Weekly Newsletter: November 24, 2025
The financial markets could use some time on the psychiatrist couch discussing what happens when you get everything you want, but remain disappointed. This past week saw a bit of catch-up in economic data, beginning with the employment report for September. October is expected to be rolled into the November report, which will be released nearly two weeks later than usual. September’s figures came in much better than expected, indicating the jobs market was still decent ahead of the shutdown. However, (there is always one!) the unemployment report popped up to 4.4% and within a few ticks of rounding up to 4.5%. Combined with continuing jobless claims that remain stubbornly high, investors could see a Fed leaning a bit more toward cutting rates than sitting on their hands when they meet on December 9th and 10th. Next up was the Nvidia earnings, the poster child for everything AI. A good earnings report could calm fears of an AI bubble, and growth would continue at a breakneck pace. A surprisingly strong report and very bullish comments from the company initially pushed the stock up by 5% and the market followed. Persistent worries about the duration of the spending on AI seeped in quickly, and both Nvidia and the markets finished the day lower in a huge reversal of fortune. Rounding out the week were more Fed speakers who left the door open for lower interest rates, calming fears, and pushing the market higher. Thursday and Friday made for a stressful month wrapped up in those two days. The coming week should be a focus on family and Thanksgiving. Do not be surprised if weird Uncle Charlie shows up on Wall Street or at the table to make for another awkward week.
The monthly jobs report is generated from survey data. Since the government was closed for business, those surveys never went out nor were collected, and reconstructing them is impossible. So the October “report” will get rolled into the November data that gets released after the Fed meeting. The delay comes on the heels of a decent report for September. The other component that the Fed watches, inflation, will get a partial read from producer prices, not at the consumer level. One other report that could move the needle is retail sales, a gauge of the health of the consumer. Earnings reports from retailers provided a mixed picture of the consumer, with Target coming in below expectations and Walmart topping them. Smaller retailers also saw a mixture of good/bad news as well. The patchwork of data is not likely to capture the true nature of the economy until after the first of the year, when reporting gets back to a regular schedule. The Fed has indicated that they are “data dependent”, which means they are looking backward rather than forward. Based on the imperfect data so far, it will be hard to justify cutting rates further. The question gets asked all the time: Who benefits from interest rate cuts? The last few cuts have not materially impacted the housing market, nor will they reduce rates on credit cards. It may help large borrowers (read the government) reduce their interest rate costs. For the average consumer, lower inflation would be better than lower rates.
The relationship between two and ten-year treasuries has remained relatively stable near historically low levels all year. Typically, an inverted yield curve, like in 2023, is followed by a return to a “normal” curve of 150 to 200 basis points within a year or so as the economy gains steam coming out of a recession. This time around, the curve has gotten stuck about one-third of the way there. Some are pointing to a muted economic recovery, blaming the lack of immigration, the imposition of tariffs, and/or a weak overall economy outside of the AI spending spree. Without a good understanding of the forces now at work in the economy, it remains a difficult argument to cut rates further without stepping back and assessing.
The extremely positive earnings report from Nvidia initially spurred the markets higher, only to reverse course during the day. Unlike the past year, which saw the averages pulled higher by a small number of stocks (technology), this month has seen the exact opposite: more stocks are rising than falling, even as the averages decline, due in large part to technology stocks correcting. That dynamic was last seen early in the year, culminating in the market bottom at the end of April. The market may be “correcting” by having the best performing stocks do poorly, while those that have done poorly are getting their time in the sun. If so, that rotation could have legs well beyond a few weeks and may last well into 2026.
Enjoy the Thanksgiving holiday with your family and friends. We are so very grateful to be working with you, and we look forward to another prosperous year ahead.
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.