Here's the Deal

This week the Fed cut rates as expected, but Powell made it clear that December isn’t a sure thing. At the same time, QT’s approaching end signals a major policy shift beneath the surface. Add in layoffs across key sectors, a softening labor backdrop, and rising signs of long-term energy and commodity rotations, and the market is quietly recalibrating for the next phase of the bull market.

Let’s dig in.

FOMC Rate Cut and the End of QT (Quantitative Tightening)

The Fed lowered rates by 25 basis points this week—from 4.00-4.25% to 3.75-4.00%—exactly as expected. They also announced that Quantitative Tightening (QT) will end in December.

But here's what caught everyone off guard: Jerome Powell made it crystal clear that a December rate cut is far from guaranteed. I'll admit, I wasn't sure he had it in him to push back so firmly against presidential pressure. Credit where it's due as he refused to bend more.

The Miran Dissent

As expected, the newest FOMC member and Mr. “Don’t let the evidence get in the way of my best hope and guess,” Stephen Miran, dissented and wanted a 50bps rate cut instead. He was alone in this view, the only one among the 11 voting members who thought cutting rates by 50bps here was the right call. Powell also mentioned "very lively discussions" about rate decisions, both now and going forward.

Reading between the lines, it seems the newest committee member who prefers gut feelings over evidence is making waves and complaining in meetings. That's my interpretation, anyway.

Why Powell's Holding Firm Matters

Powell is doing the right thing here. Inflation has climbed every single month since "Liberation Day" in April, when the administration announced its new tariff rates. This is happening at a point in the economic cycle when inflation should naturally be declining as it was before that announcement, and/or much closer to the Fed’s 2% goal.

Speaking of that 2% goal, Powell also firmly stated that it will remain the target as rumors of raising the target to 3% have swirled enough for questions to persist in the Q&A with reporters after the rate decision announcement.

What QT Ending Actually Means

When QT ends, the Fed stops reducing its balance sheet. This is a good time to address a common misconception: your friends who claim "the Fed is printing money non-stop" are wrong. Yes, the Fed will resume monetary expansion eventually, but here's what matters more: the money created through private bank lending dwarfs anything the Fed does.

If you truly hate "money printing," then you should never take out a mortgage, car loan, or any other loan—because that's how most money actually gets created "out of thin air" in our banking system.

Looking Ahead to December

Since the Fed’s announcement and Powell’s emphatic statement that another cut in December is far from a sure thing, and strongly confirming that sentiment multiple times during the press conference dropped the odds of a December rate cut sharply.

Coming into the week markets were pricing in a 90% that the Fed would cut another 25bps in December, that is now down to 63%.

Trump-Xi Meeting: Progress on Trade Framework

Trump and Xi had a productive meeting this week, with both US and Chinese delegations reporting positive momentum. Treasury Secretary Scott Bessent laid important groundwork ahead of the talks, setting the stage for a potential trade deal.

What They Agreed To

Both sides agreed to maintain the current framework for another year while continuing negotiations.

Here's what the agreement includes:

• US tariffs on Chinese products will drop from 57% to 47%

• China agreed to curb fentanyl-related exports

• China will pause its controls on rare earth mineral exports for one year

What This Means

The tariff reduction is significant, though rates remain elevated compared to pre-2024 levels. The one-year pause on rare earth export controls and lowered tariff rate buys both sides time to negotiate longer-term agreements.

Layoffs: A Warning Sign We Can't Ignore

This week brought a wave of major layoff announcements from some of America's largest and most recognizable companies. If this trend continues and accelerates, job losses will become a key driver shaping our economy in the months ahead.

These announcements add to the mounting evidence that the US economy is somewhere between the late stages of an economic slowdown and the early stages of a recession.

The Numbers

For the week of October 26 to November 1, 2025, several companies announced layoffs exceeding 1,000 workers:

• UPS: 48,000 layoffs across management and operations

• Amazon: 14,000 layoffs, primarily in corporate divisions

• General Motors: 1,700 layoffs at US manufacturing sites, plus additional salaried position cuts

• Paramount: ~2,000 layoffs as part of post-merger restructuring (approximately 1,000 occurred this week)

• Target: ~1,000 layoffs in ongoing corporate restructuring

What to Watch

The breadth across different sectors (logistics, tech, manufacturing, media, retail) suggests this isn't an isolated issue affecting one part of the economy.

When companies of this size start cutting simultaneously, it typically signals they're all seeing the same thing: weakening demand and darker forecasts ahead.

Beef Prices: Some Relief May Be Coming

After surging 50% this year, cattle futures are showing signs of topping out. Technical charts suggest prices may have peaked in the short to medium term, which could mean some relief at your local butcher or grocery store in the coming months.

The lag is typically 1-3 months between the time cattle futures begin to drop and when you see lower prices in grocery stores. The lag exists due to grocers working through existing inventory purchased at higher prices and adjust contract terms.​ Keep in mind that grocery stores operate at extremely slim 3% profit margins. So, if you like having quick and easy access to them, probably best not to get too mad when they don’t immediately drop prices when futures suggest lower prices in the future.

But the longer-term story is more complicated. America's cattle herd just hit its lowest level since 1973, and Trump's recent move to quadruple Argentine beef imports has sparked controversy with U.S. ranchers.

Good news: you might catch a break soon. Full picture: it may only be temporary unless bigger changes happen.

Earnings Season: Week 4 of 6

S&P 500 companies continue to report solid growth. That's positive, though the pace is slowing compared to earlier in the year.

