in January. Or we get a hot inflation report that vanishes the dream of 2026 cuts – we’re talking about 2–4 cuts – and the selloff deepens before year end. And regarding the accuracy of US data, well, it will take time to see whether the data is being tweaked to serve the White House’s lower-rate ambitions.

The US dollar is preparing to close the week on a slightly better note, and returning above the 200-DMA should help the greenback stay on course for further recovery of this year’s losses.

The downside potential in the euro is limited as the European Central Bank (ECB) is not willing to cut rates further, with policy looking – and feeling – like it is in a good place at the moment. A very rare feeling, indeed.

For Japan, the story remains the same: the USDJPY will weaken along with the rising pressure on JGBs, while sterling sees the post-Budget appetite gently wane. Gilt yields rebounded yesterday on the realization that the Budget – though eventless – didn’t necessarily hint at a sustainably better fiscal picture. And it cannot.

When productivity and growth slow, the only way to get more money in is by collecting higher taxes and issuing more debt. More taxes being deflationary, the Bank of England (BoE) could get back to cutting rates in December. Cable looks good to sell.

In commodities, gold is back to gains as softening Fed expectations and lower US yields bring inflows into the yellow metal – that’s good because gold is acting as you would expect, shrugging off the impact of the speculative moves of late summer.

Crude oil, on the other hand, is better bid into the OPEC meeting weekend. OPEC is expected to reiterate its intention to pause production increases when it meets this weekend to relieve downside pressure on oil prices.

Indeed, oil prices have been falling this year despite many rate cuts from major central banks and a cheaper US dollar – both fundamentally supportive of prices. That means that ample OPEC and non-OPEC supply has weighed heavier on price dynamics.

So OPEC knows that if it wants to throw a floor under cheapening prices, it must restrict production. But the thing is, OPEC’s share in the global oil market has been narrowing, meaning that lower supply – even fresh supply restrictions – may not reverse the bearish trend if the US keeps 'drill, baby, drill.'