Market Report.
🎄 Before we start sharing the daily stream of economic data and financial reflections, we want to wish you a happy Christmas.
📈 Yesterday we learned of the revision to US economic growth for Q3 2025 — and, as expected, it was revised higher. The US economy did not grow by 3.8% in Q3, but by an impressive 4.3%.
💪 These are remarkable figures and strongly suggest that the US economy is far from showing signs of weakening, contrary to what many financial newspapers were claiming at the beginning of the year. As you know if you follow us, we argued the opposite — and once again, we were right.
📉 The Core PCE inflation was also published, in line with expectations, turned out to be 2.9%, but above the previous period of 2.6%.
🧠 Nevertheless, U.S. consumer confidence deteriorated in December, falling 3.8 points to 89.1 on the Conference Board’s index. This was lower than the 91.0 economists had forecast. The deterioration in consumer confidence suggests households are growing more concerned about the economic outlook, which could lead to a pullback in spending in the coming months.
🏛️ Donald Trump said he expects the next Federal Reserve chair to cut interest rates when markets are performing well, adding that anyone who disagrees will “never” lead the U.S. central bank. Separately, Treasury Secretary Scott Bessent supported the idea of revisiting the Fed’s 2% inflation target once inflation is sustainably brought back to that level.
📢 Trump said in a social media post that he wants a new Fed chair who will lower rates if the market is performing well, not “destroy the market for no reason whatsoever.” He wants a Fed chair who will align with his economic priorities, rather than one who may raise rates to combat inflation, which Trump sees as “destroying the market.”
💻 As 2025 began, the digital asset industry was optimistic about its prospects under the Trump administration. President Trump had received significant campaign support from the crypto industry and was promising a more crypto-friendly regulatory approach. Major financial firms were finally embracing the crypto sector, lending it more mainstream legitimacy.
🚀 In the early part of the year, this optimism translated into real results for the industry: Crypto prices surged, digital asset companies rushed to go public, and legal cases against industry figures were dropped or pardoned. This suggested the crypto sector was poised for a major breakout and increased mainstream adoption under the new administration’s policies.
📉 However, as we approach the end of the year, investors are facing one of their biggest disappointments: the sharp decline in crypto markets. Bitcoin is now more than 30% below the highs reached earlier this year and, for the time being, shows little momentum for a meaningful recovery.
🔁 That said, the crypto market has endured far worse periods in the past, and many seasoned crypto participants are likely to view this episode as just another bump in Bitcoin’s meteoric journey.
🇯🇵 Over night we had in Japan the BoJ’s monetary policy meeting.
🏦 The BOJ Governor Kazuo Ueda’s vague comments on the timing of the next interest rate hike have riled up yen bears, but there are firm clues the central bank could raise rates sooner than markets expect. There is a slim chance the BOJ could hike rates as soon as April 2026, though the timing will depend on upcoming data. Other analysts expect the first hike in April followed by another in October.
📊 The central bank maintained its pledge to continue raising rates and projected firms will keep raising pay next year, underscoring its conviction that Japan will durably hit its 2% inflation target.
🔩 Copper prices surged above $12,000 a ton for the first time, extending a strong bull run driven by mine outages and tightening supply. At the same time, copper is accumulating in U.S. warehouses as buyers rush to secure shipments ahead of potential new tariffs under Donald Trump, creating an arbitrage trade and distorting global flows.
🌍 According to JPMorgan, China currently holds a dominant share of global inventories: 96% of copper, 75% of aluminum, 70% of corn, 54% of wheat, 30% of soybeans, and 22% of crude oil.
🧩 Interesting year‑end reflections on monetary policy.
🇪🇺 First, European interest rates stood above those of the United States from the 2009 financial crisis until 2015, coinciding with the end of US quantitative easing and the launch of QE in Europe.
⚖️ Second, from 2015 to 2020, interest rates in both Europe and the US remained largely synchronised, providing a period of balance and relative neutrality for capital flows between the two regions.
🔥 Third, following the inflationary shock of 2022, it is now US interest rates that stand above European rates — a relatively unusual configuration in historical terms.
