December 8, 2025

It’s not how much money you make, but how much money you keep, how hard it works for you, and how many generations you keep it for.”

Robert Kiyosaki

Well, all eyes will be on the Federal Reserve this week, but first here are the numbers. The S&P 500 gained .85%, the Down Jones Industrial Average added .79%, the Nasdaq led up 1.75%. Internationally, the FTSE 100 lost .55% and the MSCI-EAFE gained .12%. The 2 -year treasury paid 3.564 and the 10-Year yield was 4.139%.

So what happen in another good week? All three major indexes finished up between 0.3% and 0.9% on the heels of their best Thanksgiving-week performances in more than a decade. As everyone is awaiting the Federal Reserve interest rate decision, one of the key elements is the inflation numbers. To that end last week, the Federal Reserve’s preferred inflation gauge showed little improvement in September, with overall prices up 0.3% month‑over‑month and core prices (excluding food and energy) rising 0.2%. The report, delayed by the government shutdown, reinforces expectations that the Fed can move toward a rate cut next week, a development markets have been pricing in ahead of the central bank’s decision. Inflation is under control, or at least it was in September. That was the big reveal in last Fridays release of the personal consumption expenditure index.

In corporate news that could reshape media and tech stocks, Netflix agreed to acquire Warner Bros. Discovery for $72 billion, combining two of the largest streaming and studio businesses. The deal — expected to close in 12 to 18 months after Warner separates its cable operations and subject to regulatory approval — prompted heavy trading in both companies and raises questions about consolidation and competition across streaming, TV and film. Commodities and futures were mixed as markets digested the inflation print and the blockbuster Merger & Acquisition. Light crude futures were modestly higher while grains and metals showed varied movements across sessions. Overall, investors balanced cooling inflation signals with big-picture corporate consolidation as they position portfolios ahead of the Fed’s expected policy shift.

And the labor market? U.S. applications for unemployment benefits fell to 191,000 from the previous week’s 218,000, the lowest level in more than three years, during Thanksgiving week. Last Wednesday private payroll report, issued by ADP, showed that the U.S. economy unexpectedly shed 32,000 jobs in November. But last week’s initial jobless claims data showed new applications for unemployment benefits fell, a sign that the labor market remains healthy.

A word on Artificial Intelligence (AI) and the ramifications to the economy and job creation, The AI world will supposedly be one in which a massive number of jobs will be replaced by a variety of robots. While some of this is already happening, such as on factory and warehouse floors, changes are also occurring in truck driving, taxis, and a variety of other fields. The upshot of all of this is likely to be a significant improvement in GDP and productivity. Now for the hard part, and that is the reallocation of citizens into productive occupations. With the decline of birthrates in many developed economies, the pool of available labor is likely to shrink over time. However, the anticipation is that the job losses will rise faster than the population declines, thereby raising the issue of how to support the displaced workers. Only the future will tell but if your children or grandchildren are thinking about majoring in computer science, they may want to reconsider and look at careers that support AI and Quantum computing, or the trades.

Big news on the political front which could affect the balance of power and the direction of the policy the Trump administration is trying to implement. The Supreme Court last Thursday ruled that Texas could use a new congressional district map that could add up to five GOP seats in Congress in next year’s midterm election. Also, SCOTUS will take up birthright citizenship, another hot topic for the America First crowd.

Any good news on mortgage rates? On the housing front, mortgage rates continued their recent downward trend amid expectations of Fed easing, with the average 30-year fixed rate falling to 6.19% for the week ending December 4, down from 6.23% the prior week; the 15-year fixed rate similarly declined to 5.44% from 5.51%.

As of December 7, 2025, the U.S. stock market has experienced significant volatility this year, driven by factors like aggressive tariffs implemented early in the Trump administration, persistent inflation concerns, and a resilient but cooling economy. The S&P 500, a key benchmark, closed last Friday at approximately 6,870—up about 17% year-to-date from its January open around 5,900. Despite this gain, Wall Street forecasts for the final weeks of 2025 are mixed, with most analysts anticipating modest additional upside or consolidation rather than explosive growth. Expectations center on seasonal strength (e.g., the “Santa Claus rally”), probable Federal Reserve rate cuts, and good earnings reports, tempered by high valuations and policy uncertainties.

We believe everything points to good gains for the S&P 500 by year-end, potentially landing it between 6,500 and 7,000. This would mark the third straight year of double-digit returns (following 24% in 2024 and 20%+ earlier projections for 2025), but at a more muted pace than historical averages. Emerging markets show brighter spots, with stronger earnings growth expected, while international developed markets lag due to trade barriers. The good news? The bullish drivers for December are 1. Seasonality and Sentiment: December is historically the third-best month for the S&P 500 (average +1.5–4.4% since 1950 when Q3 is positive, as it is this year at +14.8%). Portfolio managers may chase performance, boosting laggards. 2. Fed Policy: Markets price in a 25–50 bps cut at the December 10–11 meeting, with total 2025 cuts at 75 bps. This could ease borrowing costs and fuel risk assets. 3. Earnings Momentum: Q4 reports (ongoing) show resilience; tech/AI firms like Nvidia and Meta continue to outperform, with EM earnings up 9% YTD. And finally, 5. Economic Resilience: GDP growth at 1.6–2.5%, unemployment steady at ~4.2%, and inflation nearing 2.4% by year-end provide a soft-landing backdrop.

Any bad news or problems? The bearish risks and headwinds are 1. Tariffs and Trade: “Reciprocal tariffs” (up to 60% on imports) have raised inflation forecasts to ~4%, slowing growth and hitting exporters. OECD sees global GDP dipping to 2.9%. 2. Valuations: S&P 500 trades at 22–23x forward earnings (high vs. 155-year average), vulnerable to a 5–10% correction if AI hype cools or recession odds rise (J.P. Morgan: 40% chance). 3. Labor and Fiscal Pressures: Cooling job market (e.g., September data beat fears but signals slowdown) and $7T debt wall could amplify volatility. 4. Geopolitical/Volatility: VIX at ~19 (elevated); potential AI “exhaustion” or bitcoin selloffs could spill over. However, going forward the 2026 Preview: Bullish tilt, with S&P targets of 7,500–8,000 (UBS, JPMorgan) on 12–14% EPS growth and AI buildout.

We shall see, hope all are well on track with your Christmas shopping. The markets certainly helped make this season merry and bright.

Mike