Market Views 3Q25

👉 Click HERE to listen to the call.

After a powerful run in Q3, markets are entering the final stretch of the year with new all-time highs, surging liquidity, and a growing divide between leadership and fundamentals.

The Fed’s first rate cut since 2024, resilient earnings, and record AI investment powered risk assets higher. Mega-cap Tech and speculative pockets led the charge, while quality and fundamentals lagged. Beneath the surface, retail flows amplified market momentum—but also its fragility. Early signs of a cyclical recovery and a broadening earnings base are emerging, but the foundation remains uneven.

In this quarter’s Market Views, CEO Will Muggia shares what’s driving the late-cycle rally, why leadership remains narrow, and where Westfield sees selective opportunities as the cycle evolves.

Inside the call:

• A liquidity-driven rally with narrow leadership:
  Fed easing and AI enthusiasm fueled a powerful move higher, but most of the gains came from a handful of mega-cap names. Speculative momentum dominated as quality and defensive styles lagged—an environment typical of late-cycle markets.
• Retail participation surged, boosting—but destabilizing—markets:
  Retail now represents 20–30% of equity volume, fueling high-beta rallies and crowded trades. This activity has supported performance but leaves the market more vulnerable to sharp reversals if positioning unwinds.
• Cyclicals and small caps are showing early signs of life:
  After years of underperformance, industrial activity is stabilizing, and small-cap earnings expectations are inflecting higher. A sustained broadening in leadership could create attractive opportunities outside the index heavyweights.
• Valuation dispersion is setting the stage for active management:
  Top-heavy valuations remain elevated, but beneath the surface, dispersion is wide. Small and mid caps, cyclicals, and select Health Care names offer potential entry points for investors willing to look beyond the Mag 7.
• Sentiment remains stretched:
  Hedge fund exposure is near multi-year highs, retail is “all in,” and speculative behavior is rising. Yet institutional participation remains more measured—a gap that could drive volatility if market leadership falters.

Whether you’re assessing the durability of the AI trade, watching for signs of cyclical rotation, or evaluating valuation-driven opportunities away from the index leaders, this quarter’s call offers timely perspective on positioning through a late-cycle rally.

👉 Click HERE for the slides.