The start of the year has featured a marked increase in initiatives by the US government on various economic and geopolitical fronts. This chart is included as a very unserious example of how headline driven price action is dominating the market landscape in the first days of the new year.

With "stimmy checks" on the way, the speculative fervor is rampant for those seeking to generate short-term gains from pushing various topical thematic exposures higher. Various areas like speculative aerospace, rare earths, obscure small cap housing/financials companies and small cap commodities are getting bid to the moon.

After accounting for factors that typically explain equity returns, a growing share of U.S. stock returns are tied to a single, common driver. Take one guess of what this driver is? BlackRock and other market participants are urging clients to remain invested in the AI theme. BlackRock in a recent market note told clients that to invest in non-AI opportunities in the US and abroad is a highly influential "active-call" on their portfolios. Instead, they believe owning AI "deliberately" is the winning path ahead.

Yields are rising globally as hiking cycles might get underway around the world. Price action post FOMC has featured small cap outperformance and continued softness in long-dated US government bond yields (TLT ETF).

In September, the MSCI World gained 3.25%, large cap stocks outperformed mid and small cap stocks. The tech-heavy Nasdaq Composite index gained 5.61% as AI fervor took another leg higher. Seasonality factors were turned upside down when US stocks registered their best September in 15 years

The Russell 2000 is now up almost 10% since November 20th driven by anticipation of a continued fall in US interest rates. All eyes are on the Fed meeting next week to shape the risk taking environment for the remainder of 2025.

The prospect of easier financing conditions in the USA in the months ahead is igniting reflation themes. Metals and small caps have gone wild since the Fed pivot on November 21st.

The lack of strong market breadth YTD has been a prominent feature of the market backdrop, evidenced by 35% of the S&P 500 now currently in bear market territory.

The lack of market breadth has been negatively impacting Equity Long/Short strategies that seek to select stocks outside of the Mag 7 to own while use a mix of individual equity shorts and market hedges on the short side.

The lack of visibility on Fed policy, exacerbated by a lack of official data in the wake of the government shutdown, is curtailing the opportunity set for Macro US FX/Rates trading. Additionally, risk sentiment generally has lacked much direction, because of the cloudy rate outlook. • The probability of a Federal Reserve rate cut in December 2025 sharply declined over recent weeks, falling from nearly 100% a month ago to approximately 30-40% as of yesterday, but now this morning Fed officials are taking on a more dovish tone, bringing the expectations back to ~75% for a cut.

YTD, Korea has been one of the hottest markets globally with notable outperformance of US indices in recent months.

A potent combination of domestic and pan-Asia retail activity with global institutional investor inflows spurred on the rally, with the index up over 60% YTD.

This year the S&P 500 is on a bit of a hybrid/WFH schedule rallying at the start of the week then closing out Thursday and Friday with more sellers than buyers.

The trend could be in place due to the heightened geopolitical and domestic political uncertainty inspiring investors to de-risk into the weekend.

Perma bear journalist Bond Vigilantes.com put together a spooky chartpack. Among the scariest of charts was one showing a slowdown in freight shipments. The Cass Freight Index is approaching GFC and covid low levels. Restrictive monetary policy and a weaking consumer has fueled the drop in activity since 2021, and the impact of tariffs have yet to be fully reflected in the data.