Market Insights Recap — Week of November 3, 2025

Hello. I'm Steve Orr, Chief Investment Officer for Texas Capital's Private Bank.

Shifting gears, Fed fears and holding breadth. What do they mean for our portfolios? What should we be thinking about?

A solid October. More new highs. Cheaper money from the Fed. Tariff uncertainty, on again, off again. Some more bank credit issues out there. More treats than tricks, for sure. So let's get ready for November. Now, of course, we're well into the 30s for the government shutdown days, so we don't have any hard, backward-looking economic data. We do have private and Fed regional bank surveys, and they paint a pretty positive picture, really. There's pockets of good news here and pockets of concern. On the negative side, those concerns: housing costs. They're still a problem. Existing home sales. Why do they call them existing? They're used homes, folks. Anyway, they're bumping along at a 4 million annual rate. Now contrast that with pre-2019, at a 5 million rate. So housing sales still haven't recovered. The prices though are still going up nationally at a slower rate than the last couple of years. Still, affordability is tough. 

Now over on the positive side of the ledger, five of the 12 Fed regional banks create regular manufacturing and service surveys. And for the first time in a year, all five are reporting improving orders, employment and lower inventories. The tariff news improved at the end of the month with deal announcements from Korea and Malaysia. We think the China one-year truce is going to help trade sentiment. The coming consumer benefits from the One Big Beautiful Bill may shift the economy up into second gear in early 2026. 

Yes, the Fed cut rates by one quarter of a point as expected, a mild surprise from Chair Powell and his press conference though. Recall, in recent speeches, he and other Fed speakers have focused on job growth and how, during the summer, job growth slowed. And what were the causes and were layoffs are coming along and this, that and the other with jobs, jobs, jobs, forget about inflation. Well, you would think if they're really concerned about jobs and they don't have the hard job data because of government shutdowns, that they'd keep cutting rates. But Chair Powell said that that is not a foregone conclusion, that we would get another rate cut in December. And we think with the reasonably good news in the economy that a December cut is probably not likely. So pause for now. The new Fed funds rate at the moment is 4%, down to 3.75%. So expect your cash, your money markets to kind of drift down into that territory.

Now, what about stocks? Let's take a look at October, usually about number seven in the rankings. Remember, September is the worst performer historically. But October is no great shakes either. Well this was a very fine October. Anywhere from plus-3% for some of the Mag Seven, down to just -1% for small cap. Again, not bad at all. But, look back, when you have a 10-month run for the S&P 500 and a strong October, you usually get a good year-end rally. So, we're staying the course; all of our indicators are green. I am a little worried about breadth, and a breadth is not what you breathe in and out; it's the number of stocks participating in the rally or the drawdown. And here, we have a few more new lows than new highs the last couple of days. And we also have just fairly even winners versus losers. So when you're in a strong rally, you like to see a whole lot of winners, really good breadth and very few losers. So we'll keep our eye on that. 

But for now, all of our indicators are in the green, and we see no need to adjust portfolios at this time in a meaningful manner. So, 'til next time.