Core Viewpoint - The EUR/USD exchange rate has shown resilience despite potential pressures from US economic data and Federal Reserve signals, indicating a delay rather than a complete abandonment of expectations for rate cuts [1][2][3]. Economic Indicators - A strong US jobs report indicated a rise in headline jobs growth, with the unemployment rate increasing due to a larger labor force, yet the dollar softened, suggesting better-balanced positioning among investors [2][3]. - The market is currently pricing the next Federal Reserve rate cut for January at 24 basis points, compared to 10 basis points for December, reflecting a shift in expectations [3]. European Economic Outlook - The eurozone is showing signs of stability, with business sentiment remaining constructive, which may support the euro against the dollar [6]. - The European Central Bank (ECB) is expected to report negotiated wages for Q3 at an annualized rate of 2.45%, down from 3.95% in the previous quarter, indicating rising real wages and potential positive consumption surprises in 2026 [6]. Central Bank Activities - ECB President Christine Lagarde is set to speak at the Frankfurt European Banking Congress, focusing on the benefits of investing in Europe and possibly discussing the expansion of EUREP repo lines to enhance euro invoicing [7]. - The Swiss National Bank is expected to maintain a cautious stance regarding the strength of the Swiss franc, with limited options for rate cuts or interventions [9]. Japanese Economic Policy - Japan is implementing targeted fiscal stimulus aimed at energy subsidies, which may help lower headline inflation and keep the Bank of Japan from raising rates, potentially leading to more negative real rates and a weaker yen [10]. - There is an increasing likelihood of intervention in the USD/JPY exchange rate if it approaches the 159/160 range, particularly during the US Thanksgiving holiday when market conditions are thinner [11].

Performance Overview - Baron International Growth Fund gained 6.04% in Q3 2025, underperforming its benchmark MSCI ACWI ex USA Index which appreciated 6.89% [3] - Year-to-date performance shows the Fund at 24.85%, slightly below the benchmark's 26.02% [4] - The Fund's performance remains ahead of the Proxy Benchmark on a year-to-date and one-year trailing basis [3] Market Drivers - The initiation of a Federal Reserve easing cycle and enthusiasm for AI-related investments were key drivers of global equity returns during the quarter [7][32] - Ongoing uncertainty regarding U.S. tariffs may clarify in the current quarter, but a global central bank easing cycle is evident [7][32] - The shift in U.S. trade and immigration policy, along with accommodative monetary policy, is expected to impact global inflation dynamics [7][32] Sector Performance - Poor stock selection in the Information Technology sector, particularly due to Constellation Software Inc.'s share price correction, was a significant detractor [8] - Favorable stock selection in the Materials sector, driven by positions in global security and sustainability themes, contributed positively [8] - Weak stock selection in Consumer Staples and Communication Services also negatively impacted performance [8] Geographic Performance - Underperformance was noted in Poland, Japan, and Israel, while favorable stock selection in Australia and China partially offset these losses [9] - The Fund remains optimistic about China's AI potential and structural growth story in India, despite recent underperformance [9] Top Contributors and Detractors - Top contributors included Lynas Rare Earths Limited, argenx SE, and Lundin Mining Corporation, with Lynas benefiting from geopolitical tensions [10][11][13] - Key detractors were Constellation Software Inc., InPost S.A., and ODDITY Tech Ltd., with Constellation facing uncertainty around AI impacts and leadership changes [14][15][16] Recent Investment Activity - New investments included Nomura Holdings, EssilorLuxottica SA, Pony AI Inc., and GDS Holdings Limited, reflecting a focus on high-conviction ideas [24][25][26][27] - Increased exposure to existing positions such as Lundin Mining Corporation and Japan Exchange Group, while exiting positions in less favored stocks [29] Outlook - Strong performance is expected from global markets, particularly in Europe, driven by increased defense and infrastructure spending [30][31] - The Fund anticipates continued growth in China and Korea, with many holdings poised for significant earnings improvements [31] - The competitive landscape in AI is evolving, with China emerging as a formidable player alongside U.S. technology giants [34][35][36]

Market Overview - The market has experienced a significant rise of 36% since the lows in April, but today's decline marks the largest drop in over six months [2] - The VIX, a measure of expected volatility, spiked by 1.29%, indicating a strong market reaction as investors seek safety [2][3] Investor Sentiment - The spike in the VIX suggests that investors are looking for protection, which is often a sign of an interim low in the market [4] - Despite the pullback, it is viewed as a buying opportunity unless there is a structural change in the market [3][4] Future Outlook - Historical data suggests that forward returns are generally positive one week and one month after such market movements, with expectations of a potential increase of 60 points in the near term [4][5] - The market has shown resilience with "buy the dip" behavior from investors, indicating confidence in a rebound [5] Structural Factors - Key drivers for stock attractiveness over the past year include innovations in AI, blockchain technology, and the Federal Reserve's easing cycle, which are expected to provide ongoing support despite geopolitical tensions [7] - The market's performance is not expected to end on its lows, with a possibility of a buying opportunity emerging after any further declines [8]

Market Trends & Predictions - Bitcoin is expected to outperform gold in year-to-date returns [1] - Potential for Bitcoin to reach $200,000 [1] - Paul Tudor Jones anticipates a "massive rally" before the bull market peaks [1] - Analogy drawn between the current market setup and the tech bubble of 1999 [1] Economic Factors - Unprecedented combination of a 6% US deficit and a Fed easing cycle is noted [1]

