Market Overview - Australian shares continue to rise, with a +0.4% advance in futures following a +1.9% increase the previous day, supported by a rebound in Wall Street technology stocks [1][3] - The Nasdaq index is up +0.9%, while the S&P 500 and Dow Jones both increased by +0.5%, indicating a recovery in market sentiment after a previous decline [3] Company News - Electro Optic Systems (ASX:EOS) is under scrutiny as it prepares to respond to a short sell report from Grizzly Research, with the market expecting the release before market open [4] - Elevra Lithium (ASX:ELV) has signed a Memorandum of Understanding (MOU) to supply Mangrove Lithium with spodumene concentrate, with expectations to supply up to 144,000 tonnes per year [4] - PLS Group (ASX:PLS) has secured a multi-year offtake agreement with Canmax for 150,000 tonnes of spodumene at a price of US$1,000 per tonne [5] - Eastern Gas Corp (ASX:EGA) is set to debut on the ASX, focusing on oil and gas exploration in the Cooper and Surat Basin, with an initial market capitalization of $5.5 million [5] - Compushare (ASX:CPU) and Amotiv (ASX:AOV) are also expected to report earnings, with CSL (ASX:CSL) leading a series of quarterly reports [5][6] Commodity Prices - The Australian dollar is trading at US 70.9 cents [7] - Iron ore prices have increased by nearly +1%, currently at $99.80 per tonne [7] - Brent crude oil has risen by +1.5%, now priced at $69.06 per barrel [7] - Gold is trading at $5,095 per ounce, while US natural gas futures have decreased by -8% to $3.14 per gigajoule [7]

Core Viewpoint - South Korean equities are experiencing a decline as investors are moving away from tech stocks, while Indonesian shares have dropped over 2% following a downgrade in the country's credit rating outlook by Moody's, impacting Southeast Asia's largest economy [1] Group 1: South Korean Market - South Korean equities have extended their declines, indicating a trend of retreat among investors from technology stocks [1] Group 2: Indonesian Market - Indonesian shares fell by more than 2% after Moody's downgraded the country's credit rating outlook, marking a significant setback for the economy [1]

Joining us now is Abby Joseph Cohen, Columbia Business School professor and retired Goldman Sachs partner. And great to have you. On the day that we crossed through the 7000 threshold on the S&P 500, I know it doesn't mean a lot fundamentally, but it is a big round number.And I wonder what your take is on this continued a i boom. You know, a small CEO said just now his customers are starting to realize that it's sustainable and so are aggressively building up their equipment. Well, I'm delighted to be here ...

Core Insights - The S&P 500 index closed at 6,845.5 in 2025, exceeding initial forecasts by more than 16% [1][3] - Analysts had predicted a modest year for the stock market, with expectations of gains between 5% to 10% [4][5] - The unexpected rise in the S&P 500 was influenced by various factors, including President Trump's tariffs and the performance of AI stocks [6][20] Market Predictions and Performance - Initial forecasts for the S&P 500 in 2025 ranged from 6,275 to 6,375, reflecting a gain of approximately 7%-8% [5] - The S&P 500 had finished 2024 at 5,881.6, marking a 23% increase from the previous year [4] - The index's performance in 2025 was significantly better than the conservative estimates made by analysts earlier in the year [12][14] Impact of Tariffs - President Trump's "Liberation Day" tariffs, announced on April 2, led to a sharp decline in the S&P 500, which fell below 5,000, a drop of nearly 20% [7][8] - The initial fears surrounding the tariffs included potential runaway inflation and reduced consumer spending, which did not materialize as expected [15][17] - Only about 20% of the tariffs were passed on to consumers, mitigating the anticipated inflationary impact [17][18] AI Market Dynamics - Concerns about an "AI bubble" influenced stock predictions, with high price-to-earnings ratios indicating potential overvaluation [21][22] - Despite these concerns, investment in AI stocks exceeded expectations, contributing to higher corporate earnings and stock prices [23] - A significant majority of investors expressed intentions to maintain or increase their AI stock holdings [22] Future Market Outlook - Forecasts for the S&P 500 in 2026 suggest a target range of 7,400 to 7,500, indicating potential gains of 8% to nearly 10% [24] - The upcoming midterm elections are expected to introduce volatility, as historical trends suggest challenges for the party in power [24] - Observers note that President Trump's responsiveness to stock market performance may influence future economic policies [26][27]

