The big three US stock indices fell on Thursday, despite weaker oil prices, lower bond yields and upbeat economic growth data, as a record fall in Alphabet's shares following the company's latest earnings pummeled communication services stocks and revived investor concerns over AI spending.

In my column today, I look at why the issue of Fed credibility is back on the table after Chair Kevin Warsh on Wednesday struggled to explain why the central bank left interest rates on hold. By his own admission, growth is strong, inflation is too high, and financial conditions aren't tight. So why not raise rates? Today's Key Reads Today's Talking Points: Lagarde resigns European Central Bank President Christine Lagarde resigned on Thursday, with her departure confirmed for February next year, eight months before her term expires.

She stands down at a critical juncture — economically, the euro zone faces weak growth, high energy prices, and rising inflation risks; politically, it is grappling with unrest in France, a potentially historic election there early next year, and the ongoing Ukraine-Russia war.

Lagarde says she is resigning because she wants to speak more freely about major, but unidentified, events. "I don't think that I can remain neutral." European leaders have more than one key ECB position to fill in the coming months — executive board member Isabel Schnabel leaves in January, and the central bank's chief economist Philip Lane is due to depart in May.

Less is more At least that's the view of Fed Chair Kevin Warsh when it comes to policy decisions, forward guidance, 'dot plot' forecasts, and pretty much all communication. Warsh made that clear in his post-meeting press conference on Wednesday, where he announced that seven of the Federal Open Market Committee's eight meetings next year will be policy-setting events, and this will be reduced to six in 2028.

Warsh said this will give the FOMC more time and space to take longer-term strategic views, and the impact on financial markets remains to be seen. Having fewer meetings to set policy means the Fed could fall behind the curve more easily, it could mean there is a greater chance of bigger moves at each meeting of, say, 50 bps, and could raise the likelihood of inter-meeting decisions. It will mean less market volatility around "live" meetings, but perhaps increase inter-meeting volatility. Watch this space.

Alphabet droop Could a historic day for Google parent company Alphabet prove to be a turning point for the wider AI trade? Alphabet shares sank a record 13% on Thursday after third quarter results that missed expectations and pointed to a massive acceleration in cash burn from increased AI spending plans. The fall wiped around $500 billion off the company's market cap.

The scale of the selloff underscores how jittery investors have become in recent weeks, and how sensitive the market is to AI firms' cash flow. Contrast Alphabet with Oracle, whose shares surged 11% on Wednesday after it said it plans to cap external financing and achieve positive cash flow in the second half of fiscal 2028. Granted, Oracle shares fell back on Thursday, but investors are becoming more discerning. What could move markets tomorrow?