Cooking Oil Tuesday, Bank Bump Thursday and TACO Friday; When Markets Grind in the Blind
Sunday morning in Gibraltar, and the café conversation is unusually muted. Not the quiet of contemplation, but the exhausted silence that follows a storm. Friday's brutal correction is still fresh with portfolios bruised, screens red, and the cortado tastes different when you've spent the week watching positions unwind. The Rock stands unmoved by market drama, but those of us who watch global markets know that Week 41's reckoning was only the opening act. Week 42 became the test: could markets find their footing, or would panic cascade?
What unfolded was neither rally nor rout, but narrative whiplash where political tweets moved markets faster than fundamentals. Monday brought tariff threats that sent indices tumbling. Tuesday delivered Trump threatening to ban Chinese cooking oil imports (which we barely buy) over soybeans, wiping $450 billion in market cap before lunch. Thursday's regional bank scandals triggered a 6% financials rout. By Friday, a TACO-style pivot (TACO: Trump Always Chickens Out) pulled equities back from the brink. Exhausting, volatile, and typical of markets trading with data sources on furlough, relying on policy tweets rather than earnings calls.
For those nursing wounds from Week 41, this week offered no respite, only education. Volatility became the new operating environment. Gold soared above $4,300 only to reverse sharply, oil collapsed on oversupply fears, Bitcoin limped lower, and the VIX refused to settle below 20. If Week 41 was the thunderclap, Week 42 was the aftermath: surveying damage, counting cost, asking whether this was correction or the start of something structural.
From my perch here in Gibraltar, watching ships queue in the straits and headlines queue on Bloomberg, one lesson stands out: in markets shaped by geopolitics and policy whims, patience isn't just a virtue … it’s survival. Let's dive into what Week 42 revealed, what it cost, and what it means for those still standing.
Recap: Where We Left Off (Week 41)
Week 41 delivered the drama global markets had been quietly fearing. Late-week selling swept through equities with COVID-crash intensity, while crypto logged its worst volatility and liquidation event in history, far surpassing even the darkest days of previous winters. Tariff tremors escalated into full-scale correction, scattering risk appetite and forcing brutal repricing.
The S&P 500, NASDAQ, and Russell 2000 erased weeks of gains in days as tariff panic took control. Tech and AI leaders reversed hard on China supply chain fears. European indices suffered their biggest intraday drops in a month, pressured by Trump trade headlines.
Gold powered above $4,000/oz on risk-off flows. Oil collapsed 13% on demand fears. Bitcoin dropped over 10%, logging crypto's worst weekly crash which is a sobering reminder that even digital "safe havens" are vulnerable when panic strikes.
Treasury yields fell as the Fed pivoted dovish and November rate cut odds spiked. Trump's tariff threats amplified cross-market volatility and forced a global repricing of risk assets.
For private equity, the lesson was stark: leverage that looked brilliant on Monday became a liability by Thursday. Forced liquidations swept the room, and speculative holdings sold at fire-sale prices. Markets were forcefully reminded that fundamentals matter … and when they turn, they turn with violence.
If you missed last week's dispatch, you can find it here: Correction Without Warning; When Tariffs, Panic, and Price Discovery Made Volatility Real
This Week: Cooking Oil Tuesday, Bank Bump Thursday and TACO Friday; When Markets Grind in the Blind
Weekly Market Table
*Odds implied by CME futures/options for the next FOMC meeting.
US & Global Equities
S&P 500, NASDAQ, and Dow managed modest weekly gains (+0.4-0.5%) despite extreme intraweek volatility, as Trump's Friday tariff walk-back and strong bank earnings provided relief after Thursday's regional bank panic.
Regional bank crisis dominated midweek, as Zions Bancorporation disclosed $50 million in loan losses and Western Alliance alleged fraud, triggering a 6% rout in the KBW Banking Index and reviving fears of systemic credit stress reminiscent of the Silicon Valley Bank collapse.
Tech sector found footing late in the week, buoyed by TSMC's stellar Q3 earnings and raised revenue guidance, reinforcing AI infrastructure demand despite tariff uncertainty and chip supply chain fears.
European indices (STOXX 600, FTSE 100) fell sharply (-0.9%), as US regional bank contagion fears spread to European financials, with Barclays, NatWest, Standard Chartered, and HSBC all dragging London's FTSE lower.
Small caps struggled throughout the week, with the Russell 2000 underperforming as credit concerns and trade war rhetoric disproportionately impacted domestically focused businesses.
Gold, Digital Assets and Other Assets
Gold surged to record highs, hitting $4,379/oz driven by regional bank fears, US-China trade tensions, and expectations of further Fed rate cuts. Before pulling back $400 on profit taking.
Silver followed gold higher, briefly hitting $54.35/oz before pulling back, though it remained on track for significant weekly gains as safe-haven demand spilled into precious metals broadly.
