The Value Investor: What Really Matters This Week

Key Takeaways

1. Fed and BoC cut rates while ECB and BoJ held steady — cautious easing, not a pivot.

2. Inflation remains sticky around 3% in the U.S., still a drag on consumer confidence.

3. U.S.–China trade truce trimmed tariffs and eased rare-earth supply fears.

4. Tech earnings strong but uneven; Alphabet and Amazon shine, Tesla and Meta stumble.

5. Markets steady despite shutdown, with stocks up in October and yields hovering near 4%.

The Fed trimmed rates by 25 basis points to 3.75–4.00% and hinted at an early end to quantitative tightening. The market threw a mini-party before realizing Jerome Powell still has commitment issues—rate cuts in December are “far from certain.” North of the border, the Bank of Canada followed suit, cutting to 2.50%. Across the pond, the ECB and BOJ just crossed their arms and said “we’re good.” The message? Central banks are cautiously easing, but no one wants to be the first to admit inflation might actually be tamed.

US inflation ticked up slightly to 3.0%, core at 3.3%. That’s not ideal, but it’s not 2022 either. Europe’s around 2.16%, Japan’s still fighting to make sense of life above 3%, and China’s inflation barely wakes up at 0.5%. The bottom line: prices are stabilizing, but the “everything costs too much” feeling hasn’t quite left the building.

Trump and Xi shook hands in Busan, extending their trade truce. Tariffs got trimmed, China reopened its rare earth exports, and both sides agreed to keep buying each other’s stuff like grown-ups. Will it last? Probably about as long as the average New Year’s resolution, but it does remove one headache from investors who care about supply chains longer than a TikTok clip.

The “Magnificent 7” had another headline-grabbing week. Alphabet and Amazon crushed earnings, Apple squeaked by, and Microsoft plus Meta got side-eyed for their AI spending sprees. Tesla’s earnings disappointed, which at this point is less “news” and more “calendar event.” Overall, the group’s revenue rose 17% while profits jumped nearly 27%. The market loves them, but when CEOs start warning about “lofty valuations,” you know we’re in the weird part of the cycle.

BMW and Mercedes both reported that Chinese sales are stuck in neutral. Mercedes even saw profits drop 70% year-over-year before “adjusting” the numbers back into something less horrifying. Meanwhile, Ferrari quietly revved past everyone with solid growth and enviable margins. The lesson? Luxury and scarcity still win—whether it’s handbags, V12s, or undervalued cash flows.

In the US, the federal government shutdown is now 35 days deep and officially tied for the longest in history. Economists estimate the drag could shave up to 2% off Q4 GDP if it drags on. Federal workers are missing paychecks, data releases are delayed, and the CBO is basically guessing at this point. If Washington were a company, the board would have fired management months ago.

Stocks ended October with solid gains: S&P 500 up 2.3%, Dow up 2.5%, Nasdaq leading but wobbling on November 4 after the big bank CEOs warned about froth. The 10-year Treasury yield nudged above 4.1%, oil hovered around $60, and gold flirted with $4,000 per ounce like a cat knocking over a glass. Underneath all that noise, the long-term investor’s takeaway is simple: focus on durable businesses, not central bank tea leaves.

When you read headlines about AI bubbles, trade truces, and billion-dollar buybacks, remember what Buffett and Munger taught us: the market is there to serve you, not instruct you. The world may change every hour, but value compounds quietly, one rational decision at a time.

Happy investing!
Josh

The information is provided for educational purposes only and does not constitute financial advice or recommendation and should not be considered as such. Do your own research.