November 2025 edition

Hello. This is Keith Berner, and thanks so much for joining us again for this month's market update. Before we get into our key takeaways, I just wanna take a, a minute to just talk about where we are. And where we are this year is actually in a pretty good position from a capital markets perspective. We have global equities up more than twenty percent, US large caps up more than seventeen percent, and good old fashioned bonds are up five or six percent kinda doing what they're supposed to do. So it's one of those those years. If you had the headlines ahead of time, it may have not helped you out because there was so much noise, and it was hard for investors to kinda keep focus on what's important. And one of the biggest things that were were important is corporate earnings, which I'll talk about. But now going directly into our key takeaways, I do think it's important to recognize we are in a global, rally. So I've already mentioned we have US and international markets recently making fifty two week highs. Within the US in particular, we do have a two speed stock market just like we have a two speed economy, which I'll touch on more. The earnings story is still front and center in our work. That continues to be the north star. We're still seeing good trends there. And then finally, I've gotten the question when you have big gains heading into the final two months of the year, is that a positive or negative? And historically, before year end, you tend to add to gains even if you have some hiccups along the way. So what I'd like to do now is just walk through our weight of the evidence framework to to really help us understand where we might be headed. And as a reminder, the the way the evidence framework we use, we start off with a historical analysis. We overlay that with the economic cycle and then layer on fundamentals and market signals to try to get the the the evidence on our side or make higher probability decisions. So from a historical framework, it's important to note the bull market just had its third year anniversary. When we look back historically, there's only been seven bull markets since nineteen fifty that has had a third year anniversary. The good news is as we look forward the next twelve months, all those bull bull markets shore additional gains even though the caveat is it's a relatively, small sample. The other positive is historically when the Fed has cut rates, when the market is close to all time highs. About a year later, the market spent up ninety percent of the of the time. Again, that doesn't guarantee it's going to to replicate that, but from a historical context, that is a positive. We have gone a long time without even a normal pullback, so that's still something that investors should keep in mind, but the underlying trend is still positive. Turning to the economy, you know, our main punch line this year has been more of a muddle through economy. As we look into twenty twenty six, we expect a slight uptick in the economy that's really predicated on three main factors. One, we expect lower rates from the Fed. So on the margin, that should help. Two, some more clarity from the tariff side. And then thirdly, probably the most important side is that we expect to see, some improvement because of the tax policy where you get some incentives from both consumers and, businesses as well. So we're expecting a slight uptick. So now let's move into the the next bucket, which is fundamentals. You know, a lot of questions I'm getting is around, are we in a tech bubble? Valuations seem high. And, you know, valuations for the overall market are elevated. We're at a cycle high. The offset to that is the earning trends remain very strong. As markets have made fresh all time highs, we're seeing forward earning estimates also at all time highs as well, and that's being driven by tech and communications and the growth side. So we we're still overweight those areas even though we do recognize there's some concentration risk. Moving to the technicals or market signals. The underlying market trend is still positive both in the US and globally. We have over ninety percent of global markets in the uptrends. I did mention we had this kind of two speed, stock market in that the mega cap growth and tech names are rising at a much faster pace than small caps and mid caps, or at least they have so far. But the underlying trends for small caps and mid caps are also still rising, again, just not at the same pace. Moving then to so what does this all mean from a tactical position standpoint? Globally, we're still team USA. We still have a bias for US equities, but we are also seeing opportunities globally in international markets. For instance, we just saw Japan with a new prime minister make a fresh multi decade highs. Europe has been a bit more mixed recently, but, you know, some of these markets are still benefiting from, you know, some stimulus there as well. On the fixed income side, at this point, we're still sticking with high quality, looking for a better opportunity in the credit markets where credit spreads remain very tight. And then lastly, on gold, we've been positive on gold all year long. That said, in, over the over recent weeks, we discussed in some of our notes that we thought the risk reward on a short term basis was somewhat less positive because gold became the most stretched to the upside relative to its trend that we've seen since, two thousand six. So we think we think we, gold likely kinda cools or continues to cool off a bit. Structurally, we still think there's some positives, and we wanted to from a portfolio diversification standpoint that we still wanna have an allocation, but patience is likely going to be a virtue there. So bottom line, summing this all up is that, you know, we do have these positive and negative forces still intact, but we still think this bull market deserves the benefit of the doubt. And we would stick with that trend to look at pullbacks as opportunities. You know, as always, we'll continue to follow the weight of the evidence and keep you informed as our views evolve.