Summary – A top-down review of interesting calls and comments made last week in Treasuries, monetary policy, economics, stocks, bonds & commodities. TAC is our acronym for Tweets, Articles, & Clips – our basic inputs for this article.
Editor’s Note: In this series of articles, we include important or interesting Tweets, Articles, Video Clips with our comments. This is an article that expresses our personal opinions about comments made on Television, Tweeter, and in Print. It is NOT intended to provide any investment advice of any type whatsoever. No one should base any investing decisions or conclusions based on anything written in or inferred from this article. Macro Viewpoints & its affiliates expressly disclaim all liability in respect to actions taken based on any or all of the information in this article. Investing is a serious matter and all investment decisions should only be taken after a detailed discussion with your investment advisor and should be subject to your objectives, suitability requirements and risk tolerance.
1.Markets Last Week
We may not know much but we do know that VIX leads. The week before VIX was up 16% & reached a virtual panic level. This past week VIX fell 31%. And look how it led the broad market!
US Indices:
- VIX down 31% to 16.19; Dow up 3.2%; SPX up 3.2%; RSP up 3.1%; NDX up 4.9%; SMH up 8%; RUT up 5.5%; MDY up 4%; XLU up 2.8%;
To quote a believer:
- Seth Golden@SethCL – Fri 11-28 – In equity mkts world there is but 1 guaranteed, profitable strategy that beats mrkt... Short-VOL $VXX $UVXY looking to close at all-time low; If you don’t like the term guaranteed and profitable in the same context, join the other sheep who have missed Strategy of the Century $SPX $SPY $UVIX $VIX $SVIX $QQQ
The S&P is not at a new all-time high but something important is:
- Ryan Detrick, CMT@RyanDetrick – 11-29 – New all-time high in the S&P 500 advance/decline line. Few things are more bullish than breadth making new highs. As we said all November, new highs are still coming in 2025 and this does little to change that view.
Now to wishing an “almost” becomes an “Oh yeah!“
- Subu Trade@SubuTrade – 11-28 – This is interesting: We *almost* got a Zweig Breadth Thrust today. That’s just as bullish as the original Zweig thrust.
Another way of saying it:
- Larry Tentarelli, Blue Chip Daily@bluechipdaily – 11-28 – Over the past 5 trading days, ~95% of both $SPX and $NDX stocks closed higher. A very strong recovery underway.
Key Stocks & Sectors:
- AAPL up 2.7%; AMZN up 5.7%; GOOGL up 6.9%; META up 9%; MSFT up 4.2%; NFLX up 3.1%; NVDA down 1.1%; MU up 14%; BAC up 4.1%; C up 5%; GS up 6.7%; JPM up 5.1%; KRE up 2.2%; EUFN up 4.2%; SCHW up 2.5%; APO up 1.4%; BX up 2.6%; KKR up 3.1%.
Dollar was down 63 bps on UUP & down 68 bps on DXY:
- Gold up 4.7%; GDX up 13%; Silver up 15.1%; Copper up 5.5%; CLF up 16.4%; FCX up 7.8%; MOS up 1.3%; Oil up 2.7%; Brent up 1.5%; OIH up 3.1%; XLE up 1.2%;
International Stocks:
- EEM up 2.3%; FXI up 2.1%; KWEB up 3%; EWZ up 4.9%; EWY up 1.9%; EWG up 3.9%; INDA up 92 bps; INDY up 86 bps; EPI up 1.2%; SMIN up 1.6%;
Naturally you would expect Treasury rates to go down & Treasury ETFs to go up. They did but only modestly.
- 30-year Treasury yield down 4.4 bps on the week; 20-yr yield down 4.8 bps; 10-yr down 4.2 bps; 7-yr down 2.3 bps; 5-yr down 1.3 bps; 3-yr down 0.1 bps; 2-yr down 0.7 bps; 1-yr down 2.6 bps;
- TLT up 79 bps; EDV up 1.2%; ZROZ up 1.3%;
Is a lowest monthly settle bullish or bearish?
- Mike Zaccardi, CFA, CMT 🍖@MikeZaccardi – 11-28 – $TNX 10yr yield lowest monthly settle since Sept 2024. 4.02%
That brings to a warning-type chart from SentiTrader email titled – Bond Option Sentiment Signals Short-Term Crowding Risk.
