Archive for December, 2025

• Morning News: December 11, 2025
  Eddy Elfenbein, December 11th, 2025 at 7:07 am

  Trump Doesn’t Want to Talk About Affordability. Democrats Say That’s a Gift

  Why the ‘Affordability Hoax’ Is a Trap for Trump

  Affordability Isn’t a Hoax. It’s Not a Crisis for Most, Either

  Trump’s Tariffs Represent An Attempt to Achieve the Impossible

  Fed’s Fractured Vote Signals Trouble Ahead for Future Rate Cuts

  If That Was a Hawkish Cut, Doves Needn’t Worry

  Fed Cuts Or Not, The Stock Market Is Likely To Move Higher In 2026

  Fed Chair Jerome Powell Says U.S. May Be Drastically Overstating Jobs Numbers

  ECB Unlikely to Follow Fed For Now, But Currency Moves May Yet Prove Decisive

  Brazil’s Central Bank Holds Its Key Rate at Lofty 15%

  Bank of Canada Attempts to Temper Excitement About Economy

  Mexico Approves Up to 50% Tariffs on China, Other Asian Nations

  Nine Large US Banks Engaged in Debanking Practices, OCC Says

  Buffett Set to Hand Berkshire Baton to Abel, Who Has a Tough Act to Follow

  BlackRock’s Crew of Quant PhDs Are On Track for a Record Year

  Americans Grasped the Absurdity of Social Security, and Worked Around It

  Reckoning with the ‘New Normal’

  The Military Suppliers Cashing In on Trump’s Immigration Raids

  IEA Forecasts Smaller Oil Surplus as OPEC+ Output Declines

  The World Needs a Lot More Copper. But Will There Be Enough Supply?

  Trove of Critical Minerals Uncovered in the Utah Desert

  Hatching the Automobile’s Future in a Cloistered Los Angeles Lab

  The Boom in US Power Demand Isn’t Just About AI

  Oracle Is Having Its Own ‘Code Red’ AI Moment

  Oracle Shares Tumble as AI Spending Outruns Returns

  Google CEO Says We’re All Going to Have to Suffer Through It as AI Puts Society Through the Woodchipper

  Meta’s Zuckerberg Pushes Highly Paid AI Lab to Build Moneymakers

  Bringing the Genius of Artificial Intelligence Down to Earth

  For Trump, the Warner Megadeal Talks Are All About CNN

  These Warner Bros. Deals Instill Fear and Loathing in Los Angeles

  On Your Left, Hollywood’s Fading Relevancy

  Coca-Cola Names Next CEO

  Lilly’s Experimental Shot Cuts Body Weight by 23% in Study

  Abbott Fired a Warning Shot on Baby Formula — Then Launched a Lobbying Blitz

  In Act of Boycott, Malaysia Makes Its Own ‘McDonald’s’

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• Morning News: December 10, 2025
  Eddy Elfenbein, December 10th, 2025 at 7:07 am