Market Outlook - Analysts expect the S&P 500 to finish 2026 with an average price target just shy of 8,000, indicating a yearly gain of 15.9% excluding dividends [2] - Historical data shows that after strong market performance, the average return for the following year is typically lower, at 4.6% [3] - The S&P 500 has risen over 80% since the start of 2023, marking its best three-year return since 2021 [10] Performance Trends - The S&P 500 is on track to finish 2025 with a 17.8% advance, despite earlier volatility [6] - A third consecutive year of double-digit returns would be significant, as only four instances of such performance have occurred since 1949 [4] - The "Magnificent Seven" tech stocks now account for 35% of the S&P 500's value, indicating a concentration in market leadership [8] Investment Sentiment - Some analysts believe the market may be due for a breather in 2026, citing heavy reliance on AI-driven trades as a potential risk [7] - Fundstrat Global Advisors argues that historical patterns show strong performance can continue into a fourth year, with median three-year returns of 155% in similar past instances [12][13] - Continued investment in AI data centers is expected to boost corporate earnings across various sectors, suggesting a broadening of the market rally [14] Broader Market Indicators - The small-cap Russell 2000 index has risen over 13.6% this year, indicating positive performance outside the S&P 500 [15] - International stocks, represented by the MSCI All Country World ex-USA Index, have increased by 29.8% this year, outperforming the S&P 500 [16]

Group 1: Investment News Highlights - Bill Ackman has made a $2.1 billion deal to acquire an insurer, aiming to create a "modern Berkshire Hathaway" [1] - Ray Dalio discusses the evolving nature of market crises and their impact on investment strategies [1] - A rotation from growth stocks to value stocks is anticipated to strengthen in the upcoming year [1] Group 2: Value Investing Insights - 2026 is projected to be a significant year for value stocks, indicating a potential shift in market dynamics [4] - Polen Capital emphasizes a multi-dimensional approach to small-cap investing, highlighting the importance of diversification [4] - The Fear & Greed Index indicates a strongly overvalued market, suggesting caution among investors [4] Group 3: Research and Analysis - Research indicates that regulation may not effectively mitigate bad behavior in financial markets [7] - Professionals recommend various books that can enhance investment knowledge and strategies [7] - Predictions for 2026 suggest that the equal-weight S&P 500 may outperform the traditional market cap-weighted version [7]

Group 1 - Elastic (NYSE: ESTC) has experienced a decline in investor favor due to slowing growth, despite its product being increasingly relevant in the current market [1] - The company's offerings are positioned well within the tech landscape, indicating potential for future growth [1]

Market Overview - The Nasdaq 100 is set to recover December's losses, driven by renewed interest in technology stocks, with global equity markets experiencing gains [1] - Futures on the Nasdaq 100 rose by 0.5% following a nearly 3% rally over the past two sessions, with tech and mining shares leading the advances in Europe [1] - Asian benchmarks, particularly South Korea's Kospi, which are heavily influenced by artificial intelligence demand, also outperformed [1] Commodity Movements - Significant price increases were noted in commodities, with gold, silver, and copper reaching record highs, while oil prices rose amid geopolitical tensions related to Venezuela [2][5] - Spot gold prices increased by over 1.5%, surpassing the previous record of $4,381 per ounce set in October, and silver also reached a new record [5] Economic Sentiment - There is growing optimism for a year-end rally in equities, as dip buyers helped US stocks rebound from previous declines, with the S&P 500 Index gaining 0.9% on Friday [3] - The market is experiencing a "risk-on" liquidity wave, supported by resilient US economic growth and expectations of lower Federal Reserve interest rates, which are easing financial conditions [4] Geopolitical Factors - The rise in oil prices is attributed to increased geopolitical tensions, particularly following the US's intensified blockade on Venezuela, which has implications for global oil supply [2][5]

Core Insights - Precious metals like gold and silver are experiencing historic highs, with gold prices rising 70% and silver prices increasing 130% this year, indicating a significant shift in market dynamics [2][3] - Simultaneously, tech stocks, particularly in the Nasdaq Composite, have surged approximately 21% year-to-date, driven by strong performance from major tech companies and investor enthusiasm for AI technologies [5][6] Group 1: Precious Metals - Gold and silver have reached all-time highs, with gold surpassing previous records and silver following closely behind [2] - The rally in precious metals is driven by geopolitical risks and expectations of a shift towards easier monetary policy by the Federal Reserve in 2026 [3][4] - Central banks globally are increasing their gold reserves, and inflows into precious-metal ETFs are contributing to rising asset prices, reflecting investor interest in safe-haven assets amid concerns over fiat currencies [4] Group 2: Tech Stocks - The Nasdaq Composite has rebounded after a softer start to December, with recent sentiment around AI economics helping to alleviate concerns about capital expenditures [6] - The last time gold and growth stocks moved in tandem was during the pandemic-era liquidity surge, highlighting a historical correlation between safe-haven assets and risk assets during times of economic uncertainty [7] - Over the past five years, the Nasdaq has increased over 80%, while gold has gained over 130%, showcasing the volatility and potential profitability of these trades [8]

Core Viewpoint - Hedge funds have sold off Hong Kong and Japanese stocks, indicating a shift in investment strategy due to concerns over inflated technology valuations [1] Group 1: Market Trends - The tech-heavy Hang Seng and Nikkei indices experienced declines in the last two trading sessions [1] - The sell-off by hedge funds occurred just before these declines, suggesting a correlation between hedge fund activity and market performance [1] Group 2: Investment Sentiment - Concerns over over-inflated tech values are driving hedge funds to reduce their exposure to these markets [1] - This trend reflects a broader caution among investors regarding the sustainability of tech stock valuations [1]