Equities ran into their first speed bump in seven months as a combination of a government shutdown, cautious Fed commentary, and concerns about AI-related names led to mixed performance across the popular domestic indices. The technology-heavy Nasdaq Composite Index lost -1.51%. The S&P 500 and the Dow Jones Industrial Average used an end-of-month rally to eke out gains, appreciating 0.13% and 0.32%, respectively. The 10-year U.S. Treasury ended the month trying to break 4%, after a couple of months of trying to sustain a decline. We continue to monitor the 10-year U.S. Treasury, as its interest rate serves as the benchmark for the vast majority of assets. Overall, markets ended the month strongly, but all the major indices were down more than 4% at one point in the middle of the month.
The current global monetary environment is favorable for equity valuations, despite recent market volatility. While downturns often focus investor attention on price movements, it’s crucial to consider the broader macroeconomic context. Corrections during periods of monetary tightness tend to be more severe than those during periods of monetary easing. Today, equity investors benefit from a dovish stance among central banks, with over 90% either cutting rates or maintaining them over the past six months. This rate cut uniformity is significantly above historical norms. When few cut rates, equity markets tend to underperform, but the current monetary accommodation bodes well for risk assets. Bloomberg’s Global Financial Tightness Indicator, which tracks central bank rates and liquidity measures, remains at historically permissive levels. Although developed economies saw a contraction in excess liquidity in 2025, this was offset by increased money supply growth from China, which continues to support global asset classes. Market sentiment around Federal Reserve policy has also improved, with a better-than-50% probability of a rate cut at December’s meeting, up from about 30% a week or two ago.
Overall, current financial conditions are conducive to equity exposure. Should monetary tightening and liquidity constraints arise, the outlook would change, but neither is present now, offering reassurance to investors concerned about market direction. Consumer confidence in the U.S. took a significant hit in November, primarily due to the recent government shutdown. The Conference Board’s headline consumer confidence index plummeted from 95.5 in the previous month to 88.7, falling well short of consensus expectations. Notably, expectations for the near future declined even further, while current sentiment about business conditions and the labor market weakened to a lesser degree. The survey that produced these insights was conducted entirely after the shutdown commenced, effectively capturing its immediate impact on consumer perceptions. While views on the labor market declined, the dip was far less pronounced than in other confidence metrics, suggesting potential resilience. If the job market begins to rebound from the effects of the shutdown, consumer sentiment could also climb back in the following month.
When it comes to personal finances, Americans rated their situations at the lowest level since August 2024, leading to a more cautious outlook for major purchases over the next six months. Despite an increase in pessimism regarding business conditions on the horizon, concerns about labor market prospects remained relatively stable. In summary, the government shutdown dealt a notable setback to consumer confidence in November. However, the persistent strength of labor market perceptions, even amid reduced buying and business sentiment, may set the stage for a partial recovery in December, assuming economic conditions stabilize.
Please see the following updates on existing positions held at the firm:
Catalyst Bancorp (Ticker: CLST)— Catalyst Bancorp’s board of directors approved a new stock buyback initiative permitting the acquisition of approximately 205,000 shares, representing roughly 5% of current outstanding shares. Since establishing its inaugural repurchase authorization in January 2023, the company has systematically executed share repurchases totaling approximately 1.18 million shares, representing about 22% of the original common shares issued, at an average price of $11.97 per share. Still, during the month, noted bank activist investor Joseph Stilwell took a 5.2% position in the bank and filed a 13D. Over the last couple of years, we have written to the board urging them to acquire more shares at a faster pace, as their stock continued to trade at a significant discount (~35%) to tangible book value. We will write again this month.
CMB.Tech (Ticker: CMBT)- The shipping and offshore services conglomerate reported it achieved EBITDA of $238.4 million in Q3 2025, a 34.6% year-over-year increase from $177.1 million in the same quarter of 2024, driven by significant gains from vessel disposals and meaningful improvements across its tanker and offshore service segments. Management outlined an optimistic outlook for the fourth quarter and beyond, noting that shipping markets rebounded after the seasonally subdued summer months, with both the tanker and dry bulk sectors reaching multi-year highs, supported by strong new bookings expected to enhance results in upcoming quarters significantly. The company maintained its strategic capital allocation approach, proposing an interim dividend of $0.05 per share payable in January 2026, while simultaneously continuing its fleet rejuvenation program through the delivery of seven new vessels during the period and the sale of two older tonnage assets to optimize its environmental profile and operational efficiency. The stock was up more than 20% this month.
Blue Ridge Bankshares (Ticker: BRBS)- Our special situation bank investment has completed one of its essential steps in the overall process of getting the bank sold. Earlier this month, the bank announced that its consent order had been lifted. As a result, we project that the bank will start a strategic alternatives process to explore a sale. Banks under consent orders are much less likely to sell or to get a reasonable price. We are projecting a target price range of $4.60 to $5.00 in a sale situation and possibly higher if a bidding war develops.
Net Lease Office Properties (Ticker: NLOP)— The liquidating REIT announced another special cash dividend of $4.10 for each outstanding share. The payment is scheduled for December 19, 2025, to all investors holding shares as of the December 4, 2025, record date. Management funded this dividend in part through a recent real estate transaction involving a Thermo Fisher Scientific facility in Morrisville, North Carolina, which generated approximately $33.0 million in gross sale proceeds. We estimate a full liquidation value of $35-$37 per share, and for the liquidation to be concluded within the next 18 months. The market liked the news, and NLOP gained over 5% the following day.
Best regards,
Stash J. Graham