  Latin America Shouldn’t Be So Triggered by the New US Strategy

  I.M.F. Prods China, Gently, on Its Weak Currency

  ECB Could Raise Growth Projections, Lagarde Says

  Bond Traders Cast Doubt on Extended Fed Rate Cuts Past December

  Betting Market Fanatics Are Risking It All for Six-Figure Payouts

  Great Income Squeeze Begins as Fed Spells End to Easy Yields

  Kevin Hassett Says He Wouldn’t Bow to Pressure Over Cutting Interest Rates

  The Bank Secrecy Act Very Much Needs a Modern Fix

  Wells Fargo Expects More Job Cuts, Will Roll Out AI Gradually in 2026

  How Epstein’s Deep Ties Across Wall Street Helped Him Build Wealth and Power

  Big Tech Always Gets Its Way With This White House

  On Affordability and Consumer Costs, Trump Goes All-In on an Alternate Reality

  Why Giving Matters, Even For Trump Accounts

  Truckers Who Fail English Tests Are Pulled Off Roads in Trump Crackdown

  A Scientific Pipeline to the Nobel Prize Fueled by Immigrants

  C.E.O. Resigns in Fallout Over Massive South Korean Data Breach

  China’s DeepSeek Uses Banned Nvidia Chips for AI Model, The Information Says

  Taiwan Invokes National Security Law to Protect TSMC Trade Secrets

  Chip Company Plotted to Send Technology to China, Ex-C.E.O. Says

  SpaceX IPO Plan Puts $2.9 Trillion of Listings Back on the Table

  Mapping the Political Fallout of GOP Health-Care Cuts

  Warner Bros.’ Bidders Brace for a Fight That Will Last Months

  Lest We Forget, Blockbuster Twice Passed on Netflix

  U.S. Manufacturers Slow Orders Ahead of Supreme Court Tariff Ruling

  If Trump Tariffs Fertilizer, U.S. Lacks Reserves ‘To Meet Domestic Demand’

  A Billion-Barrel Oil Glut Is Forming at Sea

  Rare Earths Aren’t Rare for Everyone

  Silicon Valley Is Racing to Make Critical Minerals—and Blunt China’s Dominance

  Geothermal Startup Fervo Attracts New Investors Including Google

  Mining’s Underdog Becomes Big-Ticket Dealmaker

  Nuclear and Fossil Fuels Join Forces to Undermine Renewables

  Uber Pulls Back From Electric Cars, Slashing Incentives for Drivers

  Nissan’s U.S. Boss Says the Automaker Lost Its Way

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• CWS Market Review – December 9, 2025
  Eddy Elfenbein, December 9th, 2025 at 5:27 pm

  (This is the free version of CWS Market Review. If you like what you see, then please sign up for the premium newsletter for $20 per month or $200 for the whole year. If you sign up today, you can see our two reports, “Your Handy Guide to Stock Orders” and “How Not to Get Screwed on Your Mortgage.”)

  How much is cash worth? We’ll soon learn the answer. Paramount has launched a hostile takeover bid for Warner Bros. Discovery. Netflix already announced a deal for WBD, but that was in cash and stock. Specifically, Netflix offered $27.75 per share for WBD. That’s $23.25 per share in cash and $4.50 in stock. Paramount is offering $30. All cash.

  The details get a little tricky because WBD’s cable holdings aren’t in the Netflix deal. If those are spun off, that could be very lucrative while Paramount is trying to buy all of WBD. What I like is that Paramount is bringing its offer directly to WBD shareholders. Personally, I’d lean toward the Paramount offer.

  The S&P 500 Nears a New High But Doesn’t Quite Make It

  Through Friday, the S&P 500 rallied nine times in 10 sessions. The index got within 0.5% of a new all-time high. Then it lost its nerve and quickly backed off. The S&P 500 lost ground yesterday and today, albeit by a very modest amount.

  

  Will the market rally through to a new high? I can’t say, but if it does then the Federal Reserve would be an ideal catalyst. The Fed began its two-day meeting today. Tomorrow afternoon, the central bank will release its policy statement, and it’s widely accepted that the Fed will cut interest rates again. This would be the third cut in as many meetings.

  If the Fed cuts by 25 basis points, then it would bring the Fed’s target range for its Fed funds rate to 3.50% to 3.75%. This is the overnight lending rate that banks use between themselves. Over the last year, through September, core inflation is running at 3%. A Fed cut would lower the real interest rate, meaning adjusted for inflation, to a range of 0.50% to 0.75%. That’s low by historical standards, but there’s room to go lower.

  There could be some drama at this meeting. I’m curious what the vote will be. For the first time in many years, there may be a rift among FOMC members. Jerome Powell appears to be fine with a rate cut this week, but I sense he’s not fully onboard with another rate cut next month, while some members are.

  Even though the C in FOMC stands for committee, it’s rare to see divisions within the Fed. The Fed prefers to make its moves by consensus. Sometimes you’ll see minor dissents, but nothing too dramatic. By and large, the chair gets their way. A Fed chairman hasn’t been outvoted in over 40 years.

  But Powell is a lame duck. That may change things. Powell will be out as Fed chair in May, and Kevin Hassett is the leading candidate to be President Trump’s pick. Powell was initially appointed by President Obama. He was then elevated to Fed chair by President Trump and reappointed by President Biden.

