Weekly Newsletter: November 17, 2025
“The game never ends when your whole world depends on the turn of a friendly card”. Wall Street has caught the short-term fever of immediate gratification. From zero-day option trading, where the “bet” is only good for the day, to ETFs based on a single stock and can deliver multiples of the daily move in either direction. “Predictive markets” are the latest in a line of products that seem to be created to separate money from individual investors. Will the Fed cut rates in December? Will the SP500 close above 7000 at year’s end? One can “invest” in the outcome they believe will occur. Similar to making a bet on the winner of a football game, it is designed as a yes/no outcome. Whatever happened to finding companies where investors like the products, understand the goals and objectives of the company, and can hold shares for a decade or two? Warren Buffett will be stepping down from running Berkshire Hathaway at the end of the year and will close a chapter on successful investing for the long term. After having successfully navigated the treacherous calendar period of August to October, the following 4-5 months are supposed to be the best of the calendar. Yet, halfway through November, the averages remain lower. Beginning with the press conference after the last meeting, various Fed officials have been talking down the potential of a cut in December. So blame the Fed for a weakening market. The Wall Street bet has gone from near certainty to merely a coin flip over the past three weeks, coinciding with the weaker market. Now that the government is once again open for business, expect a deluge of economic data in the coming weeks that could move that bet quickly and dramatically in either direction.
There will be plenty of economic news to digest ahead of the Thanksgiving holiday. From September’s unemployment report, now due on Thursday, to some inflation data the day before Thanksgiving. The huge data dump over the coming weeks is an effort to get back on the usual reporting schedule by December, as well as report the missing data points due to the 45-day shutdown. Many of the data points will come with plenty of caveats and will likely be asterisked as analysts try to read the torn-up tea leaves to divine the strength and direction of the economy. It may be after the turn of the new year that truly “good” data will be released that investors can lean on. Filling the void over the past few weeks has been corporate earnings and Fed chatter. Corporate earnings have generally been good. Some that are close to the consumer, like fast-food restaurants, airlines, and credit card companies, have reported mixed results and varying views on the consumer. A cynical view of the Fed chatter would be that they are prepping the market for a pause in December. One of the goals of the Fed over the past few decades is not to surprise the markets. The rapid increase in rates in 2022 was a surprise and led to a 20% decline in the markets until both entities got on the same page. The economic data releases should provide some help to the markets and the Fed as to the direction of interest rates in 2026.
The slow decline in equities and a cautious Fed have pushed interest rates modestly higher. While shortterm rates remain nailed near the Fed’s rate target, longer-term bond yields have ticked higher as expectations grow for a Fed pause. Commodity prices have picked up as well, leading to worries about sticky inflation. Overall interest rates have been remarkably stable during the year as worries about a slowing economy and higher inflation pull rates in opposite directions.
Questions have gone from mere whispers to loudly wondering how all the spending on AI, from data warehouses to machines and electricity to power it all, will be profitable, and more importantly, when they will be profitable. Many of the key players are borrowing heavily in this technology “arms race”. As a result, the tech sector has turned lower, pulling the averages lower. However, their weakness has not spilled over to the rest of the market as an equal-weight ETF is down modestly vs. over 4% for the tech sector this month. Diversification, especially outside of the US, continues to provide investors reasonable returns and many more restful nights.
The next few weeks will be loaded with “catch-up” economic reports. It will be hard to rely too heavily on these reports as they do not reflect current conditions. That said, the markets may still move wildly as the number either supports or refutes further Fed rate cuts.
The opinions expressed in the Investment Newsletter are those of the author and are based upon information that is believed to be accurate and reliable but are opinions and do not constitute a guarantee of present or future financial market conditions.