When in Doubt, Zoom Out…And Buy the Dip

By Crest Capital Advisors on October 27, 2025

Dow: 2.20% to 47,207.12

S&P 500: 1.92% to 6,791.73

Nasdaq: 2.31% to 23,204.87

Russell 2000: 2.50% to 2,513.47

Bitcoin: 110,680

10 Year Yield: 4.00%

Outperformers: Technology 2.75%, Energy 2.37%, Industrials 2.08%

Underperformers: Consumer Staples (0.59%), Utilities (0.19%)

US equities were higher this week with all (4) indices posting fresh record closes. Stocks logged solid gains this week, despite a significant wobble on Wednesday, which proved to be yet another dip-buying opportunity. Overall, the path of least resistance is still skewed to the upside on Fed easing expectations, favorable inflation data (Friday), double-digit earnings growth, and some select de-escalatory (though volatile) China-US trade headlines.

Looking at earnings for a moment, we are off to a strong start in Q3 with nearly 30% of the S&P 500 having now reported. The blended earnings growth rate for the index now stands at +9.1% (and on track for a fourth straight quarter of double-digit growth), with 84% of reporters having surpassed consensus earnings expectations (vs 70% five-year average).

Regarding macro data, September inflation data (via the Consumer Price Index, CPI) came in a bit cooler than expected, just in time for next week’s Fed meeting. Market participants are expecting another 0.25% rate cut to be delivered to markets, bringing the Fed Funds target below 4% for the first time since 2022.

Turning back for a moment to Wednesday’s sell-off, a sudden, out-of-nowhere slump that had traders on edge. By Friday afternoon, the market had already forgiven, forgotten, and printed fresh highs. It’s the kind of whiplash that reminds us volatility isn’t a warning, it’s an invitation. In 2025, “buy the dip” isn’t just a meme; as we’ve provided below, it’s monetary policy by popular demand.

Inflation Takeaways

First, a quick look at the data…

Headline CPI increased +0.3% for the month vs +0.4% expected.

Core CPI (Ex-Food/Energy) came in at +0.2% vs. +0.3% expected.

Both figures were ‘cooler than expected’, so the report was interpreted as ‘good news’.

In terms of policy, both Powell (current Chair) and Waller (potential future Chair) indicated that they’re looking through the current inflation data, skewed as it is from tariff goods passthrough. So, we don’t read much into today’s release in terms of policy implications, but it’ll make another quarter point October cut more consensus.

As far as markets go, well, they seem to like the cooler CPI data as stocks were up on Friday and closed another positive week overall. That said, there are plenty of naysayers that point to the annual growth rates for inflation remaining stubbornly high at 3%, well above the Fed’s target of 2%.

To make sense of it all, we suggest once again the WisdomTree “Alt-CPI” data-set may be a better way to look at inflation today. The difference between the official CPI and the WisdomTree “Alt-CPI” boils down to one line item…Shelter costs. The WisdomTree data substitutes real-time housing data, whereas the official government CPI uses a notoriously lagged set of data.

Take a look at the charts below to see the stark differences. Subbing in more real time shelter (+0.9% real time vs official 3.6% in BLS), we see the Core CPI would improve to 1.9%, with the headline CPI at 2.2%!

Behind the Curve…Again

For decades, the stock market and job-openings marched in lockstep: When labor demand rose, equities often climbed and vice versa. Since 2022, that relationship has broken. Stocks are up ~75 % ,while job listings are down ~33 %. (See chart below)

Never in modern history have firms seemingly reduced labor intensity (or slowed hiring) at a time of surging profitability. We believe this reflects a structural shift. Capital (driven by productivity, automation, and AI) is gaining the upper hand over labor. The heavyweight bout between labor and capital is underway.

Meanwhile, the Fed is still “on the hedge”. They recognize the possibilities, but remain grounded in historical precedent and data-dependence. In contrast, we believe this analysis is ahead of the curve. We’re interpreting the data, weaving in the AI factor, and positioning for the implications now rather than when the Fed finally comes around to recognize the impact to the labor market.

Source: St. Louis Federal Reserve (October 2025)

Have We Only Just Begun?

Historically, the US Dollar tends to move in a secular fashion. (See the chart below over the past 50 years.) Recently (represented by a down squiggle on the chart), we’ve experienced significant weakening of the US dollar stemming from the President’s actions, continued Congressional spending, and elevated levels of US debt. Prior to the recent downward move, the real trade-weighted dollar had climbed above its early-2000s peak but remained below the highs of the mid-1980s.