2. Markets During the Next 5 weeks?
We begin with the clearest call with Warren Pies of 3Fourteen Research saying “expecting new all-time highs before the end of the year“.
- Yeah, we upgraded equities at the end of last week to Overweight. And we expect new all time highs. Good chance to surpass 7,000 before end of the year. …. I’ll just give you a few things to thin about. Our sentiment model, which takes many of the most important positioning sentiment things we look at, registered extreme pessimism. That’s important. Specifically we look at Inverse ETF volume as a way to look at retail capitulation. We saw Inverse ETF volumes spike to the highest level we’ve seen in two years outside of Liberation Day. And those have always marked near-term bottoms. The other thing …. is that under the surface there was a lot of pain really in this pullback. Even though the Index was down 5% …. peak to trough,… the median stock was down more than 16% from a 52-week high. So if you back out & look at what does that imply for the index, that’s usually closer to a 10% correction. So when I put all that together and then combine it with where we’re going seasonally, I think we’re set up for a very strong end of the Year.
Re Gold, he said:
- “We like Gold. We liked it all year. I think it is a secular bull market. We had a 9% pullback. … I think Gold is going to have another strong year next year – That’s a conviction prediction for us.”
The next one is Signor Tom Lee who said to CNBC’s Mike Santoli that “we’re set up for a really strong rallying year end.” His reasons are also similar to those above:
- “And I know we just came out of a pretty terrible grind. I’ve talked to a lot of PMs that have said it’s one of their worst six week periods ever uh in their career. So we know people have lost money they’ve de-risked. But we know into year end we have the positive seasonals especially given how strong October, the mid October was. You know it’s really a five to six chance that we’re going to be up 5% into year end… the second is monetary policy I think is going to shift dovish. Even if Fed chair Powell is hawkish we know it waiting in the wings is now a shadow Fed that’s dovish. Um the third is we know sentiment is going to have to chase this rally because 80% of fund managers are trailing their benchmark. And then I think the fundamental story is pretty intact. You know, as we’re doing work into next year and I think earnings visibility is going to be really good.” …
Unlike Warren Pies who was bullish on Gold, Tom Lee was bullish on Bitcoin:
- “I think it’s still very likely that Bitcoin is going to be above 100,000 before year end and maybe even above one to a new high. So, Bitcoin makes its moves in 10 days and every year. I think some of those best days are still going to happen before year end and we’re watching it right now at 895 firming up throughout the day.”
On the other hand, listen to veteran technician Mark Newton express on Fox express some misgivings about what might come:
- “I still think that it likely is going to have a pretty sharp rally between now and the middle part of January. … I don’t think we’re necessarily out of the woods just yet with regards to the market. The market certainly is comforted when the chances of a rate cut continue to increase. And we’ve heard now that Hassett being the front runner, uh, you know, we’ve seen that the chances of a rate cut now go up to over 80%. So, the market likes that. the market hates uncertainty, particularly with regards to the Fed. Uh, the closer we can get to a rate cut being priced in, the more the market will find comfort with that and rally. …. I think that likely is going to be postponed until after the Fed meeting. There’s still a lot of here’s still a lot of uncertainty, a lot of divisiveness within the Fed. Uh, we need to see that rate cut and I think the market likely rallies after that. uh the back half of December likely can be better than the first part of December.”
That brings us to the gravest risk we see for the markets & the US Economy.
3. The Volckerist-manhood & its trap
Let us quickly review what the Fed has done so far in 2025:
- September 17, 2025: The Fed made its first rate cut of the year, a 25-basis point reduction that brought the target rate to the 4.00–4.25% range.
- October 29, 2025: The Fed cut rates again by 25 basis points, lowering the target range to 3.75–4.00%.
Now the Fed is expected to lower rates again on December 10 by another 25 bps. That is not certain given the misgivings of many economic voices to whom nothing matters more than blind devotion to today’s neo-Delphic wisdom of Volkerism.
So our grave fear is that Powell Fed will cut rates by 25 bps on December 10 but make it an unwilling if not an outright hawkish rate cut. Because, based on his own statements, we feel that nothing is more important to Fed Chair Powell than public adherence to Volkerism.
