Brian Pietrangelo [00:00:00]

Welcome to the Key Wealth Matters Weekly podcast, where we casually ramble on about important topics, including the markets, the economy, human ingenuity, and almost anything under the sun, giving you the keys to open doors in the world of investing. Today is Friday, January 9th, 2026. I’m Brian Pietrangelo, and welcome to the podcast. I would like to welcome all of our listeners back to the podcast and wish a Happy New Year, as this is our first podcast of the year after being off for the past three weeks for the holidays. So welcome back, everybody. Happy New Year. With that, I would like to introduce our panel of investing experts here to share their insights on this week's market activity and more. George Mateyo, Chief Investment Officer, Steve Hoedt, Head of Equities, and Rajeev Sharma, Head of Fixed Income. As a reminder, a lot of great content is available on key.com/wealthinsights, including updates from our Wealth Institute on many different subjects and especially our Key Questions Article series addressing a relevant topic for investors. In addition, if you have any questions or need more information, please reach out to your financial advisor.

Taking a look at this week's market and economic activity, we're going to give you a summary of the updates in two parts. Part 1 is some of the data that came out in December between our last podcast in the middle of December and today. So we can bring you up to speed and then Part 2, what are the economic releases and market news for this past week?

Starting with Part 1, we've got 3 updates for you since our last conversation in the middle of December. As a reminder, #1, the Federal Open Market Committee, did cut rates by 25 basis points, taking the Fed funds rate to 3.5% to 3.75% as the range. That caps off 3 consecutive months of 25 basis point decreases for a total of 75 basis points of decreases in the Fed funds rate during the calendar year of 2025. Back on the 10th of December, the Fed also provided their summary of economic projections, which are in a few key areas. One, they upgraded a little bit the real GDP estimate for the end of the year, as well as for 2026. Unemployment rate was basically the same. Inflation was receding. So overall some pretty good news in terms of their projections, but right now they're just projections. Most importantly on their projection for their own committee, they estimated that there would be only one rate cut in 2026 of 25 basis points. We'll have more discussion with that with Rajeev later on in the podcast.

And second, the first estimate for the third quarter of 2025, real GDP from the Bureau of Economic Analysis as it was delayed by the government shutdown, only came out from December 23rd, which was delayed quite a bit. The report showed some pretty strong numbers that were 4.3% on the quarter basis for the third quarter of 2025, which was above the prior two quarters. And so we saw some significant growth a little bit tempered by net exports, but also showed some increases in consumer spending as it is the lion's share of GDP in the United States. So overall a pretty healthy read on the GDP number. Now the revisions will also be delayed due to the government shutdown as we begin to catch up things on the release schedule as we move into 2026, but again, we'll give you that update when we have it.

And third we also got the consumer price index measure of inflation report that came out back on December 18th. Now a couple of things to note that are very important. First and foremost, the October read was not collected by the Bureau of Labor Statistics due to the government shutdown, so that's going to skew the numbers a little bit. And then the November numbers were really a two month number rather than a one month number, but it was a .2% increase on a month over month basis. So a little bit decent, but again taking with a grain of salt. In addition, what that means is for the year over year calculations, the November 2025 number came in at 2.7% inflation for all items and 2.6% for core inflation, which excludes food and energy. Now on a surface level, this is good news because it's down from the September number at 3%. But again, we caution in terms of the fact that that might have been some imputed 0 numbers. For October, so we'll have to continue to look at these numbers as we get the actual December numbers in January.

Now we move to part 2 of the economic update were the releases we want to share with you from this prior week. We've got four of them for you and then we've got 1 update on the overall geopolitical situation. First up, the weekly initial unemployment claims remain very healthy at a 208,000 level for the week ending January 3rd, so this has remained very low for about now 12 to 24 months in a range that has gone up and down a little bit, but has basically remained stable and not increased to provide a worry. And second, the job openings report showed that for the November month, job openings were down a little bit from 7.4 million in October to 7.1 million in November. And 3rd we have the new non-farm payroll report that came out just this morning at 8:30 which shows a couple of different items we're going to give you 3 months of data because of some of the delay again in the government shutdown. So we go all the way back to October where there was a minus or a decline of 173,000 jobs on the new non-farm payroll. Report. Now we give you some additional information on that data point where about 150 or so thousand of that was related to government workers and the planned or resignations for the dose campaign in the federal government. So that certainly offsets some of the gains in the private sector, again to be a net -173,000 jobs. In November that rebounded to a +56,000 jobs. And now just this morning for December, the report showed 50,000 new non-farm payrolls that were created. So clearly, at least in this three-month span, a little bit more slowing in the numbers than we have seen in the past 12 months. And 4th also as an offset to some of the slowing job numbers, there was a significant increase in productivity of labor workers. So ultimately, the third quarter 2025 report showed that productivity in labor increased 4.9% in the third quarter, which was a significant jump. And a pretty high number overall. So productivity seems to be going very well.

And finally, outside of economic data, we've got some geopolitical updates as we started the week with the news with the Venezuela situation and the capture of Nicolas Maduro and the offset from that. So we'll get George's take on that in particular as well as economic data plus our conversations with Steve and Rajeev. So George, first to you, you're first up on the opportunity to share with our audience. Your take on the Venezuela situation and the overall economic data we just heard, George.

George Mateyo [00:07:04]

Well, to say that we were surprised, I guess, about the news that transpired over the last week or so in Venezuela. Brian would probably be an understatement. I think many people, us included, or at least myself included. It's not too surprising to see some action being taken place, but the force with which the action was levied was really quite stunning and maybe a little bit surprising as I said. But to kind of put things in the context, I think it's important to remember a few things, one of which is the. Fact that oil is a big part of the Venezuelan economy represents something like 70% of their entire exports. So you know 3/4 roughly of their exports is tied to oil, which is a pretty big deal. And I think oil is at the center of this, this ongoing discussion. To widen the lens a bit further, though, Venezuelan oil only represents about 1% of the entire global output, so they're not really at the current level. Anyway, not really. A big driver of overall energy prices, but they do have a ton of oil in reserve and essentially that is I think they're the largest country in the country that has the largest amount of oil reserves. In the world, which is pretty astonishing. So I think the oil debate is probably the the issue here. We'll have to kind of think about that. What that looks like over time. It's not going to mean probably something in the near term in the sense that much of the oil reserves probably are actually hard to reach in the sense that there's a lot of excess capacity and a lot of under investment that's kind of come along with the infrastructure inside Venezuelan economy. That you get that oil moving, so to some extent, I think this is just the longer-term situation. But in the near term, I think this is more of a political event than any economic events. And that's one thing that we've probably seen the markets this week in the sense that there hasn't been too much movement in the overall energy complex. We haven't seen, you know, jumps in, in, in, in inflation indicators and so forth. And the overall stock market is certainly taking its stride with a pretty good start to the year. So again, I think this is the longer term. Maybe economic event, but in the short term this is more of a political event than anything else. Steve, I know you've paid close attention to the energy markets. I'm sure that you thought so. How did you kind of process what we saw in the last week or so?

Steve Hoedt [00:09:04]

Yeah, I would say, George, maybe the time caught everyone a little bit off guard, but I have to say it feels to me that the wheels were put in motion for this when Venezuela threatened its neighbor Guyana year or so ago when they made claims and what they call the Essequibo region. But what the Guineese. Are, it's part part of Guyana and the offshore area and? You know, you look at that, that's the most important new discovery in the world in terms of oil field put into production in the last 30 years, it's run by ExxonMobil. And when Venezuela basically threatened to to, to go in and take that by force. In my view, the clock. Just taking on how long the US would tolerate bad actor behavior from from Maduro, so you know that that kind of put things in motion. Then he did his little dance and then triggered, triggered, triggered Trump, apparently. But you know, on a serious note, when you look at the oil market dynamics, look, this is not going to impact things for a long time. And there are a couple reasons for that. Number one, the under investment in the infrastructure. There is one thing, but #2 the oil there is not high quality, it's dirty heavy crude. It's not the type of crude that you would go for unless you really need to go in that direction. It's very similar to the oil sands crude out of Alberta with the caveat that it's a little bit cheaper to produce than Albertan oil sands oil because it's hotter in Venezuela than it is in Canada. But at the end of the day, there are better fields and better resources to develop globally. So, you know when the administration talks about the oil companies are going to be willing to invest billions and billions and billions. Do this to to bring this thing back online. I really question that because you wouldn't invest there until you have. Other projects that rise, or you have to pass an internal rate of return hurdle to to make the investment useful. And I don't know that in the current global oil market that those are assets that that that the oil companies would really be interested in developing quite honestly.

George Mateyo [00:11:48]

Well, that's great Steve. I appreciate all that context and I think meanwhile, we've started to see some normalization with respect to economic data, of course. So the other thing that really kind of defined, I think the quarter that just ended was the government shutdown that we talked a lot about on this podcast and other places too and to some extent I think that really cloudy the the. Economic picture. And now we're starting to kind of see that fog lift a little bit and what we've seen kind of thus far anyway is probably more the same in the sense that the overall inflation story is moderating. I wouldn't say it's cooling to the point of that, the that target, but it's getting closer and it's kind of moving that direction. We'll see if that plays out. I think there's kind of some question marks around that. We've also seen the consumer, I would say, retrenched, but they're kind of moderating their behavior too. It seemed like Christmas was OK. I'd say based on some indicators. But overall, spending is still pretty healthy. Definitely the corporate sector, and particularly as relates to AI, which we can maybe talk about it at a different time. That's a whole nother subject. But regime, I think the big the big question saying from the Fed is how the consumer processing their job prospects and specifically we got numbers this morning that suggest the labor markets still in okay shape right now but it's certainly softening quite materially. The unemployment rate actually moved lower, which maybe because kind of further credence. The Fed's not doing anything when they get together this month, but again, we still have to be mindful that the overall market is slowing. Quite notably, we've seen that in other reports as well, but you kind of put all this in your crystal ball. How do you think that is processing the implement the fluent situation and what they're thinking about respected interest rates as we move into the new year?

