“Trade what’s happening… not what you think is gonna happen.“ — Doug Gregory

1. U.S. Enlists Mexico, EU and Japan in Its Minerals Race With China — The U.S. has agreed to work with Japan, Mexico and the European Union on the development of critical minerals used in industries such as defense, the Trump administration said on Wednesday.
The move builds on President Trump’s efforts to combat China’s dominance in the sector. Under the proposed agreements, the nations will work together to identify critical minerals necessary for certain industries and develop policies to encourage their mining and processing into products like rare earth magnets, U.S. officials said. Such minerals are used in components critical for the production of high-end military technologies and consumer products such as cars.
2. Bitcoin Drops Below $70,000 as ‘Forced Deleveraging’ Accelerates — Bitcoin tumbled well below $70,000 as the unwinding of leveraged bets and broader market turbulence deepened a selloff that’s hammered cryptocurrencies over the past three weeks. The downturn has also erased all of Bitcoin’s gains since the election of President Donald Trump, whose crypto-friendly stance had fueled the token’s meteoric rise last year. But the market started cracking this month as rising geopolitical tensions sent tremors across global financial markets and curbed risk taking. That sparked Bitcoin’s precipitous decline from mid-January and set off a self-reinforcing cycle of selling as funds liquidated assets to meet redemptions and unwind leveraged bets.
3. Job Openings Sink to a Post Pandemic Low — The number of job openings in December fell to the lowest level in eight years, excluding the COVID-19 pandemic era, underscoring the fragility of the U.S. labor market in the new year. U.S. job openings dropped by 386,000 in December to 6.5 million, the government said in a report delayed by federal shutdowns. That’s the lowest total since 2017, excluding the 2020-21 time frame. The exceedingly small gap between hires and separations illustrates just how weak the labor market has gotten since last spring. The economy is barely adding net new workers.

The week ahead — Economic data from Econoday.com:

“Do More of What Works and Less of What Doesn’t” — unknown

1. Fed Holds Rates Steady, Nods to Stabilization in Jobless Rate — Federal Reserve officials left interest rates unchanged and pointed to improvements in the US economy as they signaled a more cautious approach to potential future adjustments. The Federal Open Market Committee voted 10-2 Wednesday to hold the benchmark federal funds rate in a range of 3.5%-3.75%. Governors Christopher Waller and Stephen Miran dissented in favor of a quarter-point reduction. The upgraded assessment of the labor market is likely to hold expectations for a near-term rate cut at bay, despite escalating pressure from the Trump administration. Heading into the meeting, investors saw another cut as unlikely until at least June.
2. Meta Reports Record Sales, Massive Spending Hike on AI Buildout — The company said capital spending would reach up to $135 billion in 2026, about 20% higher than Wall Street expectations and nearly double last year’s investment level. Chief Executive Mark Zuckerberg plans to build new data centers around the globe, release new cutting edge AI models and further infuse the core advertising business with AI this year.
3. US Trade Gap Widens From Smallest Since 2009 as Imports Rise — The goods and services trade gap nearly doubled from the prior month to $56.8 billion, Commerce Department data showed Thursday. The 94.6% widening was the largest since 1992, while the shortfall for the month exceeded all projections in a Bloomberg survey of economists. That was the case again in November, with a surge in inbound shipments of pharmaceuticals and a slide in gold exports. Overall imports increased 5%, also boosted by capital goods, such as computers and semiconductors. The latest trade data will help economists firm up their estimates for fourth-quarter gross domestic product. After the figures, the Federal Reserve Bank of Atlanta’s GDPNow forecast net exports would add 0.65 percentage point to fourth-quarter growth, now estimated at 4.2%.
4. Trump Picks a Reinvented Warsh to Lead the Federal Reserve — Warsh, who served on the US central bank’s Board of Governors from 2006 to 2011 and has previously advised Trump on economic policy, would succeed Jerome Powell when his term at the helm ends in May. It marks a comeback for Warsh, 55, whom the president passed over for the top job in 2017 when he selected Powell. If confirmed by the Senate, the former Fed governor will take charge of US monetary policy at a time when many economists and investors see its traditional insulation from elected officials as being under threat from the White House. Warsh aligned himself with the president in 2025 by arguing publicly for lower interest rates, going against his longstanding reputation as an inflation hawk.

