Recent economic data paints a more complex picture for investors. Job openings have stabilized, but underlying labor-market dynamics suggest the margin for error is narrowing. At the same time, equity markets continue to advance amid rate cuts and rising risk appetite, even as earnings concentration and valuation pressures persist. With inflation still elevated and the Federal Reserve navigating competing risks to growth and employment, policy decisions—and market leadership—are likely to remain fluid in the months ahead.
US Economy
The latest JOLTs report, which includes data for both September and October, showed job openings rising over the past two months. The weekly ADP employment turned positive for the first time in five weeks, suggesting a stabilization in the labor market.
This chart shows the month-over-month changes in job openings by industry for October.
The jobs-workers gap, which measures the difference between labor supply and labor demand, remained close to equilibrium.
We’ve reached the “kink” in the Beveridge curve. A further decline in the job openings rate is likely to lead to a rising unemployment rate.
Global peace deteriorated further in 2025, with state-based conflicts reaching their highest level since WWII.
Here is how corruption is perceived around the world.
The trade deficit shrank to its lowest level since mid-2020, as exports rose far more than imports. Tariff effect?
The Atlanta Fed’s GDPNow model tracking of Q3 GDP ticked up slightly to 3.6%.
The number of US centenarians rose 50% between 2010 and 2020 to more than 80,000, reflecting a broader demographic shift driven by longer life expectancy and aging baby boomers.
US Stock Market
Forty percent of companies in the Russell 2000 Index have no earnings.
Investor risk appetite and expectations of market returns have risen to their highest level since December 2024.
Midterm years have historically been challenging for equities, with the S&P 500 averaging only a 4.6% gain and a 17.5% maximum drawdown since 1950—the most volatile and weakest year in the presidential cycle.
Equities rallied as US recession odds decreased this year. Only two of the Magnificent 7 stocks are outperforming the S&P 500 this year.
Workers across nearly all age groups are investing near-record portions of their 401(k) retirement accounts in equities.
Entering 2025, global wealth reached a record $600 trillion. However, much of this growth was driven by rising asset prices rather than new savings or investments, deepening inequality.
The Fed
The FOMC delivered a third consecutive rate cut, lowering the Fed funds target range to 3.5%–3.75%, in line with consensus.
Markets were expecting this… with fed-funds futures traders pricing in a 90% chance that the central bank would lower interest rates.
While the Fed acknowledged that inflation “remains somewhat elevated,” it said that “downside risks to employment” (which we’ve covered extensively) were the case for lowering interest rates.
Nine of the 12 voting members voted in favor of the 0.25% rate cut. But three voters dissented – the most since 2019.
Fed Governor Stephen Miran once again voted for a 0.50% cut, while Chicago Fed President Austin Goolsbee and Kansas City Fed President Jeffrey Schmid both voted to hold rates steady.
Altogether, six of the 19 Fed officials (including nonvoters) favored no cut at the meeting, while one (Miran) wanted interest rates even lower.
The Fed also announced that it would begin buying $40 billion in short-term Treasurys to ease stress on money markets, and added that purchases will “remain elevated” for a few months.
The Fed also released its quarterly Summary of Economic Projections today. The Fed sees inflation, as measured by the personal consumption expenditures price index, coming in at 2.9% for 2025, slightly below its September estimate of 3%.
The Fed sees the unemployment rate staying at 4.5% through the end of the year, the same as its projection from September.
While those projections were the same as or better than the past update’s, they’re worse than the inflation (2.4%) and unemployment (4.3%) rates the Fed projected for 2025 at the December 2024 meeting.
In short, the estimates didn’t improve enough to do away with “stagflation” concerns.
As you surely know by now, Powell’s term as chair is up in May. Unless President Donald Trump makes a drastic change in direction, the current Fed chair has zero chance of being asked to keep serving in the role.
Trump wants someone who is favorable to lower interest rates, or certainly more inclined to lower them than Powell has been over the past year.
The White House’s director of the National Economic Council, Kevin Hassett, has been rumored as the favorite over the past few weeks – with Trump saying he already knew who his choice was going to be.
But today, we learned that another early front-runner for the job, former Fed Governor Kevin Warsh, is getting a second interview. So will Hassett and two others at some point.
This comes after reports about Wall Street concern that Hassett might not be the best person for the job and would lack credibility both publicly and among other Fed officials. As CNBC reported today.
[Trump’s] possible selection received some pushback from the markets recently, especially among fixed income investors concerned Hassett would only do Trump’s bidding and keep rates too low even if inflation snaps back.
A CNBC survey of Wall Street investors published yesterday showed that 84% believe Trump will pick Hassett as the next central bank head, but only 11% think that he should be the choice. Current Fed Governor Christopher Waller was favored by 47%, followed by Warsh at 23%.
It’s hard to know exactly what’s going on in this process, besides Trump wanting lower rates. But he and Treasury Secretary Scott Bessent probably also don’t want runaway inflation.
Great Quotes
“Be yourself; everyone else is already taken.” ― Oscar Wilde
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All content is the opinion of Brian Decker
