Good morning,
Take a much better-than-expected year for equities—where most managed money has underperformed its benchmarks due to a lack of AI concentration—add a brief but sharp -4.8% pullback in mid-November, followed by a quick recovery, and then another -2.6% drop from last Friday through Wednesday, and you begin to understand why “nervousness” among investors feels like an understatement. Zantac, it seems, is suddenly in short supply.
It doesn’t help that the Fed appears directionless. Blame the data-starved government shutdown for that, not Powell & Co. Every wiggle in the market feels worse than it is—especially to those banking on a Santa rally. Yesterday’s action helped soothe some battered psyches: a slew of in-line or better-than-expected data (led by a softer CPI) and Micron’s “all-chips-on-AI” outlook lifted the S&P 500 by +0.8%.
Futures are flat this morning—well off their overnight highs—which might actually be a good omen for Santa-rally believers. Positive opens have often led to negative closes lately, so a quiet open could be just what’s needed. The final two months of 2025 are tracking eerily close to last year’s pattern—two pullbacks followed by a late-year surge. It doesn’t guarantee a repeat, but technically, there’s nothing arguing against it.
Today marks the final quarterly “everything-expires” session—options, futures, and futures on options. Good, bad, or indifferent, it’s unlikely to move the long-term narrative.
Have a great weekend—see you Monday.
Be well,
Mike
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