Each month, CAISSA performs an analysis of prevailing global events, assessing their potential influence on our clients’ wealth plan. We are diligently having strategic discussions with our portfolio managers, ensuring that our position remains informed and aligned with current market dynamics.

Below, you will find CAISSA’s perspective on key topics markets are currently digesting.

After a Brisk Rally in October, November Saw Muted Returns Across Most Asset Classes

US Equities were in negative territory for much of November until a late-month rally pushed the S&P into positive territory as expectations for a Fed cut in December grew.  The backdrop remained uncertain with the delay in economic data caused by the government shutdown (which ultimately ended mid-November), and mixed leadership kept volatility elevated.  AI-related investments were a notable drag as investors questioned valuations and profitability, prompting rotation into more defensive areas such as healthcare, the month’s top performing sector.

CAISSA Perspective: AI remains a key swing factor, with ongoing questions around profitability and the pace of spending driving quick shifts in sentiment. Even small headlines can spark outsized market reactions, underscoring how sensitive the trade has become. The recent rebound is encouraging, but the elevated headline risk and the market’s heightened responsiveness to AI developments will likely keep volatility elevated in the near term. CAISSA has moved to neutral weighting in equities to remove any overweight to frothy assets.

Major Banks See the Dollar Staying Under Pressure Through 2026

Leading banks anticipate a softer U.S. dollar through 2026, reflecting continued easing by the fed, widening fiscal deficits, and accelerating growth across international markets. This backdrop suggests the dollar is likely to remain under pressure, reinforcing themes of recent weakness.

CAISSA Perspective: A weaker dollar tends to benefit globally diversified portfolios by boosting returns on international investments. While short-term currency moves can be volatile, the broader shift towards global growth and lower U.S. real yields creates a constructive backdrop for maintaining balanced exposure outside the U.S. In 2025, CAISSA increased International exposure from underweight to neutral, using periods of market volatility to add.

Policy Participants Have Expressed Sharply Divergent Views on Future Interest Rate Decisions, Leaving Investors Cautiously Optimistic

The Fed cut rates another 25 basis points in December to a bogey range of 3.5-3.75% and indicated a slowdown in further reductions – possibly one more in 2026.

CAISSA Perspective: As the year winds down, markets remain supported by moderating inflation, stable monetary policy and a favorable corporate fundamental backdrop. However, elevated valuations, concentration driven by the strength in AI related securities, and persistent macro uncertainty call for thoughtful diversification and disciplined risk management. CAISSA has been trimming gains in portfolios and realigning to more neutral weightings.  While our equity and fixed income allocations are at a comfortable position, we are looking at adding some dynamic positions to the portfolio in 2026!