The week ahead — Economic data from Econoday.com:

“If most traders would learn to sit on their hands 50 percent of the time, they would make a lot more money.” — Bill Lipschutz

1. US Pending-Home Sales Plunge by Most Since Start of Pandemic — An index of contract signings decreased 9.3% to 71.8 last month, according to data released Wednesday by the National Association of Realtors. The decline was regionally broad and well below the lowest estimate in a Bloomberg survey of economists. Housing activity typically slows in winter
months and picks up more in the spring selling season. While NAR adjusts the data for these patterns, the drop was still the largest for any December in data back to 2001.
2. US Economy Expanded at Revised 4.4% Pace in Third Quarter — Inflation-adjusted gross domestic product, which measures the value of goods and services produced in the US, increased at a revised 4.4% annualized rate, the fastest in two years, according to Bureau of Economic Analysis data out. The report showed one of the strongest back-to-back quarters for growth since 2021, when the economy was still recovering from the pandemic. Companies dialed back the tempo of goods imports after an early-year rush to beat President Donald Trump’s sweeping tariffs. Consumer and business spending have also held up well despite erratic trade policies.
3. PCE Inflation Meets Expectations. Fed Is Likely to Hold Rates Next Week — The core personal consumption expenditures price index, which excludes food and energy, rose 0.2% in November from the previous month and 2.8% from a year earlier, the Bureau of Economic Analysis reported Thursday. Those figures match FactSet estimates for a 0.2% monthly increase and a 2.8% annual gain. Headline PCE increased 0.2% on the month and 2.8% year over year, compared with expectations for a 0.2% monthly rise and a 2.8% annual increase. Because the data were delayed by the record-long government shutdown, the numbers reflect conditions from November, already several months old. While PCE is the Fed’s go-to inflation metric, the age of the report means officials are likely to place less weight on this reading than they would under normal circumstances.

The week ahead — Economic data from Econoday.com:

“I’m not better than the next trader, just quicker at admitting my mistakes and moving on to the next opportunity.” — George Soros

1. US Core CPI Rises 0.2%, Bucking Estimates for Bigger Rebound — The core consumer price index, excluding the often volatile food and energy categories, increased 0.2% from November, according to Bureau of Labor Statistics data out Tuesday. On an annual basis, it advanced 2.6%, matching a four-year low. Economists said that data was artificially depressed by the record-long government shutdown because the BLS couldn’t collect prices in October and assumed no increases in key housing metrics. November data were also collected later than usual and could have been affected by holiday discounts. Several categories showed price declines, including appliances and used cars and trucks. Vehicle repair costs fell by the most on record. Core goods prices, which exclude food and energy, stagnated last month — also defying expectations for a rebound.
2. Germany Leads Military Mission in Greenland in Response to Trump — Germany will take the lead of European nations sending military personnel to Greenland after Denmark said its meeting with top US officials intent on controlling the world’s biggest island revealed that a “fundamental disagreement” remains. France will participate in the joint drills in Greenland this week, according to the defense ministry’s press office, which provided no details. In addition, Sweden is sending “several officers,” Norway two persons and the UK one officer. The reconnaissance group is visiting the island ahead of the planned “Arctic Endurance” training exercise, UK Defense Minister John Healey told reporters in Sweden. Denmark on Wednesday said the drill with North Atlantic Treaty Organization allies would become a permanent fixture.
3. Trump Threatens Insurrection Act as Minnesota Protests Grow — The 1807 law allows the president to use regular military troops on US soil for domestic law enforcement. It was last invoked during the 1992 riots in Los Angeles. Trump’s ultimatum could further fray tensions in Minneapolis, where on Wednesday a federal officer shot a man in the leg. The incident occurred one week after the fatal shooting of a local woman who was a US citizen by an ICE agent, which touched off the demonstrations.
4. Trump to Hit European Nations With 10% Tariffs as He Presses for Sale of Greenland — The president, in a social-media post on Saturday, said the 10% tariffs would go into effect on Feb. 1 and would apply to all goods sent to the U.S. from Denmark, Norway, Sweden, France, Germany, the United Kingdom, the Netherlands and Finland. The tariffs will increase to 25% on June 1 and remain in place until a deal is reached for what he called the “complete and total purchase” of Greenland, Trump said. The president has said it is necessary for the U.S. to take control of Greenland to counter China and Russia. In his social-media post, he said the U.S. is “immediately open to negotiation” with Denmark and the other European countries, casting the tariff threat as leverage to secure the Arctic territory. Greenland Prime Minister Jens-Frederik Nielsen said recently that his constituents don’t want the island to be owned or controlled by the U.S.

