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.December 17 – What happened?
What happened did actually happen on December 18! A nice 3-day rally into College Football Playoffs:
- SPY rallied 1.4% from Dec 17 close of 680.59 to 671.40 on Dec 19 close;
- QQQ rallied 2.8% from Dec 17 close of 600.41 to 617.05 on Dec 19 close;
- SMH rallied 5% from Dec 17 close of 339.24 to 356.23 on Dec 19 close;
- NVDA rallied 5.9% from Dec 17 close of 170.94 to 180.99 on Dec 19 close;
Why? Below are many valid reasons from the cognoscenti. But, in our humble & simple opinion, the markets followed the 17.9% rally in Micron from Dec 17 close to 265.92. Micron not only surprised on earnings but its outlook squelched the rampant earnings fear re AI & Semis then prevalent in the market.
And how did the S&P close out the week?
- Trader Z@angrybear168 – Dec 20 – $SPY weekly tension closed bullish, bears never got a chance.
The above is fine but what about volatility, the index that seems to have more causal impact on markets?
- Zee C O N T R A R I A N@ZeeContrarian1 via Trader Z – Dec 20 – Both the $VIX and $VVIX are near or at yearly lows. This is not a contrarian signal; it actually signals that most protection has been dropped as we move into one of the most bullish parts of the year, the Santa rally. Barring any new negative data, expect the year-end rally to continue.
And,
- Seth Golden@SethCL – Dec 17 – Clock⏰starts… NOW. – 3 of last 4 times it spiked above .92, $SPX pullback ended and markets rallied to all-time highs. Yesterday the CBOE P/C Ratio finished .94 $CPC $SPY $ES_F $QQQ $NYA $VIX $NVDA $AAPL $SMH $AMZN $CPCE
But what about bond volatility?
- The Market Ear@themarketear – Dec 19 – SPX loves falling bond volatility — and the MOVE just crashed. https://zerohedge.com/the-market-ear/bond-vol-screaming-aths-spx
All this quant stuff is fine but simple minds would like to know if new money also came in last week?
- Mike Zaccardi, CFA, CMT 🍖@MikeZaccardi – Massive $98.2 billion equity inflow last week –GS The subject of today’s Daily Insight blog post for my X Subscribers only.
At this point, we have to include an “interesting” chart we saw on pre-Micron morning of December 17:
- Ryan Detrick, CMT@RyanDetrick – Interesting bullish chart forming via @FrankCappelleri in his note this AM.
Having looked forward above, why not look backwards to see what happened? The long & detailed post below is about market that began a calendar year with a 10% drawdown, followed by a 20% rally & closed the year positive. We present it below in a condensed form & from 1940 onwards without missing the key message:
- Wayne Whaley@WayneWhaley1136 – Dec 20 – THE TEN WHALEY S&P REVERSAL YEARS LIKE 2025
…. The seven cases since 1940 were each followed by double digit gains in the following years and did not experience a 10% Next Year Drawdown, as measured from year end.
- 3. The 1942 case was followed by three consecutive positive years, 19.4, 13.8 & 30.7%.
- 4. The 1949 case was followed by three consecutive double-digit years, 21.9, 16.3 & 11.8%.
- 5. The 1970 case was followed by two double digit years, 10.79 & 15.6%.
- 6. The 1982 case was followed by seven consecutive positive years with an avg annual gain of 14.5%.
- 7. The 2009 case was followed by five consecutive positive years with an avg annual gain of 13.4%.
- 8. Seven of the following nine years after the 2016 case were double digit including the following 19.4% year.
- 9. The 2020 case saw four of the following five years up double digit 26.9, -19.4, 24.2, 23.3 & 16.5% and one could argue is still in progress.
What about the Christmas Rally, you ask?
- Subu Trade@SubuTrade – The “official” Santa Claus Rally begins on December 24. It covers the last 5 trading days of December + the first 2 of January. $SPX was up 77% of the time. The last 2 were negative, but there has never been a third straight down Santa Claus Rally.
