October Market Brief
We maintain a tactical risk-on stance in our asset allocation, reflecting our confidence in the current market’s return potential.
By: OpenArc Investments
CIO SNAPSHOT
We maintain a tactical risk-on stance in our asset allocation, reflecting our confidence in the current market’s return potential. We remain overweight equities, and recently increased exposure to U.S. markets funded from International Developed, as we believe robust U.S. earnings growth continues to underpin domestic equity performance. Within equities, we are responsibly bullish on the AI supercycle, with targeted allocations to technology and power infrastructure, and are optimistic on financials and defense, supported by lighter regulation and elevated fiscal spending, respectively. In fixed income, we hold a neutral position in duration to manage rate sensitivity, while emphasizing higher-yielding opportunities that deliver compelling income generation in today’s environment.
Source: Dynasty Financial Partners, Bloomberg, Goldman Sachs Research, 451 Research, YCharts, as of 09/30/2025
MACRO
Growth: The labor market continued its deceleration trajectory, with nonfarm payrolls adding just 22,000 jobs in August. Retail sales rose 5.42% year-over-year in September, demonstrating consumer resilience despite labor market softness. Manufacturing PMI remains below 50 despite robust high-tech industrial activity—a paradox explained by diffusion indices measuring breadth rather than intensity, missing concentrated sectoral booms even when high-tech capex represents over 50% of non-residential investment.
Inflation: August’s inflation data revealed a modest acceleration in headline CPI to 2.9% year-over-year, up from July’s 2.7%, with core goods inflation ticking up from 0.21% to 0.28% month-over-month, potentially indicating the start of tariff pass-through effects. Despite this uptick in headline figures, core CPI maintained its position at 3.1%, while services inflation remains benign. Meanwhile, gold prices surged above $3,750 per ounce in September, potentially signaling continued market concerns about inflation persistence.
Monetary Policy: The Federal Reserve cut interest rates by 25 basis points in September, lowering the overnight funds rate to 4.00%-4.25%. Chair Powell emphasized labor market concerns while attempting to remain balanced, though markets interpreted his messaging as more dovish than expected. The September Summary of Economic Projections showed Fed members expecting two more cuts by year-end 2025 and only one rate cut in 2026, which is well above the sub-3% rate implied by the fed funds futures market.
MARKET
Equities: Markets moved higher across the board, as the S&P 500 posted its best September month in 15 years, gaining +3.7%. In what has historically been the worst month for stocks, every major index posted gains, led by emerging markets, which increased by +7.1%. September’s broad-based gains reflect improved investor confidence, as the Fed cut interest rates for the first time this year. Sector performance was split in September, with Technology leading the way, bouncing back from a negative August, advancing over 7.5%. Consumer Staples, Materials, and Energy all went negative, with Financials virtually flat at +0.1% in September.
Bonds: Global bonds posted moderate gains in September as yields fell on rate-cut expectations. US curve shifted from bull steepening to bear flattening; Europe flattened on hawkish ECB; UK long-end surged on fiscal and inflation risks; Japan’s yields hit highs amid political uncertainty. The Fed cut rates 25bps, the BoE held, the ECB and the BoJ stayed put. Credit spreads tightened globally, boosting fixed income returns as risk assets outperformed Treasuries.
Currencies: The US dollar was flat over the month of September, with initial weakness reversing on stronger data and month-end rebalancing flows. G10 currencies were mixed over the month.
Commodities: Gold and silver finished the month strong, up +11.92% and +17.44%, respectively. Precious metals continue to see support from the broad market, as demand expands beyond traditional players to ETFs as well. Oil was down -2.6% as investors braced for possible OPEC+ output hikes.
Source: Dynasty Financial Partners, Bloomberg, Goldman Sachs Research, 451 Research, YCharts, as of 09/30/2025
GOLD MARCHES TO NEW HIGHS
Gold prices are up nearly 45% YTD, as ETFs and retail buyers are adding to incremental demand. By the end of Q3, total AUM in global Gold ETF’s reached $472 Billion. Central banks have also increased their gold reserves YTD, led by China, Poland, and Turkey. Notable factors such as ongoing trade, monetary policy, and geopolitical uncertainty continue to serve as a tailwind for price action.