The week ahead — Economic data from Econoday.com:

1. US Job Openings Decline to Lowest Level in More Than a Year — The number of available positions decreased to 7.15 million in November from a downwardly revised 7.45 million in the prior month, Bureau of Labor Statistics data showed Wednesday. The figure was below all estimates in a Bloomberg survey of economists. The pullback in openings reflected fewer opportunities in leisure and hospitality, health care and social assistance, as well as transportation and warehousing. The number of hires declined to the lowest since mid-2024, while layoffs also eased. The number of layoffs in November declined to a six-month low after climbing in the prior month to the highest level since 2023, the JOLTS report showed. At the same time, there was a pickup in the number of Americans who voluntarily left their jobs in industries including accommodation and food services, as well as construction
2. US Trade Gap Shrinks to Smallest Since 2009 on Imports Drop — The goods and services trade gap shrank 39% from the prior month to $29.4 billion, Commerce Department data showed Thursday. The deficit was smaller than all estimates in a Bloomberg survey of economists. The report was delayed for over a month because of the federal government shutdown. Imports decreased 3.2%, reflecting declines in inbound shipments of medication and nonmonetary gold. Imports of pharmaceutical preparations dropped to the lowest since July 2022. The value of all US goods and services exports rose 2.6% in October. The figures aren’t adjusted for inflation. Companies frontloaded imports of drugs in September, likely in anticipation of President Donald Trump announcing what would be a 100% tariff on pharmaceutical imports to start Oct. 1, which ended up being delayed. Many companies were able to avoid the duty by striking deals with the administration in exchange for promises to lower drug prices.
3. US Payrolls Rise a Below-Forecast 50,000, Unemployment Lower — Nonfarm payrolls increased 50,000 last month after downward revisions to the prior two months, according to Bureau of Labor Statistics data out Friday. The unemployment rate edged down to 4.4%, settling back after the record-long government shutdown. The gradual cooling in the US labor market prompted the Federal Reserve to cut interest rates three straight times to close out 2025. While it was one of the weakest years for hiring since 2009, employers have also largely refrained from layoffs. The December data also suggest the labor market remained fragile at the end of the year, and the outlook for hiring is guarded. Economists see another year of limited job opportunities and cooling pay gains, likely exacerbating voters’ affordability concerns going into this year’s midterm elections.
4. SSupreme Court Sets Wednesday for Next Opinions Amid Tariff Watch — The US Supreme Court said Wednesday will be its next opinion day after leaving the market in suspense Friday on the fate of President Donald Trump’s tariffs, his signature economic policy. Arguments on Nov. 5 suggested the court was skeptical that Trump had authority to impose the tariffs under a 1977 law that gives the president special powers during emergency situations. A ruling against Trump on tariffs would undercut his signature economy policy and deliver his biggest legal defeat since returning to the White House. At issue are Trump’s April 2 “Liberation Day” tariffs, which placed levies of 10-50% on most imports, along with duties imposed on Canada, Mexico and China in the name of addressing fentanyl trafficking.

