The first week of winter ended on an optimistic note, restoring investors’ hopes for the traditional “Christmas rally,” which has occurred 59 times in the last 75 years. The chances of a successful end to the year depend heavily on the Fed’s decision to cut rates, which members of the monetary committee are expected to approve next week. Currently, the probability of a rate cut is 86%, but forecasts are one thing, and reality is another. We will see what happens, as the central bank will have to make a decision “blindly,” without having fresh data on the state of the US economy at its disposal. This is a quick review from Ivan Kompan, Edinburgh Business School analyst.
One of the concerns for investors is the increasingly “K-shaped” U.S. economy: wealthy Americans keep spending and driving growth, while the less affluent struggle. This divergence can’t last forever — something might eventually break. Since high-income households fuel the services-driven U.S. economy, a correction in stocks or real estate could push the country toward recession. Yet Bank of America argues recession risks remain low and GDP may grow 2.4% next year — turning the economy from “K-shaped” into simply “OK-shaped.”
The corporate front was calm. Michael Burry injected some pessimism, calling Tesla “wildly overvalued” and pointing to Musk’s broken promises and constant dilution — though faith often beats logic. Meta pleased investors by trimming Metaverse spending and shifting resources to AI. Overall, nothing dramatic.
Big banks, including BlackRock and BofA, insist there’s no bubble — only an AI-driven cycle boosting investment, profits and productivity, unlike the irrational dot-com era. Wall Street says: full steam ahead, no panic! Whether to believe it is up to you.
Markets feel strange: indexes near record highs while the Fear & Greed Index signals fear. Investors are torn — afraid to be left holding overpriced AI stocks, but also scared to miss out on the next technological revolution. And the more you think about it, the scarier it gets.
*And finally, we would like to remind you that the information you have just listened to is not an investment advisory. Remember – investments in the stock market are always tied up with financial risks. So be careful and cautious.