The Big Tech Story: AI Demand Is Accelerating

The "Magnificent Seven" tech giants all reported this week, and the headline is clear: enterprise AI demand continues to accelerate.

Microsoft reported 39% Azure revenue growth, with CEO Satya Nadella saying the company is "capacity constrained" trying to meet AI demand. They're spending heavily on infrastructure to keep up.

Alphabet (Google) saw cloud revenue jump 34% year-over-year. More than 70% of Google Cloud customers now use their AI products, and AI-related revenue grew over 200%. Their cloud backlog surged 82% to $155 billion, with more billion-dollar deals signed than in the previous two years combined.

Amazon's AWS revenue rose 20%—the fastest growth since 2022—driven explicitly by enterprise AI workloads. Management raised their capital expenditure forecast to meet future demand.

Apple reported plans for "Apple Intelligence"-powered products launching in 2026, signaling their push into AI-integrated devices and services.

Consumer Spending: Resilient but Cautious

Reports from Apple, Amazon, Mastercard, and PayPal show real consumer spending remains solid despite elevated prices. However, there are signs of increasing caution.

Credit card and digital payment volumes are robust, but companies note softening in basket sizes (average purchase amounts). Consumers (especially middle and higher-income groups) are adapting by prioritizing value, using flexible payments, and choosing essential over discretionary purchases.

The bottom line: consumers are proving resilient but are watching costs more closely and shifting their spending patterns as economic headwinds persist.

Other Sector Highlights

Energy: Exxon Mobil posted strong Q3 earnings of $7.5 billion but lower than last year, reflecting steady, not surging, global energy demand.

Industrials: UPS emphasized cost reductions amid a stabilizing but competitive logistics market, a key barometer for goods movement and business investment.

Materials: Vale SA reported record iron ore production, indicating commodity supply and industrial demand are holding up, particularly in emerging markets.

What This Week's Earnings Tell Us

Looking ahead to next week (Nov 3-7), key reports will provide fresh insights:

• McDonald's: Will show whether value-focused consumers are still spending or pulling back

• Robinhood: Will indicate retail trading trends and risk appetite

• AMD, Arista, Palantir: Will update AI and cloud infrastructure demand trajectories

• Uber and Airbnb: Will reveal how discretionary travel is holding up

• Industrial and energy names: Will offer clues on capital goods demand and commodity sector health

Markets:

Jerome Powell and the Fed threw a little cold water on the markets with their suggestion that another rate cut in December was absolutely not a sure thing, reminding investors that the Fed will remain data-dependent. It wasn’t a bearish message, but a reminder that the current environment can change in an instant with a large enough catalyst in an important economic driver.

$SPY ( ▲ 0.33% ) S&P 500

Base Case for this week: Early Weakness First

• Expect some early-week softness.

• Key support to hold: $674–$671 zone, with softer support above at $676–$675.

• If support holds and we move higher, watch these targets for resistance:

  • $685.50ish

  • $689.70ish

  • $692.50ish

  • $694.40ish

  • $697.30ish

  • $700ish

Alternate Case: Week Starts Strong

• If SPY opens strong, first resistance to watch is $692.50ish. How price reacts there will set the tone for the rest of the week.

$DIA ( ▲ 0.14% ) Dow Jones Industrial Average:

$QQQ ( ▲ 0.48% ) Nasdaq:

$IWM ( ▲ 0.56% ) Russell 2000 (Small Caps):

Bitcoin $BTC.X ( ▼ 1.19% ) is still struggling to gain real traction, but it’s quietly showing signs of stabilization. The longer it holds current levels, the more likely it is to set up for a push higher.

Market breadth continues to flash a bit of a warning — fewer stocks are participating in the upside — but it’s not a reason to abandon equities. Ultimately, you’d like to see some higher highs beginning to form in Market Breadth rather than this range bound action since April’s low. If not, and if Market Breadth does not get back to a high, history suggests a crash within 6-18 months from the last high in Market Breadth. That last high was 12 months ago.

Keep in mind that historically, November is one of the strongest months for markets, and seasonal tailwinds are still at our backs.

Early Signals Worth Watching

Energy and Commodity Trends:

Last week, we discussed how oil and gasoline prices were beginning to show early signs of bottoming. That pattern is continuing to develop and is worth keeping on your radar.

Natural gas is also starting to form what looks like the beginning of a new long-term uptrend. That makes sense when you consider the bigger picture: AI usage is rapidly increasing power demand, and natural gas is one of the few energy sources that can scale quickly to meet that demand until nuclear capacity is rebuilt, which will likely take about a decade.

Natural Gas Play: Comstock Resources ($CRK)

One way to participate in this trend is through Comstock Resources $CRK ( ▲ 2.01% ) .
The stock recently broke out of a massive 10-year base and spent last week successfully retesting that breakout level. A strong sign of confirmation on the monthly chart.

Fertilizer & Resource Play: Sociedad Química y Minera de Chile ($SQM)

Another chart showing signs of a potential new long-term uptrend is $SQM ( ▲ 1.58% ) (Sociedad Química y Minera de Chile). This Chilean mining company focuses on mining materials used in fertilizers.

This developing trend aligns with the broader commodity relationship between cattle and corn futures mentioned and shown earlier. There is an inverse relationship between Cattle Futures and Corn Futures. As cattle prices fall, the price of corn goes up. When corn prices rise, farmers typically plant more, which increases demand for fertilizers like potash.

Given this setup, fertilizer prices, especially potash, are likely to trend higher in the months ahead. I’ve already begun accumulating positions in this space and have a detailed breakdown ready to release once the timing fully confirms.

The window of opportunity here looks to be getting close.

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