  The FOMC meeting will conclude tomorrow, and the policy statement will be released at 2 pm ET. For the January meeting, the odds of a Fed rate cut are at just 23%. After cutting rates tomorrow, traders see the Fed taking a six-month break. With tomorrow’s decision, we’ll also get the Summary of Economic Projections, otherwise known as the dot plot. This will tell us more about the Fed’s plans for 2026 and beyond.

  The key for investors is to watch for the health of the jobs market. Remember that more workers translates to more shoppers. The Labor Department released its jobs openings report today, (ie, the JOLTS report). The report said that the number of job openings for October rose to a five-month high.

  That’s the good news. The bad news is that job openings increased a tiny bit, from 7.66 million to 7.67 million. Also, layoffs rose to 1.85 million which is the highest since early 2023. Hiring fell by 218,000.

  

  Healthcare has been the big jobs driver all year. Outside that, the numbers haven’t been that impressive. This fits the overall pattern we’ve seen: a stagnant jobs market. The reality is that consumers and businesses are struggling to deal with higher costs.

  Also, we may have to put a big asterisk on today’s numbers from the JOLTS report. The BLS said that because of the government shutdown, it had to stop using its regular methods. The next JOLTS report will be out on January 7.

  The phrase that’s been making its way around economists these days is “no hire, no fire.” In other words, the unemployment rate is still quite low by historical terms, but companies aren’t willing to hire new employees.

  Hiring has slowed down, especially for new college graduates. It’s as if the economy has hit a perfect equilibrium where businesses aren’t willing to shed staff, but they’re weighed down by costs and uncertainty so they’re not hiring either. I don’t expect this balance much longer. Soon, firings will be hard to ignore.

  Home Deport Offers Cautious Guidance

  Shares of Home Depot (HD) were weak today after the company gave disappointing guidance. I like to pay attention to what Home Depot has to say. They probably have a better understanding of consumer spending than many official government reports.

  Home Depot has struggled lately. Over the last three months, the S&P 500 is up around 5% while HD is down by 15%.

  For fiscal 2026, the home improvement store expects sales growth of 2.5% to 4.5%. That unnerved some traders. Wall Street had been expecting 4.5%.

  Home Depot also said it expects EPS growth to be flat to +4%. For comparable sales, HD sees growth of flat to +2%. Of course, a lot of this will depend on the housing market. For the current fiscal year, HD sees EPS falling by about 6%. Home Depot isn’t alone. Toll Brothers and Hovnanian both said that demand is being held back by high mortgage rates and worries about the tariffs. So much of the broader economy is closely tied to the housing market.

  On the plus side, the Russell 2000 Index of small-cap stocks hit a new high today. The Russell 2000 has lagged the market consistently for the last five years. Every prediction of a rotation to the little guys has flopped. Well, it’s happening again. The Russell 2000 has outpaced the S&P 500 for the last month. I hope this trend continues, but I won’t make any promises.

  One of the more difficult aspects of investing that’s hard to convey to a new investor is just how big the big companies are. The giant blue-chip behemoths dominate the investing world, and everyone else is running behind.

  Consider that if all 2,000 stocks in the Russell 2000 merged to form one super company, it still would be far from the largest company on Wall Street. The combined value is currently around $2.7 trillion. The Russell 2000 makes up for just 7% of the Russell 3000. The five largest companies in the S&P 500 make up slightly more than 25% of the index.

  Financial stocks have also improved in recent weeks. Goldman Sachs (GS) and Bank of New York Mellon (BK) both hit new highs today. A wider yield spread is good for the banks. Tech has also been acting better in recent days, but it’s still lagging several sectors over the last month.

  I hope you don’t mind if I brag a little about IES Holdings (IESC). I mentioned this stock to you three weeks ago, just before its earnings report. The company currently operates through four business segments: Electrical, Communications, Infrastructure and Residential. It’s been a huge winner for us this year.

  On November 21, the company reported outstanding results for its fiscal Q4, and the shares rallied 8.5%. Revenue rose 16% to $898 million. Operating income was up 39% to $104.3 million, and diluted adjusted EPS was $3.77 compared with $2.61 one year ago.

  I had already told you some of this story a few weeks ago, but the latest news is that the stock has rallied even more. The stock has closed higher for the last six days in a row. The stock reached another all-time high. IESC is up 27% since I first told you about it, and 125% since I first added it to our Buy List a year ago.

