November 1, 2025

My Thoughts on
the Market

Weekly Edition

How did the markets do?

• It was a volatile week for stocks as tech companies continued to report quarterly earnings. The S&P 500 finished the week slightly positive, just above breakeven.
• Bonds had a mild selloff despite the 0.25% rate cut after Fed Chair Jerome Powell announced on Wednesday that further cuts in December are “not a foregone conclusion”.
• The VIX (the index that measures stock market volatility) rose 11.4%, indicative of investors’ uncertainty of the future.

What headlines moved the markets?

• The Federal Reserve cut rates by 0.25%, setting its benchmark rate to 3.75 - 4%.
  • This week’s rate cut was widely expected by investors and already priced into the market.
  • What wasn’t expected though, was the division among the Fed governors (some wanted a 0.5% cut and others wanted none at all).
    • Powell’s comments about the uncertainty of another 0.25% cut in December spooked the bond markets, causing a mild selloff.
• Major layoffs were announced: UPS to cut 48,000, Amazon will cut at least 14,000 (up to 30,000), Nestle will cut 16,000, and Accenture will cut 11,000 jobs.
  • Most of the layoffs are white-collar jobs and management positions.
  • Companies cite “evolving and automating our processes” and an increased reliance on AI.
    • This trend is good for shareholders but terrible for employees, and will likely have a far reaching impact on the US workforce.
    • I do not envy new college grads, government employees, or folks working in middle-management; this is an increasingly difficult time to find and keep a job.
• Big Tech earnings were a mixed bag with Amazon and Apple rallying while Meta and Microsoft disappointed on AI spending forecasts.
  • Simply spending large amounts of money on AI won’t automatically translate to higher earnings. Other companies should take note.
• US-China trade relations improved after Trump and Xi met and agreed to a one year “trade war truce”.
  • Given President Trump’s mercurial nature on tariffs, many investors are skeptical of the permanency of this agreement.

Personal Finance: what is a Roth IRA?
Disclaimer: taxes are complicated and unique to each individual. Consult with your advisor before making any major tax decisions. This is general educational information and not intended as financial advice.

• A Roth IRA is a form of tax sheltered retirement account where you contribute after-tax dollars (money that you have already paid income taxes on).
  • Unlike a Traditional IRA or 401k/403b, you do not receive a tax deduction when you contribute to a Roth IRA.
• The benefit of a Roth IRA is that all growth and future withdrawals are tax free.
  • Example: you put $1,000 each into a taxable brokerage account, a Traditional IRA, and a Roth IRA. Assume that you leave the money to grow for 10 years to the sum of $3,000 per account and then withdraw all of it.
    • The taxable brokerage account will have dividends and interest that count towards your income taxes each year, and then you will pay capital gain taxes on the $2,000 in gains (growth on investment).
    • The Traditional IRA will not have any taxes during the 10 year period, however all of the $3,000 will be taxed as income when you withdraw it since the initial $1,000 contribution was treated as pre-tax dollars.
    • The Roth IRA will not have any taxes during the 10 year period, nor will you owe any taxes when you withdraw the $3,000 since the initial $1,000 was considered after-tax dollars.
• There are several drawbacks to a Roth IRA:
  • Like all retirement accounts, you pay a penalty if you withdraw the funds prior to age 59.5 (unless under certain circumstances).
  • Any contributions made must remain in the account for at least five years.
  • You are limited to the amount that you can contribute to a Roth IRA:
    • $7,000 per year if under age 50 and $8,000 per year if over age 50.
    • You cannot contribute to a Roth IRA at all if you earn more than $150k annual income (single) or $246k annual income (married).
    • There are exceptions to these limitations, namely Roth Conversions, Backdoor Roth contributions, and the Mega Backdoor Roth.
• Who should consider a Roth IRA?
  • Although this is an oversimplification, Roth IRAs are generally beneficial for investors who believe that their taxes will go up in the future.
    • I will cover this in more detail over the next couple of weeks.

Quote of the week
“I think very unfortunately both parties are seeing pain and seeing polling, but they think it’s the other party that is hurting and not recognizing that it is the American public.” - Matthew Bartlett, Republican Strategist, when asked about the present state of the government shutdown.

• We are currently 31 days into the second longest government shutdown in US history.
  • The longest shutdown was 35 days during Donald Trump’s first Presidential term from 12/22/2018 - 1/25/2019.
• So far, the economic impact is estimated at $7B in losses and could grow to $14B in losses if the shutdown continues through Thanksgiving, approximately -2% of Q4 GDP, according to the nonpartisan Congressional Budget Office.
  • Over 750,000 federal workers have been furloughed since October 1.
• The pain for Americans could be exacerbated depending on the outcome of the recent fight over funding SNAP benefits (food stamps) and the issue at the heart of the shutdown - healthcare subsidies.

Conclusion

• We are beginning to see the impact of AI on the economy, and much like the implementation of Industrialization, there will likely be significant disruption to the American workforce.
• If I could put all of my retirement money into a Roth IRA, I would, but the contribution rules make that difficult to do (more on this next week).
• Whether you are Republican, Democrat, or Independent, all of us should be upset with our elected officials’ inability to compromise and reopen the government.

Have a nice weekend!

Kevin