1/2 US Big Tech – except TSLA & META – continues to have better earnings estimate momentum for calendar Q4 2025 & 2026 than the S&P 500 as a whole. The best performing Big Tech stocks – NVDA, GOOG & AVGO – also have the strongest estimate revisions for next year...

DataTrek's Nick Colas: "We are in truly uncharted territory for this commodity pair, with silver looking very expensive relative to oil... Silver is not a solid long-term investment at current prices.” @marketwatch.com www.marketwatch.com/story/why-si...

An ounce of silver now buys more than a barrel of oil. This has never happened in the modern (1975 – present) era and suggests extremes in market sentiment around these 2 commodities.

DataTrek's Nick Colas: "The oil/silver price ratio points to silver being in a speculative bubble and/or oil being excessively out of favor"... adding that silver prices are likely the more distorted of the two." @barrons.com www.barrons.com/articles/sil...

We go into 2026 with the S&P 500 showing record net margins and elevated valuations. These 2 facts are interrelated and pave the way for further index gains next year.

When considering the possibility of a bad 2026 for US large caps, the most important thing to know is that large drawdowns always have a specific economic, geopolitical, or monetary policy catalyst. The old saying that “bull markets don’t die of old age” is historically accurate.

The dollar was down broadly last week against both developed & EM currencies. The Swiss franc, Australian dollar, Chinese offshore yuan & Mexican peso all made 1-yr highs vs the dollar. US large caps still managed to beat developed economy equity markets but lagged EM.

Fed Funds Futures are even more convinced that the Fed will only cut rates modestly next year, with one 25 bps reduction at Powell’s last meeting and another one in July/September 2026.

1/2 Since 1928, the S&P 500 has posted a negative total return of -10% or worse in 13 calendar years. Six were due to recession alone. The other 7 were caused by geopolitical uncertainty, Fed rate hikes, or some combo of these factors...

Fund investors continue to remain skittish on US equities, preferring non-US stocks, bonds and commodities.

DataTrek: "When US large-caps peak in December, they do it in the second half of the month 71% of the time... the S&P 500 peaked on the last trading day of the year five times, the most of any single day." @inc.com www.inc.com/phil-rosen/s...

1/2 Most (82%) of the S&P’s daily price action over any given 1-yr can be explained by US large cap Tech from 2010-2019 vs 85% since 2020. In other words, there's not been a notable rise in the correlation between the S&P and Tech over the last 16 years...

Retail money market fund balances have doubled in the last 3 years, to +$2 trillion, thanks to positive real short-term yields. Even still, at 7% of US GDP, these balances are not at past peak levels (9% in 2001).

S&P 500 sector correlations remain below their long run average (0.70 vs. 0.80), consistent with typical bull market price action. Big Tech’s recent losses are other sectors’ gains, a healthy development.

DataTrek's Jessica Rabe: "History strongly suggests U.S. large-cap healthcare is overbought relative to tech and the latter should outperform over the next roughly two months." @marketwatch.com www.marketwatch.com/story/eli-li...

Younger worker (aged 20 – 24) unemployment in the US is running at levels consistent with prior recessions. AI adoption may only be partly to blame.

1/2 Silver recently outperformed gold by +2 standard deviations over the prior 100 days, something that has only happened twice since 2010. Those prior instances saw silver continue to outperform over the short term...

The S&P 500 Health Care Sector has recently beaten Tech by +2 standard deviations (13.0 percentage points) over the prior 50 trading days. When that has happened since 2010, Tech went on to outperform by an average of 11.3 points over the next 50 days.

The S&P 500 continues to trade rich to its 5-year average price/earnings multiple (22x vs. 20x). Investable upside for the index requires it to both hold current valuations and see earnings beat expectations by 10% next year.

History suggests that the S&P 500 will make another new high before the end of the year. Since 1980, when the index has made a new high in December, those peaks usually (71%) come in the back half of the month.

Crisis hedges (those that protect against +20% downside) aren't especially expensive right now & may get even cheaper if volatility follows its customary seasonal pattern into YE. Protecting an S&P 500 portfolio against a 20% fall in 1H 2026 costs just 1.1% to portfolio returns.

The S&P 500 Technology sector is the worst performing group since it peaked on October 29th, down -6.4%. Investors have rotated out of Tech and into Health Care (+8.4%) and Financials (+5.6%) over that period.

Gold and the S&P 500 have both done well this year (+64% and +16%, respectively), but they remain virtually uncorrelated assets. Over the last 100 days, their correlation coefficient is just 0.10. In September 2024, it was -0.50.

Bond bears like to remind us that 10-year Treasuries yields are up 48 bps since the Fed began cutting rates in September 2024. They omit the fact that this month was essentially “peak economic pessimism” for the bond market, with both very low real yields and inflation expectations.

