November 2023 -Seasonal Strength

First and foremost, we would like to extend our heartfelt appreciation to the brave men and women who have served our nation with unwavering commitment on this Veterans Day. To our clients who are veterans, we thank you for your service, today and every day.

In our September (2023) note, I discussed seasonal weakness -with August and September being the worst performing months for the equities markets and October, November and December being the three best performing months for equities markets -historically speaking.

To date, this has proven to be the case again this year with markets getting off to a very nice start in November and we see further positive tailwinds for equities and bond prices very slowly falling into place (knock on wood).

Around the middle of October, we observed market and consumer sentiment hitting lows we haven’t seen in some time. It was easy to understand why with geopolitical strains, the ongoing Ukraine/Russia war, the Israel/Hamas conflict igniting and newly minted 8.00% 30-year fixed mortgage rates adding fuel to an already slowing real estate market -it was hard to find anything positive on the horizon.

On October 27th the S&P 500 Index officially notched a -10% correction from its recent July 31st high of 4,588. Yes, a bit painful to sit through but please remember, the S&P 500 Index (or “the market”) typically has at least one -10% correction per year.

This is healthy, allows for resetting of expectations based upon updated quarterly earnings, forward earnings guidance, recent changes in Macroeconomic conditions and creates a new base for further expansion. Visually, I like to picture a fully blown-up balloon about to pop then releasing a bit of pressure from it.

What sparked the current rally we’ve experienced over the last couple of weeks then? On November 1st, the Federal Reserve chose to pause on another interest rate hike given the steady decline of inflation. This was the second pause in a row, largely signifying their interest rate hiking campaign has reached an end.

Yes, in September we expected a .25% rate increase on Nov. 1st but for once, we were happy to be wrong. This pause, sparked bond yields to drop and falling bond yields are positive for stock prices. Remember, lower treasury yields (which affect market interest rates) mean lower borrowing costs, which mean lower cost of capital, which mean higher margins, which equal higher earnings per share (in the long term).

In tandem with the recent Fed pause, companies have largely reported better than expected third-quarter earnings vs. market expectations. This was a pleasant surprise and a 5% year over year increase in S&P 500 earnings is a distinct possibility—perhaps 10% excluding the energy sector. Again, higher earnings mean higher earnings per share, which is the true driver of higher long-term stock prices.

Lastly, it appears the market has finally come to grips with the current rate environment. We know that higher treasury yields result in higher borrowing costs, but the American consumer appears to be less effected by them this go around. Unless an Individual or Corporation has a lot of floating rate debt, they have had almost three years to refinance this debt into fixed rates at historic lows. We believe this to be the difference between current and past periods of rising rates. This could be the main reason the consumer continues to purchase, and recession calls continue to be unrealized.

There’s no doubt the last couple of months have been challenging, given increased economic and geopolitical uncertainty. But taking a step back and looking at the underlying themes coming together that may not be obvious initially, are some of the positives that we believe will help markets finish higher into year’s end.

As always, we wish you and your family a great Friday evening, and a wonderful weekend!


Please reach out to us with any questions or comments you may have regarding your specific situation.


Jaran C. Day, Chief Investment Officer


Griffin Dalrymple, CFP®, Chief Strategy Officer