Client Newsletter Example: An Important Read Today for Every Serious Trader or Investor - A Macro Look at All of the Most Important Facts Facing These Markets Right Now
Published on September 26, 2025 @ 6:48am
Today's newsletter is long, but it's probably one of the more important newsletters any serious investor or trader could read to close out their week. If you want an extremely objective macro view of all that's actually happening out there right now, today's the day to take some time to digest all of it:
An Important Read Today for Every Serious Trader or Investor - A Macro Look at All of the Most Important Facts Facing These Markets Right Now
We've studied historical patterns of stock markets for decades. And while we do spend the large majority of our time fundamentally and technically analyzing individual names and ETFs we believe are going to provide you with market-average-beating returns, it's also extremely important that we keep you well abreast of what's actually happening out there.
Yesterday, the last sentence in our newsletter said, "It's about charts, the economy, Treasury yields, some geopolitics at times, and fundamentals -- with the latter being the most important of them all."
Well, today, I've taken the time to give you what we believe to be a very thorough macro view of every one of those important components in determining the ongoing health of U.S. equities. Maybe even more important, we're giving it to you based on facts, not on all of the opinions everyone has been so accustomed to hearing out there in the media these days.
While we do constantly scour news daily, probably more so now than ever before, it's not because we're looking for opinions to support the context for what we suggest. Rather, it's a constant and timely hunt for facts that may actually affect the markets as a whole, a sector, an ETF, or an individual company name.
With that, I want to point your attention to what we believe to be the most important issues facing these markets today.
First, we don't need to hype what has happened since the April bottom, nor do we want to hype what continues to happen when it comes to the major indexes and many of the individual names associated with them. We'll leave that to others. Today, I want to point your attention to the forward-looking pros and cons of what's actually happening out there, and how traders and investors should view all of it.
First and foremost, the major indexes still aren't showing any long-term signs of weakness yet. The weekly charts of the NASDAQ 100 and the S&P 500 still remain both mid- and long-term intact. Sure, we're going to get short-term selloffs from time to time, but when you look at the weekly charts of both here, you can see there's still nothing glaring enough to suggest the ongoing bull market is coming to an end yet.
In other words, traders and investors can still maintain exposure to what continues to do well and even use any forward weakness as attractive buying opportunities.
While Treasury yields do still remain somewhat elevated, they're now exactly where they were back in the summer of 2008, just after the entire equity landscape staged one of its best buying opportunities in history. Provided here are weekly charts of both the 10- and 30-year yields, and as you can see, neither are around their recent historical highs nor around their recent historical lows.
However, if everything continues to play out the way we think it will, we do expect interest rates to come down further and further, which means the single most important component to stock market performance over the next few years should end up being well supported by a lower interest rate environment.
I'll also add that tariffs are now starting to add to U.S. Treasury coffers, and if rates can continue to come down, the interest being paid on the U.S. deficit should also come down as well. That too would support the idea of a slow reduction in the U.S. deficit. Remember, if the U.S. can't start to get control of its deficit, nothing else will matter--that's the single biggest issue facing the future of the America as we know them today (yes, both the U.S. and Canada).
It's not to say there aren't concerns out there right now, though. But before I get into those concerns, just know that equity markets do have a long history of climbing a wall of worry, at least until one or more of those concerns actually comes to real fruition.
More importantly, none of the following concerns have actually managed to trigger enough real fear within the professional community yet, meaning while there are concerns, none of them have actually become a big enough problem yet to trigger any sort of systemic event.
First, just this morning, we got more inflation data via the Personal Consumption Expenditures Price Index (PCE), the one piece of ongoing inflation data that the Federal Reserve probably pays more attention to than anything else.
On a year-over-year basis, PCE came in at 2.9%, which is exactly what economists were expecting. Even more important, the data continues to suggest that while inflation does remain a little sticky, it's far better now than it has been in recent years.
Basically, the U.S. economy is holding up better than many expected, with resilience still the dominant theme. Consumer spending remains healthy, especially at the higher end, and business investment--fueled by AI, digital infrastructure, and new technology buildouts--is providing a steady tailwind. Growth has surprised to the upside, and even with rates elevated, the economy has managed to adapt without slipping into contraction.
However, challenges are still present--hiring has cooled, and some households are feeling the weight of higher costs--but the broader picture remains stable. Inflation is easing, corporate earnings are holding up, and confidence in long-term growth drivers is intact. For now, the U.S. continues to show it can balance the pressures of tighter policy with the underlying strength of its consumer base and innovative industries.
Still, technology valuations have once again surged to levels that feel disconnected from underlying fundamentals, with many of the most-hyped names trading at extremely high multiples despite generating little to no real income.
Investors are bidding up these stocks on the promise of future breakthroughs, particularly in artificial intelligence, even though their current financials don't justify the prices being paid. While the largest tech giants at least have entrenched revenue streams and profits, a growing subset of highly speculative companies is riding the wave of excitement, echoing patterns that were all too familiar during the Dot Com bubble.
The parallels to the late 1990s are striking. Back then, companies with barely a business plan were valued as if they would dominate entire industries overnight. Today, the same dynamic can be seen in AI-related names and other buzzy tech plays, where valuations are being driven more by narrative than by earnings. The difference this time is that established giants like Microsoft, Alphabet, Amazon, and Meta are anchoring the sector, but even they are being priced at bubble-like premiums given the level of growth already implied in their stock prices. The enthusiasm is real, but so is the risk that expectations are running far ahead of reality.
