CAISSA’s November Perspectives
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.
Earnings Strength Persists
The rally continued in October, fueled by persistent optimism about artificial intelligence, ongoing rate cuts from the Federal Reserve, and robust third-quarter earnings. As of November 7th, over 90% of S&P 500 companies had reported earnings, with blended earnings growth at 13.1%1. If the quarter closes above 10%, it will mark the fourth consecutive quarter of double-digit earnings growth.
CAISSA Perspective: We often hear that stocks look expensive and that high valuations limit forward returns, which is true in isolation. However, 82% of companies reported earnings above estimates as of November 7th (the 5-year average is 78%)1. Therefore, it’s equally important to recognize that these above-average earnings growth figures have helped support those valuations that drive long-term stock gains. This environment reinforces our view of maintaining diversified equity exposure to capture the benefits of continued earnings strength across sectors, not just in AI-related names.
Rate-Cut Expectations Cool After Fed’s Cautious Tone
Bond markets rallied as yields declined, reflecting continued central bank easing. Although the 0.25% rate cut was widely anticipated, hawkish dissent and Chairman Powell’s remarks on the balance of risks caught investors off guard. Futures markets, which had priced in a 94% probability of a December cut before the meeting, dropped to 67%2 after.
CAISSA Perspective: With 150 basis points of rate cuts since the cycle peak, the Fed has already delivered its largest non-recessionary easing since the mid-1980s. This has reflected a policy shift towards a more accommodative stance as the Fed balances its dual mandate of maximum employment and price stability. Futures markets still have better than a 50% chance of another rate cut in December, and high-quality bonds remain an important stabilizer and potential source of total return as yields adjust lower. Any pause in 2026 will likely be short-lived as the Fed Chair’s term is set to end in May of next year.
US and China Reach Trade Truce, Easing Global Tensions
The US and China formalized a one-year trade truce at the November APEC Summit, with the US cutting tariffs to 47% and China suspending retaliatory tariffs on American agriculture products and rare-earth exports. China also committed to purchasing at least $25 billion in US soybeans over the next few years.
CAISSA Perspective: We generally align with the broader market, looking past the trade war headlines, recognizing that the recent escalations by both sides are strategic moves aimed at ultimately de-escalating tensions. The one-year truce reinforces this outlook, easing uncertainty around global trade and supply chains. Had the high tariffs been seen as permanent, the implications for markets would have been far more severe. For portfolios, it underscores the importance of looking past the short-term noise and maintaining exposure to diversified strategies positioned to benefit from long-term growth trends.
Sell in May? Not this Year
“Sell in May and Go Away” has its origins in London’s financial district. The original phrase was “Sell in May and go away, come back on St. Leger’s Day,” with the event referring to a horse race held in September. In its original context, the adage recommended that British investors and bankers should sell their shares in May, relax and enjoy the summer months, and return to the stock market in the fall after the St. Leger stakes.
CAISSA Perspective: We remain constructive on stocks as we head into year-end. Markets have built strong momentum coming off a historic six-month period during what is typically a weaker and more volatile stretch for equities. That resilience reflects solid earnings trends and broad market participation. With seasonal factors turning more favorable, the momentum behind this really provides a supportive backdrop for further gains, even if we see some near-term volatility along the way.