The US economy expanded at a solid pace last year and is coming into 2026 on a firm footing. In support of our goals today, the Federal Open Market Committee decided to leave our policy rate unchanged. Essentially, the economy has once again surprised us with its strength. >> That's true. Will enjoy it while it lasts. The Fed is pausing rate cuts for the first time since July, and President Trump isn't happy about it. writing on True Social that the Fed is hurting America and our national security and costi ...

No movement in home equity rates, as the Federal Reserve left interest rates unchanged at its first meeting of 2026. The $30,000 home equity line of credit and the five-year $30,000 home equity loan were flat for the week, remaining at 7.44% and 7.92%, respectively, according to Bankrate’s national survey of lenders. As home equity rates hover at a three-year-low, Bankrate’s senior industry analyst Ted Rossman explains why conditions are improving for home equity borrowers. “The current HELOC average, 7 ...

Investors are looking past headline inflation noise to drive a significant market shift. According to Professor Jeremy Siegel, the current rotation toward small-cap and value stocks is sustainable, supported by underlying economic resilience and the clear trajectory of Federal Reserve policy.Broadening MarketProfessor Siegel observes a notable rotation away from the largest growth names as earnings season begins, suggesting a healthier market advance is underway.Large-cap growth stocks have recently pulled ...

Core Insights - The US dollar ended the previous week softer, influenced by inflation signals, rising Treasury yields, and uncertainty surrounding the Federal Reserve and the White House [1] - Mixed inflation data, with Core CPI undershooting expectations and PPI meeting them, did not significantly alter the Federal Reserve's near-term policy stance [2] - The breakout in the 10-year yield above 4.2% suggests a potential increase in long-term US yields, yet the dollar struggled to gain traction due to resilient equity sentiment and reduced geopolitical fears [3] Currency Performance - The New Zealand dollar led the G10 currencies, supported by strong domestic manufacturing data, while the Canadian dollar benefited from optimism regarding renewed trade engagement with China [4] - European currencies, particularly the Euro, Swiss Franc, and Sterling, performed poorly due to political issues and declining growth momentum [4] - The Yen traded unevenly, influenced by speculation over US-Japan FX intervention and expectations of further Bank of Japan tightening, but overall demand for safe havens remained low [5] Currency Pairs Analysis - GBP/AUD has weakened significantly, with expectations for the trend to continue lower, potentially testing the key level of 1.98820 [6][8] - EUR/NZD has formed a head-and-shoulders pattern, with a baseline around 2.007; a break below this level could lead to a nearly 3% decline, testing the previous key level at 1.96225 [9][10] Market Outlook - Upcoming events, including the Davos summit and US-EU tensions over Greenland, are expected to create volatility in the Euro and Swiss Franc [11] - The acceleration of the equity earnings season, with results from major companies like Netflix and Intel, will shape risk sentiment and influence Dollar-sensitive carry trades [12] - The 10-year yield's movement above 4.2% will be closely monitored, as its trajectory could significantly impact the US dollar's performance against improving global risk appetite [13]

Cryptocurrency Market Insights - Cryptocurrency has evolved from a speculative asset to an institutionally recognized market, with Bitcoin and Ethereum ETFs gaining approval, potentially leading to increased institutional investment and reduced volatility [2][6] - In 2025, over 22 million tokens were added to the crypto market, with Bitcoin starting the year at $98,314.95, reaching an all-time high of $124,752.13, and ending at $88,429.58 [4] - The approval of ETFs is expected to attract institutional interest, while regulatory supervision may help stabilize the market and reduce volatility [5][6] - Investors can choose between direct token ownership for higher potential returns or spot ETFs for federal oversight and reduced technical burdens [7] Stock Market Overview - The stock market experienced significant volatility in 2025, highlighted by a tech sell-off triggered by the release of a low-cost Chinese AI model, leading to a 3% drop in the Nasdaq and a 17% plunge in Nvidia shares, erasing nearly $600 billion in market value [8] - The S&P 500 gained approximately 16%-17% in 2025, driven by factors such as "AI euphoria," Federal Reserve policy changes, and reactions to geopolitical news [9] - The 2025 cycle set a high-stakes environment for 2026, characterized by aggressive AI scaling and lower interest rates, with the S&P 500 surpassing 6,900, indicating strong momentum despite potential volatility [10] - The market is expected to broaden beyond tech giants into traditional sectors as the Federal Reserve continues to lower borrowing costs, although high valuations and geopolitical tensions may lead to extreme volatility [10][11]

Core Viewpoint - Morgan Stanley's Chief Investment Officer Mike Wilson presents a bullish outlook for the U.S. equity market, predicting high teens earnings growth and focusing on the consumer goods sector as a key investment area [1][5]. Group 1: Economic Drivers - Wilson describes the market's path as "crystal clear," driven by a stabilizing Federal Reserve and legislative support that will rejuvenate the consumer sector [2]. - He emphasizes a combination of falling interest rates and fiscal stimulus as factors that will unlock pent-up demand in the consumer goods sector [2][3]. Group 2: Consumer Goods Sector Performance - Wilson identifies consumer goods as his top conviction pick for the year, suggesting that the sector is poised for a rebound after experiencing a "rolling recession" [2]. - The Dow Jones U.S. Consumer Goods Index has shown a performance of 9.62% over the last six months, while year-to-date performance is -1.40% and one-year performance is 6.42% [4]. Group 3: Earnings Outlook - Contrary to concerns about a slowdown, Wilson asserts that the earnings outlook is strengthening, forecasting earnings growth in the "high teens" as the market rally expands beyond the technology sector [5]. - A significant factor in this optimism is the Federal Reserve's renewed asset purchasing to stabilize funding markets, which Wilson views as a positive development for investors [6].

