The data is back!
At last, in late November, Congress passed—and President Trump signed—the Continuing Appropriations Act, 2026, averting further turmoil after a 43-day impasse, the longest in U.S. history. Triggered by disagreements over FY2026 appropriations, the shutdown furloughed roughly 900,000 federal employees, withheld an estimated $14 billion in paychecks (with a near-miss for military salaries on November 14), and disrupted critical services, from FAA air-traffic control (forcing 10% flight reductions) and WIC nutrition programs to BLS labor reports and national park operations. Data collection at agencies such as the Bureau of Labor Statistics (BLS) and the Bureau of Economic Analysis (BEA) was severely hindered. As a result, many October-period indicators typically released in November—including the BLS Employment Situation report, CPI, PPI, and the BEA’s Personal Income and Outlays—were pushed into December. Private-sector surveys, forward-looking models, and international releases proceeded as scheduled, creating a partial data vacuum that amplified market volatility and forced investors to lean heavily on PMIs and sentiment gauges.
Overall, November’s figures pointed to a U.S. economy losing momentum—tracking below a 2% growth pace—yet still avoiding outright recession, supported by services and pre-shutdown resilience. The delayed BLS/CPI releases now loom large for the December Fed meeting, with markets pricing an 85% probability of a 25 bp rate cut on December 10. Consumer confidence plunged to its second-lowest reading on record (92.3), reflecting widespread anxiety over delayed wages and persistent inflation concerns. Private-sector surveys indicated that services remained in expansion (PMI 55.0), while manufacturing stayed in contraction territory (48.7). Growth expectations for 2025 were trimmed to roughly 1.8–2.1% by the Conference Board, S&P Global, and the OECD, while the World Bank warned that global growth outside formal recessions is on track for its weakest performance in 17 years. Limited labor-market data deepened the uncertainty, but the few releases available—ADP below +50,000 and JOLTS openings easing to 8.7 million—signaled a cooling but not collapsing jobs backdrop.
Economic data from Europe and other advanced economies painted a similarly subdued picture. Many countries continue to wrestle with low growth, structural constraints, and uneven recoveries, highlighting the fragility of post-pandemic expansions amid energy transitions, fiscal consolidation, and ongoing trade frictions. In the Eurozone, the OECD projects 2025 GDP growth at a modest 1.2%, mirroring Germany’s manufacturing malaise (PMI 42.5, a five-month low) and soft services activity in France (PMI 53.2), all set against an ECB rate pause and a still-firm 2.1% core inflation rate. Elsewhere, developed markets fared slightly better: private forecasts estimate Japan’s annualized Q4 growth at 1.1%, supported by wage gains but constrained by yen weakness and a 0.8% Q3 export drop. Canada’s outlook remains similarly muted, weighed down by a housing downturn and commodity volatility, while the UK’s OBR expects just 1.0% growth amid residual Brexit effects and persistent labor shortages. Collectively, these economies continue to muddle through at sub-2% trajectories—supported by services and policy easing but vulnerable to global trade tensions and geopolitical spillovers from the recent U.S.–China agreement, which provided modest relief by stabilizing supply chains without meaningfully accelerating momentum.
Fortunately, the shutdown did not disrupt the release of third-quarter earnings results, which once again proved exceptional for U.S. corporations. American firms delivered standout performance that lifted global aggregates to their strongest pace in over three years, even as Europe and other regions lagged under structural challenges and currency headwinds. In the U.S., S&P 500 companies posted a powerful 13.4% year-over-year EPS gain—well above the initial 7.9% projection and marking the fourth consecutive quarter of double-digit growth. The surge was led by IT (40% EPS growth, supported by AI tailwinds at Apple, Amazon, and the broader Magnificent Seven, whose EPS rose 18.4%), financials (+23%), and health care. Earnings beats were broad-based, with 82–85% of firms surpassing EPS expectations and 77% beating on revenue. In contrast, Europe’s Stoxx 600 delivered essentially flat EPS growth (0–0.2%), hampered by Germany’s manufacturing slump and sharp sectoral declines in commodities, energy, and autos (down 25–55%), though domestic banks and insurers provided some offset. Forward expectations for Europe have improved modestly, with analysts projecting 8–12% EPS growth in 2026 on the back of monetary easing and fiscal support, yet the performance gap with the U.S. remains wide.
