If you’ve spent any time in San Francisco, you know the cruel trick our seasons play. Tourists show up in July expecting California sunshine, only to find themselves shivering in the fog, hunting for an overpriced fleece at Fisherman’s Wharf. The real summer arrives in September and October - when the rest of the country is raking leaves, we’re finally breaking out the short sleeves.
The same can be said for the markets right now - what may look gloomy on the surface may actually be setting up for something brighter.
Washington has managed to shut the government down again, the fourth time in just 12 years. The labor market has been slowing and headlines feel heavy. Yet underneath the fog, corporate earnings are looking stronger than expected, much like San Francisco’s hidden summer that only shows up when you least expect it.
And if you're not impressed with the local weather analogy, here is one of my patented sports analogies: this year’s Giants season was one long gray drizzle - lots of talk, no real payoff. Meanwhile, the 49ers, down seemingly half their roster to injuries are somehow 4-1 after knocking off the supposedly superior Rams last night. It’s a reminder that expectations don’t always equal outcomes.
📊 Key Numbers at a Glance (Q3 2025)
- S&P 500: +7.8% in Q3, +13.7% YTD — corporate earnings remain the real driver behind the gains
- Bonds: +2.0% in Q3, +6.1% YTD — rate cuts provided support despite mixed signals
- International stocks: +4.2% (developed), +10.1% (emerging) — broader participation beyond U.S. large caps
- Gold: Record $3,841/oz, +16% in Q3 — investors hedging against uncertainty
- Jobs: Only 22,000 added in August, with nearly 1M fewer over the past year after revisions — headline gloom
- Inflation: +2.9% YoY (August) — still elevated, but easing from earlier highs
- Fed: Cut rates by 0.25% in September — unusual mid-cycle move, but supportive for growth
While the headlines are screaming shutdowns, labor pressures and uncertainty, the market story may be closer to a San Francisco fall - sunny in ways the tourists (and sometimes even the locals) don't anticipate. Corporate earnings are still delivering, valuations outside the biggest names look more attractive and even the Fed’s shift toward rate cuts can provide support.
And just like the fog rolling over the Golden Gate or a depleted Niners squad pulling off an upset against the Rams - the lesson is that things aren’t always what they seem. Headlines can feel heavy, but earnings resilience and broader market strength are giving investors more sunshine than drizzle. The key is to look past the noise, stay balanced, and remember that long-term results are rarely defined by short-term surprises.
Until next time, take good care!
