The Profit Margin: December 15, 2025
Statistic of the Week
While there has been no shortage of articles debating whether an investment bubble is forming around artificial intelligence and related stocks, a much older asset class delivered a standout performance so far this year. Gold surged more than 60% in 2025, marking its strongest annual gain since 1979.
Global Perspective
While Chinese exports to the United States have declined sharply, China has successfully redirected its goods to other markets at a record pace. So far in 2025, the country has posted a trade surplus of $1.1 trillion, surpassing the $1 trillion mark for the first time. Europe has absorbed a significant share of these exports, prompting concerns among some EU officials about growing trade imbalances.
Market Moving Events
Tuesday: Employment Report (November), Retail Sales (October)
Thursday: Jobless Claims, Consumer Price Index
Friday: Existing Home Sales, Consumer Sentiment
Commentary
A selloff on Friday, driven by lingering concerns over a potential “AI bubble,” pushed both the S&P 500 and Nasdaq into negative territory for the week, with the major indices declining 0.63% and 1.62%, respectively.1 In contrast, the Dow Jones Industrial Average posted an impressive weekly gain of 1.05%.2 There is a growing case that market breadth has been improving in recent weeks. The DJIA reaching a record high, the equal-weighted S&P 500 performing well, and a rally in small-cap stocks all support this view. Bond prices fell as yields rose. The yield on the 10-year Treasury edged up 0.04% from the prior week, closing Friday at 4.18%.3
Investors are rightly paying close attention to the actions of the Federal Reserve. At last week’s meeting, the Fed reduced its benchmark interest rate by 0.25%. Notably, although the FOMC has cut rates by a cumulative 1.75% since September 2024, the 10-year Treasury yield has moved higher—marking the first time this dynamic has occurred in more than 40 years.4 Another key takeaway from the meeting was the Fed’s announcement that it will restart a program to purchase Treasury bills. Chair Powell emphasized that the purpose of these purchases is to smooth market operations, not to stimulate economic activity.5 In its statement, the Fed also noted that it believes current employment figures may be overstated by 60,000 jobs per month.6 This week, markets will receive the delayed November employment report on Tuesday. The CPI report, scheduled for Friday, will also be closely watched, though it will provide only a year-over-year reading.7
Chart of the Week
The FOMC met market expectations last week, cutting its benchmark target rate. The new target range now stands at 3.50%–3.75%.
Source Materials
Market Moving Events:
MarketWatch.com
Chart of the Week: Clearnomics,
The Federal Reserve
Statistic of the Week:
Financial Times
Global Perspective:
The Economist
Commentary:
1. Bloomberg
2. Bloomberg
3. MarketWatch.com
4. Portfolio Strategy Weekly / Barron’s
5. Investor’s Business Daily
6. Investor’s Business Daily
7. Investor’s Business Daily