Source: Dynasty Financial Partners, Bloomberg, Goldman Sachs Research, 451 Research, YCharts, as of 09/30/2025
CIO SPOTLIGHT: ALL ABOUT POWER
How AI Is Transforming Data Centers and Power Demand
Artificial intelligence is reshaping data center design and energy needs. Generative AI workloads require far greater computing power than traditional cloud services, driving hyperscalers to prioritize speed and scalability. Goldman Sachs projects the five largest U.S. firms will invest $736 billion in across 2025 and 2026 to expand capacity, making data centers the backbone of AI innovation.
Explosive Growth in AI Workloads
AI currently accounts for 13% of global data center demand but is expected to reach 28% by 2027, while traditional workloads decline. Retrofitting older facilities is no longer viable; operators are building purpose-built centers to handle higher power density and cooling requirements.
Power Intensity and Hardware Evolution
AI hardware is driving unprecedented energy consumption. According to Goldman Sachs, in 2022, leading systems used eight GPUs per server; by 2027, racks could house 576 GPUs consuming up to 600 kW—enough to power 500 U.S. homes. This shift from CPUs to GPUs will push global data center electricity demand up 165% by 2030, raising its share of global power demand from 1–2% today to 3–4%, and in the U.S., from 4% to over 8%.
Bottom Line
AI is not just a tech revolution—it’s an infrastructure revolution. The race to deploy advanced models is forcing hyperscalers to rethink priorities: power density, cooling innovation, and grid connectivity are now strategic imperatives. Companies that secure power and scale fastest will gain a decisive edge. Computing and energy systems are converging, and success will hinge on managing this intersection effectively.
Company data; Goldman Sachs Research; 451 Research; Nvidia; Masanet et al. (2020, Cisco, IEA, Goldman Sachs Research); IEA
Source: Dynasty Financial Partners, Bloomberg, Goldman Sachs Research, 451 Research, YCharts, as of 09/30/2025
DISCLOSURES
OpenArc Corporate Advisory, LLC, (“OpenArc”) is a registered investment adviser with the Securities and Exchange Commission. This material is presented for informational purposes only and should not be construed as an attempt to sell or solicit any products or services of OpenArc nor should it be construed as legal, accounting, tax or other professional advice. Past performance of model performance shown is no guarantee of future results. The model portfolio performance does not reflect actual trading or any advisory, management, or transaction fees, all of which could result in substantially lower results. This does not reflect the impact that material economic and market factors may have had on decision making. You cannot invest directly in an index.
This investment strategy is based on a model portfolio developed by Dynasty Wealth Management, LLC (“Model provider”), a registered investment adviser with the Securities and Exchange Commission. OpenArc retains full discretion over the implementation, customization, and management of client accounts using this model. The Model provider does not manage client accounts, does not provide individualized investment advice, and is not responsible for investment decisions, performance outcomes, or suitability determinations. The Model provider receives compensation from the underlying investments. Outsourcing costs range from 2 – 4 bps (program fee) and can be discounted based on assets under management. Outsourcing includes investment management, trading, billing, and communications. This fee will be absorbed by OpenArc.
Performance data does not reflect the deduction of advisory fees or any other expenses clients may incur in the management of their advisory account, which will result in a reduction of client’s returns. It is the responsibility of OpenArc to disclose the advisory fees charged and how it affects the returns shown in this document. Additionally, the effect of income taxes is not shown. The performance reflects reinvestment of dividends and interest, as applicable.
This material does not take into consideration an investor’s specific investment objectives or risk tolerance. Performance analysis is based on information provided by Morningstar, or other third parties. The information contained in this presentation has been gathered from sources we believe to be reliable, but we do not guarantee the accuracy or completeness of such information, and we assume no liability for damages resulting from or arising out of the use of such information.
Historical performance results for investment indices and/or product benchmarks have been provided for general comparison purposes only, and do not include the charges that might be incurred in an actual portfolio, such as transaction and/or custodial charges, investment management fees, or other fees applicable to the account, all of which could result in substantially lower results. It should not be assumed that your account holdings correspond directly to any comparative indices.
The information presented does not reflect the impact of taxes on non-qualified accounts. Any tax considerations do not constitute tax advice and are not intended to be used to avoid federal, state or local income tax, or related tax liability. We do not provide legal, accounting or tax advice. You are encouraged to discuss the tax and legal implications of any transactions contemplated with a professional legal, accounting or tax advisor.