It was another day of red for the US and European Stock markets on Tuesday, erasing more than US$1.5 trillion from global equity valuations as investors await the all-important earnings report from Nvidia (NASDAQ:NVDA). The S&P 500 fell 0.8% to 6,617, and the Dow shed 1.1% to 46,091 – both notching up four consecutive losing days – with the Nasdaq 100 also giving up 1.2% to 24,503. Sector performance diverged sharply. Consumer discretionary and technology stocks led the declines, falling 1.9% and 1.6%, respectively, while energy and healthcare showed resilience with gains of 0.8% and 0.6%, respectively. The VIX also recently hit 22, highlighting an anxious market ahead of Nvidia’s print today, with options implying an eye-popping 7.0% move in either direction for the Stock!Keep an eye on this technical setup; I watch it closely, and it has proven to have a good track record. As you can see from the charts below, the VIX has closed north of the upper Bollinger Band (set to 2 standard deviations), and the daily price of the S&P 500 recently formed an AB=CD pullback to 6,594. This technical confluence often delivers a dip-buying opportunity.UK Inflation Cools in October, Clearing the Path for December Cut In the FX space, the GBP was in focus this morning, with the October CPI inflation data landing at 7:00 am GMT and largely came in line with consensus. YY headline inflation was 3.6%, easing from 3.8% in September, with YY core inflation at 3.4%, softening from 3.5%. The MM services print was lower than expected at 0.2%, albeit improved compared to the previous month’s 0.3% fall; the YY services release also defied market expectations at 4.5%, down from 4.7% previously. Of note, you will recall that at the BoE’s latest rate decision, the forecasts suggested inflation had peaked; you may also have noted that today’s headline data is now in line with the central bank’s estimate.In the immediate aftermath of today’s inflation release, we saw a sell-off in GBP, though the move was short-lived and really nothing to write home about. GILTs open at 8:00 am and will provide more information on BoE rate-cut expectations. We knew heading into the event that investors were broadly expecting the BoE to move forward and reduce the bank rate by 25 bps next month, to 3.75% from 4.00% (assigning around an 80% probability). Ultimately, with economic growth stagnant, jobs data cooling, and inflation showing signs of easing, it is fair to say that this helps seal the deal for a rate cut next month. However, it is worth pencilling in that we have November’s inflation report out a day before the meeting, and, of course, the Autumn Budget will be released next week, which could muddy the waters for the BoE.Most Fed Officials Maintain a Cautious ToneWhere are we with recent Fed speak? Along with Governor Stephen Miran, Governor Christopher Waller continues to advocate for lowering the Federal funds target rate next month. However, as I pointed out in yesterday’s post, the pendulum is clearly swinging toward caution, given the lack of official data and the elevated inflation that remains north of the Fed’s 2.0% target. In my opinion, in the absence of clear official data, a tentative stance is sensible, particularly for a Fed that has largely adopted a data-dependent, meeting-by-meeting approach.All Eyes Are on Nvidia’s Earnings TodayLet’s be honest. Today is about one thing: Nvidia’s Q3 earnings report, with options implying an eye-popping 7.0% move in either direction, as mentioned above.Set to be released after the market closes, with a notable 8.0% weighting in the S&P 500 and 14.0% in the Nasdaq 100, analysts expect an adjusted EPS of US$1.25 on revenue of US$55 billion for the AI behemoth, up from the reported EPS for the same quarter a year prior at US$0.81.The chipmaker’s earnings report is a focal point that could determine the trajectory of the AI-fuelled sector, which has dominated investor sentiment since April. The chipmaker’s results represent a notable test of whether AI infrastructure spending will deliver meaningful returns.