Cover:
-President Donald Trump has reportedly narrowed his choice for chair of the Federal Reserve to Kevin Hassett, currently the director of the National Economic Council. Hassett, who has strong academic credentials and a background in public policy, was previously confirmed as chair of the Council of Economic Advisers with significant bipartisan support. His involvement in the 2017 tax cuts reflects his supply-side economics. However, Hassett's loyalty to Trump raises concerns about his ability to remain independent as Fed chair, particularly in light of Trump's previous criticisms of current chair Jerome Powell and his demands for lower interest rates. Trump's recent remarks suggest he wants the next Fed chair to prioritize rate cuts, which could potentially compromise Hassett's credibility with fellow Fed officials. While some colleagues support Hassett, others worry that his allegiance to Trump may hinder his independence and influence how he approaches policy decisions. Even if Hassett advocates for lower rates based on economic rationale, the perception that he is acting in accordance with Trump’s wishes may persist, impacting his effectiveness as chair.
Interview:
-No update
Tech Trader:
-Oracle's second-quarter earnings report illustrates the precarious nature of the AI industry in the latter half of 2025, highlighting how a single negative development can significantly impact investor sentiment across the sector. Investor behavior is characterized by a heightened sensitivity to news, as they scrutinize information through the lens of potential market bubbles, often leading to premature exit strategies. Instead of pondering whether a bubble exists, investors should focus on its current phase and potential triggers for collapse. Historical context indicates that bubbles are ongoing processes rather than abrupt events, as evidenced by the prolonged Dutch tulip craze and the British railway mania. The late stages of a bubble often offer substantial returns; for instance, from the time Alan Greenspan highlighted "irrational exuberance" until the dot-com bubble burst, the NASDAQ Composite surged 288%. Despite the eventual downfalls of once-prominent companies like Cisco Systems, their substantial rebounds years later serve as a reminder of the uncertainties in investing, urging caution over immediate reactions to market fluctuations.
The Trader:
-Whether the stock market continues to rise may hinge on significant mid-December economic reports due to a government shutdown affecting their typical release schedule. Key reports include the November jobs report, arriving on December 16, and the consumer price index on December 18, both of which will incorporate some October data due to prior cancellations. A mild slowdown in job growth or a slight rise in unemployment, along with stable inflation data, could favor cyclical stocks, potentially leading to a strong market start in 2026, as noted by Nicholas Brooks from ICG, who anticipates further interest rate cuts. Small-cap stocks, particularly the Russell 2000, may benefit as they remain comparatively inexpensive. The market’s direction largely relies on technology stocks, influenced by developments in AI, although recent earnings reports from companies like Oracle and Broadcom have caused considerable losses and spurred investor unease described as “Fear of Bubble” by Mike Treacy from Apex Fintech Solutions.
-Housing stocks are stagnating due to high mortgage rates, rising construction costs, and elevated home prices, causing top housing ETFs to lag behind this year's market rally. Despite this, optimism is growing for 2026, particularly after the Federal Reserve's recent interest rate cuts and declining mortgage rates from 7% to 6.2%. Economists at Redfin anticipate a "Great Housing Reset" leading to increased home sales and normalized prices. Upcoming earnings reports from builders Lennar and KB Home are expected to reflect a cautiously optimistic outlook, despite current economic uncertainties and mixed results from other builders like Hovnanian and Toll Brothers, whose CEOs noted signs of demand but urged caution in projections.
Features:
-Lululemon Athletica stock surged 9.6% on Friday, marking its best performance in months, following the announcement of CEO Calvin McDonald's resignation. Investors hope this change will help Lululemon recover from two years of underperformance. The board has not named a permanent successor, and interim leadership will be provided by CFO Meghan Frank and CCO André Maestrini. Rick Patel, an analyst at Raymond James, noted that establishing a new strategy will take time, creating uncertainty around a significant turnaround timeline. Under McDonald, who joined in 2018, Lululemon's shares peaked during the pandemic due to increased demand for athleisure but have since returned to pre-pandemic levels. The brand's growth stagnated as competition increased and fashion trends shifted away from activewear. According to Randal Konik of Jefferies, Lululemon's struggles stemmed from a lack of innovative product offerings and inconsistent design, which alienated loyal customers and led to declining sales amid heightened competitive pressures.