As for historically underperforming groups that might beat the S&P 500 in 2026, the Street believes Real Estate, Materials, and Utilities can see their fortunes improve (expected upside of +17.0%, +16.2%, and +16.1%, respectively).

DataTrek's Nick Colas: "Based on Wall Street analysts' price targets, the S&P 500 sectors most likely to see a beneficial momentum shift in 2026 are real estate, materials, and utilities." @marketwatch.com www.marketwatch.com/livecoverage...

The latest air quality readings from China’s 5 largest cities by GDP contribution reflect a near-uniform acceleration in economic activity. The Chinese economy went through a lull in the middle of 2025, but it now appears to be heading into 2026 w/ measurable positive momentum.

US corporate bond spreads are ending the year on an optimistic note, well below their 2024 and 2025 averages. They are not, however, so low as to suggest excessive complacency.

Fed Funds Futures expect 2 rate cuts in 2026, one under Powell and one (yes … just one) under his successor.

The Street’s consensus price targets for S&P 500 companies bubble up to an expected 12-month index return of +16.7%. History suggests this is aggressive and only possible if there are no macro shocks next year.

Since the start of the current bull market 3 years ago, only 3 S&P 500 sectors have outperformed: Tech, Communications & Consumer Disc. Wall Street analysts think they'll work in 2026 as well, but also expect Real Estate, Materials & Utilities to play some much needed catch up.

Fund investors have gone back to being skittish on US equities, but this cohort will likely start adding to their domestic stock positions in Q1 2026, as 401(k) contributions start again.

1/2 US Big Tech stocks’ correlations to the S&P 500 over the last 100 trading days are below the long run average (0.54 versus 0.62), reflecting strong investor macroeconomic confidence...

Fed Funds Futures do not expect another rate cut until the end of Q1 2026 (at the earliest) and only 1 – 3 cuts for all of 2026.

The FOMC’s new SEP was a bullish investor’s dream, forecasting better economic growth, lower inflation, and stable unemployment. Chair Powell’s press conference comments were consistent with these views.

1/2 US Big Tech has outperformed the S&P by 11.0 pts over the last year, well below the long-run average (+31.4 pts)...

Over the last year, US small cap Growth has outperformed Value by just over its long run average (2.9 vs. 2.3 pts). Growth’s trailing 1-year win rate versus Value since 2004 is 65 pct.

Since 1930, the fifth year of a given decade has averaged exceptionally strong S&P 500 returns. This year has not followed that pattern, and the 2020s is proving to be an unusual decade in other ways as well.

1/2 The S&P 500’s forward PE multiple has increased by +4.2% this year, but the index is up +16.3% YTD. The remainder (12.1 percentage points, most of the S&P’s gains) is due to the market adjusting higher its expectations for corporate earnings power...

US large cap Growth has been besting Value by +2 standard deviations for over a year. We think rotating into the S&P 500 rather than overweighting Growth in 2026 is sensible risk management.

Single B rated US corporate debt spreads over Treasuries are understandably sensitive to market worries regarding recession risk. At present, they are 2.98 percentage points, well below the 2015 – 2019 average of 4.69 points. This market, just like stocks, is very bullish on the US economy.

1/2 It has been 3 years since the launch of ChatGPT, and 39% of S&P 500 companies still did not mention AI on their most recent quarterly earnings calls...

Fed Funds Futures expect a “hawkish cut” at this week’s final FOMC meeting of the year. Current odds imply the next cut will be in March/April 2025.

Developed economy currencies rallied by an average of +0.7 pct vs the dollar last week, while EM currencies were mixed (average -0.3 pct). The S&P 500 underperformed all major non-US equity indexes.

Wall Street analysts tend to overestimate forward-year S&P 500 earnings by 2 – 3 pct. This suggests that the index is trading for 22.7x – 22.9x likely 2026 earnings.

For the second time in a row, Wall Street analysts have collectively increased their S&P 500 quarterly earnings estimate over the first 2 months of a reporting period. The change is small (+0.5%) but reflects incremental fundamental momentum.

1/2 November was another huge month for venture funding, again driven by AI megadeals. While newly public companies this year have shown mixed returns, there have been a few big winners...

S&P 500 sector correlations to the index are currently below the long run average (0.68 vs 0.80), reflecting strong investor confidence. Based on this metric, the 2023 – present bull market is superior to either the 2019 rally or the 2020 – 2021’s post-Pandemic Crisis rebound.

1/2 When the Nasdaq Comp rallies for 3 straight years after an annual loss like in 2022, history since the early 70s shows these annual gains have continued into Year 4 two-thirds (67%) the time...

1/3 The S&P 500 trades for 22.2x consensus expectations for 2026 earnings ($307/share), close to its 2020 peak (23.0x) & above its 5-year average (20.0x)...