Navigating Uncertainty: The U.S. Economy & Financial Markets Offer Opportunities

Economic Overview - The U.S. economy is showing positive signs despite limited economic data due to the federal government shutdown, with the Consumer Price Index (CPI) indicating persistent inflation but slightly lower than expected monthly updates [1] - Job data reflects greater stability, with state-level unemployment claims showing limited layoffs, countering reports of large tech companies reducing headcount [1] Employment Trends - The latest ADP private sector jobs report indicates October job gains exceeded expectations, with smaller firms continuing to hire despite larger firms reducing headcount [2] - The Purchasing Manager Index shows overall economic expansion, with growth in the services sector outweighing weaknesses in manufacturing [2] GDP Growth Projections - The U.S. economy is projected to grow at approximately 2.5% for the calendar year 2025, aligning with the previous business cycle average [3] - Despite concerns regarding tariffs and geopolitical risks, the economy is expected to maintain momentum [3] Corporate and Household Earnings - Persistent GDP growth is anticipated to lead to higher corporate and household earnings, although lower-income households may experience some weakness [4] - This aggregate growth is expected to support equity markets, potentially reaching new highs [4] Investment Strategy - The company favors domestic equities with a focus on quality growth, particularly in the information technology, industrials, and financial sectors [5] - With the U.S. Federal Reserve reducing short-term interest rates, the intermediate part of the yield curve is seen as offering return potential while providing a buffer against equity market volatility [5] Market Sentiment - The Cash Indicator reflects a healthy amount of risk priced into financial markets, with current volatility potentially presenting buying opportunities [6]