Market Commentary - October 6, 2025
Government Shutdown Is Here
We are now in a government shutdown. Historically, shutdowns have not negatively impacted the economy or markets, and most have ended within just a few days. But current negotiations have stalled. So, we took a look at Kalshi, a federally regulated exchange where investors trade on the outcome of real-world events. Its prediction market is now pricing a shutdown of roughly 14 days, and that data point has been rising. During President Trump’s first term in office, there was a government shutdown that lasted 34 days, from December 22, 2018 to January 25, 2019. During that period, the equity market rallied 10.3%. But bear in mind that the average overall return during a government shutdown is zero (0.0%). So, while a shutdown might unnerve investors, historically, they have not had a material impact on the equity market.
Market Commentary - October 6, 2025
Stocks Breathe A Sigh Of Relief With Inflation Tracking As Expected
The Federal Reserve (Fed) began a new rate-cutting cycle with a 25-basis-point reduction on September 17, aiming to support the labor market, while balancing its dual mandate of keeping inflation in check. That’s why last week’s Core PCE (Personal Consumption Expenditures) report carried particular weight with markets. PCE came in as expected at 2.9%, and both the stock and bond markets responded with a sigh of relief that it was not worse than expected. The Fed’s inflation target is 2%, a level they don’t expect to reach for several more years. In fact, Core PCE hasn’t been at 2% since early 2021, nearly four years ago.
Market Commentary - September 22, 2025
Stocks Continue To March To New Highs
Last week, in reaction to the labor market showing early signs of weakening, the Federal Reserve (Fed) cut interest rates, as expected, by 25 basis points, beginning a new cycle of lowering interest rates. This marks the first rate cut of 2025 after three cuts late last year that totaled 100 basis points. The Fed has a dual mandate: maximum employment and stable inflation. The Fed has been trying to get inflation back down to 2% but inflation has remained elevated; the Fed does not expect inflation to return to 2% for a few more years. Despite this elevated inflation, the Fed said it needed to support the labor market which is weakening so the FOMC (Federal Open Market Committee) decided to cut rates. The equity markets celebrated the lower rates by marching to new record highs. We remain bullish on the market, but stocks remain very overbought. The risk remains that stocks correct 5.0%-10% or have a temporary sector rotation from Growth to Value. We maintain our year-end target of 7000, rising to 7200 by early next year.
Market Commentary - September 17, 2025
The Corner September 2025
Our work continues to support a secular bull market, driven by economic growth, consumer spending, and transformative technologies. Corporate earnings continue to rise, profit margins are still expanding, and the markets anticipate that the Federal Reserve (Fed) will cut short-term interest rates 25 basis points this month, which could buoy the equity market and boost economic activity. Our year-end target for the S&P 500 is 7000, and we expect it to reach 7200 next year. Our long-term target for this secular bull market has the S&P 500 reaching 12,000–13,000 for by 2029–2030.
Perspectives - September 17, 2025
The Rise of Stablecoins
The rise of stablecoins is disrupting the global monetary system. Stablecoins, which are digital currencies pegged 1:1 to fiat currencies (e.g., the U.S. dollar), are rapidly transforming the global payment landscape by leveraging blockchain technology for fast, secure, and low-cost transactions. Unlike volatile cryptocurrencies, stablecoins such as Tether’s USDT and Circle’s USDC maintain stable value through their backing by U.S. Treasury bills, cash, short-term commercial paper and other relatively secure investments. This allows for near-instantaneous trade settlements at a fraction of the cost of traditional systems (e.g., SWIFT or CIPS). The recent passage of the GENIUS (Guiding and Establishing National Innovation for U.S. Stablecoins) Act in the United States establishes a robust legal framework for stablecoin issuance and regulation, mandating 1:1 backing with high-quality reserves. This legislation, alongside the Crypto-Asset National Security Enhancement and Liability for Investors and Transparency (CLARITY) Act and the Central Bank Digital Currency (CBDC) AntiSurveillance State Act, strengthens the U.S. dollar’s role as the world’s reserve currency while fostering innovation in digital payments. Stablecoins are increasingly adopted for international trade and commercial transactions, offering significant cost savings and efficiency over conventional banking systems.
Market Commentary - September 15, 2025
Good Inflation Data Leads To Lower Interest Rates & Record Highs In Stocks
Markets cheered last week as a much better-than-expected Producer Price Index (PPI) and an as-expected Consumer Price Index (CPI) sent interest rates lower and propelled stocks to record highs. Also supporting the move higher in stocks was the earnings report from Oracle (ORCL), which had blowout earnings growth, underscoring continued strong demand for artificial intelligence (AI) products. The market is pricing in 100% probability that the Federal Reserve (Fed) will cut interest rates this week by 25 basis points and that the Fed will cut twice more this year, in October and December. Lower rates support the economy, the consumer, and risk assets (which includes equities). We continue to believe the S&P 500 is tracking toward 7000, representing a 6% gain from current levels. We also are expecting the rally to continue into the first quarter of 2026, with the S&P 500 achieving 7200, which would be a nearly 10% gain. In our view, this Bull has got legs and is still charging ahead.
Perspectives - September 10, 2025
Chart Book August 2025
Global equities advanced in August on the back of strong corporate earnings, moderating inflation and expectations for lower interest rates. As measured by the S&P 500, U.S. stocks rose 2.0% despite weak labor data, tariff concerns, and persistent inflation. U.S. equity markets were lifted by Fed Chair Jerome Powell’s dovish Jackson Hole remarks that fueled hopes for a September rate cut. International developed market equities were up 4.3% and emerging market equites were up 1.6%, as both were propelled by a weaker U.S. dollar. Sector performance was mixed as information technology lagged following reports of limited financial returns from most corporate AI pilots, while materials led gains on trade progress and stronger manufacturing. Healthcare outperformed thanks to attractive valuations and positive company-specific developments.