A Lot to Be Thankful for This Year

With American Thanksgiving just around the corner, investors have plenty to be thankful for this year. The US equity markets are hitting fresh highs driven by resilient earnings growth. The crypto space has had quite a year too, as Bitcoin races toward the $100,000 mark thanks to the Trump Bump.

With just 26 trading days left in the year, markets despite their challenges continue to surprise and reward those with patience and conviction. As we give thanks next week, let’s reflect on the year (so far):

1. Strong Market Performance. For the second consecutive year, the stock market is on track to post impressive annual gains of more than 20%.

2. Small-cap Resurgence. Market leadership is no longer confined to the technology sector as small-caps and other sectors step into the spotlight, creating a more balanced market dynamic.

3. Policy Uncertainty. While uncertainty could inject some volatility in the months ahead, markets have shown an extraordinary ability to adapt and climb over hurdles.

4. Easing Inflation. Core inflation, as measured by the Consumer Price Index (CPI), is lower than during 2022–2023. While it hasn’t yet reached the Fed's target rate of 2% (and might not), it’s a positive trend for both consumers and investors.

5. Bond Yields in Focus. Bond yields have declined modestly. However, rising inflation expectations in the bond market under the incoming Trump administration could push yields higher creating a mixed environment for fixed-income investors.

6. A Favorable Regulatory Environment. The incoming administration’s commitment to a less onerous regulatory framework could spur even more growth in the coming year. This shift has the potential to drive an uptick in mergers and acquisitions, initial public offerings, and overall capital markets activity.

7. Strong Demand for Homebuilders. Despite affordability challenges in the housing market due to higher mortgage rates, demand continues to benefit homebuilders.

8. Elevated Stock Buybacks. Stock buybacks remain at historically high levels, driven by cash-rich mega-caps.

Despite massive uncertainties in the global economy—from geopolitical tensions to inflationary pressures and shifting policy landscapes—there are reasons to stay optimistic and hopeful for what lies ahead. As you gather around the table next week with friends and family, hold this thought dear: in life, as in investing, every challenge holds the seeds of opportunity.
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