October’s reputation for high volatility remains intact.Yesterday’s rebound off the Friday sell-off created by the threat of 100% tariffs on China was erased on the open this morning. Fifteen minutes later, a recovery began. The VIX almost hit 23 after closing at 19 yesterday, and then fell rapidly to 21.2, back near where it closed on Friday. Volatility remains elevated, and the best explanation is the strained relationship between the US and China, with a focus on the rare earth markets, so crucial to advanced electronics.Clearly, geopolitical risks remained heightened with the US shutdown unresolved, and tariffs still a work in progress, especially with China. At the same time, the peace in the Middle East just negotiated should have been encouraging.Tech is seeing above-average pressure, which is easy to explain as profit-taking, also being pushed by the regular comments about AI looking like a bubble.Bond market yields have moved down materially, with the US 10-year briefly trading below 4% premarket. Expectations of Fed easing have gone up materially. A quarter-point cut this month is assured, though a 50bps cut is seen as zero. Another quarter point cut in December is now a 92% bet. A further cut in January has jumped to 54%, and another cut in March is now 27%. Yield spreads in corporate bonds are slightly higher but remain historically low and do not reflect recession concerns.On the commodity front, gold dipped modestly on the open, after setting yet another all-time high of $4,190/oz overnight, and is higher on the day after stocks bounced. Silver did the same and now sits at the pivotal $50/oz level. Crude oil is lower, dipping below $58/bbl overnight and is still down 2% on the day, close to as low as it’s been in 5 years. Natural gas is testing the $3/mcf level. The US dollar index traded above 99 and remains close to that level, up for the week and the month, though still down over 3% LTM. Crypto remains under pressure, with Bitcoin trading below $110K overnight and recovering to $111.7K in a reflection of risk-off sentiment.On the earnings front, all the major companies reporting today had beats top and bottom, and in a less volatile situation would have been a boon to market sentiment. Instead, JP Morgan (JPM) is down 1.7% (+27.3% YTD), Goldman Sachs (GS) is down 3.6% (+32.5% YTD), and Johnson & Johnson (JNJ) is down 1.5% (+30% YTD). Citigroup (C) is up 0.9% (+37.8% YTD), Wells Fargo (WFC) is up 6.3% (+19.5% YTD), and BlackRock (BLK) is up 1.5% (+14.3% YTD). It’s still a very good start to the earnings season.It’s been a rough few days, and issues with China are far from over, but the earnings results are encouraging, the low energy prices are good for inflation, and expectations for sustained cuts by the Fed are a very positive development. The trend remains positive, and if earnings go well, no one will be surprised to see new highs by year’s end.