Weekend Update #256
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Markets remained volatile this week, with the VIX climbing to a one-month high and the Fear & Greed Index plunging to 8, signaling “extreme fear” among investors. Even Nvidia’s strong earnings and outlook were not enough to lift sentiment, as tech and AI-linked stocks continued to face pressure amid rich valuations, mixed messaging from Federal Reserve officials, and the cancellation of October jobs and inflation reports, which left markets with less clarity on the economic trajectory. However, late-week sentiment improved after New York Fed President John Williams signaled openness to a December rate cut, providing a stabilizing catalyst after several days of uncertainty. Stocks rebounded on Friday, though major indexes still finished the week lower overall, reflecting cautious positioning ahead of incoming data and Fed decisions.
In the absence of October labor data, investors dissected the September jobs report, which showed payrolls rising by 119,000, well above expectations despite continued downward revisions to prior months. Job gains were concentrated in construction, financial services, healthcare, and leisure and hospitality, while manufacturing and several service industries posted a fifth straight month of declines, reinforcing a gradual cooling across key sectors. The unemployment rate climbed to 4.4%, the highest since October 2021, adding to evidence of a softer labor market. Markets initially reacted positively as the report increased the perceived probability of a December rate cut, offering a narrative that slower employment conditions could accelerate monetary easing.
Consumer sentiment in November ticked higher as the end of the government shutdown lifted expectations for the coming year, but the index remained near historic lows at 51.0, underscoring continued household pessimism. Current conditions deteriorated further as consumers reported heightened concern over income pressure and the highest perceived risk of job loss since July 2020. Inflation expectations eased across all measures as tariff-related pressures moderated, offering one bright spot in the data. Buying conditions were mixed as household goods weakened while home and vehicle sentiment improved, and high-income households remained positioned to support spending, though their confidence showed increasing sensitivity to equity market performance.
Adding to global uncertainty, Japanese officials signaled a firmer stance on normalizing interest rates as the yen continued to weaken, yet markets did not respond with the currency support policymakers hoped for. BOJ board member Junko Koeda suggested a rate hike could come as early as next month, but the yen still fell toward the ¥155—160 range, prompting warnings from government officials about one-way, disorderly moves. Discussions around potential intervention have intensified as the central bank attempts to counter persistent currency weakness. Although Japan’s latest GDP contracted, economists noted that temporary factors may have exaggerated the decline, while persistent inflation and a weaker yen continue to push the BOJ toward policy action.
Friday’s Close (Weekly Performance)
S&P 500 6,602.99 (-1.95%)
Nasdaq 22,273.08 (-2.74%)
Dow Jones 46,245.41 (-1.91%)
Thank you Blue Room Senior Analyst NICK PEART.
President Trump
Well, thank you very much. We have just had a great meeting, a really good, very productive meeting. We have one thing in common. We want this city of ours that we love to do very well. And I wanted to congratulate the mayor. He really ran an incredible race against a lot of smart people, starting with the early primaries against some very tough people, very smart people. And he beat him, and he beat him easily. And I congratulated him.
We talked about some things in common like housing and getting housing built and food and price. The price of oil is coming way down. Anything I do is going to be good for New York. If I can get prices down, it is good for New York. And we have got them way down from last year. As you know I have been saying to a lot of people, Walmart said that Thanksgiving this year is exactly 25% less than last year. So that is good for New York, good for everybody.
I just want to congratulate the Mayor. I think you are going to have hopefully a really great mayor. The better he does, the happier I am. I will say there is no difference in party. There is no difference in anything. And we are going to be helping him to make everybody's dream come true, having a strong and very safe New York.
And congratulations, Mr. Mayor.
Mr. Zohran Mamdani
Thank you, Mr. President. Thank you. I appreciate it.
President Trump
Please.
Mr. Zohran Mamdani
I appreciated the the meeting with the President, and as he said, it was a productive meeting focused on a place of shared admiration and love, which is New York City, and the need to deliver affordability to New Yorkers, the 8 and a half million people who call our city their home, who are struggling to afford life in the most expensive city in the United States of America. We spoke about rent. We spoke about groceries. We spoke about utilities. We spoke about the different ways in which people are being pushed out. And I appreciated the time with the president. I appreciated the conversation. I look forward to working together to deliver that affordability for New Yorkers.
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