Rajeev Sharma [00:13:21]

Well that’s a good question, George. I mean the unemployment rate falling for December and that two more than expected. We saw Treasury yields immediately react moving higher in yields specifically as non-farm payrolls rose 50,000 and less than economics economists had forecast, and traders all but gave up on the fact that we're going to get a rate cut this month. Those odds are already pretty low, and after this labor report came out, nobody's really expecting anything at the January 28th FMC meeting. For a fed rate cut now, so now the market has gravitated towards two rate cuts for 2026, with the first one coming sometime around mid year most likely June. And job data was the first clean read that we got on the labor picture after. As you mentioned, the government shutdown, which was six weeks. So now we finally have a fresh jobs report. We could start seeing changes in those two rate cut expectations by the market. What that would depend on would be on how labor market continues to perform over the next several months. Then you also have inflation. That is cooling, but still above the feds 2% target goal. So again, just like in the past, just like we saw before, data is going to be the key of how the Fed is going to move forward with their rate cutting cycle. It will likely be, in my opinion a stop-start approach for rate cuts. The other factor that's affecting this is the fact that many people, many investors, feel that we're pretty close to the neutral rate. So even if we do get rate cuts, we're probably closer to well by the end of this year, we'll be closer to the end of a rate cutting cycle than the beginning of 1. So where do we go after that? I think that's also in the minds of a lot of investors. The other factor, the other factor that's really affecting the treasury markets right now is that investors are reducing their long positions and they're going short in treasuries. And again, this is a result of these renewed geopolitical uncertainties. Now generally in the past, whenever you've had some kind of geopolitical uncertainty, treasures have been viewed as safety haven asset and you saw money pouring into treasuries. We didn't see that on the Venezuelan news this time around. It wasn't that much of a factor as far as why treasuries yields were going lower in the first couple of days of the trading year, but we don't see those foreign buyers. We want to see the latest foreign buyers reports last couple of reports, they were still pretty firm on their levels of buying treasuries. It's going to be very important to see if they continue to be that way. Specifically, European buyers, they started slowing down their purchases of treasuries and some import to see if that continues as well. And then you have other factors in in fixed income that are affecting headlines and and the most recent one being Fannie and Freddie being told to buy $200 billion in mortgage bonds. This move is a targeted move that is an attempt to really push mortgage rates lower by boosting demand for mortgage-backed securities and many view this as an aggressive intervention. And the question is how far the GSE's should be able to go to impact housing finance. So again, we haven't seen the scale of intervention since 2008 =, And it's a directive that's coming directly from President Trump. So, this may again start to bring in the question of the independence or how we look at monetary policy going forward. I look at how we're how things are being affected or impacted by directives from from the White House. Again, this may deliver some short term relief. But again, it asks the question where is that line between monetary and housing policy?

George Mateyo [00:16:40]

Rajeev, you're right to point that out. And I think what it signals to me is just as you mentioned a broader sentiment that the Oval Office is trying to really dictate policy in a pretty overt way. And of course, you know, every administration has their own view on how they want to build their sticks, so to speak or kind of pull the lever of the economy. But as we talked about and we mentioned this and I think our year end outlook call your head outlook call I should say is the fact that affordability has become a real lightning rod issue and that's just maybe a covert for inflation or some other things. Well, I think Brian, maybe experienced some of that during his travels recently when people asking him about inflation too and prices. And again, this notion that the White House is trying to engineer mortgage rates or maybe manipulate the housing market to some extent says to me that again, they're really concerned about inflation and affordability as a domestic issue. So I think that we just have to kind of keep that in mind. I think it does maybe lend some support to this notion that inflation will probably be somewhat stickier. Irrespective of what happens at some of these indicators that then watches like the inflation, the inflation rate itself. So I don't know, Steve, if you've got a view on that, I think. But from our perspective, I think it makes sense to remind people that positioning in this purple position, this, this environment probably needs to be again be both based on diversification #1, but also what you've done with your portfolio, Steve is kind of tilt a little bit more towards cyclicality and I think that's also proven to be somewhat  beneficial in this of this year. Any thoughts on how that actually enters to your calculus around portfolio positioning as we think about 2026.

Steve Hoedt [00:18:12]

Yeah, George, you know, when you look at the way. That the year has started out, I mean solid beginning of the year, right up really nicely through the 1st 5 days. And when you look at the things that have been working versus the things that have been not working, we we've seen the Mag 7 you know not out of the gate in Ripple or in fashion not getting crushed or anything but the cyclicals have been doing very well and it seems that the market is coming around to our point of view which is that the quote unquote run it hot scenario seems to be in play for the for the foreseeable future and you know, this is what we kind of talked about in our outlook the caveat and the reason why we continue to talk about diversification and owning other assets instead of just saying you know, push all your chips to the center of the table for the on on equities is that you know the run at hot scenario has inflationary implications and when you get to the middle of the year with the new Fed chair. I don't know that you're going to get the market reacting to what happens with a run at hot scenario in a bullish fashion, so. You know all things right now point to earnings having a good year because of all these kind of growth positive initiatives that we're talking about, but it does introduce some additional uncertainty, a little bit further down the road and that that's the thing that kind of gives us pause and we're very happy to see the market doing well out of the gate. But I think you just got to take it with a little bit of a grain of salt.

Brian Pietrangelo [00:20:05]

Well, Steve, you mentioned the new Fed chair, Rajeev, what are your thoughts on the updated stats of probabilities or possibilities in a new Fed chair?

Rajeev Sharma [00:20:13]

Stats are saying it's probably be somebody named Kevin, but yeah, we do have the 2 front runners, Kevin Hassett & Kevin Washington. I think that what's going to be very important is, you know, the perception really is again, back to what will be central bank independence and what will it look like? What would the Fed look like after Fed Chair Powell leaves? I think what's going to be very important. There are other rotations within the Fed. Obviously the chair doesn't have the final say. It has to be a vote. So those are the voting Members that will be there as well. But I think what's really important right now is that the market understands that whoever is going to be in that position as Fed Chair, it's going to be handpicked by President Trump, and we all know that President Trump wants more rate cuts, wants to really start moving monetary policy to more of a cutting cycle. So many feel that it will be a more aggressive Fed going forward. So I do think right now Hassett’s got the lead right now as far as the polls go.

Brian Pietrangelo [00:21:09]

Thanks, Rajeev. And we'll finish up today's podcast as the first of the New Year with George as his overall arching comments for our listeners. George, any thoughts?

George Mateyo [00:21:19]

Well, to some extent, we’ve kind of covered these already, Brian, but I think just in terms of how we're thinking about your head, I think it is important again to reiterate, despite all of the consternation and maybe concern things we think, number one, that the business expansion is going to continue, meaning the odds for a recession is pretty low right now and that's going to be good for overall top line revenue growth that's going to actually be good for earnings as well earnings furthermore probably have some support from productivity gains, which is good for margins and that all leads to probably, as Steve mentioned, a pretty good recipe for stock prices. The converse of that I guess, is the fact that the valuations coming this year as they were last year this time frankly are still quite extended. So we're not going to likely see a whole lot of support this year from valuations. And I think over the past 12 months with the market up some 15-16%. Most of that too is based on stronger earnings as opposed to valuation. So in other words. If we start to see some deterioration in the urns or productivity story, that could be somewhat problematic for stock prices and maybe Steve pointing out, inflation might be one of those things that causes that to shift a little bit, but nonetheless again as I said #1, we still think the overall odds of a recession is pretty low. #2 the other thing we want to emphasize is that I think the overall narrative around investing in AI is shifting, it's not falling apart, but I think it's becoming more discerning. As Steve you pointed out, it was one kind of these moments where we seem kind of a rightly tide with many boats and now I think there's probably more discernment between the winners and the losers and that just again creates more opportunities but also creates some level of risk. And frankly there are more opportunities in other parts of the market that we're seeing attractive valuations. And then thirdly, the thing that I think we again, we talked about this too is that diversification probably didn't matter much from 2021 to 2024 in this to some extent really we saw really the market being levitated and supported by just the handful of stocks. And actually last year was a year where diversification really worked. If you have exposure towards international markets. If you have exposure to bonds, if you have exposure to real assets, your portfolio would have been better off than just owning that handful of stocks. And I think that's still somewhat underappreciated, Brian. So I think in our view, again being diversified is probably a really preferred winning strategy for the long run. And I know that sounds a little bit kind of like a cliche, but I think it's very true. And that's one thing that we're going to continue. To emphasize, as we think about the year ahead.

Brian Pietrangelo [00:23:44]

Well, thanks for the conversation today, George, Steve and Rajeev. We appreciate your insights and thanks to our listeners for joining us today. Be sure to subscribe to the key Wealth Matters podcast through your favorite podcast app. As always, past performance is no guarantee of future results, and we know your financial situation is personal to you, so reach out to your relationship manager, portfolio strategist or financial advisor For more information and we'll catch up with you next week to see how the world and the markets have changed and provide those keys to help you navigate your financial journey.

Disclosures [00:24:19]

We gather data and information from specialized sources and financial databases, including, but not limited to, Bloomberg Finance LP, Bureau of Economic Analysis, Bureau of Labor Statistics, Chicago Board of Exchange Volatility Index, Dow Jones and Dow Jones NewsPlus, FactSet, Federal Reserve and corresponding 12 district banks, Federal Open Market Committee, ICE Bank of America Move Index, Morningstar and Morningstar.com, Standard & Poor's, and Wall Street Journal and wsj.com. Key Wealth, Key Private Bank, Key Family Wealth, KeyBank Institutional Advisors, and Key Private Client are marketing names for KeyBank National Association, or KeyBank, and certain affiliates, such as Key Investment Services LLC, or KIS, and KeyCorp Insurance Agency USA, Inc., or KIA.

