But the median forecast is losing its relevance with the growing opinion – and political – divergence at the heart of the FOMC. Yesterday’s vote already was subject to 3 dissents: 2 voting members preferred keeping rates steady, while Stephan Miran – who was appointed by Trump himself with the mission of ‘cut, cut, cut’ – opted for a 50bp cut.

Beyond the official vote, more regional Fed members showed reluctance to cut rates when inflation is just below the 3% level, with looming upside risks. Overall, 6 out of 19 Fed members didn’t agree with the Fed’s decision to cut by 25bp. And most of them preferred keeping rates unchanged – and wait until at least an updated CPI print to guide them. Miran was the only person pushing for a jumbo rate cut (Surprise!)

And oh, Donald Trump said that yesterday’s cut could’ve been higher, and will probably announce his next Fed Chair pick soon enough to inject more dovish members into the mix – to make sure that the Fed cuts, cuts, cuts.

So, the market reaction to such a crowded and undecided Fed was unusually positive. Treasuries and equities rallied. The US 2-year yield fell close to 3.50%, the 10-year yield retreated to 4.12%, the S&P500 gained, but the small-cap index outperformed with a 1.32% rally to a fresh ATH.

The US dollar fell below a critical Fibonacci level – the 38.2% retracement on the fall–rebound – and is now back in the medium-term bearish consolidation zone, while gold gained and silver rallied to a fresh record high on softer US dollar and softer yields that reduce the opportunity cost of holding the non-interest-bearing metals.

For next year, the Fed will probably sit and wait for at least 6 months whoever takes the helm from Powell. The next cut from the Fed is not expected before June next year, and money markets continue to price in two rate cuts in 2026.

But the divergence of opinion at the heart of the FOMC will probably get worse as politics influence some members’ decisions grandly. Respect and credibility regarding the Fed will be put to a tough test, and some decisions will make more political sense than economic.

This is terrible news. It probably makes sense to continue to reduce exposure to the US dollar.

Now, coming back to the market reaction, I rubbed my eyes a few times with unbelief seeing the positive reaction of equity markets to the Fed decision. I think there was little to cheer in that chaos. Consequently, it didn’t take much for the post-Fed optimism to evaporate with Oracle earnings.

Oracle announced a higher-than-expected EPS growth – but that was due to a one-time income from the sale of a subsidiary. Cloud sales increased 34% – but were lower than expected. Revenue from its infrastructure business grew 68% – also lower than expected by analysts. And more dramatically, the company continued to burn cash last quarter: its free cash flow reached a negative $10 billion.

To make matters worse, the company said that it expects capex to reach about $50 billion in the fiscal year ending May 2026 – $15 billion more than its September forecast – and investments at Oracle are financed by debt: overall, the company has about $106 billion in debt.

Frankly, the report was not dramatically bad, but it came to confirm concerns around heavy AI spending, financed by debt, with an unknown timeline for revenue generation, sending Oracle shares down by more than 11% in after-hours trading.

As such, Asia woke up to a bleak day. SoftBank lost more than 7% – the kind of moves that we’re now used to seeing in its stock price – while the tech-heavy Korean Kospi is under pressure, as national chip champion SK Hynix gives back more than 2.50% after the country’s main exchange issued a warning that the stock price had gone too high – following a nearly 300% jump between April and November – suggesting that we could be entering a bubble zone. Perhaps.

US futures are down this morning with Nasdaq leading losses. The Fed outlook looks dodgy. Worries regarding leveraged AI investments are taking centre stage. The FOMO of the AI rally is now turning into a fear of a bubble. Stock valuations are high and market breadth is quite narrow, with most of the gains and appetite relying on AI.

It’s reasonable to expect a correction as fundamentals are moving away from the reality on the ground. Capital markets are turning into a big betting ground, and valuations make little sense. But go tell that to investors. The market rally is so sweet that there seems to be a collective understanding that if no one sells, the rally could simply go on. So let’s see whether anything could shake the omertà!

Good news is, the next big news of the week – Broadcom earnings – looks safer from a risk perspective. The company is expected to deliver another strong quarter, with consensus calling for roughly +30–32% year-over-year EPS growth, and ~24% annual revenue growth – driven by robust demand in custom AI silicon and networking products.

Guidance on AI-related revenue and future demand trends will probably be solid as well, given that they are involved in the production of Google’s TPUs – which are expected to become a new hot commodity for those looking for cheaper alternatives to Nvidia’s GPUs for running AI applications, especially inference – expected to make up a big chunk of future AI computation.

And given how markets are willing to pull Santa into year-end – despite political, geopolitical and economic worries – good news from Broadcom could easily turn sentiment positive.

For how long? As long as people are willing to see unicorns fly in the air!