The week ahead — Economic data from Econoday.com:

Happy Holidays and Wishing Everyone a Healthy and Prosperous New Year

1. US Economy Grows at Fastest Pace in Years With 4.3% GDP Gain — Inflation-adjusted gross domestic product, which measures the value of goods and services produced in the US, increased at a 4.3% annualized pace, a Bureau of Economic Analysis report showed Tuesday. That was higher than all but one forecast in a Bloomberg survey and followed 3.8% growth in the prior period.
The BEA was originally due to publish an advance estimate of GDP on Oct. 30, but the report was canceled due to the government shutdown. The agency typically releases three estimates of quarterly growth — fine-tuning its projections as more data comes in — but it will only release two for the period leading up to the longest shutdown on record.
2. Time just jinxed the AI stock-market rally with its 2025 person of the year — Pioneered by analyst Paul Macrae Montgomery in his newsletter “Universal Economics,” the Time Magazine Cover Indicator — also known more generally as the Magazine Cover Indicator — posits that if a popular investment theme makes it to the cover of a general-interest publication like Time magazine, then the end is probably near. Time magazine announced its selection for person of the year. For 2025, it awarded the honor to a group of people, as it sometimes does: “The Architects of AI.” Brent Donnelly, president of Spectra Markets, crunched the numbers, and found that the person-of-the-year track record as a counterindicator is actually quite remarkable. Although the sample size is small, by Donnelly’s count — there have only been nine instances so far, including this year’s, in which the Time cover represented an investable person, company or category — it has been surprisingly effective. Investments, whether in companies or trends, tied to a person-of-the-year pick were higher one year later just 13% of the time, according to Donnelly. After two years, that figure rose to 25%. The only example that didn’t sell off during the following year was Intel Corp., whose co-founder and then-CEO Andy Grove was tapped as 1997’s person of the year. Intel shares were hammered a few years later, when the dot-com bubble burst.

“The market is a device for transferring money from the impatient to the patient.” – Warren Buffett

1. U.S. Unemployment Rose in November ​Despite Job Gains — Nonfarm payrolls increased 64,000 in November after declining 105,000 in October, adding to the choppiness seen in the labor market in recent months. The unemployment rate rose to 4.6%, according to Bureau of Labor Statistics data out Tuesday, continuing its upward climb as many out-of-work Americans struggled to land new jobs. The decline in October payrolls, which was the largest since the end of 2020, was due to a 162,000 plunge in federal government employment as workers who accepted the Trump administration’s deferred resignation offers officially dropped off payrolls.Fed officials are split over whether more cuts are needed next year. The median Fed official penciled in just one reduction in 2026, according to rate projections released alongside the decision, but some policymakers see no further cuts. Traders, meanwhile, have been counting on two.
2. October Retail Sales Fell Flat. Weak Car Sales Weighed On the Data— Retail sales were virtually unchanged in October from September, according to data released Tuesday by the Census Bureau. Economists polled by FactSet expected a 0.05% increase. Sales rose 3.5% on an annual basis. September’s headline retail sales were revised lower to a 0.1% monthly increase from a 0.2% increase previously. That weaker vehicle sales weighed on October’s figure—sales at car and parts dealers were down 1.6% from September—wasn’t a surprise. Many people rushed to buy a car earlier this year, fearing tariffs would push costs prohibitively higher later on.
3. US Core CPI Eases to Four-Year Low in Shutdown-Impacted Report — The core consumer price index, which excludes the often-volatile food and energy categories, increased 2.6% in November from a year ago, according to Bureau of Labor Statistics data out Thursday. The overall CPI climbed 2.7% in November from a year ago. The longest-ever government shutdown prevented the BLS from collecting much of the October price data. That not only limited the agency’s ability to determine month-over-month changes for the broader measures of inflation, but some economists noted it likely impacted the annual November figures as well. Despite numerous caveats, the report offers some hope that inflationary pressures are easing after remaining stuck in a narrow range since early this year. The BLS said the core CPI rose just 0.2% over the two months ended in November, restrained by declines in costs of hotel stays, recreation and apparel. Prices of household furnishings and personal care products rose.
4. Mortgage Rates Are Falling but Owners Still Won’t Sell — Nearly 30 million households, or 54% of primary mortgage-holders, have mortgage rates at or below 4%. They were able to buy homes or refinance their mortgages when rates fell to 3% or lower in 2020 and 2021.
Now, many of those who want to move don’t feel it is worth it to buy a home and take on mortgage rates that have doubled. This “lock-in effect” has helped freeze the housing market for three straight years, suppressing the number of U.S. homes for sale and keeping inventory well below historic levels for most of that period. The Federal Reserve cut short-term interest rates this month but signaled it might be done with further rate cuts for now. Mortgage rates edged lower to 6.21% this week, holding near the one-year low reached in October, Freddie Mac said.

