October 24, 2025

In the Loop – October 24, 2025

“In The Loop” is designed to give you a short update reflecting major developments, earnings, and investment trends across some core Equity Income and Growth holdings. All clients should be aware that individual buy/sell recommendations will be conveyed directly to you on an individual basis. Have a great weekend.

It is hard to imagine that with the S&P500 close to all-time highs that we are just now entering the historically best months for the markets. Next week 5 of the 7, “Mag 7”, will report earnings and we expect those earnings to be good. These 5 companies represent approximately 24% of the S&P 500. So, what continues to drive this market higher- strong earnings from the market leaders, the expectations of lower interest rates, 10-Year Treasury Bond below 4% and $60’ish Oil to name a few.

However, not everything is in perfect harmony. Towards the end of last week and the beginning of this week we did see some tensions within money markets as the repo rates moved higher. The Federal Reserve uses Quantitative Easing(QE) and Quantitative Tightening (QT) to influence liquidity, interest rates and overall economic activity. Since June 2022, the Federal Reserve has used QT to reduce its balance sheet by $2Trillion. The reduction of liquidity has helped reduce inflation. Since we are seeing signs of stress from lack of liquidity, we expect the Fed to end the QT cycle. Stress has shown up within Regional Banks, Business Development Companies (BIZD) and private credit. The last time this setup occurred was September 16-17 of 2019. Repo rates spiked causing the Fed to inject $75 Billion a day into the repo market. Markets briefly dipped, quickly stabilized and then surged roughly 15% in 4 months based on resumed balance sheet expansion. I’m sharing this with you because if it happens again, it will not be a panic moment but rather a buying moment.

Another interesting fact I read this week from LPL research team was that the defensive sector allocation in the S&P 500 has fallen to an all-time low of 16.6%. For defensives, we include consumer staples, healthcare and utilities. Not surprisingly, the previous all-time low came in March 2000, at the peak of the dotcom bubble, when defensive sectors composed 17.1% of the S&P 500. At current valuations, healthcare is becoming very interesting.

We have highlighted and recommended many technology companies over the last few years, especially since the introduction of Chat GPT in the summer of 2023. To be clear, we still believe in their earnings power and remain committed to our positions. However, we do need to be mindful that it now represents a record high of 35% of the S&P 500 index.

Expect calls from our team to set up 4th Quarter and Year-end reviews.

Individual Company Updates

I am only including one company this week because I think this message from Jamie Dimon is so strong and highlights how we should all be viewing future investments.

JPMorgan Chase (JPM) – Strategic National Investment Initiative

JPMorgan unveiled a major strategic effort called the Security and Resiliency Initiative, a 10-year, $1.5 trillion commitment to strengthen U.S. economic security and industrial self-sufficiency. The program will channel capital into sectors deemed vital to national resilience, including domestic supply chains, aerospace and defense, energy independence, and advanced technologies such as AI and quantum computing.

As part of the initiative, JPMorgan will deploy up to $10 billion in direct equity and venture investments to support emerging U.S. companies in these priority industries. The remaining capital will be mobilized over the decade through lending, financing, advisory services, and capital markets activity, marking a 50% increase over the bank’s earlier $1 trillion long-term commitment to these sectors.

CEO Jamie Dimon said the program reflects growing urgency to onshore critical capabilities, noting that “the United States has allowed itself to become too reliant on unreliable sources of critical minerals, products, and manufacturing.” The move positions JPMorgan as a central financial engine behind the next wave of U.S. industrial and national security investment.

We remain focused on navigating market trends and positioning portfolios for long-term growth and resilience.
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