The Vice Chair of the FOMC set market expectations a couple of weeks ago for a return to balance sheet expansion (to avert any 2019-like liquidity shock).
And then, this past Friday, he signaled support for a December rate cut.
It's fair to assume the FOMC Vice Chair (Williams) is in alignment with the FOMC Chair (Powell), and with that we should expect the Fed voting majority to tip toward the direction of a rate cut when the Fed meets on December 10th.
The interest rate market has indeed responded as such, swinging aggressively since early Friday morning — from pricing in almost no chance of a rate cut, to pricing a high probability of a (December) cut.
That said, more important than the 1/4 point rate cut, is the news of the past week on AI. We had Nvidia earnings, that suggests the supply constraint of the past two years is resolving. And with that, demand backlogs are beginning to be fulfilled.
The bigger news of last week? We've just had another leap forward in model intelligence.
When OpenAI released ChatGPT5 back in August, the gains from that iteration, relative to past iterations, were noticeably smaller. So, there has been speculation that the innovation wall had been hit.
But with Alphabet's release of Gemini3 last week, it looks like a new phase of model innovation is here — huge gains!
I had ChatGPT evaluate it, compared to itself. Here's what it says …
"ChatGPT-5.x has felt like 'tightening the screws' on a very strong paradigm (better reasoning/grounding, better tools), but without hugely expanding what’s possible.
Gemini 3 looks like a new leg of the S-curve: turning LLMs from 'answer engines' into general-purpose simulation + app builders."
This is why Google stock (Alphabet) is hitting new record highs, while the rest of the mag 7 stocks are in double-digit drawdowns (except Apple).