HOW I SEE IT – by Bruce
US Thanksgiving /10-year forecast/Policy Push market
US Thanksgiving week- historically is positive for equities -some of the indices are close to all-time highs again- we’ve had back-and-forth action since October 1- still expect positive finish for the year.
Positives:
AAII Investment Sentiment Survey- 32% bullish/ 25.3% neutral/ 42.7% bearish- steady readings for last 3 weeks-good not euphoric or extremely bearish.
RBC CM. The Pulse of the Market -" 1. The S&P 500 having finally entered what we considered to be tier 1 garden variety pullback territory last week, we review what we’re watching to help us gauge if/ when the pullback has run its course. ( So far, it has). 2. With old leadership within US equities under pressure we review which trades are working best right now (or might be starting to work) among the data sets we track regularly (Small caps and value sectors with valuation appeal and safer factors). 3. We review what we learned from the consumer companies that reported over the past week (companies highlighted a mixed macro backdrop, ongoing and intense consumer challenges, ample inventories, their ability to manage through tariffs, and more specific AI use case examples).”
Charts - Number of S&P 500 stocks above their 20 day moving average is currently above 70%. It was sub 30% a few days ago. This isn’t some overall bounce on weak breath like they keep telling us but a legit buying thrust.
S&P 500 revenue growth is on track to reach 8.4% y/o/y and 3Q 2025 the highest since Q3 2022. If this holds it would mark the second consecutive quarterly improvement. The strength has been broad-based with all 11 sectors reporting positive year of your revenue growth so far in Q3. Convincing signs of a bottom at the end of last week. Inverse ETF volume as a percentage of total spiked up to 43% outside of Liberation Day - this is the highest % in more than 2 years.
Hard to see this bull end until we start getting some IPO supply. The AI adoption rate is apparently surging, unlike any other major technological advance -will it continue at this pace?
GS - 10-year forecast “We expect global equities deliver solid long-term returns despite elevated valuations - our forecast of 7.7% in US dollars is close to the historical medium supported by structural drivers such as nominal growth, profitability, and shareholder distributions.”
CNBC market Outlook – “2025- 2026- S&P 8000 is achievable- driven by mega cap earnings continuation, AI driven productivity and margin expansion, stable inflation path, acceleration corporate capex.”
Insider buying. Is turning up across major groups. Several key markets are showing notable accumulation.
Ed Pennock-“ Markets continue to rally driven by higher expectations by a Fed rate cut in December - now 80% expected - concern about cooling labor market and slower inflation would allow such a cut.”
US Banks. Regulators issue rule to modify regulatory capital structures.
Fidelity. Mark Schmehl – “Fundamentals remain strong despite market fear. AI driven businesses are sold out and demand keeps accelerating. Supply is the bottle deck. AI adoption is exploding. Real applications are emerging fast 2026 will be the year of AI at scale. Private market insights give him an edge helping anticipate trends like power, constraints, and robotics early.
Ned Davis - Volatility last week was US focused. Outside of the US most data last week pointed to few signs of a sustained global slowdown in the near term and more signs of ongoing ease monetary policy all conducive to the continuation of the equity bull market. Emerging labor market slack could keep inflation from escalating and is a good reason for continued Fed rate cuts.
Jim Paulsen- From innovation to policy push. As economic policy support finally broaden leadership seems poised to shift from innovative new era stocks to policy pushed old era stocks. So far the contemporary bull market has been overwhelmingly driven by innovation- that is, leadership by new era stocks. My guess is the next leg will be driven by economic policy accommodation or buy a policy push!
Dr Ed Yardeni - 2020s Outlook - He expects 2.5- 3% real GDP growth in 2026 rising to 3.5- 4% annually through the late 2020s. A productivity boom driven by BRAIN technologies (biotech, robotics, AI, nanotech). S&P 500 fair value path to 9000- 11,000 by 2029. Disinflation toward 2% as productivity offsets labor cost pressures. A more independent Fed. Rebalancing away from mega cap AI names- rotation towards industrials, financials, healthcare, & global equity. Gold 10,000 by 2029.
Ted Lee - Expected rally into month end. Fed chair is quite dovish, and we expect rates to fall. I don’t think expensive stocks are reasons not to own them. So, remember to buy the dip and stick with the mag seven. Reasons why expect a year at rally. 1. First the government shut down ended. 2. The Fed is going to cut in December. 3. The seasonal strength markets have been up six months in a row - a sign of momentum. 4. Investor sentiments bearish still high. Still the most hated V shape rally.
Negatives.
Cash levels in US equity mutual funds have declined to 1.2% of total assets the lowest and at least 20 years- this is below the February low of 1.3% and the 1.5% low seen before the 2022 bear market.
Global inflation is easing towards YE, sadly not fast enough as higher government spending and monetary easing remain the norm.
Foreign investors have ploughed $647 billion into US stocks over the past 12 months at all-time high.
Short sellers are crowding into US small caps where a weaker balance sheets, higher borrowing costs and exposure to slower growth make easy targets.
Traders are now shorting ETF at the fastest pace in history.
Housing - there are 37% more home sellers than buyers.
Charts - Weak private jobs numbers should result in cut. Labor sentiment is not that strong, but not showing up in initial jobless claims.
Brian Westbury - The stock market looks priced for perfection and is underestimating recession risk. But a housing collapse is highly unlikely and a collapse even greater than the last one even more
Investment strategy – ““Life moves fast. If you don’t stop and look around once in a while, you could miss it” Ferris Bueller
Stock of the Days: SOBO, AMZN, HBM, DBM, BBM