Market Thoughts: There's more to cheer than jeer

With Washington back to work, investors and policymakers alike await a slew of delayed economic data. While current headlines feign concern, December very much remains a live meeting for the Fed. At the moment a December rate cut seems a coin toss.

We get the quarterly summary of economic projections at the December Federal Open Market Committee meeting. Investors catching up to delayed data. We’ll soon have forecasts from the Fed to set the pace and expectation for monetary policy in the new year.

It may take a month before agencies catch up with releases. That said, numbers will begin to trickle in. Some may be skipped entirely. For employment data, I don’t expect much of a deviation from the trend we’ve seen. A steady but slowing labor market. Less hiring, not much firing.

Income, spending and retail sales data may take longer. That said, third-quarter earnings and C-suite investor calls highlight strong revenue growth and expanding margins. The S&P 500 has again printed low double-digit earnings growth, with about 80% of companies beating analyst forecasts.

Equity valuations continue to press higher. Multiple expansion this year has literally been hard earned on the back of earnings growth. As 2026 Outlook notes get written, they’re more likely than not to anchor on stable corporate balance sheets, productivity and margin expansion… another year of strong earnings growth ahead. Rational exuberance the drumbeat.

We see a macro environment where global growth is supported as tariff headwinds fade. For now, Goldilocks prevails. While the U.S. Supreme Court may surprise (positively or negatively) on tariffs early next year, investors are looking through it. We’ll see what happens when we get there.

I don’t question the direction of markets given the fundamental backdrop. I question the pace. Too much of a good thing–too quickly–can end badly. Or at the very least create the next investment opportunity. Be careful what you wish for.

As the U.S. Mint presses its last run of pennies, the irony of rounding up isn’t lost on anyone. Either as a consumer bearing incremental cost, or the Fed tolerating stickier inflation than they’d like – doing so under the umbrella of preventing a softening U.S. labor market becoming something worse. I’d encourage the European Central Bank and Bank of England to think likewise.

With a cloudy outlook on whether we see a rate cut from the Fed swirling, we’re seeing a healthy bout of market consolidation. Hope springs eternal for an additional 50-75bps of easing from the Fed next year. The same holds for a Santa Claus rally.

There’s a modest shift in sentiment happening around big-tech, AI and the ongoing capex arms race. The biggest spenders have more than enough capacity to leverage balance sheets in a winner-take-all dash to artificial general intelligence. That’s the ‘good’ news. I think.

I’m unsure investors will be as energetic about tech multiples as capex financing gradually pivots from free cash flow to debt issuance. I don’t make that observation as an alarmist. For the biggest players, balance sheet credit quality isn’t (yet) a concern.

As an investor, a shift in the mix to issue debt may temper the broad push higher we’ve seen in aggregate valuation levels. We’re very early in the swing to meaningfully add debt to the capex funding mix. It’s something to keep an eye on.

What are we doing not to be ‘over exposed’ to tech wobbles? We’ve diversified geographically, across sub-sector and company exposures. We hold a healthy mix of stocks, bonds and alternative investments. In multi-asset portfolios, core bonds continue to serve as a risk diversifier.

The punchline for big tech exposure, as much as you may want to fight it? Equity markets remain predominantly a big tech trade. The engine powering multiples higher. We hold overweights to healthcare, financials and tech, including AI-related names. But if tech stumbles…

…it will take everyone along for the ride. If tech valuation expansion slows, lagging sectors can play catch up. When valuation dispersion across sectors becomes too wide, laggards bootstrapping higher is the healthiest way for a market to consolidate. Ideally, then to move higher, driven by earnings.

Sentiment is upbeat. Dip buyers stand at the ready. Momentum traders powering on. Energizer bunnies never more eager. We are modestly overweight equity and credit across portfolios. Fully invested in duration across the bond curve. We’re not overreaching for risk. Not chasing after markets. Staying invested.

Always expect market turbulence. For now, there’s more to cheer than jeer.

Unless explicitly stated otherwise, all data is sourced from Bloomberg, Finance LP, as of 11/13/25.

Opinions, estimates, forecasts, and statements of financial market trends that are based on current market conditions constitute our judgment and are subject to change without notice. We believe the information provided here is reliable but should not be assumed to be accurate or complete. The views and strategies described may not be suitable for all investors.