"Impressive" 2025: Seasonal Trends & FOMC Outlook Keep Bulls Running

Market Volatility and Recovery - The market has experienced a five-session winning streak, indicating a reduction in volatility after a turbulent start to November [1][2] - The realized volatility of the S&P 500 over the last 21 sessions is reported at 14.6%, reflecting the recent market movements [3] - The volatility index (VIX) was around 25 a week ago but has since dropped below 17, suggesting a stabilization in market conditions [4][5] Federal Reserve and Rate Cuts - There is a strong expectation (87% chance) of a 25 basis point rate cut by the Federal Reserve in about a week and a half [7] - The market's reliance on the Fed's actions is highlighted, with concerns about the implications of such reliance [8] - The Fed's approach to rate cuts is seen as a maintenance measure rather than a response to severe economic issues, which is viewed positively [14][15] Earnings and Market Performance - Earnings growth is projected to be around 14-15% next year, supporting a positive outlook for risk assets [13] - The S&P 500 is currently only 1.4% away from its all-time highs, indicating strong market performance despite earlier sell-offs [15][18] - The Russell 2000 index is also close to its all-time highs, suggesting a broad market recovery and rotation into different sectors [16][18] Sector Rotation and Investment Trends - There has been a rotation in investments, with capital moving from high-performing stocks like Nvidia to other sectors, indicating a healthy market dynamic [17][19] - The market has shown resilience, with net new money flowing into various sectors, which is a positive sign for continued growth [17][18] - Despite some profit-taking in high-profile stocks like Alphabet and Nvidia, the overall market remains stable [20]