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Brian Pietrangelo [00:00]

Welcome to the Key Wealth Matters weekly podcast, where we casually ramble on about important topics, including the markets, the economy, human ingenuity, and almost anything under the sun, giving you the keys to open doors in the world of investing. Today is Friday, December 12th, 2025. I'm Brian Pietrangelo, and welcome to the podcast. And before we begin today's conversation, we would like to wish everybody out there a happy holiday season for every religion and especially a Merry Christmas as we get into the December holidays. Also, a program note due to those holidays and some scheduling opportunities, this will be our last podcast of 2025.So we want to make sure we wish everybody a great holiday season. With that, I would like to introduce our panel of investing experts here to share their insights on this week's market activity and more. George Mateyo, Chief Investment Officer, Steve Hoedt, Head of Equities, Rajeev Sharma, Head of Fixed Income, and Cindy Honcharenko, Director of Fixed Income Portfolio Management. As a reminder, a lot of great content is available on key.com/wealth insights, including updates from our Wealth Institute on many different subjects, and especially our outlook for 2026 as we just posted it, and take a look to see what we have to say about the upcoming year. In addition, if you have any questions or need more information, please reach out to your financial advisor. Taking a look at this week's market and economic activity, the economic release schedule on the calendar was fairly light this week as we continue to have various delays due to the lapse in information gathering from the government shutdown a few months ago. As an example, on a delayed basis, we will not get the all-important employment situation from the Bureau of Labor Statistics for the months of October and November until next week on the 16th.We're also still waiting for the first estimate of the third quarter 2025 GDP report, and that won't come out until the 23rd of December. So let's turn to data that we do have. And this week we came out with the unemployment claims on an initial basis from the Department of Labor for the week ending December 6, and the number was 236,000, which was an increase of 44,000 from the prior week, which looks pretty big. However, let's diagnose the numbers. The week ending November 29th, the prior week, was the week of Thanksgiving, so the claims are going to be lower due to that fact that there was the Thanksgiving holiday. So if we go back to the week ending November 22nd, when the numbers were 217,000, this week's increase only really is about 19,000 on an increase, which doesn't sound as bad, but we'll continue to watch those numbers on behalf of our read on the economy. But net numbers are still pretty low, which is a favorable sign. And second, we got the job openings report through the JOLTS report, as it is known from the Bureau of Labor Statistics, where we got two months in one, and that came out earlier this week for the months of September and October, still delayed from the government shutdown. And we did see a little bit of an increase from August in those numbers for September and October at around 7.7 million job openings. So fairly stable there, not too much change in the news, but generally an increase is possibly systematic for the seasonal updates or it's just a decent read. Either way, we'll continue to watch that number going into the new year. And third and most importantly, the big news for the week was the Federal Open Market Committee for the Fed that occurred on this past Wednesday with the press release and the decision to lower rates. Now, this is the third consecutive meeting that the Fed has lowered rates for a total of three times this year in 2025, but the meeting had a lot of more content to it and a lot of deeper discussion that we will cover during today's podcast. So, as it is very important, we'll get right to Cindy Honcharenko to give us a recap of the FOMC meeting and the implications for the markets and the economy. Cindy?

Cindy Honcharenko [4:02]

The committee cut the federal funds rate by 25 basis points, bringing the target range to three and a half to three and three quarter percent. This marks another step in the Fed's gradual easing cycle as inflation continues to move lower and the labor market cools. But the real story isn't the cut itself. It was the three dissents behind it. Two officials thought the Fed shouldn't cut at all, and one argued the Fed should cut even more. And that kind of split is rare, especially on the rate-lowering decision. So let's unpack it. Austan Goolsbee and Jeffrey Schmid dissented because they preferred to hold rates steady. Their concern is that inflation progress, while real, may not be durable enough to justify easing at this stage. They worry about cutting too soon and risking re-acceleration in prices. On the other side was Stephen Myron, who dissented for the opposite reason. He actually wanted a larger 50 basis point cut. He argued that the labor market has cooled significantly and that inflation is steadily drifting toward target, so a faster adjustment was appropriate. 

Taken together, these three dissents mark the most fractured vote we've seen in years, and they tell us something important. The Fed's no longer aligned on how restrictive policy still needs to be and the center of gravity inside the committee is widening and that will shape the policy debate into 2026. So what did the Fed say? The Fed acknowledged continued disinflation, noting inflation was eased over the past year, even if the progress has been a little uneven. Policymakers also said the labor market has shifted from hot to balanced, with job growth moderating and wage pressures cooling. They described policy as restrictive, but less so than earlier in the year. And now they see the risk to inflation and employment as more evenly balanced. We also got a new economic projections. The SEP and the dot plot shows the Fed expects only one rate cut in 2026. That's a slower, shallower easing path than markets anticipated. The committee also announced a restart of the U.S. Treasury purchases to modestly expand the balance sheet. Importantly, policymakers frame this as performing a technical reserve management adjustment. It's about maintaining ample reserves as the balance sheet runoff tightened conditions in the money markets. What did Powell say? Well, he struck a thoughtful but cautious tone. He said that the committee felt a modest adjustment was appropriate given the combination of easing inflation and cooling labor market. He emphasized that the Fed is not declaring a victory on inflation, that there's more work to do, and they need to see continued progress before moving more decisively. He also addressed the usual pattern of dissent, describing them as genuine differences in interpreting the data. He portrayed the committee as unified in goals, but wrestling with timing and magnitude, which is exactly what you would expect at this late stage of the disinflation process. As far as the balance sheet, he was extremely clear. This is about ensuring adequate reserves, not about stimulating the economy. And when asked about the single 2026 rate cut in the dot plot, he stressed that it's not a commitment. Future policy will depend on the data, especially inflation's path and how the labor market evolves. So, what does this all mean for next year? Now, the Fed's baseline is just one rate cut in 2026. Additional cuts are possible, but they will require either cleaner disinflation or a more noticeable slowdown in employment. The split vote underscores the uncertainty, the officials disagreeing on both sides, some worries about inflation, others concerned about growth. The path of rates in 2026 is far from settled. So, markets should expect higher policy volatility, more debate inside the committee, and a very data-dependent Fed. Rajeev and George, I'd love to hear your take on this week's FOMC meeting and announcement.

George Mateyo [08:18]

Well, Cindy, first and foremost, happy anniversary. I'm not going to say what year it is, but happy anniversary to you. And thanks for all your great years of service here with us at Key Private Bank and Key Wealth.

Cindy Honcharenko [8:28]

Thank you very much.

George Mateyo [08:30]

You're very welcome. I'm going to look back and say the Dow was probably, I don't know, maybe a few thousand points lower maybe. But anyway, we won't go down that path. But nonetheless, thank you and congratulations and happy anniversary.

Cindy Honcharenko [8:42]

Thank you.

George Mateyo [08:42]

In terms of the Fed, though, I guess we should pretty much say happy anniversary to Jay Powell soon, too. I think his term is coming up to an end sometime relatively soon. And this could, in fact, be his last rate cut ever, maybe. I think there's a strong likelihood that they might not cut rates again as his term is chair anyway. And of course, he could stay on his governor for a few more years, but it seems like we kind of have this thought that maybe there'll be a new chair sometime in the spring of next year. And as you suggested, maybe the Fed will be on hold until then, or maybe even longer, potentially. But I think the overall tenure was a pretty growthy outlook in the sense that they did lift their growth forecast in their projections. And I would probably say they're probably being a bit too cautious on the inflation side, where maybe there's some chance that maybe inflation runs a little bit hotter than what they're thinking if those gross numbers come to fruition. And frankly, the division is probably not a bad thing either. It’s probably a clear example to the administration that this is not just one person that can control what happens with interest rates, which, of course, is what some people might like, but I think it might be more complicated than that to actually achieve. So if nothing else, the Fed probably fades into the background a little bit as we shift the discussion to other things in the first half of this year, including the AI trade that we've talked a lot about and other things as well. But I think we'll probably have to, of course, navigate the uncertainty which comes with the new Fed share. I mean, that announcement could, of course, come any day. I guess, Rajeev, if you're looking at the overall appetite for risk markets, it seems like credit spreads continue to be well contained and pretty well behaved. We have seen some yields kind of pop up other parts of the world, though. I’m not sure if you want to comment on either one of those two things, but that would probably be something to pay attention to, in my view, in terms of the appetite for risk and also what's happening overseas. What do you make of that?

Rajeev Sharma[10:26]

Well, it's a very good point, George. The overall sentiment after the Fed was that yields are reflecting the fact that maybe we don't get the three rate cuts that the market anticipated for next year. And so the market is right now at a 25% odds of a rate cut in January, at the January 28th meeting, which is quite significantly lower than what the market was thinking before the Fed meeting. If you look at credit spreads, they've been very, very contained. We had a lot of supply this week before the Fed. Market digested that, and...investment grade and high-yield spreads are both pretty much where they started the week at these almost a few basis points away from multi-decade tights that we saw in September. So credit spreads haven't really reflected the fact that we've had so much supply this year. And I think that it's very interesting that so much demand continues to be for credit. Especially investment grid credit, very high quality credit that you're getting very good yields at. And it's an income play, really, for the market right now. And I think that's going to continue into next year. I do think that the market is anticipating maybe two or three rate cuts next year. I think the credit markets are also anticipating that. If we don't get those, then I do think that high yield could come under some pressure, especially the lower rated bonds that have to go back into the market to refinance their existing debt. And that's going to be tough on some of those triple-C rated bonds out there. And that's going to be something very important to monitor.

Brian Pietrangelo [11:57]

You know, George, you've said many times that it's not as important as to when or if the Fed is cutting rates, but more important as to why the Fed is cutting rates, whether it's part of the dual mandate on inflation coming down or jobs market suffering. I was a little surprised that I haven't really heard Jay Powell talk about the fact that he thinks some of the jobs data may be overstated and therefore weaker than expected. Do you have any thoughts on that?