The week ahead — Economic data from Econoday.com:

“The elements of good trading are (1) cutting losses, (2) cutting losses, and (3) cutting losses.” – Jesse Livermore.

1. Fed Cuts Rates With Three Dissents, Projects One Cut in 2026 — The Federal Open Market Committee voted 9-3 Wednesday to lower the benchmark federal funds rate by a quarter point to a range of 3.5%-3.75%. It also subtly altered the wording of its statement suggesting greater uncertainty about when it might cut rates again. When asked if it were a foregone conclusion that the Fed’s next move would be a cut, Powell demurred, but added that he didn’t see a rate hike as any official’s base case. Wednesday’s dissents and the rate projections highlight divisions among policymakers that have emerged over whether weakness in the labor market or stubborn inflation represent the larger danger to the US economy.
2. Some Republicans Break With Leaders in Healthcare Fight — A growing chunk of Republicans in both the House and Senate are breaking with party leaders and saying the GOP should extend expiring Affordable Care Act subsidies, seeing that as the only way to avert big cost increases for 20 million households next year and buy time for a bigger overhaul. Already, some GOP lawmakers have sponsored or signed onto bills that would extend the tax credits for one or more years, while including changes designed to crack down on fraud and limit eligibility to exclude higher-income households. They include Sens. Susan Collins (R., Maine), Jon Husted (R., Ohio) and Roger Marshall (R., Kan.)—all of whom are up for election next year—and vulnerable House Republicans like Reps. Rob Bresnahan (R., Pa.) and Mike Lawler (R., N.Y.).
3. US Trade Deficit Unexpectedly Shrinks to Smallest Since 2020 — The goods and services trade gap shrank nearly 11% from the prior month to $52.8 billion, Commerce Department data showed Thursday. The median estimate in a Bloomberg survey of economists was for a $63.1 billion deficit. Large monthly swings in trade this year related to US implementation of tariffs have introduced similar volatility in the government’s measure of economic activity — gross domestic product. The September trade figures will help economists fine tune their estimates for third-quarter GDP.

The week ahead — Economic data from Econoday.com:

