Big Tech’s Wake Up Call
November was a volatile month as investors hit pause on the tech-driven bull market. Value stocks and small-cap stocks fell back into favor after months of being crowded out by the Big Tech cash machine and all things AI-related (Artificial Intelligence).
Fed Independence Under Siege
President Trump announced Kevin Hassett as his top choice for the next Fed chair with betting markets placing the odds at nearly 90%, he will replace Jerome Powell in May 2026. Many economists warn of a Nixon-era redux, whereby an overly influenced Fed sets monetary policy too loose and triggers years of painfully high inflation.
If markets lose confidence that the Fed operates independently, long-term borrowing costs could rise significantly, hurting everything from mortgages to corporate debt.
The $7 Trillion Wall of Money
Money market holdings now sit above $7 trillion, with yields around 4.0% remaining attractive to investors. But November likely marked the beginning of the end. As the Fed continues cutting rates to accommodate economic growth, yields on money market funds and high-yield savings will lose their luster.
The path of least resistance for money market outflows will be Treasuries, municipal bonds, and dividend-paying stocks. However, these assets may be proof the AI bubble hasn’t topped. The datacenter and infrastructure financing has hit a wall, but public debt markets can provide an offramp. The next phase of AI investment could attract a new phase of bondholders by tapping into this wall of savings. If so, the so-called hyperscalers won’t need a government backstop (yet).
DOGE’s (Permanent) Disruption
The October 2025 Challenger Report revealed employers announced 153,074 job cuts—the highest October total since 2003. The Department of Government Efficiency’s restructuring accounted for nearly 294,000 direct federal job losses, with another 21,000 cuts from downstream effects as federal contractors, universities, hospitals, and nonprofits lost government funding.
Economist Jim Bianco argues these numbers reflect permanent changes. Automation, mass deportations, and slower population growth are redefining labor growth expectations. Bianco argues America needs far less job creation going forward to sustain economic health than suggested by the status quo.
China’s Structural Crisis: A Silver Lining for the West?
China’s industrial overcapacity problem intensified throughout November, particularly in electric vehicles, solar panels, and steel. As China’s capacity contracts, this could provide a positive catalyst for cyclical business growth in the West.
Renewed pricing power could return to developed market manufacturers in pro-cyclical industries and signal tailwinds for small-caps and value stocks in 2026.
Crypto Excesses Punished
After Bitcoin’s surge toward record highs earlier in the fall, November brought crypto investors crashing back to reality.
Most dramatically, investors yanked $3.6 billion out of spot Bitcoin ETFs in November. The downside correlation between Bitcoin and the Nasdaq increased markedly, meaning crypto fell alongside technology stocks rather than providing portfolio diversification.
Skepticism toward this area has proved warranted. And last month’s volatility supported the case for relying on more traditional safe haven assets during market hiccups, not “digital gold.”
Note: Year-End Mutual Fund Distributions
Mutual funds have started their year-end payouts of capital gains and income. You may hold one or more funds that experience temporary dips on a given day. The change you see is just an accounting adjustment, not a loss. They will be adjusted by Schwab over the following days as the dividend is reinvested.
The FSA team anticipates and manages these payouts in the context of your personalized investment strategy. Any affected holdings will be monitored to ensure your portfolio stays on track.
To 2026 and Beyond
A well-built plan is nothing without the right people to work with. Our team is here to serve you exactly where you are and to support your financial journey every step of the way. Warm wishes to you and your family this holiday season.
Please contact your advisor to discuss any changes regarding your investment objectives and how we manage your money. Thank you.
Jordan Daugherty CFA, CMT
Senior Investment Analyst
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