George Mateyo [12:21]

I don't, Brian. I mean, I think we all kind of acknowledge that the data is a little bit fuzzy in general, and it's probably even fuzzier given the government shutdown essentially negated some data. In other words, there are some surveys and some data that just wasn't collected because of the shutdown, and it probably won't ever be collected. And we're still getting data that actually was, you know, a few months delayed. So I think that might be some out of it. But I don't think there's anything untoward in the sense that the data is bad data. So in other words, we have to catch up from this period of the shutdown and get behind us. And then maybe sometime next year, we can restart the clock and getting things a bit more on a clear footing. But I do think it is true to say that what you pointed out with respect to it doesn't matter if they're cutting as to why they're cutting. And I think what we've suggested is that these rate cuts for the last several months anyway, have been more focused on just preserving and maintaining economic growth as opposed to try and restart it. And that's a key difference in the sense that sometimes when the Fed is cutting rates, they're doing so because the economy is contracting, frankly, and they've got to find a way to kind of resurrect growth. And we don't seem to have that right now. But Steve, maybe to get you into the conversation, one thing that's also apparent right now is that the US dollar has been under some pressure. And I don't know if you've got any views on that, but I think that's another tell we have to watch in terms of what the overall market sentiment might be with respect to risk. So any thoughts on the dollar, Steve?

Stephen Hoedt [13:44]

I mean, I think, George, it's one of those kind of wild cards as we head into 2026.If you look at it historically, large moves that happen very fast in the currency markets are the thing you need to be afraid of. If you get slower adjustments on a quarterly, half yearly, whatever basis, corporations are able to hedge out whatever the impact is, and it doesn't really have too much of a positive or negative impact on earnings for corporate America. When you get fast moves, though, those are not hedgeable and it can create impact. Lately, obviously, we've seen a dollar have about of weakness. We’ve seen commodities across the board, again, start to reflect that. Commodities are priced in dollars, so when the dollar goes down, commodity prices go up. The one exception to that has been oil for a host of reasons, but basically all metals and base metals have had a great last couple of months. The other question is, as we go into next year, are we going to see acceleration in this? I think that our point of view is that the dollar has migrated to a lower trading range, but that we don't see some kind of imminent collapse. And basically, you're going to see it move around here and using the dollar index as a kind of a proxy. There was a period of time where the dollar was well above 100 over the last few years. And lately, I think the view is from our shop that 95, 96 to 100 is probably the new trading range that's going to be established. We don't see some kind of imminent collapse to like 80, which would cause, again, problems for corporate America in terms of hedging.

George Mateyo [15:45]

Steve, I think we should probably get your thoughts on AI, right? I mean, that's one thing that many corporations are talking about. There was an interesting survey that came out just a few weeks ago that suggested those companies that actually talk about AI have seen their stock price actually outperform those companies that don't talk about AI. But at the same time, the market seems to be rotating a little bit away from that in terms of some of the recent underperformance by some of these major tech stocks. Do you have any thoughts on what's happening inside the market on the AI theme? 

Stephen Hoedt [16:15]

It's been an interesting week there too, George, with two big news reports from companies involved in the AI ecosystem. You had Oracle earlier this week and Broadcom last night, both of which are, maybe they're not in the MAG7, but...But they're certainly mega-cap tech, right? So when we think about it, if you look at the Oracle news, the market was a little bit surprised by the magnitude of investment that Oracle stated that it was going to continue to make. I think that the feeling is that we're getting to a point with this where the market is discerning some winners and losers, the OpenAI, Oracle, NVIDIA ecosystem has been kind of on the outs lately, and the Google, Broadcom, Celestica ecosystem has been on the rise. And the fact that Oracle was talking the numbers that they were, I think the market was a little bit taken aback by it again. Then when Broadcom comes out last night, though, and Broadcom kind of threw some cold water on people's expectations for the Google Broadcom ecosystem, because they again talked about, they refused actually to really give guidance on how much we could see in terms of sales over the next 18 months they've got lead times of 6 to 12 months. So the fact that they're not willing to give guidance out to 18 kind of made the market go, right? So we've got that stock down today, a similar amount that Oracle was down yesterday. So both ecosystems took a hit this week. I think that the message for me on this is that as we head into 2026, I really do think it's not so much a AI trade as it is a differentiation of the potential winners and losers in AI, number one. And that could be the AI stocks and companies themselves. But more importantly, I think it's the companies that are going to be able to figure out how to leverage this technology to increase productivity. And that's a...a very clear thing that we're starting to see, but I don't really think we've seen the labor market impact in the economy yet. Maybe we start to see that dig in a little bit next year. I think it's still to be determined.

Brian Pietrangelo [18:41]

You know, Steve, we were talking earlier this morning with George and everybody on the team about maybe a flashback to the 1990s and a comment that you wanted to make as we go into the end of the year. What are your thoughts on that?

Stephen Hoedt [18:52]

Yeah, it wasn't lost on me that this week. Cisco Systems reached a new all-time high. And the last time it had an all-time high was in March of 2000. And at that point, I think I mentioned it to George a little earlier this morning, that the earnings forecasts necessary to justify the valuation exceeded 5% of GDP for the US economy at the time. I mean, the scale of the bubble back then was just mind-boggling. And, you know, I think it's kind of brought into focus again. You know, there's a lot of talk about bubbles right now. It feels like there are things that are similar to '99 to 2000, 2001, but there's also a lot of stuff that's very different. So, you know, I think it gives us pause though to think that it took almost 25 years to get to a place where we have that stock at new highs. And the thing that I would like to highlight for everybody is, look, Cisco has been a real company with real earnings and real products and all that for the last 25 years. But yet, because the valuation got so overcooked, you could not make money as an investor in that stock until the last few years, as we've seen things kind of improve there and grind its way higher to a new all-time high. So I'm sure there are some folks who are doing cartwheels because they can finally unload the stock they bought at the peak for a measly gain after 25 years, Brian.

Brian Pietrangelo [00:20:38]

Well, thanks, Steve. That's a great segue to go back to George to finish up our year. As we get towards the end of the year, George, any great reminders for our investors and our listeners out there on topics of concentration and diversification and valuation?

George Mateyo [00:20:51]

Shun, shun, shun, right? A lot of things there, concentration, valuation, and so forth. I think, well, look, I think, first of all, I wish everybody a great holiday. Take some time to relax and just be with family and friends and turn off the TV for a while. Markets will still be there when we come back. And it could be a little choppy next few weeks or so as liquidity dries up and other things maybe take center stage. But I do think that we are still really bullish on the long-term outlook of our economy, big believers of human ingenuity. And I think irrespective of political noise and other things like that will be better off for it.

But I do take your point, Brian, very seriously as well to the point, which is being diversified. And as we've said many times on the last few calls and for much of the podcast this year, we've talked about the fact that the market has gotten pretty concentrated, which suggests that there's probably been this dominance of one theme kind of taking over the market. And we think it is important to diversify and having some exposure there, but being measured in your exposure, knowing what you own, knowing why you own it, and really trying to make sure your portfolio is diversified as possible, knowing that we just don't know what's going to happen next.

So we wish everybody a great holiday season, a happy, healthy new year, and we look forward to turning sometime in early January with you on this podcast. So thanks for listening. Happy holidays.

Brian Pietrangelo [00:22:09]

Well, thank you for the conversation today, George, Steve, Rajeev, and Cindy; we appreciate your insights. And as we said earlier, this is the last podcast for 2025. So on behalf of our Chief Investment Office here at Key Wealth, as well as our colleagues across the nation at KeyBank, we would like to wish you a very happy holiday season and a very Merry Christmas. And thanks to our listeners for joining us today.

Be sure to subscribe to the Key Wealth Matters podcast through your favorite podcast app. As always, past performance is no guarantee of future results. And we know your financial situation is personal to you. So reach out to your relationship manager, portfolio strategist, or financial advisor for more information, and we'll catch up with you in the new year to see how the world and the markets have changed and provide those keys to help you navigate your financial journey.

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Brian Pietrangelo [00:00:00]

Welcome to the Key Wealth Matters weekly podcast, where we casually ramble on about important topics, including the markets, the economy, human ingenuity, and almost anything under the sun, giving you the keys to open doors in the world of investing. Today is Friday, December 5th, 2025. I'm Brian Pietrangelo, and welcome to the podcast. We'd like to welcome you back. After a Thanksgiving break last week, we were off for the podcast, and I assume that you were able to spend time with family and friends like we were. So again, glad to have you back with us this week. In addition, as a program note, earlier this week on Wednesday, December 3rd, we had our national client call where we talked about our 2026 outlook for the economy and the markets. So if you're interested in hearing the recording and seeing the deck from that call, please reach out to your financial advisor or relationship manager to get the links for that information. We'll also be giving a recap for that in our podcast today during our final session. With that, I would like to introduce our panel of investing experts here to share their insights on this week's market activity and more. George Mateyo, Chief Investment Officer. Stephen Hoedt, Head of Equities, and Rajeev Sharma had a fixed income. As a reminder, a lot of great content is available on key.com slash wealth insights, including updates from our Wealth Institute on many different subjects, and especially our Key Questions article series, which addresses a relevant topic for investors. In addition, if you have any questions or need more information, please reach out to your financial advisor. Taking a look at this week's market and economic activity, we've got three key updates for you in terms of the economic releases for the past week and some commentary on that, and we will begin with that here shortly. First up, we have data on the employment market and the labor market, beginning first with the initial unemployment claims report that came out on Thursday. The initial claims for November 29th week ending were 191,000, which was significantly below the average that we have been seeing for some time now and may be related somewhat to seasonal hiring, which again reduces the initial unemployment claims that have been filed. That also being the case, it's been below 225,000 for the last three weeks of reporting, so we'll continue to take this as favorable news as this data point within the employment market. On the other hand, we were supposed to get the employment situation report for November here on Friday, the 5th of December, that covered November's data, but it was delayed and continues to be delayed from the government shutdown and will not be published until December 16th. As a result, we'd look at some alternate data that we don't normally cover and try to get a read on whether that has implications for the employment situation report that would be delayed. And one of those reports is the ADP National Private Payroll Report, which showed that there was a loss or decline of 32,000 jobs in the private sector for the month of November. And second, this week we got both sides of the Institute for Supply and Management's PMI reports, one manufacturing and one services. On the manufacturing side, their report continues to show contraction in the manufacturing side of the economy, not only for the 9th consecutive months, but rolling on to roughly a five-year period where the manufacturing industry has been in contraction. However, opposite from that, on the services side of the economy, it has been expanding in the month of November and has basically also been an expansion for about 5 years. So a completely different side of the economy, and we'll continue to look at that data to report it for you. And third, we're getting information real time on PCE inflation for the month of September. It's coming out right as we're recording this podcast here on Friday morning. So we'll talk about that within our sections of the podcast. But that being the case, remember, PCE, or personal consumption expenditures inflation, is the preferred measure for the Fed. Now, that being said, given the government shutdown that we had, this information is also delayed, so we'll only be getting the PCE inflation number for the month of September, which means it's a little bit stale, but it's still very important because it's the last official read before we go into the Federal Open Market Committee meeting next week. And speaking of the Fed, as our last comment, they will meet on Tuesday and Wednesday of next week for the last meeting of 2025. And we'll talk with Rajeev and the team about the implications of the data for that meeting and where we're headed as the probabilities of a rate cut are pretty high, and then talk to Rajeev and the team as to where we might be going for 2026. In addition, during our last segment, we will talk about a recap of our 2026 outlook. So George, let's begin with you to talk a little bit about what that inflation report might be, also some of the implications of the employment data, even though it's not complete. George?