Core Viewpoint - Jim Cramer suggests that JPMorgan Chase & Co and Goldman Sachs Group Inc are undervalued based on their price-to-earnings (P/E) ratios, despite general investor sentiment being cautious about financial stocks [1][5]. Valuation Analysis - JPMorgan trades at approximately 15.6 times forward earnings, while Goldman Sachs is around 15.3 times, significantly lower than the S&P 500's 24 times multiple, indicating a substantial valuation gap [2]. - The current valuation discounts are attributed to concerns over interest rates and credit risks, which have historically affected bank valuations [2]. Potential Catalysts - If the Federal Reserve's easing cycle occurs, net interest margins may stabilize, leading to a rebound in deal-making activities, which could enhance the attractiveness of current valuations [3]. - There is a resurgence in Wall Street's M&A activities, with pipelines rebuilding and capital markets becoming more active, potentially increasing fee income for both banks by 2026 [3]. Share Buybacks - Both banks are actively engaging in stock buybacks, with JPMorgan repurchasing nearly $3 billion in stock last quarter, which can enhance earnings per share (EPS) without relying on significant loan growth [4]. Investment Perspective - The current valuations of JPMorgan and Goldman Sachs present an opportunity for investors, as they are trading below market multiples, suggesting a potential for upside if market conditions improve [5]. - The "boring" nature of bank stocks may lead to unexpected gains if interest rates ease and deal-making accelerates, making the current investment proposition appealing for those willing to hold [5].

Market Outlook - City Research expects the S&P 500 to reach 6,600 by year-end, suggesting potential near-term volatility in Q3 [2][3] - City Research anticipates the S&P 500 to reach 6,900 by the end of the first half of next year, with a bull case of 7,200 [2] - City Research suggests buying during any volatility in Q3 [3] Federal Reserve and Monetary Policy - City Research anticipates two more Fed rate cuts by the end of the year and potentially two more in the first quarter of next year due to labor market weakness [4] - A Fed easing cycle into a soft landing is considered very positive for risk assets [7] Gold Market - A Fed easing cycle, geopolitical concerns, and a potentially slowing economy are considered positive factors for gold [5] - Central banks continue to buy gold, supporting diversification [4][5] - Gold price could still see some upside from current levels [5] Labor Market and Economy - City Research anticipates unemployment to rise to approximately 48% by the end of the year [7] - The US is experiencing a growing infrastructure economy alongside a weakening labor market [6] - Stronger payroll data could negatively impact equities [6] Tariffs - The effective US tariff rate is currently around 18% [8] - The effective tariff rate could potentially increase to 20% with sectoral tariffs on pharmacy or electronics [9]

Core Insights - Gold prices have reached a new record, positioning the metal for its largest annual gain in over 45 years [1] - Gold futures surged to approximately $3,750, while immediate delivery bullion traded above $3,700 per ounce [2] Year-to-Date Performance - Gold is up more than 40% year-to-date, marking its best performance since 1979, driven by expectations of a Federal Reserve easing cycle and recent interest rate cuts [3][9] - The dollar index has decreased roughly 10% year-to-date, contributing to gold's rise as it is priced in US currency [4] Market Dynamics - Inflows into physically backed exchange-traded funds (ETFs) have reached a three-year high, with central banks continuing to accumulate gold [4] - Central banks, particularly in emerging markets like Russia, China, and India, are buying gold in significant quantities to hedge against currency fluctuations [5] Fund Manager Sentiment - A recent Bank of America survey indicated that gold is now the second most crowded trade, following the 'Magnificent 7' stocks, yet 39% of fund managers reported minimal allocation to gold [6] - The average allocation among surveyed fund managers was only 2.3% [6] Analyst Perspectives - Goldman Sachs analysts noted that gold's breakout is driven by conviction buyers, including increased ETF holdings and renewed demand from central banks after a seasonal lull [7] - Goldman Sachs has set a price target of $4,000 per troy ounce for gold by mid-2026 [8]

Market Outlook & Strategy - Wells Fargo raised its year-end S&P target to between 6600 and 6800, while anticipating increased volatility [1] - The market has largely priced in the Fed's rate cuts and a relatively stable economy, leaving limited room for further capitalization on this dynamic in the near term [2] - Wells Fargo believes 2026 could be an even better year, given the resolution of fiscal policy and the potential continuation of accommodative monetary policy [3] - The market indicates positive momentum for the remainder of the year and into the next, supporting a bullish outlook [6] Sector Allocation - Wells Fargo is underweight on small-cap stocks, despite their recent outperformance, citing quality degradation and the prevalence of non-earners in the small-cap universe [10] - The idea of rotating from tech to small caps is considered nonsensical, especially given the significant market capitalization difference ($3 trillion vs $28 trillion) [8][9] Economic Indicators - Corporate balance sheets are in a strong position, with high yield spreads at fresh lows [4] - Banks are at all-time highs despite the Fed cutting interest rates, indicating no significant concerns about credit quality or defaults [5]

Core Points - The article discusses the financial sector and highlights the author's extensive experience in journalism and reporting, particularly in the context of Canadian politics and economics [3]. Group 1 - The author has over a decade of experience in reporting, specifically within the financial sector since 2007 [3]. - The author's background includes covering territorial and federal politics in Nunavut, Canada, indicating a strong understanding of regional economic issues [3].

Core Viewpoint - Société Générale reported a 10% increase in its financial performance, indicating a positive trend in its operations and market position [1][2]. Financial Performance - The company achieved a 10% growth in its financial metrics, reflecting strong operational efficiency and market demand [1][2].