Oil collapsed for a third straight week, with WTI settling near $57 and Brent at $61, pressured by IEA forecasts of a 4 million bpd oversupply in 2026, weak demand signals, and hopes for a Trump-Putin summit to end the Ukraine war.
Bitcoin continued its October slide, falling 6% for the week and trading around $111,000, as the much-hyped "Uptober" narrative turned into "Rektover" digital assets failed to act as safe havens during the week's turmoil.
Crypto liquidations from Week 41 ($19 billion in forced selling) continued to weigh on sentiment, though analysts suggested the controlled deleveraging event may have cleared weak hands and set the stage for future recovery.
Macro & Policy
Fed rate cut expectations firmed, with markets pricing a 99% probability of a 25bp cut at the October 28-29 meeting, bringing the federal funds rate to 3.75-4.00%, as Fed officials including Bowman and Waller signalled support for further easing.
Government shutdown entered its third week, depriving the Fed and markets of critical economic data and forcing policymakers to make decisions in a "data fog” … a scenario that added to uncertainty and market volatility.
US Treasury yields fell, with the 10-year near 4.11% and the 2-year at 3.56%, as credit quality concerns and dovish Fed expectations drove demand for safe-haven bonds.
Dollar index weakened, slipping toward 98.20 as rate cut bets intensified and global growth fears eclipsed any US domestic resilience narrative.
Inflation remains sticky, with tariff-driven price pressures adding to Fed concerns, even as job market data showed continued softening—creating a challenging environment for monetary policy.
Geopolitical Analysis
Trump tariff pivot (the TACO moment): After threatening 100% tariffs on Chinese goods over rare earth export controls, Trump reversed course on Friday, calling such levels "not sustainable" and signalling that US-China talks were "back on track"; instantly easing pressure on global equity markets.
US-China trade talks scheduled: Treasury Secretary Scott Bessent and Vice Premier He Lifeng confirmed plans to meet in Malaysia next week, with Trump and Xi Jinping expected to meet later this month at the APEC summit in South Korea—offering hope for a de-escalation of trade tensions.
Rare earths at the centre: China's sweeping controls on critical rare earth minerals as mentioned last week are essential to electronics, defence, and high-tech manufacturing which remain the flashpoint, with both sides acknowledging the "mutually assured pain" of further escalation.
Regional bank fears spread globally: Concerns about fraud, bad loans, and credit quality at US regional banks reignited memories of the 2023 Silicon Valley Bank crisis, with JPMorgan CEO Jamie Dimon warning "when you see one cockroach, there are probably more."
Trump-Putin summit hopes: Trump's announcement of a planned meeting with Putin within two weeks raised hopes for a Ukraine ceasefire, though markets remained sceptical given past summit failures to produce concrete progress.
What's Pertinent This Week (Week 42)?
Tariff Whiplash: Trump's Friday pivot from "100% tariffs" to "not sustainable" and "back on track with China" was the week's defining moment, instantly shifting sentiment from panic to cautious optimism and rescuing equities from a deeper selloff.
Regional Banks in the Spotlight: Zions' $50 million loan losses, Western Alliance's fraud allegations, and Jefferies' exposure to bankrupt First Brands triggered a sharp selloff in financial stocks, reviving 2023 crisis fears and forcing questions about systemic credit quality.
Gold's Historic Run: Gold's surge past $4,300/oz marked its 45th all-time high of 2025 and its best weekly gain since March 2020, as investors fled to traditional safe havens amid banking fears, trade uncertainty, and Fed easing expectations.
TSMC Delivers, Tech Stabilizes: Taiwan Semiconductor's Q3 beat and raised guidance for mid-30% revenue growth reinforced AI infrastructure demand, providing a crucial confidence boost to the battered semiconductor and tech sectors.
Oil's Oversupply Problem: With the IEA forecasting a record 4 million bpd surplus in 2026 and OPEC+ showing caution, oil prices hit five-month lows—a stark reminder that supply gluts and weak demand can overwhelm geopolitical risk premiums.
Data Blackout Continues: The ongoing government shutdown left the Fed and markets "trading blind," with key employment, inflation, and retail sales data postponed which were forcing policymakers to rely on corporate earnings and anecdotal evidence.
Private Equity's Macro Insights
Lessons Learned from the Week That Tested Resolve
It's Sunday morning in Gibraltar, and the brunch crowd at Casemates Square is quieter than usual. Not because the food isn't good (it always is) but because portfolios are still recovering from a week that felt like a masterclass in humility. Week 42 didn't deliver the knockout blow that Week 41 threatened, but it tested something more valuable: resolve.