So we thought it might make some sense to review what another Fed Chair did in cutting rates by 25 bps three times & see how the stock market behaved after the 3rd cut.
- September 18, 2007 – Bernanke cut the Federal Funds rate by 50 bps from 5.25% to 4.75%.
- October 31, 2007 – Ben Bernanke cut interest rates by 25 bps from 4.75% to 4.5%).
- December 11, 2007 – Bernanke cut rates again by 25 bps to 4.25% with minor effect.
How eerily similar is the above sequence – 3 rate cuts in September, October & then in December? Heck, even the actual dates are nearly identical! Sept 17 (25) vs. Sept 18 (07); October 29 (25) vs. Oct 31 (07) and NOW December 10 (25) vs. December 11 (07). And actually Bernanke cut a total of 100 bps in the above rate cuts while Powell will have only cut by 75 bps by December 2025.
Now look at the SPY chart below from August 07 to December 07. The first cut on September 07 was bullish and the SPX rallied to a new all-time high in mid-October 2007. This year, the SPX did rise to a new all-time high in October 2025 after the first rate cut in September 25.
But note the head & shoulders pattern below in October 2007 with rate cuts on September 17, 2007 & October 31, 2007 serving as the shoulders between the SPY peak head in mid-October. Notice also the fall in the S&P from November 1, 2007 until the rally from the 4th week of November 2007 into the expectations of a rate cut on December 11, 2007.
How weirdly similar is that November 2007 action to this November 2025? As then, the S&P rallied in the last week of November 2025 and may keep up that rally into the Fed rate cut expected on December 10, 2025. Then it depends on what Chair Powell says in his presser.
Already there is disagreement within the Fed about the wisdom of the 3rd rate cut of 2025 on December 10, 25. So, in our opinion, the probability of Chair Powell telling us to not count on a 4th rate cut in January 26 is high. If he does, then the S&P might face a tussle between that disappointment & the built-in momentum.
(SPY: August 2007 – December 2007)
The real risk in our judgement is that Powell’s belief in Volkerism – stay firm – don’t cut rates before the data so dictate“ – is more intense & religious than Bernanke’s own belief in Volkerism. (We think Bernanke voiced Volkerisms because politically it was consistent with the given believes of Paulsen & Republicans).
We tend to believe in the Wave Method of Economics, especially once momentum so dictates.
- “The Wave method says that big economic moves are neither discrete nor do they occur in steps that you can react to. When economies start moving, they move in wave patterns. And following the waves does NOT save you. You merely keep following the down wave & sink. The ONLY way to save the economy is to lead the fall in waves with powerful liquidity to slow down the momentum of the wave and that, in economic terms, means add rate cuts & liquidity ahead of the next dip in growth. This is 100% anti-Volckerist.”
Hopefully, the 3rd rate cut in December 2025 proves helpful & it stabilizes the economy. What might better stabilize the affordability crisis in 70%-80% of America is the $2,000/- injection currently planned. The sooner it gets in the hands of the American people, the better the economy will be.
And double hopefully, our fears will be proved groundless &, thanks to the Zweig Breadth Thrust among others, the stock market rallies to a higher new all-time high by year-end.
4. Lincoln Riley & Ryan Day
Yes, Michigan lost badly to Ohio State this weekend. But we are not sad. Indeed, we are thankful to the first 10-12 minutes of the first half when Michigan got the lead playing tough & hard. Then it was all over in the second half.
We & other Michigan faithful were aware of this possibility since Oct 11, the day of the USC-Michigan game. One of the sideline reporters had asked Lincoln Riley (USC head coach) about why he was confident about playing Michigan. Riley told her “this year, they don’t have the two giants in the middle“, meaning Graham & Grant, the two mammoth defensive tackles of Michigan that shut down USC’s running game & delivered QB sacks in 2024. Riley proved correct and USC beat Michigan by 18 points in the 2nd half.
OSU also beat Michigan by 18 points for the same reason. This year, the Michigan defensive line did not even come near the OSU quarterback. And the widely touted young freshman QB at Michigan didn’t measure up. But there is always next year.
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