George Mateyo [00:05:05]

Well, Brian, I'm not sure if we can make too much of the data that came out this week in the sense that it was kind of noisy. And more specifically, the claims numbers that you referenced. Well, I think we kind of like to look at claims because it's a good flat point in terms of really some near-term economic data, and it comes out on a weekly basis, or it used to anyway. But this number was pretty low, as you mentioned. It almost seems like artificially low. I don't know if that was because of the fact that took place during the Thanksgiving holiday. And sometimes, obviously, people aren't probably out in the streets looking for work during Thanksgiving, hopefully. And that might kind of skew some of the data on the downside. The other data that you talked a little bit about, of course, has to do with ADP and employment. In the past, there, too, many people didn't really use that indicator very much. They kind of thought there was some sampling issues that probably we won't get into right now. But again, the overall numbers suggest the overall trend is, again, a cooling labor market, but not collapsing. And just a general sense that the labor market is in okay shape right now. And that's probably good enough by all accounts. I think the market probably took it to heart that the Fed might not be pausing after all, because the numbers were a little bit soft. But we still have to navigate probably this malaise we're in with respect to the fact that data has been pretty opaque. The other signal that just came out this morning, of course, is the inflation numbers, which again suggests that inflation is still kind of sticky, but not spiraling out of control again. So again, we have this ongoing narrative with respect to cooling labor conditions and sticky but not rising inflation. So I think overall, it kind of is an interesting setup for the Fed to kind of chew on this. At the same time, their own leadership transition is still kind of swirling around in the ether that we have to kind of understand a little bit. So I don't think there's going to be too much new news that we have to uncover. The Fed probably still seems somewhat divided, although in the more recent days, it seems like they've kind of coalesced around what they might do. But again, there's probably a little bit of doubt in terms of what they will do for sure. I don't know, Rajeev, if you've any thoughts on that, but it seems to me that the Fed is still kind of operating somewhat blindly with respect to academic data. And maybe a pause makes some sense, but the market is suggesting they should still cut. What do you think?

Rajeev Sharma [00:07:14]

Well, George, today's PCE release is the last piece of data that the Fed is going to get before the FOMC meeting next week. We did see recent labor data that's also quite bifurcated, in my opinion. ADP showed private payroll decline in November.  That was the sharpest decline since we've seen since March 2023. So then that fueled some of those easing bets from the market that the Fed is going to cut rates next week. While we had the weekly jobless claims, they fell to a three-year low, suggesting that the Fed could actually wait and see approach, continue with the wait and see approach. So a lot of noises out there with this data. Next week's FOMC meeting currently has a 95% probability that we will have a 25 basis point rate cut. It's being framed more as a risk management rather than a pivot towards aggressive easing. But the thing to watch really will be the number of dissents that we see when we find out the dot plots next week, find out exactly who wanted to vote for a rate cut, who said that we should pause. I think it's going to be very important for the future in 2026 of how deep rate cuts go in 2026.And I think that's going to be very important. But again, I think that you're seeing in the treasury market right now, there is some dip buying. You do have investors out there that are looking at bond yields. They're seeing them at one or two basis points higher across the curve. Tens are visiting their defined range of 4.05 to 4.15%. We've been in that range since the last October FOMC meeting. And you have seen investors come out there and say, okay, 4.15% on the tenure, I'm going to buy.

And we're seeing that.

And Friday is probably the day where I think a lot of investors are going to make some of those decisions before the Fed meeting. The FOMC meeting decision next week. I think that whatever data we've seen so far as far as economic data, many have viewed that as old data, stale data. Once this is all out of the way, which we've got today with the PC number, I think we're going to have to focus more on the Fed meeting.162 We also have other things to focus on. We have auctions. They resume on Monday. $58 billion of a three-year new issues coming to the market.

$39 billion of a 10-year and $22 billion of a 30-year are coming Tuesday and Thursday. So the only day that we don't have an auction next week is Wednesday, which is the Fed meeting, and Friday, which is because it's Friday. So I do think that there's a lot of other moving parts in there that might keep some of the pressure higher and keep yields elevated in the Treasury curve. But really all eyes are on the Fed for next week.

Brian Pietrangelo [00:09:47]

Well, Steve and George and Rajeev, we've all had a great opportunity this past week, which is a good segue to think about 2026 now that we get past the Fed meeting next week. And we had a national client call where we talked about our outlook for 2026 and had a couple of key themes that we want to share with everybody today as a recap for that call on Wednesday, 12-3. So George, let's start with you. We've got our top six for 2026. And the first question in the recap is, do you think the economic momentum will continue and will a recession be avoided in 2026?

George Mateyo [00:10:22]

Yes and no. I guess yes, I think the economic momentum can and will continue, Brian. And no, I think we will avoid, yes, we will avoid a recession. Trying to think the right way to say that.

But yes, I think a recession is probably not likely next year. There's always something that could go wrong. In fact, there's a lot of things that people are thinking will go right next year. So as you think about everybody else's putting out forecasts too, I think the outlook across the board is pretty bright. And we have to keep our eyes open to that because I think there's always things that can kind of go bump in the night if we're not aware of them. And one of which, of course, is inflation, which probably we'll probably talk about that in a little bit, I would guess. But overall, I think the economic momentum continues. News in the next year.

Brian Pietrangelo [00:11:01]

Great, number 2 for George and possibly for Steve, is the artificial intelligence status in a bubble? And if so, do you think it will burst or is there something else going on?

George Mateyo [00:11:15]

Well, I think the expectations are certainly elevated, right? So maybe a bubble is not really the word I'd use right now. But instead, I think the overall expectations around what AI might do in terms of the overall, I get the infrastructure that's associated with it. And we've noted on some of these calls in other places too, that we are kind of shifting to a little bit more of a riskier phase in the sense that many companies now are relying on debt to finance that infrastructure. So I think the answer is probably not yet, but I think it really bears monitoring. Steve, what are your thoughts?

Stephen Hoedt [00:11:43]

Yeah, I think that we're similar, but a little bit nuanced on this between you and me, George, and that I think it's a little bit earlier in the cycle for this than you do. But I would say that when I think about bubbles, a bubble typically encompasses not just market participants, but society as a whole. And if you think back to the bubble in 99 and 2000, like you had sock puppet advertisements on television, you had kind of, It permeated everywhere in society. It started to become a cultural phenomenon as much as a market phenomenon. And I really don't think we're there yet with this AI business. It hasn't permeated everywhere yet. And frankly, there's a lot of skepticism on it. There's more skepticism on it from a consumer adoption standpoint today than there was a year ago. So I think we're entering a phase where, to your point, people are needing to be discerning. And it's very clear that there are ecosystems emerging in the AI world right now with one kind of coalescing around Google Gemini and another coalescing around OpenAI. And as we move through 2026, I mean, it's very possible that we could start to see winners and losers in the AI space as opposed to just everybody assuming everything AI is a winner. And that would be a very big change compared to what we've seen over the last two or three years, where basically anything that touched AI was up and to the right. I think that if we move into a world where there's discernment between winners and losers, that looks a lot different than what we've seen over the last couple of years. So maybe we don't have a bubble per se, but we get this kind of discernment between winners and losers.

And you get some very popular stocks that have some very public potential pullbacks or issues.

Brian Pietrangelo [00:13:53] Great. So moving on to #3, for you, Rajeev, what do you think is happening as we get past next week's meeting for the Fed in 2026? What do you think about the leadership changes at the Fed? What might it mean for interest rates in 2026? And what do you think the outlook is for the dual mandate of both inflation and employment?

Rajeev Sharma [00:14:13]

Well, you know, the outlook for Fed independence, that's going to be a key driver for 2026, key concern for 2026 from investors. There's political pressures. They continue to mount There will be some leadership transitions. There'll be some new appointments. And those new appointments will likely align with White House thinking of aggressive rate cuts. So there will be debates over the Fed's dual mandate, inflation versus maximum employment. This could all weaken the Fed's autonomy, but institutional guardrails remain strong. I think what's going to be very important is the Fed has to maintain its credibility. If the Fed starts looking that it's politically biased in one way, I think there's going to be a lot of concerns about the future of the Fed. And I really do think that, you know, we've seen some dovish signals by the Fed in 2025. We're going to start seeing more stronger dovish signals by the Fed in 2026. Potentially, that could lower Treasury yields. It could steepen the yield curve. Fed Chair Powell's term ends in May 2, 2026. President Trump is expected to nominate a successor. Right now, Kevin Hassett has the odds in his favor, over 80%.