1. Payrolls at US Companies Fall by Most Since 2023, ADP Reports — The U.S. labor market slowdown intensified in November as private companies cut 32,000 workers, with small businesses hit the hardest, payrolls processing firm ADP reported Wednesday. With worries intensifying over the domestic jobs picture, ADP indicated the issues were worse than anticipated. The payrolls decline marked a sharp step down from October, which saw an upwardly revised gain of 47,000 positions, and was well below the Dow Jones consensus estimate from economists for an increase of 40,000.
Larger businesses, entailing companies with 50 or more employees, actually reported a net gain of 90,000 workers. The biggest loss came in professional and business services, which saw a decline of 26,000. Others shedding jobs included information services (-20,000), manufacturing (-18,000), and financial activities and construction, both of which saw losses of 9,000.
2. China’s Services-Sector Activity Growth Slows — The RatingDog general services purchasing managers index fell to 52.1 in November from 52.6 in October, marking the lowest level in five months, according to a statement released Wednesday. Service providers continued to cut staffing in November, though the pace of reduction slowed slightly. Companies surveyed by RatingDog remained optimistic about the outlook, but the future business activity expectations index fell to its lowest level since April.
3. Trump Tightens Work Permits for Migrants, Expanding Crackdown on Legal Immigration — Work permits issued to immigrants who have applied for asylum or a range of other humanitarian programs will now be valid for 18 months rather than five years, under a new policy announced Thursday by the Trump administration. In the past week, Trump has called for a broad “reverse migration” of legal immigrants in the U.S., including from countries such as Afghanistan. A day after the shooting, Trump posted to his Truth Social platform that he planned to “permanently pause migration from all Third World Countries,” and his administration is working on expanding the list of countries subject to a travel ban. The shortened expiration dates for work permits will primarily affect immigrants seeking asylum or other forms of humanitarian protections, including refugees, immigrants who have won their asylum cases, or who have another form of deportation relief known as withholding of removal.
4. Core Index Decelerates for the First Since April — The core personal consumption expenditures price index, which excludes volatile food and energy prices, indicated a 0.2% monthly rise while the annual rate was 2.8%. The monthly rate was in line with the Dow Jones consensus, but the annual level was 0.1 percentage point lower. The core annual rate edged down from 2.9% in August. In addition, headline PCE increased 0.3% for the month, putting the annual inflation rate also at 2.8%, according to the department’s Bureau of Economic Analysis. Both of those readings were in line with expectations though the annual rate was up 0.1 percentage point from August. Goods prices surged 0.5% on the month as President Donald Trump’s tariffs continue to work their way through the economy. Services prices were up just 0.2%. Food rose 0.4% while energy was up 1.7%.

The week ahead — Economic data from Econoday.com:

1. U.S. Retail Sales Rose 0.2% in September, Below Expectations — Purchases at stores, restaurants and online increased a seasonally adjusted 0.2% in September from the prior month, the Commerce Department said Tuesday. That was below the 0.3% increase economists had expected, and marked a cooling from the 0.6% increase clocked in August. September’s retail sales report suggested consumers closed out the summer months on a weaker footing. Consumers reined in spending in a number of key categories, including vehicles, electronics, clothing, sporting goods and at online retailers. Still, spending at bars and restaurants rose a solid 0.7%, and spending at personal care and grocery stores also rose.
2. Airbus issues major A320 recall after flight-control incident — Airbus said in a statement a recent incident involving an A320-family aircraft had revealed that intense solar radiation may corrupt data critical to the functioning of flight controls. For about two-thirds of the affected jets, the recall will result in a relatively brief grounding as airlines revert to a previous software version, industry sources said. But the scale of the operation is expected to cause significant disruption, emerging just ahead of the busiest travel weekend of the year in the United States.
3. Trump Says He Is Canceling Biden Executive Orders Signed With Autopen — President Trump said Friday he was revoking all executive orders former President Joe Biden signed with an autopen, escalating his battle with his predecessor over the use of the signature proxy device. Both Democratic and Republican presidents have used autopens, devices that replicate signatures. Trump has said autopens shouldn’t be used on important documents. He said earlier this year that he has used an autopen for unimportant papers.
Presidents are legally allowed to undo executive orders signed by their predecessors. Trump could potentially revoke Biden’s legislation or the dozens of pardons he issued, including to family members. Biden also gave thousands of commutations at the end of his presidency. Still, legal scholars say there is no mechanism to undo clemency after it is granted.

The week ahead — Economic data from Econoday.com: