Trending
After 43 days, the longest U.S. government shutdown finally wrapped up, with Congress passing a funding bill that keeps the lights on through January 30, 2026 (can’t wait for the 2026 sequel). Roughly 1.4 million federal workers will get backpay, and key programs like SNAP are switching back on. The shutdown is expected to shave about 1.5 percentage points off fourth-quarter GDP, leaving the economy growing at a slower 1.0%–1.5% pace, but analysts expect activity to gradually rebound in early 2026 as operations normalize. While the spending and growth will be made up for, it doesn’t change the damage done at a particularly precarious time for the economy.
With the government reopened, economic data will start flowing again, though late and not all at once. And for certain metrics like October unemployment, never at all. The October jobs report will be published next week, but the unemployment rate will be missing due to incomplete surveys. Uncertainty lingers around Affordable Care Act subsidies, which could negatively impact healthcare costs for millions and the stock prices of healthcare companies if Congress fails to extend them by year-end.
Markets spent the week adjusting uncomfortably to a notable rotation. After a seemingly never-ending seven-month surge, technology and AI stocks hit another wall. Rising debt levels, asset-heavy business models, and falling odds of a December Fed rate cut (now around 44% versus 95% a month ago) weighed on mega-cap names. Other sectors like health care, industrials, energy, and materials outperformed as investors diversified away from the year’s biggest winners.
Despite the turbulence, corporate fundamentals remain reasonably solid, and the broader indexes held up. Bond markets were mixed, with Treasury yields drifting slightly higher, while municipal bonds outperformed. Oil swung both ways on supply concerns and geopolitical headlines, gold retreated after hawkish Fed comments, and bitcoin continued its three-week slide.
What this means for investors
The end of the shutdown removes a key short-term risk, but slower growth and shifting market leadership suggest it’s a good time to stay diversified. Concentration can make you rich and broke, sometimes just months or years apart. The breadth of strong returns outside just U.S. Large Cap makes a myopic focus on the U.S. a major mistake. Rather than lean too heavily on tech, be open to the opportunities in mid-caps, health care, industrials, and across international developed and emerging markets. The U.S. economy can regain its footing, but we have to push through the next few politically tense months (this includes the politics at the Fed, unfortunately).
Market Activity
Essentially flat for the year, Bitcoin and Ethereum are poised to be among the worst-performing assets of 2025. Commence the risk-on soul searching.
Seymour Skinner and most of crypto X right now
Stocks
Fixed income
Economic Reports
The data is coming back! Next week, we start getting older data, with most of the October data further delayed to a December release. The data will start trickling back in over the next couple of weeks, including the unreleased and most recent jobless claims, as well as the September data on Thursday. Get excited for market swings and lots of interpretations.
Last week
Next week
Earnings Releases
Not only is the economic data rolling in, but Nvidia earnings hit on Wednesday. Thursday pre-market is going to be frothy.
Last week
Next week
Recommendations
Markets & Economy
Do gamblers invest differently? | The stock market is often compared to a casino, but what happens when you ask gamblers to come to a lab and trade in stocks? The move toward brokers offering crypto-trading and gambling/prediction markets is excellent for business and very bad for users.
There's a Word for That | YieldMax ETFs are a bait and switch for income-focused investors. The quintessential yield trap, an unusually high yield, misleads investors into thinking it is a good investment. In actuality, it’s a cash grab.
Government Reopens Without Data That Guides Markets and the Fed | Jobs and inflation data will be released late and with caveats, complicating the Federal Reserve’s deliberations on interest rates. Odds of a cut are below 50% and falling.
A Taxing Inheritance
Boomers Are Passing Down Fortunes — And Way, Way Too Much Stuff | The “Great Wealth Transfer” is expected to transition trillions of dollars into the hands of Gen X and Millennials. It is also likely to transfer trillions of items, antiques, furniture, knick-knacks, and tchotchkes of assorted real or imagined value.
Chart(s) of the week
Even as some CPI inputs cool and slow their ascent, the breadth of components breaching the 3% year-over-year inflation threshold is growing. The Fed is waffling on a cut that seemed like a sure thing only a month ago. This ubiquity of price growth is hard to ignore, not to mention the possibility that the low growth in owner equivalent rent in September was a mistake or an aberration.
Sources: BLS, Apollo Chief Economist
Absent the shutdown, the economy was estimated to grow between 2.5% and 3.0%, but that will be cut down by as much as 1.5%. The following quarters will capture that demand, but it will take a full year or more. The shutdown not only came at a difficult time for the precarious economy, but unlike the 2018 shutdown, it left economists and businesses totally blind to nearly all official economic data. The true costs and their 2nd order effects will not be known for many months.
Source: Edward Jones, Bloomberg
Falling to $94k at Friday’s market close, Bitcoin appears to have further broken away from the (usually overfitted) tracking of the M2 money supply. Will it snap back, or has something changed?
Source: @saylordocs
Related: Markets Blink, Not Break: Why November’s Pullback Looks More Like a Pause Than a Panic