In September, the MSCI World gained 3.25%, large cap stocks outperformed mid and small cap stocks. The tech-heavy Nasdaq Composite index gained 5.61% as AI fervor took another leg higher. Seasonality factors were turned upside down when US stocks registered their best September in 15 years.

The market finally took a breather this week, pulling back slightly from all-time highs as the US government shutdown continues with no end in sight. While the shutdown has not yet caused a major risk-off event, the lack of progress is starting to weigh on sentiment. Beneath the surface, the semiconductor space continues its relentless rally, punishing short-sellers and highlighting the market's speculative fervor.

As market participants contemplate where we are in the cycle, reviewing market price action in the late 1990s is instructive. After the Fed bailed out LTCM in 1998, a strong, orderly rally followed. Then, from October 1999 to March 2000, the Nasdaq doubled in a ferocious speculative rally.

During the early fall period when seasonality is supposed to correct many of the summer technical imbalances, we are instead seeing vol-crushing speculation run rampant.

The US dollar has been trading in a choppy range over the past few weeks, frustrating both bulls and bears. After the recent Fed rate cut, the market is struggling to find a clear direction, leading to low-volume, counter-trend reversals.

Global markets posted strong performance in August 2025, driven by resilient economic data and evolving central bank signals. Developed market equities were led by Japan, while the S&P 500 saw strength in Materials and mega-cap tech companies.

While skeptical and cautious investors can ponder various secular headwinds facing the global economy, fund manager sentiment has roared back since April as managers begin to sync better with the Trump’s bluster first, negotiate later approach to policy initiatives. Multiple examples of Trump backing down from aggressive threats to making sensible compromises. The rise in sentiment coincides with all-time-high price levels for global equities alongside the Fed reducing interest rates for the first time in 12-months.

Shockingly aggressive revisions in US jobs data paint a less rosy picture of US economic health over the past 24 months. These revisions not only suggest expectations for lower interest rates but also indicate a troubling shift for labor statistics departments,

A weaker dollar and settlement of US tariff negotiations is supporting an uptick in sentiment and increased capital flows towards emerging markets and China. While domestic Chinese stories remain plagued by the economic overhang, many global Chinese manufacturing and technology firms have low valuations versus global peers.

With continuing claims hitting YTD highs and trending higher over the past quarter, the question becomes whether this could be a leading indicator of greater deterioration in US economic data statistics. Worsening jobs numbers could help support the Fed/Trump's rationale to reduce interest rates in September.