October 27, 2025

“I never ask if the market is going to go up or down because I don’t know,

and besides it doesn’t matter.”

Sir John Templeton

Well, another good week on Wall Street and overseas in England. Here are the numbers. The S&P 500 added 1.59%, the Dow Jones Industrial Average rose 1.93%, and the Nasdaq followed up 1.58%. Internationally, the FTSE 100 led up 3.11% and the MSCI-EAFE gained .46%. The 2-Year Treasury yield was 3.484% and the 10 remained barely above 4%.

So as President Trump heads off to Asia and the hopes of a trade deal which could continue this bull run, what else is happening?  The Wall Street Journal reports, Top U.S. and Chinese negotiators sounded a positive note after trade talks that lay the groundwork for a meeting between Trump and Xi Jinping this week. Trump said the U.S. will impose an additional 10% tariff on Canada in response to an Ontario ad that he said misrepresented comments from Ronald Reagan. The State Department’s internal intelligence agency cast doubt earlier this year on the notion that Vladimir Putin was prepared to negotiate an end to the war in Ukraine, dissenting from a more optimistic CIA assessment of potential talks, according to several current and former officials.

In the much to do about nothing category: Almost overnight, the President tore down the East Wing to make way for the grand space he has long coveted. It was a classic example of the former real-estate developer in action: bulldozing through norms, exerting control over groups that might stand in his way, taking advantage of oddities in permitting rules and acting so quickly that nobody could stop him, this of course is the media obsession instead of things that affect your life.

As to the markets? International stocks are on pace to outperform their U.S. counterparts by the widest margin in 16 years. However, the US markets held their own so far this year, with stocks finished the week on a high note as strong corporate earnings and some encouraging data on inflation pushed all three major U.S. indexes to new records. Strong corporate earnings are easing data-deprived investors’ anxieties about the health of the U.S. economy, providing support to markets. U.S. markets pushed higher after an inflation update that came in softer than expected, sending the S&P 500 and Nasdaq toward record highs and lifting the Dow by roughly 500 points intraday. Commodities were mixed, oil and many agricultural futures fell modestly, gold lagged, and the dollar held largely steady.

On the macro front, China’s new five‑year plan, signaling a renewed push into domestic tech and consumption, kept investors focused on how trade tensions and global supply‑chain shifts could reshape markets.

Earnings season and sector flow drove major stock moves: speculative momentum in small‑cap AI plays surged, while more established companies produced mixed results, some beating estimates, others reacting negatively despite strong numbers. As investors balance headline momentum in AI and data‑storage themes with elevated valuations and upcoming heavyweight reports, the next wave of earnings and policy signals will likely steer near‑term leadership.

Interest rates? The Federal Reserve is almost universally viewed as on track to cut interest rates next week, despite inflation running at a 3% annual rate in September — well above the Fed’s 2% target. October rate cut by the Federal Reserve is a “near certainty.”

And Inflation? MarketWatch reports, consumer prices rose in September slower than expected, likely locking the Federal Reserve into cutting interest rates next week for the second month in a row. The consumer price index increased 0.3% in September, the Bureau of Labor Statistics said Friday. That was a tick smaller than the Wall Street forecast. The yearly rate of inflation rose slightly to match a nine-month high of 3.0%, however. The core rate of inflation, which omits food and gas, rose by a smaller 0.2% rate in September. That was also a notch below the forecast. The 12-month increase in the core rate inched up to 3.0% from 2.9%. The Fed views the core rate as a more accurate predictor of future inflation. Inflation is still running well above the Fed’s long run goal of 2% and it’s risen since the spring, largely because of higher U.S. tariffs, economists say. The highest U.S. tariffs in decades were supposed to result in notably faster inflation, but it really hasn’t been the case. Yes, inflation has crept higher again this year, but only gradually.

Speaking of inflation, the annual cost of living adjustment announced of 2.8%, will raise the average retirement payment by $56 to an average monthly benefit of $2,071. The annual cost-of-living adjustment is determined after every CPI report in September.  So, the government had to report the number despite the shutdown.

Some more good news on housing, last week, mortgage rates fell to their lowest level of the year. Last Thursday, Freddie Mac’s Primary Mortgage Market Survey showed that the average rate on the benchmark 30-year fixed mortgage fell to 6.19% from 6.27% last week. On October 24, 2024, the average rate on a 30-year fixed mortgage was 6.54%. “At the start of 2025, the 30-year fixed-rate mortgage surpassed 7%, while today it hovers nearly a full percentage point lower,” Sam Khater, Freddie Mac’s chief economist, said in a statement.

So, what is not to like? Traditionally we get a big pullback about this time of the month, will it happen? We shall see this week as we head toward Halloween.

As a side note, next weekend I will be traveling to my niece’s wedding in Atlanta, so expect a short and sweet report next week.

Thank you,

Mike