Weekly Market Report: November 1st, 2025
Recommended equity market positioning continues at a policy neutral stance with an expectation that we may see some routine consolidation given labor market dynamics and the nature of this narrow/modestly overbought market. Healthy earnings, accommodative policy, and resilient consumption are reinforcing a stay the course message. From a fixed income perspective, bond yields have remained rangebound, and we see no compelling evidence of that changing in the near term, so we are maintaining a neutral stance accordingly.
Financial Market Highlights
- Earnings reports re-confirmed massive, big tech capex intentions while circular AI relationships and index concentration issues continue to garner the ire of seasoned investors.
- Corporate earnings for Q3 are on pace for another strong season with 10%+ growth. Importantly, the blended 12.8% profit margin is above the figure from one year prior and handily above the five-year average.
Economic Highlights
- Supports to consumer spending remain intact for both higher income (wealth effect) and lower income (gig economy) cohorts. To add, Federal workers should get back pay, and stimulative monetary/fiscal policies are on the horizon.
- Questions surround to whether the weakness in the labor market can be countered by the AI-driven economic growth and productivity boom.
Policy Highlights
- The FOMC continued its rate cutting campaign in October by delivering another 25bps cut. Notably, the FOMC called an end to its balance sheet reducing QT program due to signs of strained liquidity in the banking system.
- The U.S. government shutdown continued through October with primary debates still squarely focused on spending disputes surrounding enhanced ACA tax credits, Medicaid and SNAP.
Bullish Asset Allocation Narratives
- Productivity and the AI boom are complimented by strong earnings and persistent growth.
- Growth conducive policies across the monetary, fiscal, and regulatory landscape including a dovish
Fed, stimulative fiscal budgets deficits, and business friendly regulation. - Fading tariff policy uncertainty with administration officials aggressively pursuing trade deals and
a potential judicial branch check on the use of the IEEP Act to levy trade taxes.
Bearish Asset Allocation Narratives
- A Fed policy error amid inflation and labor distortions from tariffs, immigration limits, and pandemic aftershocks
- Market concentration in AI momentum stocks marked by heavy FCF burn, soaring capex, circular investments, and lofty valuations.
- Consumer risk from higher rates, weak labor growth, lingering inflation, and strained balance sheets
This communication is provided for informational purposes only and is not an offer, recommendation or solicitation to buy or sell any security or other investment. This communication does not constitute, nor should it be regarded as, investment research or a research report, a securities or investment recommendation, nor does it provide information reasonably sufficient upon which to base an investment decision. Additional analysis of your or your client’s specific parameters would be required to make an investment decision. This communication is not based on the investment objectives, strategies, goals, financial circumstances, needs or risk tolerance of any client or portfolio and is not presented as suitable to any other particular client or portfolio.