November 5, 2026
What You Need to Know Today:
The election and–the dollar and bond yields
The Senate races in Mississippi and Alaska are still close to call–but Wall Street has already started to worry about a new , more serious debt ceiling crisis around the middle of 2027. The thinking–and this sounds right to me–is that the Democratic majorities in Congress and a Republican White House won’t be able to agree to lift the debt ceiling without a bitter and prolonged fight that includes a long and damaging government shut down.
And that could disrupt the bond market, pushing bond yields higher and sending the dollar tumbling. “The single biggest source of domestic policy uncertainty remaining in the U.S. is the debt ceiling that will become binding by Quarter 2 of next year,” George Saravelos, strategist at Deutsche Bank, told Bloomberg. The U.S. is about $800 billion from reaching its $41.1 trillion borrowing limit. Wall Street strategists expect the government to hit that ceiling sometime in the first half of the year.
The election and–the dollar and bond yields
The Senate races in Mississippi and Alaska are still close to call–but Wall Street has already started to worry about a new , more serious debt ceiling crisis around the middle of 2027. The thinking–and this sounds right to me–is that the Democratic majorities in Congress and a Republican White House won’t be able to agree to lift the debt ceiling without a bitter and prolonged fight that includes a long and damaging government shut down.
And that could disrupt the bond market, pushing bond yields higher and sending the dollar tumbling. “The single biggest source of domestic policy uncertainty remaining in the U.S. is the debt ceiling that will become binding by Quarter 2 of next year,” George Saravelos, strategist at Deutsche Bank, told Bloomberg. The U.S. is about $800 billion from reaching its $41.1 trillion borrowing limit. Wall Street strategists expect the government to hit that ceiling sometime in the first half of the year.
Labor market continues its hot streak as job openings jumped in September
Just in case you missed this because you were watching the elections, on Tuesday the Bureau of Labor Statistics reported an unexpected jump in job openings in September. Available positions rose 333,000 to 7.52 million from a revised 7.19 million in August, according to BLS. That topped all estimates in a Bloomberg survey of economists and is a four-month high. In addition layoffs fell to the lowest level in over a year, signaling firmer demand for workers heading into the fourth quarter. Layoffs slumped to the lowest level since March 2025 and quits rose. The so-called quits rate, which measures the percentage of people voluntarily leaving their jobs each month, climbed to 2.1%–the highest in over a year. All this points to a strong labor market–one of the Federal Reserve’s necessary conditions before it again raises interest rates. Perhaps as early as the central bank’s December 9 meeting. The CME FedWatch tool today put the odds of a 25-basis-point increase in interest rates at that meeting at 81.4%, up from 67.3% on October 2.
S&P Global Ratings lowers its outlook on Meta Platforms to “negative”
My questions are What took so long? and Who’s next? On Monday, November 2, S&P Global Ratings lowered its outlook on Meta Platforms (META) to “negative” from “stable,” citing uncertainty surrounding the company’s capital expenditure and free operating cash flow. “Given the lack of clarity around the company’s future capex and its very ambitious multi-year AI investment plans, we are less certain that it will curtail its spending as previously anticipated,” S&P said. “This dramatic increase in the company’s leverage, from about 0.1x in 2025, primarily stems from its strategy of leasing data center capacity (including its mega-data center projects Beignet and Sopaipilla) rather than from issuing debt.” The negative outlook reflects the agency’s expectation that the company’s leverage could exceed 1.0x and free operating cash flow (FOCF) could remain negative for longer than expected
Is the earnings growth rate starting to decelerate for technology stocks?
In an October 30 research report, Goldman Sachs strategist Ben Snider and his team said third-quarter earnings results underscore a challenge facing equity investors: Corporate profits remain exceptionally strong, but the acceleration in the growth rate that helped drive stocks higher is coming to an end. All things being equal, that will lead to valuations being revised lower for the highest momentum stocks. Goldman Sachs warns that investors may need to adjust their expectations as profit growth slows, artificial intelligence spending begins to mature, and market leadership shifts away from technology giants. All “what ifs”, I grant you but this is a plausible scenario and worth thinking about. The effects on the high-growth, high-multiple parts of your portfolio would be extreme. With 60% of S&P 500 (SP500) companies having reported results, earnings per share are on track to rise 33% from a year earlier. That matches the second quarter’s growth rate and represents one of the strongest performances in recent decades outside of economic recoveries following recessions. Yet Goldman Sachs expects that momentum to moderate significantly.
Saturday Night Quarterback says, For the week ahead expect…
Worries on top of worries in the week ahead. On two fronts–the possible expansion of the war in Iran once the U.S. mid-term elections are over and the likly delivery of economic news showing the labor market is strong enough so that the Federal Reserve can raise interest rates at its December 9 meeting.
