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Don't sell here unless you're really worried, says FedWatch Advisors' Ben Emons
11/5/2025, 1:01:37 AM
Economic Summary
- Market valuations are very high with elevated price-to-earnings multiples; despite solid earnings outlooks, this overextension has led to profit-taking and increased volatility, creating potential buying opportunities once positions are worked out.
- Market positioning is highly concentrated, so an unwind of large positions and limited liquidity can amplify sell-offs; additionally, a lack of clear economic data and uncertainty around reopening means investors are floating without firm visibility, delaying valuation-based decisions.
- Monetary policy outlook appears to lean toward a Fed hold in December, which supports risk assets in the near term, but some Fed officials like Lisa Cook warn that tariffs could raise inflation and necessitate a policy response, posing upside risk to rates.
Bullish
- Earnings outlook remains strong, supporting equity valuations.
- Recent pullback is an opportunity to buy value after profit-taking.
- Fed likely to hold in December, which is supportive for stocks.
Bearish
- High P/E valuations risk a meaningful correction as prices are extended.
- Concentrated positioning can amplify downside when big holders unwind.
- Economic uncertainty from lack of data and unclear reopening timing raises risk.
- Tariff-driven inflation could force the Fed to act, hurting markets.
People mentioned
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