  

  That’s all for now. The Federal Reserve meeting wraps up tomorrow. The policy statement will be out on Wednesday at 2 pm ET. I’ll have more for you in the next issue of CWS Market Review.

  – Eddy

• Morning News: December 9, 2025
  Eddy Elfenbein, December 9th, 2025 at 7:02 am

  Japan Builds Up ‘Missile Archipelago’ Near Taiwan to Counter China

  Russia’s Threats Put Europe’s Borderlands on Edge

  Russia’s Oil Tanker Logjam Crushes Prices Even as Exports Surge

  China’s Manufacturing Is Booming Despite Trump’s Tariffs

  Trump Insists Tariffs Will Buoy the Economy. For Now, He’s on Damage Control.

  An Unusually Divided Fed Is Expected to Deliver a Rate Cut

  Options Traders Bracing for Wild Stock Trading Off Fed Decision

  Investors’ Bearishness Is Often Overdone — But Their Market Bubble Fears May Be Spot-On

  US Private Credit Defaults to Ease in 2026, but Fragility to Persist, Says BofA

  Peter Bauer Would Understand the Danger of Balanced Budgets

  Supreme Court Is Asked to Take Another Ax to Campaign Finance Limits

  Trump’s Handouts Put Billionaires First and Americans Last

  Trump Says U.S. Will Allow Nvidia H200 Chip Sales to China, Get 25% Cut

  How Much Could China Gain From Access to Powerful Nvidia Chips?

  Trump’s Nvidia Shift Hands Xi an Opening on Security Curbs

  Ford and Renault Team Up in Europe to Compete Against Low-Price Chinese Cars

  Federal Judge Finds Trump’s Halt on Wind Energy Is Illegal

  America’s Biggest Power Firm Pivots Hard to Its Next Era

  Four Reasons Why the Boat Strike Debate Matters for the US

  How Trump Pushed US Park Rangers to the Breaking Point—and a Union Drive

  The Ambition Gap Is Growing

  Regulators Shouldn’t Meddle With Netflix’s Warner Bros. Purchase

  Paramount Made a Hostile Bid for Warner After Netflix Deal. What Happens Next?

  Behind Paramount’s Relentless Campaign to Woo Warner Discovery and President Trump

  EssilorLuxottica Director Says Meta’s Stake in Ray-Ban Maker ‘At Least 3%’

  Apple’s Slow AI Pace Becomes a Strength as Market Grows Weary of Spending

  These Travel Influencers Don’t Want Freebies. They’re A.I.

  Same Product, Same Store, but on Instacart, Prices Might Differ

  Now Cracker Barrel Diehards Think the Food Isn’t Up to Scratch, Either

  BAT Sets Out $1.73 Billion Share Buyback, Backs 2025 Targets

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• Morning News: December 8, 2025
  Eddy Elfenbein, December 8th, 2025 at 7:06 am

  China’s Trade Surplus Climbs Past $1 Trillion for First Time

  China’s Growth Is Coming at the Rest of the World’s Expense

  China’s Weak Currency Is Powering Its Exports and Drawing Criticism

  The Many Faces of Abu Dhabi’s Trillions

  Your Holiday Gift Contains a Lump of Tariffs

  John Lott Is Brilliant On Guns, Not So Much On Tariffs

  The Federal Reserve System Returns To Profitability

  Powell’s Vote-Gathering Challenge Shows Test for Next Fed Chair

  Your Money Could Soon Be Tied Up in This $300 Billion Crypto Market

  How a Cryptocurrency Helps Criminals Launder Money and Evade Sanctions

  Wall Street Hedged Big Crypto Bet in $500 Million Ripple Deal

  The Nasdaq 100: Booms & Busts

  Middlemen are Swallowing the Economy

  America Gets Retirement Wrong. Can Vanguard Fix That?