Historically, the dollar has moved in 10-year cycles, so it’s certainly possible we are in the early stages of an even deeper downward trend now. This would likely be good news for gold and crypto bulls, as well as for the earnings power of US multi-national corporations. We’ll be watching this trend to see how things unfold.

Source: Strategas Research Partners (October 2025)

Social Security News

Social Security’s cost-of-living adjustment (COLA) will be 2.8% in 2026, up from 2.5% this year, the Social Security Administration said on Friday of this week.

Interestingly, the COLA has averaged 2.6% over the last 20 years, according to the Senior Citizens League, a nonpartisan advocacy group.

COLA is not a raise, but is rather an adjustment to help beneficiaries keep pace with inflation.

“Over the past year, many older Americans have been financially squeezed, and Social Security is an important key to their financial health. It isn’t just a source of income, it’s a lifeline of independence and dignity for tens of millions of older Americans. Yet even with the COLA, 77% of older adults still face challenges covering basic expenses,” said Myechia Minter-Jordan, chief executive of AARP.

Source: Social Security Administration (October 2025)

Earnings Season Overview

While the early part of earnings season has been generally positive, one of the most notable trends is that from July 1st to October 1st, estimated sales growth improved in 10 of the 11 sectors. The lone exception was Utilities, which has still benefited from the power demand trade. Additionally, more sectors are expected to beat their quarterly estimates on the sales front than on the earnings front.

Economic Funnies

Crazy Stats of the Week

$38,000,000,000,000… That’s a lot of zeros and red ink to worry about. The gross federal debt of the United States has just topped the $38T level, only two months after surpassing $37T. For those keeping tabs, that’s the quickest rate of adding $1T outside of a pandemic, with gloomy fiscal milestones now being added at twice the pace seen since 2000, according to the Peterson Foundation.
In 2011, the US stock market made up 30% of the global stock market capitalization. Today, the US market makes up almost 50%.

Source: Apollo Chief Economist (October 2025)

Quote of the Week

“I will tell you that if the 2% inflation figure gets out of this room, it is going to create more problems for us than I think any of you might anticipate.”

– Alan Greenspan, 1996 Meeting Minutes of the FOMC

Editor’s Note: The Fed’s official 2% inflation target was formally announced in 2012.

Calendar of Events to Watch for the Week of October 27^th

The ongoing government shutdown continues to hamper the data collectors from releasing updates on various economic reports. Frankly, we don’t know which reports on our calendar below will actually be released, so we are including all of them…but don’t be surprised if we get none of them. The real driver of risk assets into the end of October will be earnings, specifically the arrival of the Mag-7 earnings reports, as well as the conclusion of the Fed meeting on Wednesday. We’ll have to continue to guess at the economic data, which is likely still pointing to a still growing economy and relatively stable (though at lower levels) employment and price data.

Monday 10/27 – September Durable Orders are expected to post a 0.55% month-over-month increase. The Dallas Fed Index is expected to remain in contraction at -4.0.

Tuesday 10/28 – October Consumer Confidence is expected to post a 95.0 reading. The Richmond Fed index is expected to remain in contraction at -9.5. The S&P/Case-Shiller Home Price Composite Index for August is expected to show a 1.4% year-over-year pace.

Wednesday 10/29 – The Fed Meeting concludes today, and markets are expecting another quarter point rate cut. Jerome Powell’s post meeting press conference will likely drive markets as it usually does.

Thursday 10/30 – US Preliminary Q3 GDP is expected to post 1.7% year-over-year growth with a 1.9% increase from the prior quarter.

Friday 10/31 – The Fed’s favored measure of inflation, the Personal Consumption Expenditure (PCE), is expected to post a headline annual growth rate of 2.8%, up 0.25% month-over-month. The Core (Ex-Food/Energy) is expected at 2.9% and 0.3% month-over-month.

Source: MarketWatch / FactSet (October 2025)

Crest Capital Advisors is a group comprised of investment professionals registered with Hightower Advisors, LLC, an SEC registered investment adviser. Some investment professionals may also be registered with Hightower Securities, LLC (member FINRA and SIPC). Advisory services are offered through Hightower Advisors, LLC. Securities are offered through Hightower Securities, LLC.

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