Daily Newsletter 12/04/25
US stock index futures are showing little change this morning, maintaining a mostly steady stance. Investors are cautious as they wait for important economic reports and the Federal Reserve’s upcoming decision on interest rates. The market mood is calm but attentive, with hopes building for a possible rate cut in the near future. Overall, the futures reflect a balanced tone ahead of these key events.
Our takeaway:
“As long as the music is playing, you’ve got to get up and dance.”
There appears to be little at present that could derail expectations for the Santa Claus Rally, barring an unexpected move from the FOMC. A rate cut is largely priced in, so any surprise decision could act as a catalyst; however, it remains highly unlikely that the Fed will refrain from cutting rates. Looking ahead, we anticipate continued uncertainty surrounding issues such as tariffs, geopolitical tensions, dollar debasement, liquidity concerns, and the transition between quantitative tightening and easing. While none of these factors individually seem poised to dominate market attention before the holidays, it is never wise to rule out unforeseen events. Our view is that the rally will persist until it naturally comes to an end, echoing Chuck Prince’s famous sentiment: “As long as the music is playing, you’ve got to get up and dance.” Hopefully, this current cycle concludes on a more positive note than some past market experiences, such as Citigroup’s challenges over two decades ago.
One thing will not surprise at all: an increase in volatility early next week.
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