✅ Conclusion: The Federal Reserve is unlikely to tolerate significantly higher financial costs than Europe for an extended period — President Trump will not allow it. This suggests that Fed stimulus is likely to continue into 2026, supporting a bullish market environment, while Europe may face renewed challenges, particularly a loss of competitiveness as the current interest‑rate advantage begins to fade.
🔄 Subdued oil prices plus a 2026 easing cycle from the Fed could shift market leadership away from the narrow mega-cap/AI trade that dominated 2023-2025, and toward more cyclical sectors.
🛢️ The “cheap oil” scenario refers to forecasts of oil trading below prior cycle highs in 2026, due to strong non-OPEC supply and moderate demand growth. This acts as a tax cut for energy-intensive industries and keeps headline inflation contained.
📉 The expected Fed cuts through 2026 would reduce discount rates and debt-service burdens, historically supporting performance in rate-sensitive cyclicals like banks, industrials, consumer discretionary, and materials.
🏭 Sectors highlighted as potentially benefiting include industrials, consumer discretionary, financials, and select materials. Regionally, European and Japanese cyclicals are seen as particularly leveraged to global trade and capex.
Geopolitics.
🇩🇪 The German government has signaled that the country is facing challenging years of austerity ahead. This comes as Germany is spending tens of billions of euros on supporting Ukraine and managing the influx of immigrants. German finance minister has warned of “tough decisions” and a need for “painful cuts” to government spending in the coming years, showing a clear disconnection between the government’s rhetoric around austerity and its actual spending on these geopolitical and immigration-related priorities.
🇮🇱 Israel’s growing ties with Taiwan — especially in missile defense cooperation — are quietly reshaping regional geopolitics and raising concerns in Beijing. In this sensitive context, even limited defense transfers risk undermining years of careful diplomatic balancing.
📂 Trump campaigned on exposing the “Epstein files” as proof of a corrupt elite and then signed the Epstein Files Transparency Act, which set a 30‑day deadline for broad disclosure. In the 11 months since taking office, his team has mishandled the rollout: shifting positions, signaling full transparency, then presiding over an incomplete and delayed release that angers both transparency advocates and parts of his own MAGA base.
⚖️ The Epstein Files Transparency Act was passed by Congress with overwhelming support (House 427–1, Senate unanimous) and mandates the attorney general to release all unclassified Epstein-related records in a searchable, downloadable format within 30 days. After initially opposing the bill and labeling it a partisan “hoax,” Trump signed it on 19 November 2025, triggering the mid-December deadline.
❓ Now the slow, messy release undermines Trump’s outsider‑truth‑teller brand and raises questions about whether his own circle is being shielded.
🕵️ Numerous social media users are reporting that hidden text appears when certain redacted documents are copied and pasted into a new file, suggesting the redactions can be reversed. The claims allege that the DOJ used Adobe for redactions that were ineffective, allowing text to be revealed through copy‑paste and search functions. According to these online reports, the unredacted text is alleged to reference bribery and payments intended to silence victims and witnesses.
🇫🇷 U.S. President Donald Trump publicly urged French President Emmanuel Macron to raise the prices of medicines, warning that failure to comply would prompt Washington to impose a 25% tariff on all French exports to the United States — a move that, if enacted, would threaten to destabilize trade flows and add fresh pressures to an already fragile French economy.
📌 Market view.
📈 As anticipated in our latest reports, S&P 500 futures have broken to new all‑time highs, pushing beyond 6,950 points. Nasdaq 100 futures have also moved higher, though not at the same pace as the S&P 500, and are currently trading near 25,800 points.
💵 The US Dollar Index (DXY) has continued to weaken, losing the 98‑point support level. This has allowed EUR/USD to briefly reach 1.18, before pulling back to around 1.1785.
🇪🇺 European markets have also managed to advance. DAX 40 futures are trading near 24,500 points, while Euro Stoxx 50 futures have been less optimistic, holding around 5,770 points.
🛢️ Crude oil continues its upward trend, with Brent moving above $62 per barrel.
🥇 Gold futures surged above $4,550 per ounce yesterday and are now attempting to consolidate above the $4,500 level.
₿ The clear underperformer remains Bitcoin, which continues to struggle to stabilise and has slipped once again, falling below $87,000.