AI spending underscores that risk. Big Tech is plowing tens of billions into chips, data centers, and R&D, yet monetization will take years, not quarters. The heavy upfront investment is certain to weigh on margins in the near term, and for the smaller, unprofitable firms, the path to actual income is even murkier. Investors piling in on hype alone may find themselves disappointed when the financial payoff doesn't arrive as quickly as the narrative suggests, leaving valuations vulnerable to sharp resets if sentiment shifts.
Then there's the current geopolitical climate. Tensions between the Eurozone and Russia have been climbing fast in recent weeks, with NATO now on heightened alert. Russia has stepped up its provocations, including fighter jets crossing Estonian airspace without clearance and waves of drones penetrating Polish territory. These incidents prompted NATO to activate Operation Eastern Sentry and hold emergency Article 4 consultations, signaling that the alliance views these moves as deliberate tests of Europe's defenses.
At the same time, Moscow is leaning harder into hybrid warfare--satellite tracking, cyberattacks, and other disruptive tactics--while framing Western military support for Ukraine as "direct participation" in the war. In response, NATO leaders have reinforced their collective defense commitments, ramped up military deployments in Eastern Europe, and pledged to expand defense budgets significantly. The result is a much sharper standoff, with both sides making it clear that the room for miscalculation is shrinking.
Tensions have even spilled over into explicit warnings: NATO officials have publicly affirmed that, if necessary, they reserve the right to shoot down Russian aircraft that violate alliance airspace. Some leaders and military planners stress that this decision would be taken only after graduated warnings--radio calls, visual signals, escorts--but that in extreme cases a kinetic response is on the table. Meanwhile, U.S. and Polish leaders have openly endorsed a tougher posture, saying that the defense of NATO skies must be credible and that violations cannot go unanswered.
Russia has responded with sharp rhetoric. Its ambassador to France warned that downing a Russian plane would amount to war, essentially asserting that such an act could escalate into full-blown conflict. The Kremlin has repeatedly framed Western airspace enforcement around Russia as a dangerous escalation, hinting that NATO actions may trigger a broader confrontation--even a potential World War III scenario should the rules of engagement cross certain red lines. The clash over airspace and the specter of direct military confrontation now loom larger than ever.
If that's not enough, another potential government shutdown looms. However, government shutdowns have a long history of spooking headlines far more than they damage markets. While short-term volatility is common, history shows that stocks usually hold up better than most expect. In 2013, for example, the S&P 500 actually climbed around 3% during the 16-day shutdown.
The longest one on record, in late 2018 through early 2019, coincided with a broader market rebound that saw gains of roughly 10%. That's the general pattern: markets may wobble in the moment, but once funding resumes, they typically recover quickly and often push higher within months. On average, the S&P has posted solid double-digit gains in the year following past shutdowns.
The real concern isn't necessarily the shutdown itself, but how long it drags on and whether it collides with bigger structural issues. A prolonged lapse means delays in economic data releases, slower regulatory approvals, and hiccups for federal contractors. It can chip away at investor confidence if layered on top of debt ceiling fights, credit rating downgrades, or a softer macro backdrop. In other words, a shutdown alone has rarely broken markets, but in combination with other stresses, it can become part of a bigger problem.
Looking at the current timeline, funding for the government expires at midnight on September 30, 2025. If Congress doesn't pass a budget or continuing resolution, a shutdown would begin October 1. Given the deep partisan divide, there's a real chance lawmakers run things right up to the wire. So, the date to circle is the very start of October. That's when we'll see whether this plays out as another short-lived political standoff that markets mostly brush aside, or if it turns into something more disruptive this time around.
And finally, private credit markets are drawing heightened concern as higher interest rates and slowing growth start to expose weaker borrowers. Many of the companies funded through these channels are highly leveraged and have thin cushions on interest coverage, leaving them vulnerable to even minor shocks. As profitability tightens, the risk of defaults or restructurings rises, creating potential ripple effects across portfolios that had been built on years of cheap money.
At the same time, the very structure of private credit poses its own set of challenges. The market is opaque, harder to value, and inherently illiquid, yet more retail investors are being steered into "semi-liquid" vehicles that promise access to an asset class not designed for quick exits.
That mismatch could become a real problem if redemption pressure mounts during a downturn. Add in the growing reliance of banks on these funds through credit lines and financing, and the possibility of stress spilling into the broader financial system is becoming harder to ignore.
Like I said above though, other than current valuations, none of the above have actually come to real fruition yet. And again, markets do have a very long uncanny history of climbing a wall of worry. Just look at what stocks have done since tariff news hit the tape back in February. It's typically never as much about the concern, as it is when the concern actually triggers more of a systemic event, meaning we don't see anything of the above actually triggering anything systemic at this point.
Nevertheless, as much as we spend time slicing and dicing the very short-term market landscape, bringing you what we believe to be high-quality names and ETFs we believe are going to generate returns for you, we also believe it's extremely important for every trader and investor to stay informed and abreast of all that's going on out there at any point in time.
With that, I hope today's newsletter provided you with the latter. However, unless any of those above-mentioned concerns actually starts to trigger something more systemic, we're simply going to continue to use any market-wide weakness to exploit names or ETFs we believe can provide you with great returns.
There's definitely plenty of good reasons right now why these markets are where they are, and it's important to remember that the markets are always right. Not necessarily when it comes to hype with certain names at times, but definitely with respect to the overall market environment.
Have an amazing weekend, and we'll see you right back here on Monday.
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John Monroe - Senior Editor and Analyst