And then there was one–maybe–AI company with a path to profits
In the distant past–you know like maybe 6 months ago, the conventional Wall Street wisdom divided AI stocks into two camps. There was the large group that included exciting shoot-the-moon companies like OpenAI, Anthropic, and Coreweave that were out on the leading edge of these technologies. They might well capture the future of a global economic revolution. On the basis of that promise, they had raised hundreds of billions of dollars to build out the infrastructure of AI. The big question was Would they generate enough profit to pay the interest on all that debt or would they run out of new investors to cover their losses before they generated substantial profits
And then there was a smaller group of big Internet companies–you know the names: Microsoft, Amazon, Alphabet, Meta Platforms–that stood to make huge profits building the “compute” that AI needed, but who had significant other businesses that generated huge positive cash flows so that they could finace their AI build out internally. In the last week or so, however, this wisdom has run into a huge problem.
This market is just too damn expensive given the risks–Special Report 10 picks to stay (mostly) invested while cutting your risks
Could stocks move higher from here even though they’re more expensive than a year ago? Of course.
Could they gain another 29.8% in a year? It’s possible. But it strikes me as unlikely.
That sums up the current market puzzle very neatly, I think. Stocks are expensive and don’t seem to be pricing in potential very real risks. But stocks have returned almost 30% in the last year. And it’s very hard to walk away from the possibility of that kind of gain. Even if it is unlikely. What I’d suggest right now is a stock market strategy that takes into account both a solid appreciation of the excessive valuations in this market (along with a failure to price in risk), and the realities of investor psychology.
It is too difficult to go cold turkey on stocks right now and move 100% out of the market. On the other hand, you should be moving to reduce your exposure to the riskiest parts of the market–high multiple stocks–and raising your exposure to counter-cyclical or non-cyclical stocks. In this post, I’m going to give you 10 stock picks to use in executing that kind of strategy–a way to stay in the market and yet to reduce your risks.
Special Report: The Next Big Things and how to invest in them–Part 1 Quantum Computing; Part 2 Nuclear Fusion
A suggested quantum computing portfolio. If you want a piece of this Next Big Thing, but with less risk and less upside than a pure-play quantum stock, I’d suggest Alphabet/Google (GOOG). Among pure plays I’d include D‑Wave Quantum (QBTS), up about 235% year‑to‑date as of late 2025; Rigetti Computing (RGTI), up34% YTD by late December; and IonQ (IONQ), up around 25% year-to-date by late December.
Special Report: 3 Stock Market Bubbles: When will they burst? What to do now? Part 1, the AI bubble, Part 2, the debt market bubble, and Part 3, the cheap money bubble
This is a very difficult stock market. Even as stocks climb to new record highs. On the one hand, even investors who are all in, maybe even overweight to the long side, worry that this rally isn’t sustainable for much longer. By most historical standards valuations are off the charts. I get a steady stream of stories and posts asking whether XYZ stock has climbed to faro fast. Volatility on somedays can be downright scary with relatively minor events leading to big market moves. It’s simply very hard to stay on board this rally. On the other hand, it’s very hard to get off the train. I see lots of Wall Street analysts cutting recommendations from “buy” to “hold” on valuation fears, but I see almost no one saying “sell.” FOMO–fear of missing out–is just too strong. Which is totally understandable. The Standard & Poor’s 500 index was up 25.02% in 2024 and was up another 18.11% in 2025 to date through October 27. Market leaders have racked up even bigger gains. AI chip icon Nvidia (NVDA) was up 171% in 2024 and has gained another 39% in 2025 through October 27. It’s insanely difficult to walk away from those kinds of gains. So what’d you do?
Special Report: How to invest in our 3 energy crises–First 8 picks JCI, BEPC, LNG, SMNEY, GNRC, CCJ, EQNR and GVE
You don’t need the Department of Energy or the Energy Information Administration to tell you we have an energy crisis. (Good thing since they’re shut down with the rest of the Federal government today.) All you need to do is look at your electricity bill. This summer monthly home electric bills jumped in Trenton, New Jersey, for a typical home by $26. In Philadelphia, it increased about $17. And in Columbus, Ohio, it spiked $27. And your monthly bill doesn’t capture the full damage. In California,residential electric rates are up 62% in five years. In Maryland residential rates are up 54% in five years. Most frustratingly–and most importantly for investors–those bills don’t explain the nature of the crisis.
Or more accurately “crises.” Because we’re the middle of three, overlapping and interlocking energy crises. That are playing out on different timeframes that range from NOW to the next 5 to 10 years. It’s that last point that’s critically important for investors. Because to make money–and let’s be clear: like in all crises there’s money to be made investing in these three crises–you’ve got to understand the nature of each crisis and buy into it at the right time. Not so early that you sell in disappointment because your profits haven’t arrived yet. Not so late that all themes tasty profits are gone. This Special Report is about untangling the 3 energy crises, giving you a timeline for investing in each, and then calling out 10 picks you cause to profit from theses crises. Ya, ready?
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