  JPMorgan Taps Todd Combs to Lead Security Investments Group

  Berkshire Hathaway Shuffles Top Ranks in Runup to Warren Buffett’s Retirement

  Research Veteran Yardeni Ends 15-Year Tech Bet With Underweight Mag 7 Call

  Coreweave Shares Fall on $2 Billion Convertible Notes Offering

  States Are Raking In Billions From Slot Machines on Your Phone

  Using SNAP as Leverage Was a Bad Idea the First Time

  Trump to Unveil $12 Billion in Long-Awaited Farm Aid Program

  The Year of America’s Cranky Consumer

  Shopify President Says Work-Life Balance Is A ‘Misnomer’ — And That We Should Embrace Work-Life ‘Harmony’

  The Accounting Uproar Over How Fast an AI Chip Depreciates

  Old Teslas Are Falling Apart

  IBM Nears Roughly $11 Billion Deal for Confluent

  Zuckerberg Isn’t Giving Up on His Metaverse Dream

  Trump Warns Netflix-Warner Deal May Pose Antitrust ‘Problem’

  Everybody in Hollywood Secretly Hates Netflix. So Now What?

  Netflix Has a Huge Opportunity With the DC Studios Superheroes

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• Morning News: December 5, 2025
  Eddy Elfenbein, December 5th, 2025 at 7:03 am

  Why Taiwan Is At the Center of the China-Japan Spat

  The Ultimate Legal Fight Over Who Decides the Rules in America

  Even If Fed Cuts Rates Again, US Economy May Not Get Much of a Boost

  The Moment for Gold and Alternative Bullion Investments Has Arrived

  Private Credit Woes Should Put Banks on Notice

  The Games Wall Street Plays Have Taught Them How to Win

  When Finance Needed More Math, It Turned to the Card Players

  Netflix to Buy Warner Bros. After Split for $72 Billion

  Why the Battle for Warner Bros. Discovery May Not Be Over Yet

  Wall Street Races to Cut Its Risk From AI’s Borrowing Binge

  Nvidia Has a Cash Problem — Too Much of It

  Jensen Huang Will Do For Affordability What Zohran Mamdani Can’t

  Enthusiasm for OpenAI’s Sora Fades After Initial Creative Burst

  Will Chatbots Break Our Brains—And Our Hearts?

  Why We Can’t Quit Excel

  Musk’s X Fined as EU Escalates Free-Speech Clash With US

  Meta Is Failing Kids. Lawmakers Are Failing Them, Too.

  Amazon Eyes Expanding Delivery Network After Talks with USPS Stall

  Should Walmart Really Be Trading Like a Tech Company?

  Two Types of Shoppers Are Powering Holiday Spending: The Wealthy and Deal-Hunters

  Equinor Makes North Sea Gas Discoveries

  Once a Gamble in the Desert, Electric Grid Batteries Are Everywhere

  Canada Declares Stellantis in Default for Moving Jeep Production to U.S.

  A Dress Code Won’t Make Flyers Behave, But a $44,000 Fine Will

  Southwest Cuts Profit Goal as Shutdown Upends Flight Travel

  India’s Biggest Airline Falls Into Chaos, Canceling About 1,000 Flights

  Faulty Abbott Glucose Monitor Sensors May Be Tied to 7 Deaths, F.D.A. Says

  MAGA Billionaires Can’t Get Enough Testosterone

  Trump’s World Cup Welcome Is Undercut by His Migrant Crackdown

  Sportswear Boss Offers His £3billion Firm to Anyone Who Can Prove Earth Is Flat

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• Morning News: December 4, 2025
  Eddy Elfenbein, December 4th, 2025 at 7:07 am

  China State-Owned Banks Soak Up Dollars to Slow Yuan Gains

  How to Get Russia’s Billions to Ukraine

  Merz Under Threat as Business Warns of Germany’s ‘Free Fall’

