The week that Technology lost its shine.

November 10th, 2025

We copied the title from our newsletter two weeks ago, referring to Gold at that time. The reason is that the US Technology sector fell 4%, which is the worst weekly performance since the April sell-off. This negative performance was not the product of any bad news or developments for the sector, on the contrary, market darlings like AMD and Palantir announced solid results but still sold off. We point out this significant underperformance of the Tech sector because it came in a week where all other sectors finished positive except for Discretionary and Communications. These sectors, however, are populated with the likes of Amazon, Tesla, Meta Platforms, Netflix, Alphabet etc., again Tech-related companies.

As a result, an overall risk-off sentiment ripped through global equity markets. Nasdaq was inevitably down 3% for the week, but brought the S&P500 down by only 1% as the other sectors helped the downside, as we mentioned above. Europe fell by 2% on average, as its own darlings (electrification, AI related stocks and defense) suffered a set back while the Swiss stocks proved their role as a protection hedge, ending the week mildly positive (+0.5%). On the contrary, Chinese markets showed some resilience as Hang Seng (+1.3%) and the CSI300 Index (+0.8%) moved higher. The decisions of the Chinese authorities to slash the energy cost for data centers by 50% boosted sentiment in the regional Tech sector.

What happens next is anybody's guess. The negative first week of November confirms the doubt we expressed last week on whether the traditional November rally will take place or not, but it is far too early to make any conclusion. As we had mentioned, during this year many traditional patterns have already not worked out and it would not be a surprise if the Santa-rally does not come as strong as history has it. But then again, the buy-the-dip mentality as well as the AI enthusiasm is so strong that retail flows should eventually find their way in the favorite stocks. Our favorite scenario would be that of improving market breadth (advancing-declining stocks), a metric that had plunged recently to almost record lows on a positive day (!). An improvement of market breadth and a Technology underperformance will probably create a more sustainable equilibrium, which means that diversified portfolios might provide protection through a volatile period.

The U.S. based employers cut more than 150,000 jobs in October, marking the biggest reduction for the month in more than 20 years. This is according to the report by Challenger, Gray & Christmas a large outplacement company. The report was in focus last week, in the absence of any other official labor market data in the US, due to the government shutdown. The Technology firms led the job cuts in the private sector, followed by retailers and the services sector. The outsized layoffs in October present a whopping 175% increase from a year ago and on a year-to-date basis employers have now announced 1,099,500 job cuts, or a 65% rise from 664,839 in the same time period last year. So far this year, the job cuts are at the highest level since 2020 , the pandemic year.

President Trump was dealt a blow, as the first serious elections in the US since he became President could be seen as a disaster. Democrats scored important victories in all major races. They won back Virginia and New Jersey with Abigail Spanberger and Mikie Sherrill becoming Governors of these two states which had swung to Republican in November 2024, in favor of Trump. But perhaps the most controversial win was that of Mr. Zohran Mamdani, who became Mayor of NYC, by a large margin. He will be the first muslim and openly socialist/far left Mayor of the most emblematic US city. Trump's response to the rather ugly results was that it is because his name did not appear on the ballot ...

The US government shutdown might be close to be resolved, after 41 days, which surpassed the previous record again by Trump. This happened as funds for the Supplemental Nutrition Assistance Program, or SNAP, ended on November 1st for the first time in more than 60 years, affecting more than 40mn poorer Americans who rely on the benefits of this program. At the same time, the White House was threatening to not pay retrospectively the federal employees for the days that they had not been working and airlines were slashing their flight schedules ahead of the important Thanksgiving holiday. Hence, last night eight Democrats crossed the party lines and endorsed a compromise plan for a 60-40 vote, which was necessary for the plan to be advanced. Now it must also be voted by the Republican-controlled House before the shutdown can end.

Bonds had a negative week, despite the equity market turmoil. A series of FED officials continued to pour cold water on the expectations for a December rate cut, especially in the absence of any new data on the labor market and as the AI theme is fueling GDP growth. The US 10-yr yield rose to 4.15% almost 20bp higher than the recent low, while the German 10-yr yield continued to hover around 2.65%, about 10bp higher than its own recent low. We continue to favor short-term bonds (up to 5 years), with the long-end to be used only for hedging geopolitical or macroeconomic risk, and for this reason to be invested only in the highest quality space (AA and above).

Chart of the week: Valuations are at extreme levels, but who cares.

The above chart compiled by Apollo Group, shows the data points according to two valuation metrics. On the x-axis is the ratio of the US market capitalization to GDP, which is often called the Buffet indicator, as the famous investor has been known to reference it and use it for his investment decisions. Based on this metric which currently is more than 220% , and as we look from left to right, we can see that the S&P500 is at the highest valuation ever. On the y-axis is the Shiller CAPE Price to Earnings ratio, which is the normal P/E but taking into account 10 years of earnings, so a rather long-term snapshot of valuation. According to this metric, which currently is at almost 40, and as we look from top to down, we see that only during the bubble year 2000 the S&P500 was more expensive. Then again, these are just snapshots of the past and the AI future might be a different one, where traditional metrics do not matter anymore.

Disclaimer

• The content of this document has been produced from publicly available information as well as from internal research and rigorous efforts have been made to verify the accuracy and reasonableness of the hypotheses used. Although unlikely, omissions or errors might however happen.

• The data included in this document are based on past performances and do not constitute an indicator or a guarantee of future performances. Performances are not constant over time and can be positive or negative.

• This document is intended for informational purposes only and should not be construed as an offer or solicitation for the purchase or sale of any financial instrument and it should not be considered as investment advice. The market valuations, views, and calculations contained herein are estimates only and are subject to change without notice. Any investment decision needs to be discussed with your advisor and cannot be based only on this document.

• This document is strictly confidential and should not be distributed further without the explicit consent of Kendra Securities House SA.

• Sources: Chart of the Week : Apollo Group