Each year, you have four regional Fed presidents that rotate into the FOMC. So that could reduce the hawkish weight of the Fed and bring it into more of a dovish stance. The net effect would be a dovish majority. And especially if HACCP prioritize easing to counter slowing growth and mortgage stress, you could start seeing more of a dovish posture of the Fed. You could start seeing some things like, you know, we talked about the 2% inflation target. You could see those goalposts move. Perhaps the Fed would be comfortable with the 3% inflation. So the outlook of the Fed's dual mandate comes into question in 2026. I think policymakers are split between prioritizing price stability versus maximum employment.

Brian Pietrangelo [00:16:02]

Thanks, Rajeev. Back to you, Steve, for #4. What do you think about the stock market? Will we post our 4th consecutive year of gains and will the Magnificent Seven remain magnificent?

Stephen Hoedt [00:16:13]

So I would tell you that I think our outlook for next year is a pretty bullish one based on the macro backdrop that we see. The economy looks like it's in a pretty good place. You've got both monetary and fiscal support likely in a significant fashion in 2026, all of which should lead to earnings likely exceeding expectations in our view. And when you think about that backdrop, we also think that it's likely going to be very front loaded in 2026.And to the point that Rajeev made and that George alluded to earlier, you know, if the economy's running hot, there's a fine line between running hot and overheating. And if we get to a place where things are overheating and inflation is higher than what people expect as we run into mid-year and post the Fed chair shift, we could have a scenario where the market gets disappointed with how accommodative monetary policy is. So I think that when we came into 2025, we said it was a down and up year and we kind of got the the call right on that directionally. We think that next year likely is going to be an up and then question mark year, meaning that we could chop around after we have a really great first half of 2026 or depending on how the inflation scenario plays out, you know, you could see a pullback in the second-half of the year. But we think the first half of the year is pretty clearly set up to be a fairly bullish one for equity markets.

Brian Pietrangelo [00:17:55]

Superb. George, we'll finish with you with the final two thoughts for our top six for 2026. And we'll go with #5. Do you think 2026 will be the year that investors need to worry about the national debt and the deficit?

George Mateyo [00:18:12]

Well, to some extent, Brian, I think every year is a year that we have to worry about this because the debt situation is really probably not sustainable on a long-term basis. But at the same time, I don't want to be alarmist about it. We've had this situation. We've known this issue for quite some time. I don't think there's any one tipping point that might be coming down the pike. This is not as if something's going to be surprising us when this happens. But at the same time, these things happen somewhat out of the field when they do, when bondholders do say too much and we just don't know when the point might be. Right now, it doesn't seem to be an issue. It seems to be a situation where we know every debt situation, we know a lot of leverage, but at the same time, people still want to use dollars as a currency with which to transact. And we have a lot of great things going for us as a country, a lot of great things going for us as an economy, and that should continue to benefit us and allow us to actually use this privilege we have to issue debt. So I don't think it's an issue right now, but I think we just have to be mindful of it. And I think the best thing we can do is be diversified around that.

Brian Pietrangelo [00:19:11]

Great, George. And the final question is #6. What do you think about the midterm elections that we have coming up next year in 2026? Should investors get out or stay away from the markets until they pass?

George Mateyo [00:19:22]

Absolutely not. No, I think the elections, I think Steve has said this very well. And every two years, I think now, Steve, we seem to say this, which is the markets really don't seem to care about who wins, frankly. The markets just want clarity, right? And we'll have probably plenty of time to talk about this next year as we get closer to the elections. It's not surprising to see the party in power lose a few seats, and maybe the administration now loses the majority in one branch of Congress, mostly the House, where I think the leadership right now is very narrow. So that wouldn't surprise people, I don't think, and I don't think the markets would react too negatively towards that. And to Steve's point, maybe the administration wants to get ahead of that and also try to legislate certain policies or put forward certain policies anticipation of maybe a tougher legislative calendar in the back half of next year and into the next few years thereafter. So I don't think it's not going to be that problematic for the markets. We probably have some volatility to kind of chop through and there's always going to be something unexpected happens next year. So again, as I said a few minutes ago, Brian, I guess our best view is that diversification is probably the most inexpensive thing you can do to your portfolio and have the least actually impact in most markets, but certainly when markets get crazy and markets go through periods of volatility, being diversified usually is the best solution.

Brian Pietrangelo [00:20:39]

Well, thank you for the conversation today, George, Steve, and Rajeev. We appreciate your insights. And thanks to our listeners for joining us today. Be sure to subscribe to the Key Wealth Matters podcast through your favorite podcast app. As always, past performance is no guarantee of future results, and we know your financial situation is personal to you. So reach out to your relationship manager, portfolio strategist, or financial advisor for more information, and we'll catch up with you next week to see how the world and the markets have changed and provide those keys to help you navigate your financial journey.

Disclosures [00:21:16]

We  gather data and information from specialized sources and financial databases, including, but not limited to, Bloomberg Finance LP, Bureau of Economic Analysis, Bureau of Labor Statistics, Chicago Board of Exchange Volatility Index, Dow Jones and Dow Jones NewsPlus, FactSet, Federal Reserve and corresponding 12 district banks, Federal Open Market Committee, ICE Bank of America Move Index, Morningstar and Morningstar.com, Standard & Poor's, and Wall Street Journal and wsj.com. Key Wealth, Key Private Bank, Key Family Wealth, KeyBank Institutional Advisors, and Key Private Client are marketing names for KeyBank National Association, or KeyBank, and certain affiliates, such as Key Investment Services LLC, or KIS, and KeyCorp Insurance Agency USA, Inc., or KIA.

The Key Wealth Institute is comprised of financial professionals representing KeyBank and certain affiliates, such as KIS and KIA. Any opinions, projections, or recommendations contained herein are subject to change without notice, are those of the individual authors, and may not necessarily represent the views of KeyBank or any of its subsidiaries or affiliates.

This material presented is for informational purposes only and is not intended to be an offer, recommendation, or solicitation to purchase or sell any security or product or to employ a specific investment or tax planning strategy. KeyBank nor its subsidiaries or affiliates represent, warrant, or guarantee that this material is accurate, complete, or suitable for any purpose or any investor. It should not be used as a basis for investment or tax planning decision.

It is not to be relied upon or used in substitution for the exercise of independent judgment. It should not be construed as individual tax, legal, or financial advice. Investment products, brokerage, and investment advisory services are offered through KIS, Member FINRA, SIPC, and SEC-registered investment advisor. Insurance products are offered through KIA. Insurance products offered through KIA are underwritten by and the obligation of insurance companies that are not affiliated with KeyBank. Non-deposit products are not FDIC-insured, not bank-guaranteed, may lose value, not a deposit, not insured by any Federal or state government agency.

Brian Pietrangelo [00:00:00] Welcome to the Key Wealth Matters weekly podcast, where we casually ramble on about important topics including the markets, the economy, human ingenuity and almost anything under the sun, giving you the keys to open doors in the world of investing. Today is Friday, November 21st, 2025. I'm Brian Pietrangelo and welcome to the podcast. And before we begin today's podcast, we certainly want to wish everybody a Happy Thanksgiving next week.

In fact, we will be off on the Friday after Thanksgiving to celebrate the holidays, so we won't have the podcast next week. We'll catch up with you in a couple of weeks. But again, wishing everybody a Happy Thanksgiving with friends and family. Also on the other side of the Thanksgiving week coming up on December 3rd, we are having our national client call with the Chief Investment Office here at Key Wealth to forecast our 2026 market and economic outlook. You should be receiving an invite if you are a client. If you're not a client, you want to reach out to somebody, a key or your relationship manager to get an invite, please do, so that you can sign up for the webcast. Again, it is on Wednesday, December 3rd at 1 p.m. Eastern Standard Time. I hope you can join us.

With that, I would like to introduce our panel of investing experts here to share their insights on this week's market activity and more. George Mateyo, Chief Investment Officer, Stephen Hoedt, Head of equities, and Rajeev Sharma, Head a Fixed Income. As a reminder, a lot of great content is available on key.com/wealthinsights, including updates from our Wealth Institute on many different subjects and especially our Key questions article series which addresses a relevant topic for investors. In addition, if you have any questions or need more information, please reach out to your financial advisor. Taking a look at this week's market and economic activity.

We've got four key updates for you this morning. First, even though there continues to be a delay in a number of reports from the government shutdown, we're beginning to get some of the data. So first, outside of the government report, is the existing home sales produced by the National Association of Realtors. On a month over month basis, this number increased 1.2% in the month of October, which has been the highest since February and is at a 4.1 million annual rate. Now, this is the second month in a row where that has increased, so a little bit of movement here, unlocking some of the fragility in the overall housing market with regard to turnover and existing home sales activity. So good sign there in terms of two months.

And second, we have two updates on the labor market because some reports that had previously been delayed are now starting to come out. We'll begin with the initial unemployment claims report that comes out on a weekly basis, and most recent for the ending of the week on November 15th. That number came out at 220,000 initial claims. We also saw backdated reports for the two previous weeks, which hovered around 230,000. So the good news here, folks, is that even though we were in the dark for a while, those two reports show us that around 222 average of those last three weeks of initial unemployment claims is very favorable, because it shows that there is not an existing increase in the initial claims report. So good news there on that jobs report. In addition, the government came out Bureau of Labor Statistics with the employment situation report for the month of September, which have been delayed significantly. So we just got it yesterday, and it showed 119,000 new non-farm payrolls that were created in the month of September. The report also showed some revisions for July and August at 33,000 lower, but net net that average of 119,000 was well above expectations and estimates in the market. And we'll take it as a very positive surprise of the healthiness of the jobs market at least for now in this indicator. Now, the Bureau of Labor Statistics also talk that they will not publish the October report, which means this is the last new nonfarm payrolls report we will have before the December 10th Federal Open Market Committee meeting.

