We had a relatively flat week where preferred stock prices held us back. These are not a concern, which we will discuss. Here’s each strategy (please remember to check Black Diamond for your specific results):
On The Move
The market calmed last week after the Federal Reserve reduced interest rates by 0.25% and stated that might be it for quite some time. That news sent markets falling before they largely recovered to record levels. In the mess, interest rates sensitive sectors moved down just as AI excitement is showing some cracks and concerns. We made no trades and none are scheduled for this week as economic conditions remain fluid. Meanwhile, bond and preferred prices moved lower over continued inflation and longer-term borrowing costs. None of our preferreds are under any real threat; we monitor the assets backing these securities closely. The RC preferreds all mature next year, the TWO preferreds either already float or will within 2 years and RWTO matures in 2029 (backed by prime jumbo residential mortgages). Finally, RITM is a well-diversified, well-managed pool of mortgage related assets. Whether the price moves 10% either way is not a major concern as economic forces pull them back to $25, which is where we want them to be.
Market Conditions
The trash rally continues to keep market valuations stretched just as some investors are questioning the AI chase. META (Facebook) announced results, loads of new AI spending and few results to show for its efforts so far – the stock was slashed 10% straight away. Microsoft announced slightly more to show for their spending and their stock was shaved, too. On the other side of profit street, Alphabet (Google) and Amazon showed some good AI related revenue growth and were rewarded with 10% boosts. This sort of volatility when a new technology is still so young supports the notion there is more speculation than strict analysis driving prices today (also consistent with trash rally fever.) We foresee more trash fever flare ups before the first round of AI consolidation really kicks into gear. Elsewhere, the economy shows signs of struggle despite no impending employment or inflation crisis. Continued tariff uncertainty and a lack of certain skilled workers (including migrant agricultural workers) contributes to the slowing growth just as AI excitement and tax stimulus push the other way. Eventually, a lack of tariff clarity and constrained labor will pull us into some sort of recession, and predicting that has been dismally unreliable. We see odds are still low today. Finally, and probably most importantly, the government shutdown starts to bite much harder this month. If politicians cannot get their act together soon, recession odds will fly much higher in our analysis.
What It Means for Us
As we head into the holiday season, we expect calmer markets and December tax positioning. Given our new rebalancing every 3 months, we will not be looking for tax harvesting unless you hold securities outside our regular rebalancing (like me) and we will speak with you as December nears for any moves your tax advisor recommends. Please consult with your tax expert if you do not already understand where you are for the year so we can be helpful as needed.
The CatShark Report November 2, 2025
We had a relatively flat week where preferred stock prices held us back. These are not a concern, which we will discuss.
Here’s each strategy (please remember to check Black Diamond for your specific results):
On The Move
The market calmed last week after the Federal Reserve reduced interest rates by 0.25% and stated that might be it for quite some time. That news sent markets falling before they largely recovered to record levels. In the mess, interest rates sensitive sectors moved down just as AI excitement is showing some cracks and concerns. We made no trades and none are scheduled for this week as economic conditions remain fluid.
Meanwhile, bond and preferred prices moved lower over continued inflation and longer-term borrowing costs. None of our preferreds are under any real threat; we monitor the assets backing these securities closely. The RC preferreds all mature next year, the TWO preferreds either already float or will within 2 years and RWTO matures in 2029 (backed by prime jumbo residential mortgages). Finally, RITM is a well-diversified, well-managed pool of mortgage related assets. Whether the price moves 10% either way is not a major concern as economic forces pull them back to $25, which is where we want them to be.
Market Conditions
The trash rally continues to keep market valuations stretched just as some investors are questioning the AI chase. META (Facebook) announced results, loads of new AI spending and few results to show for its efforts so far – the stock was slashed 10% straight away. Microsoft announced slightly more to show for their spending and their stock was shaved, too. On the other side of profit street, Alphabet (Google) and Amazon showed some good AI related revenue growth and were rewarded with 10% boosts. This sort of volatility when a new technology is still so young supports the notion there is more speculation than strict analysis driving prices today (also consistent with trash rally fever.) We foresee more trash fever flare ups before the first round of AI consolidation really kicks into gear.
Elsewhere, the economy shows signs of struggle despite no impending employment or inflation crisis. Continued tariff uncertainty and a lack of certain skilled workers (including migrant agricultural workers) contributes to the slowing growth just as AI excitement and tax stimulus push the other way. Eventually, a lack of tariff clarity and constrained labor will pull us into some sort of recession, and predicting that has been dismally unreliable. We see odds are still low today.
Finally, and probably most importantly, the government shutdown starts to bite much harder this month. If politicians cannot get their act together soon, recession odds will fly much higher in our analysis.
What It Means for Us
As we head into the holiday season, we expect calmer markets and December tax positioning. Given our new rebalancing every 3 months, we will not be looking for tax harvesting unless you hold securities outside our regular rebalancing (like me) and we will speak with you as December nears for any moves your tax advisor recommends. Please consult with your tax expert if you do not already understand where you are for the year so we can be helpful as needed.
Disclaimer
This newsletter is provided for informational purposes only and represents the current opinions of LUL Wealth Management (“LUL”). It should not be considered personalized investment advice or a recommendation to buy, sell, or hold any security or adopt any particular investment strategy. The information presented is based on sources believed to be reliable, but LUL makes no representation as to its accuracy or completeness.
Past performance is not indicative of future results. All investments involve risk, including the potential loss of principal. The investment strategies discussed may not be suitable for all investors. Each investor should review their investment objectives, risk tolerance, and financial situation with a qualified advisor before making any investment decisions.
Performance data presented reflects the specific LUL strategies described and may not reflect the performance of any individual client account, which will vary based on account-specific factors including timing of investments, additions or withdrawals, and individual restrictions.
This communication is not an offer to sell or solicitation of an offer to buy any securities. LUL is a registered investment advisor. For additional information about LUL, including fees and services, please refer to our Form ADV, available upon request.
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