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1. The narrative is changing from rate-cuts to slowing growth.

Given the likelihood of a Fed cut was already at the high 90% level, the weak jobs report had little positive impact on the market.

While weak jobs figures now make a rate cut all but certain — and have increased the likelihood of back-to-back cuts in October and December — investors are also contemplating the risks of a downturn.

And now, when it comes to jobs reports and other macroeconomic readings, bad news may once again look like bad news.

From here on out, the economy will tread a fine line, with investors pining for a goldilocks scenario where the economy is good enough to keep up the growth, but bad enough to keep the cuts coming. It’s hard to deny the stock market loves rate cuts. But why those cuts are needed in the first place is also important. Wall Street’s gains are fundamentally about earnings. And positive earnings are harder to come by when the economy is struggling.

Gold went up again and interest rates came down.

2. France is the canary in the coal mine.

France has a lower debt load than Japan, with a government debt-to-GDP ratio of more than 110% versus Japan’s almost 240%. But the situation is more acute in France where political turmoil is engulfing the narrative, with Prime Minister Francois Bayrou calling a confidence vote for Monday on plans for significant cuts to the budget.

The UK and US are running primary budget deficits even larger than France’s. The US is spending $1.2 trillion annually on interest payments on its government debt, about 4.5% of GDP. France is paying 2.8% of GDP in interest, while the UK’s total has jumped to 3.7%.

Borrowing debt with interest to pay back existing interest is not sustainable - the market will not tolerate it indefinitely.

3. The outlook for Japanese corporate earnings is brightening.

The 12-month forward EPS estimate for Topix is now improving faster than that for S&P 500 and Shanghai Composite. There is a growing consensus that next fiscal year will see double-digit profit growth.

4. Improving macro indicators and a strong earnings trajectory could set the stage for an Indian rally.

Reviving the domestic growth engine has been visible since the start of this year—first with tax cuts in the budget, then monetary policy easing, and now with the biggest GST (Goods and Services tax ) overhaul in eight years.

The GST tax has been reduced from 18% to 5% and will be a major consumption-driven stimulus, potentially triggering a virtuous cycle of increased demand.

This will partially help offset the adverse impact of US tariffs in the coming quarters.

5. European luxury stocks are coming to life.

A basket of luxury stocks is up more than 5% since a low in August in an otherwise fairly static market. Factors drawing in buyers include cheaper valuations, earnings estimates that appear to be bottoming out and light investor exposure.

Backing the upbeat mood around Chinese consumers is Beijing’s push to ramp up support for the property market. Speculation has been mounting that further economic stimulus could be in the works, a step that would be meaningful for buyers who account for more than 30% of some manufacturers’ revenue.

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