In a reversal of recent trends, stocks opened sharply lower, followed by a drop in the VIX, rather than the other way around. Volatility in both directions has resulted in all the major indexes down over 1% in the trailing week. The primary culprit is the hesitancy of the Fed to cut interest rates as was previously expected. This has hit small-cap names especially hard, now down 2.1% for the trailing month, while the NASDAQ is up 3% and the Dow and S&P are both up 1.1%. We can’t lose sight that it was only last week that the indexes were at all-time highs, and profit-taking is the normal course of action. The earnings season continues to be consistently beating forecasts. There are signs, however, of resistance to high valuations. Yesterday, Palantir (PLTR), an AI-oriented software company, reported major beats top and bottom and guided higher. The shares initially jumped 7% but then reversed today to down 6.5% on valuation concerns. The shares are still up 155% YTD, and some firms actually raised their price target. But with a P/E of 645X and getting cited as a good short bet against the AI bubble, the move down has seemed to have started a bit of a sell-off of high-flying AI names. There is fear of an AI correction, and if it comes, it will sweep the rest of the market with it due to the heavy weight of the leading names. I still recommend Nvidia and Palantir Technologies, and I have no plans of selling them anytime soon.The government shutdown is starting to really cause problems with several benefits not going out in November and problems at airports. It seems unlikely for it to continue into the Thanksgiving holiday, but for now, both sides appear to be willing to extend the brinkmanship, leading to more uncertainty. Interest rates are down a couple of basis points across the yield curve today, though yields are still much higher than they were before the Fed cut last week. Bets for a December cut and follow-through cuts in ’26 are moving higher, but also still much lower than before the October cut. This has pushed the US dollar index to hit 100 overnight. Commodities are modestly lower across the board, both precious metals and energy. Crypto is markedly lower, reflecting a risk-off sentiment. The dip buyers showed up this morning, when the S&P opened down 1.2%, the NASDAQ down 1.7%, cutting the losses in half in the first hour. The VIX hit a high of 20.4 overnight, opening at 19.7 and then dropping rapidly to 17.9 as the dip buyers moved in. It has since drifted back to 18.3 as the S&P moved back down below 6,800.The seasonally strong November is off to a rough start, and we may have to wait for more clarity and an end to the government shutdown to get the positive momentum back on track.