The Starry Night or The Scream? Keeping Market Fear in Perspective

The Markets

“The quality of machine learning and NLP models comes down to the data you put into them.” — Gideon Mann, Former Head of ML Product & Research, Bloomberg.

U.S. equities moved lower for the week. The S&P 500 declined 2.68%, finishing at 7,377, while the NASDAQ Composite declined 3.37% to 24,579. The Russell 2000 declined 2.05

% to 2,754. Year-to-date, all three benchmarks remain positive.

The 10-Year Treasury yield declined 0.07%, finishing the week at 4.9%. The U.S. Dollar gained 0.39% to 102 and remains up 4.03% year-to-date.

Commodities diverged sharply. WTI crude oil declined 13.07%, finishing at $91 per barrel, although it remains up 57.63% year-to-date. Gold gained 4.49% to $4,074, bringing its year-to-date return to a decline of 5.68%.

Overall, risk assets faced a difficult week, with broad equity declines and a sharp drop in oil. Gold moved in the opposite direction, while Treasury yields edged lower and the dollar strengthened.

This week’s featured researcher, Gideon Mann, spent nearly a decade at Bloomberg advancing machine learning and financial-data research. His emphasis on data quality offers a useful investing reminder: good decisions begin with reliable information, disciplined analysis, and an understanding of what the data actually tells us.

The Starry Night or The Scream?  

“The investor’s chief problem—and even his worst enemy—is likely to be himself.”

— Benjamin Graham

Years ago, Jim and his wife visited the Museum of Modern Art in New York City. Two paintings stood out: Vincent van Gogh’s The Starry Night and Edvard Munch’s The Scream.

The paintings evoke very different emotions. One can feel peaceful and reflective; the other communicates anxiety and fear.

Markets can create the same contrast.

During periods of volatility and uncertainty, it can feel like there is too much Scream and not enough Starry Night.

This week’s Weekly Input reminds us that risks deserve attention—but so do the positives.

Five Reasons to Remember the Starry Night

📈 Earnings remain encouraging. As of October 30, 60% of S&P 500 companies had reported third-quarter results. Among them, 82% beat consensus EPS estimates and 70% beat revenue estimates. Approximately 60% of companies issuing Q4 EPS guidance also provided guidance above consensus.

📊 Valuations don’t look terrible. The S&P 500 forward 12-month P/E stood at 18.7, below its five-year average of 19.8 and 10-year average of 19.1. Valuation alone does not predict future returns.

🏛️ Policy uncertainty may decline. With the midterm elections behind us, one source of uncertainty could begin to fade.

🛍️ The consumer remains resilient. Combined with positive seasonal tendencies, a still-robust consumer could help the economy and markets grind higher.

⛽ Energy-related inflation may moderate. The Weekly Input expects inflation pressure related to energy prices to decline.  None of these outcomes is guaranteed.

But markets don’t require every uncertainty to disappear before conditions can improve.

Sometimes the picture looks different when we step back from the canvas.

Fear and Opportunity

Market anxiety is real. Inflation, policy uncertainty, valuations, geopolitical events, and changing economic conditions can all affect markets.

But fear does not automatically mean opportunity has disappeared.

The Weekly Input concludes that opportunities may still exist for long-term, diversified investors, even though angst and worry can accompany the journey.

That leads to one of this week’s most memorable observations:

“One man’s anxiety may be another man’s opportunity.”

The same market can look very different depending on perspective and time horizon.

To one investor, volatility may resemble The Scream.

To another, it may reveal an opportunity that didn’t exist before.

The lesson isn’t to ignore risk.

It’s to keep risk in perspective.

Human Interest: Step Back From the Painting

Stand inches away from a painting and you may see only individual brushstrokes.

Step backward, and those disconnected details become a picture.

Markets can work the same way.

A frightening headline or volatile trading day can dominate our attention. Sometimes it helps to step back and ask:

What are earnings doing? What are valuations telling us? What has actually changed?

The goal isn’t to pretend The Scream doesn’t exist.

It’s to remember that it isn’t the only painting in the museum.

Fun Facts & Figures

📈 82%: Reporting S&P 500 companies cited in the Weekly Input that beat consensus EPS estimates.

💰 70%: Reporting companies that exceeded consensus revenue estimates.

📊 18.7: S&P 500 forward 12-month P/E versus five- and 10-year averages of 19.8 and 19.1.

😱 Two Perspectives: The Starry Night and The Scream provide a fitting metaphor for optimism and anxiety in markets. 

Bottom Line

Markets will always provide reasons to worry.

But risk awareness doesn’t require assuming the worst.

Earnings have been encouraging. Valuations are below the recent historical averages cited in the Weekly Input. Policy uncertainty may decline, the consumer remains resilient, and energy-related inflation could moderate.

There may still be some Scream along the way.

Just don’t forget to look for the Starry Night.

On This Day in History — November 9

🧱 1989 — The Berlin Wall Opens

On November 9, 1989, East German officials opened the Berlin Wall, allowing citizens to travel from East to West Berlin. Crowds quickly gathered at the checkpoints, and the wall—one of the most powerful symbols of the Cold War—soon began coming down.

For nearly three decades, the wall represented division and uncertainty.

Then conditions changed.

There’s a fitting connection to this week’s theme:

Sometimes the picture can change faster than our expectations.

History also gives November 9 a much darker significance. In 1938, Nazi Germany launched the antisemitic violence known as Kristallnacht, or the “Night of Broken Glass,” a major escalation in the persecution that preceded the Holocaust.

The same calendar date therefore carries profoundly different lessons—one about persecution and destruction, another about barriers eventually falling.

History, like markets, reminds us that the present moment is never the entire story.

Best regards,

Andrew Zittell

Yerba Buena Financial Partners

P.S. – Please feel free to forward this commentary to family, friends, or colleagues. If you would like us to add them to the list, please reply to this email with their email address and we will ask for their permission to be added.