When Headlines Move Billions, Process Becomes Priceless
This week proved that in an environment where a single presidential statement can swing markets by hundreds of billions, the only edge left is discipline. Trump's Friday tariff walk-back … calling 100% tariffs "not sustainable" and signalling trade talks were "back on track" … reversed Thursday's banking panic and salvaged equity markets from a deeper correction. But the whiplash was instructive: those who traded on emotion rather than process were caught offside, twice.
Private equity managers who had war-gamed tariff scenarios and maintained dry powder were positioned to absorb the volatility without forced selling. Those who chased momentum into Week 41's peak found themselves unwinding positions at precisely the wrong moment. The difference wasn't luck—it was preparation.
Credit Quality: The Cockroach Problem
JPMorgan CEO Jamie Dimon's warning "when you see one cockroach, there are probably more" … resonated beyond the banking sector. Zions' $50 million loan losses, Western Alliance's fraud allegations, and Jefferies' exposure to bankrupt First Brands weren't isolated incidents, indeed, they were symptoms of credit stress building in the system after years of ultra-low rates and loose underwriting standards.
For private equity, the lesson is clear: due diligence on credit exposure, counterparty risk, and portfolio company leverage must be exhaustive. The next shoe to drop may not be a regional bank … it could be a portfolio company with overleveraged balance sheets or a borrower operating in stressed industries. Now is the time to stress-test every assumption, revisit covenant packages, and ensure liquidity buffers are adequate.
The AI Infrastructure Thesis Holds … For Now
TSMC's stellar Q3 results and raised guidance for mid-30% revenue growth in 2025 offered a crucial vote of confidence in the AI infrastructure buildout. Despite tariff uncertainty and chip supply chain fears, demand for cutting-edge semiconductors remains robust, driven by data centre expansion, AI model training, and edge computing rollout.
For PE managers with exposure to semiconductors, data centres, cloud infrastructure, or enterprise software, this week validated the long-term thesis but also highlighted the importance of operational excellence and supply chain resilience. Companies with diversified manufacturing, strong customer relationships, and pricing power weathered the volatility; those reliant on single suppliers or concentrated geographies felt the pain.
Optionality and Patience: The Only Alpha Left
In a week where sentiment shifted from panic to pragmatism in 48 hours, the real alpha accrued to those who waited. LPs calling for deployment urgency got a reminder that capital preservation matters more than capital deployment when markets are trading on headlines rather than fundamentals.
Deals that looked urgent on Monday looked less compelling by Thursday, and those who resisted FOMO are now holding stronger cards. Extensions, once feared, now look prudent. In market environments defined by narrative whiplash, the best strategy isn't speed, no, it's optionality.
Ed's Closing Bell
Week 42 was exhausting. Not because of the magnitude of losses, modest compared to Week 41, but because of the relentlessness of uncertainty.
Markets proved they can absorb tariff threats, regional bank scares, and crypto crashes but only when there's hope for resolution. Trump's Friday pivot from "100% tariffs" to "talks are back on track" was the week's defining moment, a sad reminder that in policy-driven markets, blind from data thanks to the US Government shutdown, narrative from a 256 character tweet shift matters more than fundamentals.
For allocators and dealmakers, the message is unchanged: in an environment shaped by geopolitics and policy whims, patience isn't just a virtue … it's survival. The best trade isn't being first or loudest, but the one with enough ballast and enough patience to wait for the weather to clear.
Final Words
As ever, these reflections are my own and not those of Beaufort Capital or anyone wise enough to keep their opinions strictly to café conversation. If these thoughts have entertained or provoked, so much the better. The best conclusions are those reached with your own research, a dash of doubting, and, when in doubt, a trusted professional (or a double espresso).
Markets change direction faster than a Levanter gust off the Rock, and sometimes that wind can scatter your best-laid notes and portfolio alike. Anyone claiming certainty about next week is either much braver than Ed or selling something. If you think you know exactly what's coming, you probably don't. Neither do I. That's why markets, and these dispatches, stay informative but never the final word—that's yours and yours alone.
Stay inquisitive, sharpen your pencils and your instincts, and never bet your shirt on the week's forecast.
From the Rock
Week 42: where leverage and emotion collided with digital speed and geopolitical uncertainty, the greatest lesson is ancient: discipline, patience, and process are the only sustainable edges in markets that trade on tweets..
Further Reading
US Regional Bank Stocks Hit by Loan Losses and Fraud Allegations (Reuters)
Gold Hits US$4,000/oz - Trend or Turning Point? (World Gold Council)
China Accuses US of Creating "Unnecessary Panic" Over Rare Earths (Bloomberg)
IEA Forecasts Record Oil Oversupply in 2026 (International Energy Agency)
Bitcoin's October Struggles: From "Uptober" to "Rektover" (CoinDesk)
These sources help separate the noise from the navigation—happy reading and fair winds for the week ahead!