-In 2023, the US is experiencing the worst measles outbreaks in decades, with 1,912 cases reported, the highest since 1992. The decline in vaccination rates due to the COVID-19 pandemic has contributed to this resurgence. The outbreak initially surged in Texas and is now spreading in South Carolina, particularly in an under-vaccinated community in Spartanburg, which has reported 126 confirmed cases. Of these, 15 new cases were identified recently, primarily stemming from a church exposure, leading to the quarantine of 267 individuals. Though vaccination coverage among South Carolina kindergartners is 91.2%, below the national average, local officials note that vaccination rates have increased by 35% in Spartanburg County. The effective prevention rate of the recommended two-dose MMR vaccine stands at 97%, yet vaccination rates have been declining in 78% of U.S. counties since the pandemic, raising concerns about ongoing outbreaks across the country, including cases reported in states such as Utah, Arizona, and New Mexico.
Europe:
-The divergence in monetary policies between the Federal Reserve (Fed) and the European Central Bank (ECB) is becoming increasingly pronounced, influencing the broader economic landscape. The Fed is implementing cuts to interest rates while the ECB opts for stability, refraining from further easing after its recent cut. The euro appreciates against a declining US dollar, making past parity seem unlikely as the banks' strategies for managing inflation differ significantly.
The ECB displays a cautious outlook, predicting modest growth in the euro zone at around 1.2% and inflation around its target of 2%. In contrast, the US economy exhibits volatility, with growth forecasts varying from 3% to 1.7% for the year, compounded by persistent inflation rates hovering near 3%. Both central banks emphasize formal independence from political influence; however, the Fed faces increasing political pressures, particularly evident in President Trump’s appointment of Stephen Miran, an economist linked to the administration, signaling a potential shift in Fed objectives to stimulate the US economy.
Emerging Markets:
-no update
Commodities:
-US stocks and gold have experienced pronounced growth in a rare alignment not seen in 50 years, according to research from the Bank for International Settlements (BIS). The S&P 500 has increased by over 13% in the last six months, while gold prices have surged nearly 26%, both nearing record highs. This rapid rise has prompted concerns among researchers and investors about the potential for an asset bubble, characterized by a rapid increase in prices followed by a sharp correction. Currently, the focus on bubble risks has predominantly been on technology stocks linked to artificial intelligence rather than the broader market or gold. The BIS researchers stressed that bubbles are challenging to identify and predict, noting that statistical methods indicate both the S&P 500 and gold are in "explosive territory," a situation that has not occurred simultaneously in the past half-century. They caution that after this explosive growth phase, a bubble is likely to "burst" with a significant correction. Additionally, the presence of retail investors pursuing trends amid media hype and fear of missing out is often a telling signal of bubble conditions.
Streetwise:
-Originally formed through the merger of Thomas Edison's electric firm and a lighting company in Schenectady by financier J.P. Morgan, General Electric enjoyed over a century of expansive business diversification, which later led to significant divestments as market conditions changed. As of November 8, 2021, long-term investors in GE had seen 38% losses, contrasting sharply with the S&P 500's 524% gains. Following an announcement of a three-way company split, those who invested at that point exceeded S&P 500 returns, achieving over 600% gains across spinoffs. However, GE HealthCare Technologies, intended to be the fastest-growing division, has underperformed since its early 2023 spinoff, facing challenges such as trade tensions with China and cautious hospital spending, resulting in returns at only 42% compared to the S&P 500.
Next, the April 2024 spinoff created GE Vernova for energy businesses, leaving the core of GE's operations in aviation, which has now been renamed GE Aerospace. This sector has seen stronger-than-expected sales growth and profit margins, driven by a healthy global air traffic demand and a substantial backlog in jumbo jet orders. Analysts predict a prosperous 2026 for U.S. airlines, a claim met with skepticism, historically suggesting favorable outcomes might ensue.