2. Jobs, Inflation, Shelter
A direct statement in RenMac’s weekly from Neal Dutta:
- “Inflation is one of the most significant & important inputs for forward $SPX returns (note T-stat). As inflation moves lower/forward returns move higher. It’s very beneficial in the bottom 20th percentile.“
More detail & a chart from Warren Pies of 3Fourteen Research:
- Warren Pies@WarrenPies – Dec 18 – INFLATION – Last CPI report of 2025 and our thesis entering the year has been validated . All 3 broad vectors: Shelter, oil, and labor – disinflating . Shelter inflation dropped to the lowest YOY reading since 2021. Looking at CoreLogic SF rents, more shelter disinflation is ahead
And, the bottom line from Neal Dutta in RenMac’s weekly clip:
- “the simplest explanation is usually what it is and at the end of the day unemployment’s going up and 3:10 inflation’s going down. So the Fed should cut. …. Uh you know so to me it’s about balance of risks and 5:14 I think the risks are that unemployment keeps going up and that inflation keeps going down and um this is exactly why I think the 5:19 Fed should be uh signaling more rate cuts. Um but they’re not.“
That brings us to the most serious problem in America. It is what a true & sensible expert also thinks & what he suggests to Liz Claman of Fox Business in the excellent interview below:
- “… I actually don’t think inflation is going to be the problem in the future; I think we have a labor problem in the country and a significant labor problem 0:50 ….. If you get underneath the surface and you look at what I think is a real problem, if you take youth unemployment, people 20 to 24 years old, it’s 8.3%. … Millennials are having a super hard time today. If you take lower skilled jobs, you take the U6, what was it? 8.7% unemployment, “
- “we have an incredible bifurcation in the economy today. Young people having a really hard time. You saw in the Michigan survey, it’s the hardest time getting a job since they’ve been doing the survey. It’s very, very challenged. We have low income young people“
- “small business are really struggling. And I think that is the problem. And I think that
unemployment rate is going to keep trending up“
Then Rieder focused on housing:
- “I think interest rates will come down over the next year. I think what’s really important for the Fed is can you get the 10-year note down to 3.5% to 4%, and keep it constant?. … that gets the mortgage rate down; “
- “housing is such a big deal for a couple of reasons. If you get housing velocity moving, it increases labor mobilities. Nobody can sell their house. … You can’t unlock the value of your house. …. You put three people to work for every home built in this country. That really helps. That is the place you start. Listen, then I think there are things to do with student loans. I think there’s things to do in a in a bunch of different areas. And listen, over time, …. I’m involved in a lot of urban education. My school’s in Newark. … education is the key and because you don’t really know how the transition is going to but lower skill jobs are going away.”
Then Rieder discussed interest rates:
- “… I like owning interest rates in the sort of the middle part of the yield curve, the 5-year part. They had a great year. There is a ton of money sitting in cash. There’s eight trillion dollars sitting in money market funds.“
- “… I think markets are not pricing January after the Fed just went 26% odds. That’s not very much. I think the Fed should get the equilibrium funds rate should be closer to three. If you take five-year inflation break evens in expectations on inflation, it’s 2.28%. If you get the funds rate to three, you’re still well above the expected rate of inflation. So, I think you have to get there.”
And Rieder did talk about what is driving consumption in the economy:
- “first of all you have fiscal tailwind behind the economy. We have tax receipt dynamics that are at play. You’ve got AI capex spend that’s significant. However, you have an economy that’s operating well on a couple of cylinders. What’s driving consumption is people 55 and above older savers and it’s incredible about how consumption is is concentrated there.”
Kudos to Liz Claman for keeping this conversation honest & real by letting Rick Rieder say what he thought was most important to our economy & not only to the stock market. Perhaps that is because Fox has a bigger & deeper reach within America than others that only cater to the multi-millionaire class & are obedient to the coterie that virtually owns the Fed-watching community.
3. Fed Governor Waller & CNBC’s Steve Liesman
Look what Steve Liesman said to Fed Governor Waller during their conversation on December 17:
- Liesman “3:24 FOR THE RECORD, YOU WANTED TO CUT IN JULY.