And number three, speaking of the Federal Open Market Committee meeting, we got the notes from the October 29th meeting and they called the minutes. So ultimately, it describes some of the dissension that was discussed in the press conference and talked about more so, differing opinions from the participants on the committee with regard to holding rates steady in December, or looking for rate cuts based on the fog in the data that is now starting to come out a little bit more clear and forth.

Finally, in the market, we had a number of very large companies report their earnings this week, which seemed to be favorable, but yet the market had a little bit of a negative reaction to it. So we'll get Steve's take on that to help us read through those tea leaves. And finally, as a special program later on in our podcast, we'll be have a conversation around how we did with our forecast for 2025 that we published at the end of 2024. Just like we're going to be doing with this now in our 2026 forecast here at the same time of the year. So, George, let's tee you up for the first part of the conversation with your reaction to a lot of this data and what's happening in the markets and the economy. George.

George Mateyo [00:05:26] Well, Brian, I think the overall takeaway from the economic numbers that came out this week is that, frankly, there were some contradictory, numbers. And also I think the numbers were pretty stale. So more specifically, I think the thing that the market really kind of paid most attention to, of course, was the, the jobs numbers that came out for September. So again, those are probably two months old now, and I'll talk more about that a second. But the numbers were kind of mixed, frankly.

I mean, I think we saw some indications that the overall employment situation was a bit better than expected, in the sense that roughly 120,000 jobs were created in the month of September. I think that's say, there might be the highest tally since April. So that's a nice recovery there. The the prior two months, however, saw their numbers revised downward. So those would be August July numbers. So again we're kind of going back a little bit further. At the same time, the unemployment rate as you mentioned actually moves higher, almost close to 4.5%, which would probably be noteworthy. Then I guess you can kind of parse that number. So that was a good number of that number. But I think most people are going to focus on the fact that that number is still rising. So what that means is that the market is kind of appreciated.

We also saw wages come a bit soft as well. That's really good news for the inflation story. I think wages now are kind of running at about a 3.8 or so percent clip on a year over year basis, which is kind of kind of a comfort zone for the Fed. Not too hot, not too cold. I think they'd probably prefer to be a little bit softer. But, you know, America split here on that one. And I think you also just kind of know where they go. And if you think about the job numbers, the three month average now is ten. Moved up a little bit. Which is probably good news as well.

I think if you also kind of think about the numbers going forward, however, you know, some of the numbers this, this path report again, this is going back for September data, but, but the prior report suggested that most of the gains came in the private sector, which is pretty typical. But then note the note. I bring that to your attention in the sense that I think the government data, it's going to probably be a bit softer.

Many people are kind of bracing themselves for a pretty weak report when the actual October numbers come out, sometime. And I think it's going to be sometime after the Fed meets. So again, the Fed is meeting in kind of the first part of December, I think it's, December 9th and 10^th, and then at the same time, that employment report that I just mentioned will come up for a week or so after that. So, again, we're kind of in a situation where the numbers are still, things are confusing. And overall, I think things are still a little bit foggy in terms of what they might mean for the overall economy.

So let's, maybe let's shift gears a little bit. I think the bigger story in terms of this week has to do with what happened in the stock market and the stock market. Call this news in kind of a, kind of interesting fashion, I guess you could say a lot of volatility in the equity market. What do you take away from this week when you can think about earnings? And we think, what if the set up for the rest of the year is.

Stephen Hoedt [00:08:04] Well George, I mean it's I can't couch the price action in anything other than to say yesterday was probably one of the ugliest days that we've had since the turn of the decade. If you look at it, I mean technicians would look at what we had yesterday and call it an outside day, which mean we opened very high to the upside and then closed, very, very much on the downside. And it completely engulfed the days- the prior days’ range. The last time that we had an outside day, similar to what we saw yesterday in the Nasdaq according to, you know, sources that we trust was October of 2018.

So like it has been a really long time since we've seen that kind of reaction. And what was a bit shocking about it was that the numbers out of Nvidia were good enough. I mean, we got to open to the upside, but yet, we just continuously faded the entire day from that. So it kind of tells you that, the, the market, you know, we've talked for a while that things have been a little bit overcooked on the upside. And like, what could the market do in order to exceed expectations here? And even though Nvidia exceeded expectations, it clearly wasn't enough to keep the party going, at least for today.

Now, the positives from this are that when you look at the technology stocks in particular, we have gotten to areas that the market would consider oversold. So we should be getting close to an area where tech stocks are going to bounce. But if you look at the broader S&P 500, things like 20 day lows, like we like to see those spike above 50% in order to kind of give us an idea that the market is in a place where we're bottoming, and those are only around 25% as of last night.

So it seems like the broader market has a little bit more work to do here to try to find a low, and wouldn't surprise me if tech, did did. So first. I think a more interesting piece here too, is to put this in a little bit broader context. If you remember, we talked very much about the seasonal pattern that the market usually has where we have weak Septembers in October and then strong November and December.

It would not shock me at all right now, given how we had a strong counter seasonal in September and October, where we rallied strongly that we don't have the opposite happen in November and December this year, where we kind of back and fill and chop and make mark time between now and the end of the year. I don't know that we get a face ripping rally between now and the end of the year.

Like we would normally kind of see a Santa Claus rally, that kind of stuff. It feels to me like this market needs to do a little bit of digestion for the gains. Again, I don't see anything nefarious, unfolding here, but. And a pullback from here that goes down and say, tested the rolling 65 day low or even the 200 day moving average around 6300 would not at all surprise me, to be honest.

George Mateyo [00:11:08] Well, at the same time, Rajeev, you know, this confusion around the devaluation of AI stocks and the overall market sentiment. But he pointed to I think he's after colliding with what the Fed is kind of talking about. And the Fed is not talking. Well, you know, by voice, I mean, there's a lot of different people out there that are chattering, expressing different point of view.

And as we come into the, the meeting right after the holiday, Thanksgiving holiday, of course, you know, the Fed's going to meet and I'm not sure exactly what were the leaning, because we've got so many different opinions that are now being kind of penny back and forth. Are you going to sort through that maze, that fog in terms of Fed speak and what they might be thinking about when they come together in early December?

Rajeev Sharma [00:11:46] Yeah. So, George, I mean, the fixed income markets are they're really looking for any cues they can possibly get for whether we're going to get a pause in December at the December 10th FOMC meeting or whether the Fed will continue cutting rates. Generally, if you think about what the Fed has done in the past, generally they don't cut and pause or they don't hike and pause either.

But right now, this is a very different situation where we don't have the data and the Fed doesn't have the data to really make the decision. So we did have the release of the October FOMC minutes this week. And the market really, you know, got what they wanted in that meeting. Obviously they got the 25 basis point rate cut. But the minutes showed quite a bit of a divergence amongst Fed members. Many members in the minutes signaled caution. They were a little worried about continued easing. They pointed to towards, stubborn inflation, continued uncertainty around the labor markets. All in all, the committee approved the 25 basis point rate cut, but they were pretty split over the rationale of why have a rate cut.

And, when we had the, statement released in the October meeting, we only saw two dissenters, Miran and Schmidt, and they were on opposite sides of the poll. But if you read the minutes, you really see a lot more dissension. I think a lot of policymakers have been arguing that we shouldn't have any more further rate cuts, because we don't have the data to support it. Meanwhile, you have other members that, feel that, you know, we have to continue cutting rates. And then the economy, if the economy evolves as expected, then it should be, you know, we should be cutting rates. So now the expectations for a December rate cut, have fell pretty dramatically since the October FMC meeting.

When we finished the October FMC meeting, we had 22 basis points of easing priced in. Everybody thought that we're going to get the December rate cut. And, just this week we had about maybe nine basis points of, rate cut expectations for the December meeting. So basically, the market was pointing towards a pause. Then we got the stale data that you mentioned about the payroll information, and it really didn't move the needle at all because as you mentioned, George: stale data is not enough to go by. But I want to point out how quickly the market can react to a Fed member or a Fed speaker or anybody coming up with a narrative that contradicts where the market is expecting.

Today we saw Williams, Fed Member Williams come out and pretty much said that he sees a need for rate cuts in the near term. The labor market, he feels, is softening. And it feels that, rate cuts should happen. And immediately, based on those comments just this morning, those expectations of a rate cut in December went from 36% to 58%. So again, that's how volatile this market is. We've seen it in volatility indexes for the bond market that there's a lot of question marks right now of what the Fed's going to do in December.

And I think when you have the Fed narrative and the divergence that we've seen through the minutes, it's really coming down to a coin flip again. So there's going to be a lot of volatility going into that meeting. I do feel that the market is pretty much going to stay where they are as far as yields go as they approach that December 10th meeting. You're right to point out that we're not going to get the jobs data that we normally would have got before that, meaning that jobs data is going to come out on December 16th, a week later. So the question mark really is, does the Fed go ahead with blinders on again and do a rate cut, or do they feel that, let's wait for the data. And I think right now it's a coin flip.

Brian Pietrangelo [00:15:11] Certainly a great recap from the three of you for this week's activity and still remaining some of that uncertainty. So really glad to touch on it, Steve and Rajeev, in terms of that uncertainty and that volatility, as we give that guidance to some of our listeners to watch out for that volatility.

