Morning Roundup

By Mark Masterson on December 5, 2025

Good morning,

Below are the news items moving markets today:

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Executive Summary

Happy Friday!

I’ll keep it simple today as we head into the weekend…..

I posted a few charts on the economy over the past days.  I noted the difference between the leading indicators and the coincident indicators.

As the Kobeissi letter posted – the economy is bifurcated today between hard economic data and soft data.

• Surprises in hard US economic data are now up to +22 points.
• Economic surprise measures whether economic data comes in above or below consensus estimates.
• Hard data includes measurable indicators like nonfarm payrolls, retail sales, industrial production, CPI inflation, and GDP, reflecting real economic performance.
• On the other hand, economic surprises of soft data fell to -11 points, creating a historic gap.
• Soft data includes survey-based sentiment indicators such as services and manufacturing PMIs, consumer and CEO confidence, or business optimism, often reflecting future expectations.

This divergence shows that the economy appears strong while sentiment across households and businesses is deteriorating.

12 4 25

How about layoffs…..

Did you know that US employers have announced 1.2 million job cuts so far this year, the highest total since 2020 (recession) and before that 2008-2009 (recession).

12 5 25

• Economy:
  • Wealthy shoppers and deal-hunters drive US holiday spending; luxury and online sales surge, routine purchases cut (link)
  • Dollar stores boom as shoppers of all incomes seek affordable goods amid affordability crunch (FT)

It will be interesting to watch how the economy unfolds into 2026.

The impact of the Big Beautiful Bill will provide a tailwind into the first quarter.  The tax relief and refunds from the bill will provide liquidity.  I’ll be watching to see if the positive tailwinds will also impact sentiment and the soft data.

How about this stat of the day:

• It took approximately 205 years for the US Treasury to accumulate its first trillion dollars of debt. The 38th trillion? Just 71 days. James Lavish

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Articles of Interest:

• Markets:
  • Wall Street banks predict US stocks could rise double digits in 2026 despite tech spending jitters and an AI bubble (FT)
  • Investors look beyond major AI leaders as stocks linked to Google outperform following Gemini 3 rollout, TPU deals (Bloomberg, FT)
  • Outstanding Treasury debt tops $30T as interest costs account for growing share of federal deficit (Bloomberg)
  • Yen strengthens, JGB futures fall as BOJ readies a likely rate hike and signals further gradual tightening (Bloomberg)
• Washington:
  • Supreme Court allows Texas to redraw congressional map, raising GOP hopes of flipping up to five House seats (Washington Post)
  • Senators unveil bill that would block Trump administration from loosening AI chip export controls (FT, Reuters, Bloomberg)
  • Democrats to seek Senate vote on three-year extension of Obamacare health insurance subsidies after shutdown deal (Reuters)
• Geopolitics:
  • US pressured EU to block plan for using frozen Russian assets for €90B Ukraine loan, citing peace leverage (Bloomberg)
  • Putin visits India as Modi backs peace efforts with leaders beginning summit talks to boost trade (Reuters)
  • Trump to announce Gaza peace process entering second phase, unveiling new governance structure before Christmas (Axios)

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Charts of the day:

It’s not just the index that is concentrated today. (40% of the S&P 500 is 10 stocks)

It appears hedge funds are also very concentrated.

• “The average fund holds 70% of its long portfolio in its top 10 positions, close to the highest concentration on record.
• Similarly, hedge fund crowding in a small number of positions is also at elevated levels.”

-JPMorgan Cembalest

12 5 25

The very long term (Monthly) chart of the US dollar suggests that it may be looking to roll over into another longer term decline – as it did in the early 2000’s and early 1980s

MSA 12 4 25

Relative to other currencies – the dollar is still very strong historically.  (opening the path for lower dollar)

• The US Dollar is still sitting near historic extremes:
• The US Fed Trade Weighted Real Broad Dollar Index is trading near its highest level in 40 years.
• The index measures the inflation-adjusted value of the Dollar against 26 currencies based on relative competitiveness with trading partners.
• The Inflation-Adjusted Broad Dollar Index is now ~20% above its long-term average.
• In the past, such elevated valuations have been seen only in the 1930s and the 1980s.
• Meanwhile, the US Dollar Index (DXY), which comprises 6 major currencies, has declined -8.4% year-to-date, on track for its worst annual performance since 2017.
• Historic trade-adjusted Dollar overvaluation persists.

12 5 25

Yet – given the massive deficits – the weaker dollar and inflationary policy seem to be the default for any administration in office…..

• The Federal Government runs persistent deficits, and the Federal Reserve accommodates them with an inflationary monetary policy.
• It’s not a conspiracy theory. They really do work together to steal your purchasing power.

12 5 25

For what its worth – gold is coming into a typically positive season for price in January/February

12 5 25

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Quote of the day:

Rather go to bed without dinner than to rise in debt.

~Ben Franklin