Comments based on information available as of 6:00am CT on 11/14/2025
Fears of a Fed pause in December replaced fears of a prolonged government shutdown. There’s always something to worry about, and that’s one reason there’s something called the equity risk premium. If there was no risk, I wouldn’t expect equities to return more than risk free securities. Occasional market drops are the price of the ticket for the ride.
Growth: Clear as Mud 
The growth signals are mixed and the lack of official data hasn’t helped clear things up. Earnings season has been better than expected, but the jobs numbers from ADP have been more erratic than many would like. Consumer spending has been holding up, but consumer confidence has been weighed down by job insecurities. Manufacturing looks weak, even as services remain resilient. Depending on where you look, the economy is either reaccelerating, gently decelerating, or simply muddling through. For investors, that ambiguity is a challenge. Growth isn’t so strong that it’s easy to get optimistic, but it’s not so weak that it merits being too pessimistic. It’s not a Goldilocks environment where it’s neither too hot nor too cold; it’s more like an environment where investors are trudging through the mud.
Inflation: Filling the Void
The Bureau of Labor Statistics (BLS) may not have collected price data in October, but that doesn’t mean inflation for the month is destined to remain a mystery. We all observe price changes every time we shop, and while that’s not a formal statistic, it underscores that inflation isn’t invisible simply because one month’s survey was interrupted. Even without an official October reading, the BLS will still publish the November price level. Inflation is the percentage change in prices. If we have to measure the two month change instead of two one month changes, that shouldn’t make a big difference in setting monetary policy or in discerning a trend. The missing month matters far less than it might seem. For Fed officials who are holding onto the belief that inflation is a bigger concern than a slowing labor market, they may be just talking a big game. To build credibility, you want your central bank to talk tough about inflation, but their actions may diverge from their words.
Policy: For Now, Not Forever
Government shutdowns often come in clusters. The deal to end a shutdown is often short and tentative. The latest agreement to reopen federal operations only keeps all agencies funded through January 30 and then only a handful funded through September 30. There are plenty of unresolved policy disputes simmering beneath the surface, any of which could trigger another standoff and shutdown. With the new funding deadline falling just before Groundhog Day on February 2, 2026, the timing feels symbolic, a reminder that we may soon be reliving the same budget drama all over again.
Looking Ahead: Profits Do Matter
Since April, shares of companies with low—or even no—profits have outperformed those of highly profitable firms. Bears see this as yet another sign of market irrationality. Bulls interpret it differently: as evidence that investors are prioritizing expected future profits over backward-looking measures of performance. The big vulnerability is if those high hopes for future growth don’t materialize. Over extended periods, the market has rewarded profitable companies more than unprofitable ones. In the short run—week to week or even year to year—profits can appear irrelevant. But over time, they matter a great deal. Maybe that long-term tendency for profits to matter to markets can help investors stomach some of the short-term deviations from that trend.