So we are here at this time of year again, which is special, not only because of Thanksgiving next week and the upcoming December holidays, but also this is a time of year when we craft our upcoming outlook for the new year, and we also take a look back and see how we did on our outlook for this year that we wrote in November of 2024.So, a great opportunity for us to have a little dialog in this special segment with all of you. And I'll start off by saying kudos to all three of you and the entire team within our chief investment office. In aggregate, we've got six out of eight calls that we made that we're pretty much spot on. So that's a pretty good track record in terms of the investment business. And we're happy that our clients benefit from some of these calls, if not all of them. So just to recap real quick on the macro-outlook. If you go back to what we wrote in November of 2024, George, you did a great job. Spot on. In looking at what presidential administration policies would be implemented in 2025 with regard to four key ones certainly tariffs, immigration, deregulation and tax policy. And what you wrote on page eight was pretty much spot on. So kudos there, George. Steve, on your side of the equation, your equity write up was talking about a really choppy and uncertain period in the first half of the year, and we'd have a lot of trouble making much of any headway until mid-year. And then we expect that in the second half of the year would have seen a significant rally coming close to exiting the S&P 500 at around 6600.

Really spot on. In terms of that, we were pretty close. If you look to where the S&P is today it's almost there. So great call on the equity market Steve. Third Rajeev, when you wrote also back in November, you talked about a possibility or 2 or 3 rate cuts in the year of 2025. And that was very different from some of the other competitors and pundits that we listened to who were calling for many more than that. So you're spot on here. When we get to this December meeting on the 10th. It could be the third time during 2025. So your 2 or 3 cuts during the year was also spot on. Great call there from the team. The other five were more on our portfolio strategy type calls. So just a quick rundown here. We had our international exposure, which we had been underweight to for about three years, which was really a great call for our clients.

And then back on April 1st of this year, we neutralized that underweight for our international exposure, which has again been very favorable given where international markets were. So that's one for one. There. Rebalancing. If you looked at our weekly investment brief that we write every single week, you'll go back to April when there was the market selloff during Liberation Day back on April 2nd, where the market had a significant downtrend, almost 12%. And we advised our clients to look at rebalancing back into that market and again, if you've watched what the stock market has done since April, it's been on a pretty big tear. So great call there, George and the team. Then when we got to September, we also thought that the market got a little frothy with your comments, Steve. And also your comments, George, and maybe rebalancing a little bit down on equities to take advantage of some of the valuations being pretty high in specifically the tech sector. So those three for three, the other two we were a little off. We'll talk to George about that. We had a slight underweight to mega-cap throughout the year and a slight overweight to small cap.

So we'll get to that for our tactical asset allocation call. We can pin on that George. And then the last one was we always have this emphasis based on our analytics towards quality investments, both in the stock market and in the bond market. And that did not necessarily do as well. This year. So George, you want to share with us some of the thoughts that you had on the underweight.to mega cap overweight to small cap.

George Mateyo [00:19:12] You had to pick up the negative I guess, huh Brian? Okay.

Brian Pietrangelo [00:09:15] Well, I couldn't say we were eight for eight!

George Mateyo [00:19:19] Yeah we were never perfect. But yeah, kudos to Steve and Rajeev as well for making some really prescient calls over the course of the last 12 months. And even beyond that, I mean, I think we've had a pretty good track record, knock on wood. And, you know, it's a hazardous business to get to put forecasts out there. And we don't again, we don't specifically make any forecast like some competitors do. Those are, you know, I think prone to even more error. And frankly, they kind of connote this, this illusion of precision. But we can talk more about that later. I think overall, in terms of things that we've been talking about, that we've been kind of structurally underweight.

The mega-cap. Yeah, that's been kind of a tough call, but that's, to me, more of a risk management decision than a pure station decision. And what I mean by that, I mean that I think we've seen there's just this continued strength in the Mega-Cap market, and it's been surprisingly good. And I'm not going to dismiss that. And we were probably a little bit too cautious about that. But at the same time, you know, as I mentioned, it's a small bet for many of our portfolios. And I think it's still the right bet to make in the sense that if you look at where the valuations are stretched the most and at this point where we maybe where the froth has been the greatest, it's been that core of the market where the, the overall, strength of some of these big leaders, you know, they continue get stronger, but they continue to get more stretched in terms of valuation.

So again, if I just put some numbers out there, the, the, the 100 largest stock now in the S&P, you're trading at roughly 30 times earnings. The cheapest stocks in the overall market are trading at about 16 times earnings. So, the smaller cap I should say. And that's a pretty big gap I mean that’s; you know, a pretty big yawning disconnect between the large and the least large, if you will. And what we've also kind of a noted is that we think, and I think this is still the case for next year. This didn't quite come true this year, but we still think there's going to be some earnings recovery, meaning those companies that really are the lower part of the market will see their earnings growth recovers.

So, I think we've looked at in the aggregate, we think it's appropriate probably to be somewhat balanced in terms of where your exposure is. And as I mentioned, maybe from a risk perspective, you know, a little bit underweight. The real mega-cap stocks is important. And I'll be very selective. You know, I think one thing that probably is underappreciated, what Rajeev and Steve do for our clients is the fact that they think about how to structure portfolios, looking at individual securities.

And there you can express a view in terms of really where you want to be, towards some stocks and some securities, some bonds and less exposed to others. So again, if, for example, we don't own the Mega seven outright, others, maybe they should, but we're more discerning about that. And the same thing, what's true in the bond market where we want to be more discerning, and we also have you mentioned the last thing I'll point out really quickly, right?

I think you mentioned, I think it's also important to note, is that we do have a strong structural bias towards quality companies. And that actually has not been rewarded. This year. Usually we think that it is a long term benefit, a long term thesis of ours. But this year of some of the best performers have been the, the, the worst companies in terms of their performance and their overall financial metrics. You look at, for example, companies that have no earnings, some companies have new revenues, and yet those stocks have done the best this year. So it has been kind of a low quality rally. And that actually has also been somewhat detrimental to our performance on a relative basis, I would say. But overall, we think that's going to be the more advantageous position to be in the long run because we do think over time quality wins out.

Brian Pietrangelo [00:22:25] Great summary, George, and we'll take stock of it every year given the difficulty that it is in the market. And I think those two are very promising from the perspective, emphasizing quality over the long term. It has been rewarded, just not this year. So great summary, George. So with that, that was our scorecard for 2025. So pretty impressive from the team.

And we'll use that as a pivot. George, for you to mention, as I did in the opening remarks that we've got our upcoming national call on December 3rd, where we will discuss our 2026 outlook, just like we did last year, and give our listeners a preview of some of the things that we might be talking about during that 2026 outlook.

George Mateyo [00:23:03] Well, I'll tease a little bit, because I think it's still coming together. I know Rajeev and Steve have been really hard at work, and our teams at the heart of work, trying to think about how to describe and discuss what we think will happen next year. And I venture to say that we probably won't get 75% of the calls. Right, but we'll see. I think overall, you know, there are three big things we'll be talking about. And we'll be talking about disruption. Does that really, we're at a time right now where the rate of change is accelerating and the forces of disruption are becoming more pronounced. So, we'll talk about three big ones. We’ll talk about this kind of overall I guess shift away from globalization into more of a nationalistic approach, the way many countries are behaving. That's actually having some implications for traditional norms and kind of historic precedents unlike we've seen before. So, we'll talk about some of those big shifts that are happening globally. Then we'll spend a little more time talking about some of the big changes that are coming with artificial intelligence.

We can't ignore that. That's been a big part of course. And let's continue to probably kind of also, going to be a be the case next year. And then lastly, I think something that might be kind of happening for a while, and maybe, again, underappreciated is the fact that there's a lot of structural changes happening inside the markets themselves. So we'll talk about those three big, shifts and those big sorts of disruption and what they might mean for clients’ portfolios in the years ahead.

Brian Pietrangelo [00:24:21] Well, thank you for the conversation today, George, Steve and Rajeev, we appreciate your perspectives. And again, one last reminder to have a great Thanksgiving next week. And after that, on December 3rd, we're having our national client call with our outlook for 2026 as we just discussed.

Please join us if you can. Well, thanks to our listeners for joining us today. Be sure to subscribe to the Key Wealth Matters podcast through your favorite podcast app. As always, past performance is no guarantee of future results and we know your financial situation is personal to you. So reach out to your relationship manager, portfolio strategist, or financial advisor for more information, and we'll catch up with you in two weeks as we are off for Thanksgiving. When we get back, we'll see how the world and the markets have changed and provide those keys to help you navigate your financial journey.

Disclosures [00:25:11] We  gather data and information from specialized sources and financial databases, including, but not limited to, Bloomberg Finance LP, Bureau of Economic Analysis, Bureau of Labor Statistics, Chicago Board of Exchange Volatility Index, Dow Jones and Dow Jones NewsPlus, FactSet, Federal Reserve and corresponding 12 district banks, Federal Open Market Committee, ICE Bank of America Move Index, Morningstar and Morningstar.com, Standard & Poor's, and Wall Street Journal and wsj.com. Key Wealth, Key Private Bank, Key Family Wealth, KeyBank Institutional Advisors, and Key Private Client are marketing names for KeyBank National Association, or KeyBank, and certain affiliates, such as Key Investment Services LLC, or KIS, and KeyCorp Insurance Agency USA, Inc., or KIA.

The Key Wealth Institute is comprised of financial professionals representing KeyBank and certain affiliates, such as KIS and KIA. Any opinions, projections, or recommendations contained herein are subject to change without notice, are those of the individual authors, and may not necessarily represent the views of KeyBank or any of its subsidiaries or affiliates.

This material presented is for informational purposes only and is not intended to be an offer, recommendation, or solicitation to purchase or sell any security or product or to employ a specific investment or tax planning strategy. KeyBank nor its subsidiaries or affiliates represent, warrant, or guarantee that this material is accurate, complete, or suitable for any purpose or any investor. It should not be used as a basis for investment or tax planning decision.

It is not to be relied upon or used in substitution for the exercise of independent judgment. It should not be construed as individual tax, legal, or financial advice. Investment products, brokerage, and investment advisory services are offered through KIS, Member FINRA, SIPC, and SEC-registered investment advisor. Insurance products are offered through KIA. Insurance products offered through KIA are underwritten by and the obligation of insurance companies that are not affiliated with KeyBank. Non-deposit products are not FDIC-insured, not bank-guaranteed, may lose value, not a deposit, not insured by any Federal or state government agency.