November's Market Madness: Fed Policy Chaos Rocks City
November delivered a masterclass in market volatility that would have made even the most seasoned City traders reach for their blood pressure medication. What began as a seemingly orderly year-end rally quickly descended into chaos as Federal Reserve policy signals convulsed, artificial intelligence darlings cracked, and volatility spiked like a geyser under pressure.
Yet remarkably, after all the sound and fury, the S&P 500 finished November essentially flat. Only in today's liquidity-drunk markets could such drama unfold whilst leaving barely a footprint in the monthly close.
The Fed's Mixed Messages
The month's troubles began when the Federal Reserve, never content to let traders grow comfortable, took a sledgehammer to forward guidance. December rate cut odds swung from near certainty to barely a coin toss, sending every asset class into convulsions. The VIX erupted near 28 as mega-cap stocks wobbled and even the ultra-crowded AI trades endured a proper "prove it" moment.
But the moment Fed messaging wobbled back toward dovishness, as job market softness appeared in unemployment data and regional surveys, the entire market exhaled. The VIX collapsed back to the high-teens in a blink, delivering the S&P's best Thanksgiving week since the financial crisis.
AI Revolution Matures
The artificial intelligence sector provided November's other great story, though not the collapse doom-mongers predicted. Instead, we witnessed the maturation the cycle desperately needed. The "everyone wins" phase of AI cracked decisively as the Magnificent Seven fractured. One former AI titan posted its worst month since 2022, whilst another surged 7% in a single week.
This represents evolution, not extinction. The AI baton isn't being dropped but passed to more selective hands. AI is no longer a monolithic trade but a competitive ecosystem where leadership rotates, monetisation matters, and capital expenditure excellence becomes religion.
Precious Metals Shine
Meanwhile, the metals complex delivered a masterclass in physical tightness. Gold stabilised through mid-month turbulence, stretching its winning streak to four months. But silver truly stormed the stage like a metal possessed, posting seven straight monthly gains and new record highs.
In a month where narratives proved fragile, silver traded on fundamentals so pure that even cryptocurrency couldn't compete. Bitcoin endured its worst month since mid-2022, though it clawed back to $90,000 by week's end.
Market Infrastructure Tested
Even a CME outage, a cooling failure that froze major futures across equities, rates, and commodities, couldn't break the spell. In another era, such a central market engine going dark would have triggered outright panic. This time it was treated like a quirky market anecdote, an annoying detour rather than derailment.
Cash markets, ETFs, and over-the-counter pipes absorbed the flow whilst the tape marched higher uninterrupted. It demonstrated the overwhelming nature of the liquidity impulse: even when the pipes groaned, the current pushed everything forward.
Looking Ahead
November taught the Street three core truths. First, liquidity still rules the empire. When the Fed signals easing and machines keep scaling, sell-offs burn hot but die quickly. Second, the AI revolution isn't a bubble popping but a leadership filtration system. Third, November's madness ultimately cleaned the tape, flushing out sloppy hands and leaving December with a cleaner starting point.
There remains a caveat. Fed cutting cycles aren't always bullish. If labour softening morphs into real deterioration, the policy mix shifts from normalisation to triage, and equities historically don't enjoy that view. But we're not there yet. Right now, we're trading a "soft ice" landing: cooler growth, gentler inflation, friendly policy, and early tremors of AI-driven productivity.
The lesson remains simple: don't fight the Fed, don't fight AI, and don't fight liquidity when it floods the field. November's great episode reminded everyone what it costs to stand against all three at once.