Normally, you would expect a questioner to admit that Waller was indeed right then & a more honest questioner would have even congratulated Waller on being right.
Now look at the comments of Gov. Waller that he made on June 20 to the same Steve Liesman:
- “Right now the data in the last few months has been showing that trend inflation is looking pretty good even on a 12-month basis; So I label these good-news rate cuts when inflation comes down to target we can actually bring rates down; … we can do this as early as July.. “
The real question is why didn’t Steve Liesman see the wisdom in what Gov. Waller said on June 20? And why now, even after Gov. Waller has been proven right, can’t Steve Liesman acknowledge that Gov. Waller was right.
How did we describe some Fed-watchers above – “obedient to the coterie that virtually owns the Fed-watching community“? Do you think that describes Steve Liesman at least to a small extent? Let us make it easier for you – watch the entire conversation on June 20, 2025 between Steve Liesman & Gov. Waller below:
Look what we wrote back on June 22, 2025 about the above “interview”:
- “Watch again and notice the biased interrogation Mr. Waller was subjected to by CNBC’s Steve Liesman. Instead of bringing Waller’s views to CNBC’s viewers, Liesman tried mightily to oppose what Waller was saying. Now open up any interview by Steve Liesman of Fed Chair Powell & notice the contrast.”
Then we added in that June 22 commentary:
- “Google Steve Liesman and you will see him referred to as senior economics reporter for … CNBC. It appears that Liesman considers himself to be a mouthpiece for the current Chair of the Fed. Is that why he came out determined to oppose any thing Waller said that was at odds with the Powell view? More importantly, does CNBC Management want a “economics reporter” or a mouthpiece for the current beliefs of the reigning Fed Chair?”
The rudeness & partiality of Steve Liesman was not the fault of Fed Chair Powell. But it is now clear to almost all except perhaps Steve Liesman & the coterie of Fed-watchers that Fed Chair was wrong in his analysis in June 2025. We asked why Fed Chair Powell couldn’t do what, now, seems the right thing to have done? Our view expressed then was:
- “Our thinking is that Powell is over-over-conscious of his lack of academic pedigree in economics & so he simply can’t bring himself to being publicly proven wrong. So much easier to be blamed for being overly-orthodox as most religious heads would prefer.”
- “We don’t have much experience with Religious Dogma & its Orthodox interpretations. But we have seen many backward-intelligent people & a few forward-intelligent people. Powell, as we pointed out a few weeks ago, is most definitely a backward-intelligent thinker and, as such, he demands to see evidence before he gets the confidence at act. This is why he is obdurate & unflinching in his refusal to lower rates until he sees the evidence. He doesn’t seem to realize that, by the time he sees evidence & can show it to people, he might have inflicted real damage on the US Economy.“
It seems now clear to many that the intransigence of Chair Powell & the resultant delay in cutting rates has inflicted damage on the US Economy. How much? The economy itself will answer it shortly.
Now we leave you with the actual interrogation by CNBC’s Steve Liesman of Fed Governor Waller below:
We believe that Fed Chair Powell is a gentleman & he embodies an institutional respect for each & every one of his Governors. With that belief we respectfully suggest that Chair Powell recommend to all his Governors that he they desist from speaking with Steve Liesman either on or off the record. CNBC has other sensible, smart & appropriately polite people that can take Mr. Liesman’s place while Mr. Powell has the Chair. Then the next Fed Chair can review Mr. Liesman’s case, hopefully after putting a code of conduct in place for all who speak with Fed Governors on record.
For the record, we have heard & watched Steve Liesman for years and, until this year, have liked & respected him for his gentle manner of interviewing & his acumen. But we can’t recognize that old Steve Liesman in the one we saw this year & the one we saw speak publicly with Gov. Waller. Who knows the skills he displayed against Governor Waller, he might be able to display in the Liesman vs. Santelli verbal fights that had become popular on CNBC.
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