CWS Market Review – November 25, 2025

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The Federal Reserve meets again on December 10. Until very recently, it was looking like the Fed was ready to skip raising interest rates. That’s what the many Fed watchers and the futures market were thinking.

Then it all changed.

On Friday, John Williams, the top banana at the New York Fed, said the central bank should consider lowering rates at this upcoming meeting. This is a big deal because Williams is seen as being close to Chairman Jerome Powell. Also, the President of the FRBNY is the first among equals inside the Fed.

Now it looks like another Fed rate cut is ready to go.

What caused the change in sentiment? Williams said that he’s concerned about a weakening jobs market, and I have to agree with him. He’s also worried that any inflation from the tariffs could be persistent. The conventional wisdom appears to be that any inflation via tariffs will be transitory. I’m not so sure about that.

“My assessment is that the downside risks to employment have increased as the labor market has cooled, while the upside risks to inflation have lessened somewhat,” he said at an event in Santiago, Chile. “Underlying inflation continues to trend downward, absent any evidence of second-round effects emanating from tariffs.”

Mr. Williams affirmed that he still believes interest rates, which are in a range of 3.75 percent to 4 percent, are still “restrictive,” meaning they are weighing on economic activity. After two quarter-point cuts at the September and October meetings, the degree of restraint had lessened, but he said he still believed the Fed had room to reduce interest rates further to get to a “neutral” stance that neither revs up nor slows down growth.

“I still see room for a further adjustment in the near term to the target range for the federal funds rate to move the stance of policy closer to the range of neutral,” he said.

At last look, traders see the odds of the Fed cutting again at near 85%. One week ago, the odds were at 42%. Whatever happens, I think there’s a good chance we’ll see a few dissents at the upcoming meeting. Under Powell, dissents have been rare.

Christopher Waller and Stephen Miran are clearly on the rate-cutting side of the debate. Miran, in fact, favorited cutting by 50 basis points at the last two meetings. There’s a good chance that Waller could replace Jerome Powell as Fed chair when the latter’s term is up in May. However, the conventional wisdom is that Kevin Hassett is President Trump’s top choice to lead the Fed.

Yesterday, the market responded with a nice, happy rally. As you might expect, all those High Beta names were in rally mode. Google and Tesla were both up by more than 6% and Broadcom closed higher by 11%.

The Nasdaq Composite was up more than 2.7% on Monday. The High Beta ETF was up more than 2.0% while the Low Vol ETF closed down 0.3%. In other words, the market sees lower rates as an excuse to party. I’m not so sure that’s the right take.

The fact is that there are a lot of reasons to be concerned about the state of the economy. Unfortunately, the government shutdown left us without recent economic data. Still, many signs are pointing to a slowdown.

On Tuesday, the Census Bureau said that retail sales rose by 0.2% in September. That was 0.1% less than forecast. But if we don’t include auto sales, the retail sales were up 0.3% which was in line with estimates.

Miscellaneous retailers saw a 2.9% increase on the month, while gas stations, owing to the higher prices, increased 2%. Sporting goods, hobby and music stores saw a 2.5% decline while online sales were off 0.7%.

Sales at eating and drinking establishments, an indicator of discretionary spending, increased a solid 0.7% on the month and were up 6.7% from a year ago.

Retail sales, which are adjusted for seasonality but not inflation, increased 4.3% from a year ago, ahead of the 3% CPI rate for the month.

We also learned that consumer confidence fell to its lowest point since April. The percentage of workers saying that jobs are “plentiful” fell to 6%. That’s down from 28.6% in October.

Home sellers are taking their houses off the market at the fastest pace in nearly a decade. Nearly 85,000 sellers took their homes off the market in September. That’s up 28% from last year.

We still have the problem of missing economic data. Unfortunately, that will take a few more weeks to fix. The next jobs report is due out on Tuesday, December 16. The CPI report will be out on Thursday, December 18 and the GDP report will be out on December 23.

Going into Tuesday, the market was able to extend its rally. The Dow closed up more than 660 points. The S&P 500 closed above its 50-day moving average. The rally was also broader as the S&P 500 Equal-Weighted Index closed higher by 1.45%.

The Healthcare and Consumer Discretionary sectors were especially strong today. Many of the more conservative stocks on our Buy List did well on Tuesday. For example, Mueller Industries (MLI), Cencora (COR) and Rollins (ROL) all made new 52-week highs today.

IES Holdings Soars 8.5%

In last week’s issue, I told you about IES Holdings (IESC). The company is an electrical contractor that provides design, build and maintenance services. The division offers service capabilities including constant presence, critical plant shutdown, troubleshooting, emergency service, testing, and preventive maintenance.

The stock has more than doubled for us this year.

IESC currently has a market value of $7.2 billion and about 9,400 employees. The company currently operates through four business segments: Electrical, Communications, Infrastructure and Residential.

Last Friday, IESC reported outstanding results for its fiscal Q4, and the shares rallied 8.5% on Monday. Revenue rose 16% to $898 million. Operating income was up 39% to $104.3 million, and diluted adjusted EPS was $3.77 compared with $2.61 one year ago.

For the whole year, IESC made $23.66 per share. That’s up from $9.56 per share last year. The outlook is bright for IESC. At the end of the quarter, the company had a backlog of $2.7 billion.

CEO Matt Simmes said, “Looking forward to fiscal 2026, we expect continued growth in our Communications, Infrastructure Solutions and Commercial & Industrial operating segments, which are positioned to benefit from continued strong demand, particularly in our data center end market.”

I’ll have more to say on IESC in our premium letter (you can subscribe here). If you’re not familiar with IES Industries, you can read the latest investor presentation here.

That’s all for now. The government’s econ reports may be out soon. Until then, several Fed officials will be speaking this week. I’ll have more for you in the next issue of CWS Market Review.

– Eddy

P.S. This got me a lot of hate but I was right.

Posted by on November 25th, 2025 at 7:04 pm


The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.