The scarcity of economic data also shifted investor attention toward geopolitics. Following the October 30 APEC Leaders’ Summit in Busan, Presidents Trump and Xi Jinping finalized a landmark agreement aimed at de-escalating trade tensions. Key provisions included a 10-percentage-point reduction in U.S. tariffs on Chinese imports (while maintaining a 10% baseline through November 2026), China’s suspension of retaliatory tariffs on U.S. goods—including agriculture—its commitment to purchase 12 million metric tons of U.S. soybeans by the end of 2025 and 25 million tons annually through 2028, the removal of export controls on rare-earth minerals for U.S. buyers, and enhanced cooperation on fentanyl precursor chemicals. The deal eased pressure on global supply chains and boosted U.S. agricultural exports, though critics argued it failed to address deeper structural issues such as forced technology transfers.
Domestically, however, signs emerged that the administration’s year-long policy agenda has not been received as positively as Republicans had hoped. In the first major electoral test of Trump’s second term, Democrats secured a sweeping “blue wave”: flipping Virginia’s governorship to Abigail Spanberger (D), retaining New Jersey under Mikie Sherrill (D), winning New York City’s mayoralty with democratic socialist Zohran Mamdani, and approving a California redistricting map that tilts future House gains toward Democrats. They also captured 13 seats in Virginia’s House of Delegates and 5 in New Jersey’s General Assembly, securing a supermajority in the latter. Voter turnout appeared fueled by economic frustration, including lingering inflation from 2021–2023 and unfulfilled promises of renewal—factors that are increasingly shaping political sentiment and complicating the administration’s fiscal and trade agenda.
The month began on a positive note for financial markets, despite the absence of major economic data. However, investors soon grew uncertain about the likelihood of a Federal Reserve rate cut in December and became increasingly cautious about elevated valuations in AI-related equities. Markets briefly rebounded following the announcement of an end to the U.S. government shutdown but renewed technical pressures—combined with warnings from several Fed officials against premature policy easing—weighed on sentiment. Further concerns emerged over stretched valuations in the AI sector and Google’s growing challenge to Nvidia through its proprietary TPU chips, despite Nvidia’s very strong quarterly results. Toward month-end, optimism returned, supported by “buy-the-dip” flows and dovish remarks from New York Fed President John Williams, which revived expectations of a potential December rate cut. By the end of the month, the main global indices had recovered, with the Stoxx Europe 600 closing at +0.98%, followed by the MSCI World (+0.31%) and the S&P 500 (+0.25%). The Nasdaq 100 lagged (-1.57%), weighed down by weakness in the technology sector.
Williams’ comments contributed to a decline in U.S. Treasury yields, with the 2-year finishing at 3.49% and the 10-year at 4.01%. In contrast, yields in Europe and Switzerland moved higher: the German 2-year rose to 2.03% and its Swiss equivalent to -0.14%, while 10-year government bonds closed at 2.69% and 0.15%, respectively. Credit markets in the U.S. strengthened, with spreads tightening to new cycle lows: investment grade advanced +0.61%, while high yield gained +0.46%. Emerging market debt also delivered a positive result (+0.15%). Conditions in Europe were more subdued, with investment grade declining -0.25% and high yield broadly unchanged (+0.06%).
Commodities were marked by volatility. Oil prices fluctuated as concerns about weakening global demand and rising U.S. inventories exerted downward pressure, while geopolitical developments—including U.S. sanctions on Russian exports, Ukrainian attacks on Black Sea ports, and stronger-than-expected Chinese demand—provided offsetting support. Late in the month, speculation about a possible U.S.-brokered agreement between Russia and Ukraine contributed to a roughly 3% decline in oil prices. Precious metals performed strongly: gold rebounded +5.91% to USD 4,239.43 per ounce, while silver rose an even more pronounced +16.04%.
In currency markets, the U.S. dollar weakened, particularly against the euro, as expectations for a potential December Fed rate cut increased. EUR/USD closed at 1.1598 (+0.53%), while USD/CHF ended at 0.8040 (-0.07%). Bitcoin experienced a difficult month, declining -16.92% to USD 90,914.64.
In November, our portfolios outperformed their benchmarks. These performance results relate to our Discretionary clients only. Fixed income results were slightly below benchmark performance, primarily due to our underweight positions in both duration and credit. Equity performance was broadly in line with the benchmark; however, concentrated positions within the U.S. allocation—mainly Microsoft and Amazon—generated a modest negative selection effect due to underperformance relative to the broader index. This was offset by strong results from our Emerging Markets active ETF, which—unlike the benchmark—had no exposure to South Korea, a notable laggard for the period. Our global diversification also contributed positively.
Alternatives and commodities provided meaningful uplift: exposure to gold, gold miners, and silver enabled the portfolio to benefit from the broad appreciation in precious metals, resulting in significant outperformance versus the benchmark.
In terms of portfolio transactions, during the month we initiated new positions in gold and silver, through a structure that offers an asymmetric payoff with limited downside risk.