  Can Quality of Life Be a Superpower? Ask Finland

  EU Presents Plans to Overcome Investment Hurdles Hampering Competitiveness

  Bank of England Launches Stress Test of Private Equity and Credit

  Why Silver Price Has Been Surging Even More Than Gold

  Hedge Funds Double Down Using Near-Record Leverage in Quest to Boost Returns

  Are We in a Stock Bubble? This Is the Only Thread You Need

  Tariffs Are Making Rates Descent a Lot Trickier

  Morgan Stanley Exec Expects Broad Surge in M&A

  Market Doubts Hassett Can Deliver at Fed, Says PGIM’s Peters

  Bessent to Push New Residency Rule for Regional Fed Heads

  Bessent Under Discussion to Also Lead National Economic Council

  Amid Ongoing Attacks from Antitrust Ankle Biters, Business Evolves

  Democrats Press Firms About Trump Ballroom Donations

  US Private Payrolls Post Largest Drop in More Than 2-1/2 Years in November

  The World Has More Billionaires Than Ever

  Manhattan Luxury Apartment Market Surges in Month After Mamdani’s Win

  Mayor Mamdani Unleashes the Wrath of Khan

  Trusting Tractor-Driving Good Ole’ Boys More Than Harvard Faculty

  New York Times Sues Hegseth, Defense Department Over New Press Rules

  Palantir C.E.O.: Any Suggestion That Trump Is a Fascist Is ‘Stupid’

  Alphabet’s AI Chips Are a Potential $900 Billion ‘Secret Sauce’

  In Arizona Desert, Taiwanese Families Create Community and Build a Factory

  18,000 Reasons It’s So Hard to Build a Chip Factory in America

  A Growing U.S. Tech Hub Needs Workers. Colleges Try to Keep Up.

  EU Probe of Musk’s X Tests Bloc’s Digital Clout in Trump Era

  How Impoverished People Selling Their Blood Fuels Drug Profits

  How The Dollar-Store Industry Overcharges Cash-Strapped Customers While Promising Low Prices

  Tired Americans Are Spending More Just to Avoid Chores

  Josh Harris’s Firm Strikes Deal for Middleby Unit That Makes Viking Stoves

  Cava Keeps No-Discounting Stance as Restaurant Deals Abound

  But Who Is the Snake in ‘Zootopia 2’?

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• Morning News: December 3, 2025
  Eddy Elfenbein, December 3rd, 2025 at 7:10 am

  The Hong Kong Fire: A Crisis in the National Security Era

  ECB’s Lane Flags ‘Upside Surprises’ to Euro Zone Inflation

  Hegseth and His War Department Have Lots of Explaining to Do

  Fed Pick Puts Pressure on Bessent to Deliver for Trump

  A $2,000 Tariff Dividend for Everyone? Bad Idea

  Ahead of Tariff Ruling, Businesses Race to Secure Refunds

  We Can Have the U.S. Coast Guard or Tariffs, Not Both

  Those Sky-High Bitcoin Prices That Everyone Said Were Here to Stay? They Left.

  The 26-Minute, 51% Wipeout That Deepened Trumps’ Crypto Woes

  Tech Is Getting Left Behind in the S&P 500’s Latest Rebound

  SEC Halts High-Leveraged ETF Plans in Warning Over Risks

  Secretive $3 Trillion Fund Giant Makes Flashy Move Into Private Assets

  Private-Credit Fears Are Based on Four Myths

  Eli Weinstein’s Second Chances

  The Puzzle Super Bowl

  US Mortgage Rates Slide to 6.32%, Boosting Purchase Activity

  The G.O.P. War on Property Taxes Will Lose Them the Suburbs

  Trump Promised Relief, Americans Got Higher Bills

  Michael and Susan Dell Give $6.25 Billion to Launch ‘Trump Accounts’ for 25 Million Kids

  Can ‘Trump Accounts’ for Babies Change the Economics of Having a Family?

  Airbus Woes While Boeing Rebounds Show How Quickly the Script Can Flip

  ChatGPT Has Been Handed the Right to Self-Rule. What Could Go Wrong?

  YouTube Creators Find a New Consumer for AI Slop: Babies

  Is Artificial Intelligence the Latest Internet Mania? Let’s Hope!

  Saudi Fund to Own Almost All of Electronic Arts After Buyout

  US Shale’s Downbeat Executives Are All Talk

  Perseus Mining Values Predictive Discovery Around $1.3 Billion in Takeover Bid

  The World’s Plastic Problem Is Only Getting Worse

  Smiths Group Shares Rise on $2.6 Billion Screening Unit Sale

  Retailers Are Snatching Up Real Estate Again

  Svedka’s First Super Bowl Ad Will Be Made Primarily With AI

  San Francisco Sues Food Makers Over Ultraprocessed Products

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• CWS Market Review – December 2, 2025
  Eddy Elfenbein, December 2nd, 2025 at 8:17 pm

  (This is the free version of CWS Market Review. If you like what you see, then please sign up for the premium newsletter for $20 per month or $200 for the whole year. If you sign up today, you can see our two reports, “Your Handy Guide to Stock Orders” and “How Not to Get Screwed on Your Mortgage.”)