Group 1: ETF Performance and Market Dynamics - The Volatility Shares 2x Bitcoin Strategy ETF (BITX) has experienced a significant decline of approximately 50% in 2025, correlating with Bitcoin's drop from over $105,000 to around $87,469 [1][6] - BITX's leveraged structure has resulted in amplified losses beyond the expected 2x multiple, highlighting the impact of daily rebalancing during periods of high volatility [1][6] - The fund has seen outflows of nearly $557 million, which is 4.9% of its assets under management, indicating a lack of retail interest and investor confidence [2][6] Group 2: Federal Reserve Influence and Market Sentiment - The future trajectory of Bitcoin in 2026 is closely tied to the Federal Reserve's policy decisions, particularly regarding interest rate cuts or maintaining a restrictive stance [3][4] - Higher real interest rates diminish the attractiveness of yield-free assets like Bitcoin, potentially draining speculative capital from the crypto market [3] - Institutional adoption forecasts remain optimistic for 2026, with predictions of significant gains if regulatory clarity improves and corporate treasury allocations to Bitcoin continue [3][5] Group 3: Market Predictions and Investor Behavior - Current predictions suggest a 58.55% chance that another S&P 500 company will add Bitcoin to its balance sheet by late 2026, indicating ongoing institutional interest despite recent market pullbacks [5] - The Federal Reserve's quarterly Summary of Economic Projections and Chair Powell's comments will be critical in determining Bitcoin's ability to surpass the $100,000 mark again [4]

Core Viewpoint - The S&P 500 is expected to experience single-digit growth in 2026, with predictions of gains between 3% to 5%, leading to an index level around 7,200 to 7,300, amid uncertainties such as tariff issues and Federal Reserve dynamics [2][3][4]. Group 1: Market Predictions - The S&P 500 reached multiple all-time highs in 2025, including a record during the Christmas week [1]. - Jay Woods predicts the S&P 500 will finish in the range of 7,200 to 7,300 in 2026, indicating a year of modest growth [2][3]. - The index is currently up 17.7% year-to-date in 2025, marking one of the best performances in recent years [7][8]. Group 2: Economic Factors - Tariff uncertainty is highlighted as a potential stumbling block for market performance in 2026 [3][4]. - CPI data has missing components that could affect market perceptions, particularly regarding shelter and food prices influenced by tariffs [3]. - The Federal Reserve's independence and potential changes in leadership are expected to create volatility in the market [4][5]. Group 3: Historical Context - Woods accurately predicted a 12% to 15% increase for the S&P 500 in 2025, with the index closing around 6,900 [5][6]. - The S&P 500's performance in 2025 is noted as the fourth-best in the last five years and the seventh-best in the last decade [8].

Economic Data Summary - The GDP data released shows a surprising increase to 4.3%, significantly higher than the prior 3.8% and the expected 3.3% [1][4] - Durable goods orders, however, fell by 2.2%, indicating a mixed economic signal [2] Market Reaction - Following the GDP announcement, there was a notable spike in the two-year yield, reaching 3.5351, as traders reacted to the unexpected GDP growth [3] - The market's response suggests a selling trend in the front end of the yield curve, reflecting uncertainty about future interest rate adjustments [3] Federal Reserve Implications - The unexpected GDP growth raises questions about the Federal Reserve's decision to cut rates by 0.75% in September, which was primarily influenced by employment concerns [5] - There is a growing disconnect between rapid aggregate demand growth and sluggish employment figures, complicating the Fed's policy decisions [5] - The divided opinions among Federal Open Market Committee (FOMC) participants indicate that this new data point could influence future interest rate considerations [6][7]

Group 1: Economic Indicators and Market Dynamics - The Core PCE Price Index will be released on Monday, serving as a key inflation measure for the Federal Reserve, with potential implications for monetary policy heading into 2026 [1] - The Q3 GDP revision and consumer confidence report on Tuesday will provide insights into economic growth and household sentiment, crucial for assessing consumer spending sustainability [2] - Durable goods orders on Wednesday will offer insights into business investment intentions and manufacturing demand, while initial jobless claims will provide a snapshot of the labor market [4] Group 2: Holiday Trading Environment - The holiday week trading dynamics will see reduced liquidity, which can amplify price movements and create challenges for meaningful price discovery [3] - Historical patterns suggest that holiday weeks often experience reduced volatility and range-bound trading, although unexpected news can lead to significant market moves [3] - The light volume environment may result in choppy trading, with potential for sharp intraday moves that quickly reverse as liquidity returns [3] Group 3: Year-End Market Reflection - The Christmas week offers an opportunity for investors to reflect on 2025's market performance and set frameworks for 2026 positioning, with key themes including AI investment and Fed policy shifts [6] - Technology stocks, particularly those related to AI, have driven market gains, but recent earnings reports have raised sustainability questions [6] - Key questions for investors include the sustainability of AI capital expenditures, inflation moderation, and consumer spending resilience amid economic uncertainties [6]