This serves as a recap for myself and is not to be viewed as any kind of trade suggestion. All views expressed are my own.
I’m travelling tomorrow and next week but still wanted to put something in real quick as I see a potential shift this week.
Said shift is from the Wednesday Fed meeting where JPOW indicated that there is divergent opinions within the Fed and that a December rate cut isn’t at all a foregone decision.
This echoes similar stance conveyed by the BoC and ECB, where both central banks indicated a willingness to end or at least pause the current rate cut and that they are comfortable with where rates are and can afford to wait and assess.
This basically is putting a hold on the easing Fed story although the Fed is on track to taper balance sheet shrinking, which does not in itself indicate a restarting of further easing.
This has brought about some weakness Wednesday and Thursday as well with market breadth being generally weak.
Aside from the Fed, we also had the bellwether of the megacap tech earnings, and META and MSFT apparently lagged while AAPL, GOOG and AMZN all fared somewhat decently. Although all 3 names had some weakness after the initial post earnings rally.
Looking at the weekly chart of the SPX (shown on top), one can see that this week’s candle had a prominent wick on top, which after a new ATH is generally not a whole lot confidence inspiring.
Another piece of potential evidence is the rekindling of retail interest and bullishness, which as price regained lost territory and made new ATH after the 10/10 sell-off, reached a recent high again. As we all know that retail tends to be bullish late in the cycle, this again is setting off some alarm bells.
Some good news is that the Trump-Xi meeting apparently is constructive and incredible according to the president, and evidently both parties seem on track to extend truce with Trump himself indicating further possibility of tariff reduction.
All in all, I view we are at a somewhat weird place. With Powell only having months left on his tenure and Trump could soon appoint his replacement, how much does the outgoing Fed chair’s stance still count?
But at the same time he is still at the helm so he could stand up against the administration as he did and say that the right decision is a hold in December, which would likely take a good amount of support out of the backdrop.
I will tread carefully and I advise whoever is reading this piece to do so too.
The Ephemeral Tourist
October 31st. 2025 @ 11:59pm CST
The Ephemeral Tourist 