  Yesterday, the stock market broke its five-day winning streak but today, the market resumed its winning ways. The S&P 500 closed higher by 0.25%. The index isn’t far from a new all-time high. The Nasdaq Composite was up today by 0.59%. High Beta was up over 1%.

  It’s an odd market when Apple, Walmart and Applied Materials all made new 52-week highs while Procter & Gamble and General Mills made new lows.

  

  The top-performing Dow stock YTD is…Caterpillar! If you had given me 29 guesses, I still wouldn’t have gotten it.

  Shares of Boeing were especially strong today. The company expects deliveries of their 737 and 787 jets to be up next year. The stock was up over 10% today. Interestingly, Boeing is a Dow component. If the Dow was weighted by market cap, then Boeing would have almost no impact.

  The four largest Dow stocks (Amazon, Apple, Microsoft and Nvidia) have a combined market value of $15 trillion. That’s nearly 100 times larger than Boeing. Even a giant multinational appears as but a speck when compared with the tech giants.

  Trump Appears to Favor Hassett for Fed Chair

  This week, President Trump said that he already knows who he will appoint as the next Chairman of the Federal Reserve. He said he may unveil his pick before Christmas even though Jerome Powell’s term doesn’t end until May. Wall Street broadly assumes that choice to be Kevin Hassett who is currently director of the National Economic Council. For his part, Hassett has said that he’d be happy to serve.

  Several years ago, I had a brief email exchange with Hassett. I noted some major flaws in his Dow 36,000 theory. I recall the exchange being cordial despite covering our disagreements.

  This theory was from a book he and James Glassman wrote in 1999 claiming that stocks were wildly underpriced and that stocks should, in fact, be four times more expensive than they currently were. As is often the case, the book hit the bookshelves just weeks before the stock market’s top. I wonder if that altered his view.

  The Dow eventually made it to 36,000, although it took its time.

  

  In 1999, I was told that my critique was going to run in a major financial publication. Alas, that never came to pass, but I’ve held onto it. Here’s a sample of what I wrote all those years ago. (Warning: it gets mathy.)

  First, Glassman and Hassett err in their selection of an appropriate measure of risk for their purpose. The free market prices risk, just like it prices everything else. That price is included in the price of stocks. In order to measure risk, Glassman and Hassett should use a measurement that isolates risk from the price of stocks. They don’t do this. Instead, they compare the standard deviation of stock returns to the standard deviation of risk-free-bond returns. That’s a different animal. Sure enough, with progressively longer holding periods, stock returns’ standard deviations gradually get smaller. Upon realizing that at long term, the standard deviation of stock returns is the same as bond returns’, actually slightly less, Glassman and Hassett conclude that stocks are “no more risky” than Treasury bonds.

  That’s a faulty conclusion. Even if the standard deviations are the same size, it doesn’t say anything about the risk that they’re looking for. The point is that risk has still never been isolated: It’s inside those returns no matter how long-term you go. The variability of risk’s part of all these returns may be diminishing as well. That can happen even if risk stays exactly the same size. With Glassman and Hassett’s method, we have no idea how big the risk inherent in stock ownership is.

  You can read the whole thing here. I’ll be curious to see if any Dow 36,000 Theory questions will make it into Hassett’s confirmation hearings. Since the book came out, Hassett’s career has gone further, but I still think I had the better argument. As for the Dow, it didn’t break 36,000 for another 22 years.

  Ninth Contraction in a Row for ISM

  We won’t get the key economic reports until later this month. Yesterday, we got the ISM Manufacturing Report for November. This report usually comes out on the first business day of each month. The report showed that for the ninth month in a row, the U.S. factory sector contracted.

  The ISM fell from 48.7 in October to 48.2 for November. Any number below 50 means that manufacturing is getting smaller. The red flag range is usually below 45. Manufacturing makes up about 10% of the U.S. economy.

