Economic Indicators - The dollar index (DXY) reached a 4-week high, increasing by +0.24% due to positive US economic news [1] - US job cuts in December fell by -8.3% year-over-year to 35,553, marking a 17-month low, indicating a stronger labor market [2] - Weekly initial unemployment claims rose by +8,000 to 208,000, which was better than the expected 212,000, suggesting a robust labor market [3] - Q3 non-farm productivity increased by +4.9%, close to the expected +5.0%, representing the largest rise in 2 years [3] - Q3 unit labor costs decreased by -1.9%, a more significant decline than the anticipated -0.1% [3] - The US trade deficit unexpectedly shrank to -$29.4 billion in October, better than the expected widening to -$58.7 billion, marking the smallest deficit in 16 years [3] Market Expectations - Markets are pricing in a 12% chance of a -25 basis point rate cut at the upcoming FOMC meeting on January 27-28 [4] - The Federal Reserve is expected to cut interest rates by approximately -50 basis points in 2026, while the Bank of Japan is anticipated to raise rates by +25 basis points in the same year [4] Dollar Pressure Factors - The dollar is under pressure as the Fed increases liquidity by purchasing $40 billion a month in T-bills since mid-December [5] - Concerns regarding President Trump's potential appointment of a dovish Fed Chair are contributing to bearish sentiment for the dollar, with Kevin Hassett being viewed as the most dovish candidate [5] Eurozone Impact - The EUR/USD pair fell to a 4-week low, decreasing by -0.21% due to the strength of the dollar [6] - An unexpected decline in Eurozone economic confidence and easing producer price pressures are seen as dovish for ECB policy, negatively impacting the euro [6]

Core Viewpoint - The outlook for investors in 2026 includes considerations of market volatility, Fed policy, equity risks, and the potential for attractive income from bond yields [1] Group 1: Fed Policy - The Federal Reserve's policy will play a crucial role in shaping market conditions and investor strategies moving forward [1] Group 2: Equity Risks - There are significant risks associated with equity markets that investors need to be aware of as they plan their investment strategies [1] Group 3: Bond Opportunities - Bond yields are expected to remain attractive, providing potential income opportunities for investors despite market volatility [1]

Group 1: Federal Reserve Leadership and Rate Trajectory - The upcoming change in Fed chair leadership in 2026 is significant for the rate trajectory and overall macroeconomic environment [1][2][3] - A dovish Fed chair may lead to potential rate cuts, but it is unlikely that rates will drop to 1% or 2% [2][4] - The new Fed chair's ability to influence the committee's stance on rates is crucial, as they only have one vote and need committee support for major changes [3][4] Group 2: Inflation Concerns and Economic Data - Inflation has taken a backseat recently, but its potential resurgence in 2026 remains uncertain [5][6] - Current inflation data may be distorted, complicating predictions for future inflation trends [7][8] - The impact of tariffs on inflation is still unclear, with opinions divided on whether they will have a lasting effect [14] Group 3: Market Dynamics and Economic Indicators - The oil and gas market shows signs of flagging inflation, while precious metals are reaching record highs, indicating mixed signals in the economy [11][12] - The Fed's balance sheet expansion is not intended to be stimulative but may have stimulative effects on the economy [13] - Lower interest rates could benefit housing and reduce the interest burden on U.S. Treasury debt, positively impacting the real economy [22][25]

Okay, let's uh let's keep doing this, Steve. It's it's pretty interesting. For more on all this data, I want to bring in uh Hyundai Yuba Yuva, uh senior US economist at BFA Securities.You're sitting there with Steve. What do you what do you what do you think of what you just heard. >> I think this is a very very impressive GDP report.As Steve correctly pointed out, 8% essentially nominal GDP growth. Consumer spending really beat expectations. This is pretty unusual.I mean we had the monthly data for July, A ...

Group 1 - Gold stocks have strengthened again, with Shandong Gold rising by 5.25% to HKD 38.06, Zhaojin Mining up by 3.72% to HKD 33.48, Lingbao Gold increasing by 3.54% to HKD 19.57, and Chifeng Jilong Gold up by 2.95% to HKD 32.78 [1] - On December 22, COMEX gold prices broke through USD 4450, reaching a new high [1] - Federal Reserve Governor Milan warned that if the Fed does not continue to lower interest rates next year, it may increase the risk of an economic recession, indicating a potential shift towards a more dovish policy [1] Group 2 - Xinyuan Fund stated that the foundation for a gold bull market remains unchanged, although short-term volatility may increase [2] - If the US core PCE continues to decline, it will solidify expectations for two 25 basis point rate cuts in the first half of 2026, with gold prices likely to test the USD 4400 level [2] - The upcoming nomination of a new Fed chairman by Trump is expected to lean more dovish, alongside expanding US fiscal deficits and high debt levels, which will enhance the long-term value of gold [2]

Now to shift gears and get some insights on the news that is shaping the overall markets. For that, we'd like to welcome in Dale Smothers, president and CEO at RDS Wealth Management. Dale, thanks so much for being with us on this Friday.I mean, looking back at the year that was in 2025. Why do you think the this bull market is still met with so much caution. >> Jenny, you're exactly right.It was the uh climbing the wall of worry is an analogy that I like to use. This this market has been resilient. The cons ...

