Market Insights Recap — Week of October 13, 2025

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

Tariff trauma turnaround, flying blind and our favorite time. What do they mean for our portfolios? What should we be thinking about?

Well, let's start with our solid first-gear economy. How about a flashback to 80 days or so ago? China implementing controls and export licenses on rare earth metals globally, not just the U.S. Their letter went out to countries last Thursday. That threat trashed the 90-day truce between China and the U.S. Trump responded with 100% tariffs effective November 1. The two countries have several meetings scheduled between now and the final deadline of November 8, but the government shutdown continues. The Senate is out 'til next Tuesday. The House remains out of session. After all, they did their job. They passed a budget and sent it to the Senate. So no end to the shutdown and no official government data. So economists are flying blind.

Private retail sales figures from Johnson Redbook and the Chicago Fed show consumers continue to spend rising at about a 4.6% annual rate. Solid spending means good final demand, which equals steady employment, and the weekly jobless claim reports suggest little or no layoffs. No official data likely gives the Fed an excuse to cut its short-term rate by another quarter point at the end of this month. They could justify dropping the Fed funds target range as a precaution, even though they don't really need to.

Well how about stocks? Just more new highs until we hit that tariff speed bump last week. China versus the world on rare earths rattled markets around the world last Friday. We think this is a speed bump, and markets will focus on earnings that start this week. Last Saturday marked the third anniversary of the current bull cycle. The S&P 500 is up 85% since the October 2022 low. Big drivers for this cycle: moderate inflation, Fed cutting rates and AI everything. 

You heard it here first. There's just not enough electricity and copper to cover all the AI agreements and proposals floating around out there. Power and copper are this mania's picks and shovels. So expect a shakeout in the next couple of years that not every project is going to get funded or built. A pause in the stock rally would help reset fundamentals. Fundamentals are forefront in traders' minds over the next few weeks, as companies turn in their third quarter report cards. Earnings season is our favorite time of the quarter, and stocks do tend to perform best. This week, big banks lead off. On Thursday, TSMC is going to give us an update on chip supplies. Now we expect modest sales growth from the S&P 500 and earnings growth between 8 and 9%. So very nice growth considering very real tariff trauma and worries over actually abundant energy supplies. 

So let's wrap it up. China's rare earth gambit is a negotiating tactic. It's designed to pull countries into its orbit. We expect some sort of deal by mid-winter. The economy is running in at least first gear, maybe accelerating. Stock market is looking to earnings season, and good news on AI sales to continue the rally. No end to government shutdown this week; 'til next time.