  I often hear people say that America doesn’t make anything anymore. That’s not true. In reality, America is a manufacturing powerhouse, but the difference is that a lot fewer people do it.

  The problem lately is that the manufacturing sector has also had to deal with trade issues. Earlier this year, President Trump instituted a 25% tariff on vehicles and auto parts, but he’s added several side deals so some countries can get around the tariffs. Another 25% tariff came into effect last month on heavy-duty trucks and parts.

  From Reuters: “Only four industries in the ISM survey, including computer and electronic products, and machinery reported growth. Among the industries that contracted were wood products, transportation equipment and textile mills.”

  The U.S. economy is still in a precarious spot. The Federal Reserve meets again next week, and it’s almost certain that the Fed will cut rates again by 0.25%. I think that’s the smart move. After that, however, the outlook is unclear. Several Fed members have gone on record as being skittish about more rate cuts.

  After next week’s meeting, the Fed won’t meet again until late January, and I’m doubtful the Fed will follow up with another rate cut. There will probably be one or two rate cuts next year, but we’ll need to see more economic data first.

  As a very general rule, the Fed tends to closely follow the year on the two-year Treasury. This chart below shows that the two rates are nearly waltzing partners. Notice how the red line moves a tad earlier than the blue line.

  

  In this case, the red line, meaning the market’s line, is a bit below the Fed’s rate. That suggests that the market expects lower rates in the near future.

  Bitcoin has been plunging lately. At one point, the crypto currency dropped below $85,000. For some context, two months ago, it was over $125,000. This could be related to fears of an AI bubble.

  I’ll caution you that Bitcoin is very volatile, and it’s seen several drops like this before. In fact, it’s seen even larger drops than this. Still, this could mean that investors are growing tired of risky assets and they’re looking for comfort in more conservative areas. Bitcoin rallied nicely today.

  That’s all for now. The Federal Reserve is meeting again next week. The policy statement will be out on Wednesday at 2 pm ET. I’ll have more for you in the next issue of CWS Market Review.

  – Eddy

• Morning News: December 2, 2025
  Eddy Elfenbein, December 2nd, 2025 at 4:34 am

  Europe’s Defense Industry Grew by Nearly 14% in 2024

  Europe’s Green Energy Rush Slashed Emissions—and Crippled the Economy

  Chinese Rare-Earth Dealers Find Ways to Dodge Beijing’s Export Restrictions

  Energy Department Renames Renewable Energy Lab to Reflect Trump’s Fossil Fuel Focus

  Australian Bond Selloff May Extend as Hawkish RBA Bets Emerge

  Bank of England Warns Debt-Fueled Spending Boom Could Unravel

  Hard-Nosed Sympathy Is Beating Up Bond Markets

  Why Kevin Hassett Is Winning the Fed Chair Race Before It Has Ended

  Capitalism: Necessary, Moral Imperative

  Crypto’s Retail Traders Hit Hard as Strategy ETFs Plunge 80%

  Personal-Finance System Is Rigged Against Ordinary People, Two Economists Say

  Santander to Sell Stake in Polish Subsidiary for Around $473 Million After Erste Group Deal

  US to Take $150 Million Stake in Chip Startup Led by Gelsinger

  In the Shadow of Jane Street and Citadel Securities, Hudson River Mints Billions

  Sahm: $2,000 Tariff Checks Are a Good Idea Badly Planned

  Think of College Like You Would a Junk Bond

  College Students Flock to a New Major: A.I.

  Collect Social Security at 62 or Wait Until 70?

  Costco Joins Companies Suing for Refunds If Trump’s Tariffs Fall

  Burry Shorts Tesla on Valuation and Musk Pay Plan, Fortune Says

  Apple’s A.I. Chief, Who Failed to Deliver a Smarter Siri, Is Retiring

  OpenAI Completed Its Conversion. A New Ballot Initiative Seeks to Reverse It.

  Samsung’s Next Salvo Against Apple: A Triple-Folding Smartphone

  Netflix Offers Mostly Cash for Warner Bros. in New Bid Round

  Disney’s Succession Race Enters Final Stage as Iger’s Reign Draws to End

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