Economic Indicators - The recent CPI print was lighter than expected, influenced by the government shutdown, raising questions about its reliability [1] - Core CPI showed an average increase of eight basis points in October and November, but there are uncertainties, particularly regarding shelter numbers [2] - Core inflation appears to be stabilizing or slightly decreasing year-on-year, indicating improving underlying trends despite tariff impacts [3] Federal Reserve Policy - The inflation rate of 2.7% and unemployment rate of 4.6% are both significant, with the Fed's policy direction being influenced by these indicators [4] - Recent changes suggest that both inflation and unemployment trends may lead to additional interest rate cuts, with expectations of two more cuts in 2026 [5] - The Fed is currently not expected to cut rates in January, but the next employment report could influence this decision [6] Decision-Making Dynamics - The Fed's decision-making process is complicated by internal divisions, although leadership ultimately drives the final decisions [8] - If the Fed leadership decides that a rate cut is necessary, it could occur in January, despite the current cautious stance [9] - Concerns about cutting rates in a strengthening economy are mitigated by expectations of a soft labor market, with GDP growth projected at an optimistic 2.6% to 2.6% annually [10]

Economic Indicators - The December Empire manufacturing survey unexpectedly contracted by 22.6 points to -3.9, significantly weaker than the expected 10.0 [3] - The NAHB housing market index for December rose by 1 to an 8-month high of 39, aligning with expectations [3] - Eurozone industrial production for October increased by 0.8% month-over-month, marking the largest rise in 5 months and meeting expectations [6] Federal Reserve Policy - The dollar index is down by 0.24% due to the contraction in the Empire manufacturing survey, which is seen as a dovish factor for Federal Reserve policy [1] - Fed Governor Stephen Miran indicated that the current policy stance is unnecessarily restrictive for the economy, citing a benign inflation outlook and labor market concerns [3] - There is a 27% chance that the FOMC will cut the fed funds target range by 25 basis points at the upcoming January meeting [4] Currency Movements - The euro (EUR/USD) is up by 0.23%, reaching a 2.5-month high, supported by dollar weakness and positive Eurozone industrial production data [5] - The yen (USD/JPY) is down by 0.60%, climbing to a 1-week high against the dollar due to stronger-than-expected Japanese economic indicators and expectations of a potential interest rate hike by the Bank of Japan [7] Market Sentiment - Concerns are growing that President Trump may appoint a dovish Fed Chair, which could negatively impact the dollar [2] - Markets are pricing in a 0% chance of a rate cut by the European Central Bank at the upcoming policy meeting, indicating a divergence in central bank policies between the Fed and the ECB [6]

Economic Indicators - The Dec NAHB housing market index is expected to increase by +1 to 39 [1] - Nov nonfarm payrolls are expected to increase by +50,000, with the unemployment rate at 4.5% [1] - Nov average hourly earnings are expected to rise by +0.3% m/m and +3.6% y/y [1] - Oct retail sales are expected to be up +0.1% m/m, and retail sales ex-autos are expected to be up +0.2% m/m [1] - The Dec S&P manufacturing PMI is expected to decline by -0.2 to 52.0 [1] - Weekly initial unemployment claims are expected to fall -11,000 to 225,000 [1] - Nov CPI is expected to be +3.1% y/y, and Nov core CPI is expected to be +3.0% y/y [1] - Nov existing home sales are expected to be up +1.2% m/m to 4.15 million [1] - The University of Michigan Dec consumer sentiment index is expected to be revised upward by +0.2 to 53.5 [1] Global Economic News - China's Nov industrial production eased to +4.8% y/y from +4.9% y/y in Oct, below expectations of +5.0% y/y [2] - China's Nov retail sales rose +1.3% y/y, weaker than expectations of +2.9% y/y, marking the smallest increase in 2.75 years [2] - China's new home prices fell 0.39% m/m, marking the 30th consecutive month of declines [2] Stock Market Performance - US stock indexes are climbing, with the S&P 500 Index up by +0.39%, Dow Jones up by +0.27%, and Nasdaq 100 up by +0.50% [5] - The markets are discounting a 27% chance that the FOMC will cut the fed funds target range by 25 bp at the next meeting [5] - Mining stocks are moving higher, with gold and copper up more than +1% and silver up more than +3% [11] - KLA Corp is up more than +4% after an upgrade from Jeffries, leading chip makers higher [10] - ZIM Integrated Shipping Services is up more than +5% after a reported bid from MSC to purchase the company [12] Interest Rates and Bond Market - The 10-year T-note yield is down -2.0 bp to 4.165%, with T-notes climbing due to dovish economic indicators [7] - The yield curve has steepened since the last FOMC meeting, indicating bearish sentiment for T-note prices [8] - European government bond yields are moving lower, with the 10-year German bund yield down -1.7 bp to 2.840% [9]

Market Overview - The markets are experiencing record highs, with the Dow, S&P 500, and Russell 2000 reaching all-time closes, and the Dow Transports hitting a 52-week high [1] - There is a concern regarding the S&P 500's future performance, with expectations of limited growth into 2026 [2] Investment Strategies - The focus is shifting towards smaller stocks rather than the largest names, indicating a potential rotation in investment strategies [2] - Since October 29th, 41 of the top 100 performing stocks have shown negative returns, suggesting a lack of recovery in these stocks since the recent pullback [3] Sector Focus - There is an increasing interest in regional banks and consumer names as part of the new investment strategy [3] - The market is currently influenced by two main factors: the Federal Reserve's actions and developments in artificial intelligence [4] Federal Reserve Influence - The Federal Reserve is expected to cut rates again in January, with a target rate of 3.5%, which is anticipated to positively impact consumers [5] - The Fed's current strategy includes purchasing short-term treasuries, which may also support market stability [6] Economic Outlook - The upcoming midterm elections are expected to shift fiscal policy focus towards the everyday consumer, potentially improving consumer sentiment and benefiting retailers [6]