• A Market Rebound. Stocks weathered a tough sell-off in October, marking a third straight losing month for investors during a historically weak seasonal period.  However, the market is mounting a strong comeback in November, helped by better inflation numbers and lower longer-term interest rates.

• Evolving Macro. The US economy continues to plow ahead, albeit at a slightly slowing pace. The jobs market, while still strong, has slowed somewhat, with new and continuing unemployment claims both ticking higher in recent weeks.  October inflation reports at both the consumer and wholesale levels showed continued cooling, easing investor concerns about continued Fed rate hikes.

• Q3 Earnings Review. The third quarter earnings season is mostly concluded, and results were better than expected, with YoY growth of 4.1%. Revenue gains, though positive, were more muted than average. Management guidance for the fourth quarter was a bit cautious overall, and expected earnings for the current quarter have come down a notch.

Consumer-facing companies commonly noted a cautious customer, with weakening trends as the quarter progressed. Lower-income households continue to feel the pain of inflation.  Elsewhere, continued strong fiscal spending is aiding the economy.

• Conflict in Middle East. The Israeli-Hamas war has remained contained, aided by intense diplomacy and a large US military presence that has so far discouraged additional mischief by Iran or its surrogates.  At present, oil prices have fallen rather sharply, as the conflict has not spread.

• Market Outlook. Following its three-month correction, the market has regained its footing and is working higher. Favorable seasonals have helped, but the prime drivers to equities have been lower long-term rates and better inflation data, suggesting the Fed’s efforts to engineer an economic soft landing are working. Lower rates, should they prove durable, should provide a tailwind to sectors like housing and autos, helping economic growth.

Markets correct in price, time, or both, and we believe the odds are increasing that this correction has mostly run its course, having undergone a dual consolidation over the last several months (price) and the last two-plus years (time).  We continue to monitor the Treasury market, where heavy US government borrowing needs could drive rates higher once again.