Spooky Headlines Create Buying Opportunity

Market Commentary – October 20, 2025

Tariffs are nothing new to the markets, but they did get spooked by President Trump’s recent threat of additional tariffs on China

Earnings season started with the major banks announcing blowout positive earnings; the only negative headlines came from two regional banks. Zions Bancorp disclosed it would be taking a $50 million charge-off in Q3 tied to two commercial & industrial (C&I) loans in its California unit. Then Western Alliance disclosed it has sued Cantor Group V, LLC, accusing the firm of fraud in relation to a revolving credit facility. Meanwhile, JPMorgan Chase CEO Jamie Dimon opined during the firm’s Q3 earnings call that there are cockroaches in the economy. All this sent stocks down sharply. (Remember: corrections don’t happen on good news!) With the major banks posting strong earnings, the results reinforce that the broader banking system remains healthy — and that the problems facing those regional banks appear isolated and do not represent a systemic risk to the economy. As for tariffs, President Trump soothed equity markets Friday by admitting that his threatened tariffs on China “are not sustainable.

We have been looking for a pullback of 5%-10% in the equity market since September, and we are in this pullback now. October creates buying opportunities for the seasonal year-end rally. We remain buyers on this pullback, looking for the S&P 500 to reach 7000 by year-end.

Equity Markets Are Oversold, Holding 50-Day Moving Average

Both the S&P 500 and the Nasdaq 100 are oversold short-term, holding their 50-day moving average. If earnings continue to outpace expectations, equities may stabilize rather than slip into a deeper 10% correction. The government shutdown is already priced into the market, and we believe a resolution would be received positively. According to prediction market Kalshi, traders now expect the government shutdown to last about 40 days. The key economic report to draw market attention this week will be the release of the Consumer Price Index (CPI). The Bureau of Labor Statistics (BLS) recalled essential staff to complete the CPI report in time for the Federal Reserve (Fed) policy meeting set for October 28-29.

The Cboe VIX Volatility Index has spiked into the 20–30 range, a “buy zone.” With markets oversold and volatility elevated, we believe this is a
correction that is creating a buying opportunity.