A "hawkish cut" is consensus for Wed FOMC, but this is also a "market clearing" event, hence, December rally still intact.
Array ( [cookie] => 66d5a6-d19325-40064c-21352c-3f3ee9 [current_usage] => 18 [max_usage] => 2 [current_usage_crypto] => 7 [max_usage_crypto] => 2 [lock] => [message] => [error] => [active_member] => 0 [subscriber] => 0 [role] => [visitor_id] => 187324 [user_id] => [reason] => else [method] => ) 1 and can accesssWe still expect the S&P 500 to finish 2025 achieving new all-time highs, reaching 7,000-7,300. But the path seems labored, and in the first days of December, the S&P 500 is flat so far. Multiple catalysts lay ahead with the most meaningful being the December FOMC rate decision this week.
- Our 2026 Outlook report will be released on Thursday December 11th. Please keep an eye out for it.
- All eyes on the FOMC Meeting on Wednesday:
- 12/8 Mon 11:00 AM ET: Nov NYFed 1yr Inf Exp 3.2%
- 12/9 Tue 6:00 AM ET: Nov Small Business Optimism Survey 98.3e
- 12/9 Tue 10:00 AM ET: Oct JOLTS Job Openings 7115ke
- 12/10 Wed 8:30 AM ET: 3Q ECI QoQ 0.9%e
- 12/10 Wed 2:00 PM ET: Dec FOMC Decision -25bpe
- 12/11 Thu 8:30 AM ET: Sep Trade Balance -63be
- 12/11 Thu: 2026 Year Ahead Outlook Webinar - Clearly the Fed decision is the most important event in December, even if the rate outcome is not likely to be a surprise. Both interest rate markets and prediction markets see >90% chance of a 25bp cut. But the Fed decision is meaningful for several reasons.
- At the Oct FOMC press conference, Powell threw cold water on the notion of a December cut, and the FOMC minutes showed voting members were undecided. And it was only recently that incoming data, particularly weakening labor markets, and also the downturn in inflation, that a cut seemed more likely.
- So it is understandable that investors are wary of this coming Dec FOMC rate decision.
- this is expected to be another "hawkish cut" given many member sees rates closer to neutral
- but given the downside risks to labor markets and expected further cooling of inflation
- a "data dependent" Fed seems very backwards looking - In our view, even if this is a "hawkish cut," equities should still be resilient post meeting:
- a "hawkish cut" is the base case
- QT ended on December 1,
- and the Fed is now expected to be buying $45-$50b per month in Treasuries
- and if Fed sounds too "hawkish," the White House may invoke the "shadow Fed" chair - President Trump has stated that he knows his pick for the next Fed Chair. If the Fed is too hawkish, we expect the White House to soon announce Powell's replacement. This would be a surprise. Currently, prediction markets show a 90% chance no new Fed Chair is announced before year-end.
- Ultimately, we see this as a "market clearing" event. That is, investors want to get the Fed meeting out of the way and then markets can focus on the seasonals and other reasons for a December rally.
- The Fed meeting is one of several positive catalysts we see for December. There are six reasons we expect stocks to rally in December:
1. Fed is set to cut in Dec + QT ending
2. The US economy remains healthy and there is pent up demand. ISM manu <50 for nearly 3 years. And housing has pent up demand.
3. The government shutdown over = blackout in eco data over, restoring visibility
4. Performance chasing. Investors are offsides as the Nov selloff caused many funds to throw in the towel. Already 2025 is the worst year for fund manager performance with 78% trailing their benchmark.
5. Equities got oversold in November with RSI falling to the lowest level since the April tariff lows. And in April 2025, there was actual reasons for market fear.
6. It’s seasonal. December usually finishes strong. But given the deep pullback in Nov, Dec should be even stronger. - The setup for December gains is also favorable:
- since 1950, there 25 years where S&P 500 up 15% thru Nov
- of these, only 4 instances where November was "flat or down"
- this is the case in 2025
- 4 of 4 instances, S&P 500 gained in December
- median gain +3.5% - Those 4 years, similar to 2025:
- 1950, Dec gain +4.7%
- 1963, Dec gain +2.4%
- 1967, Dec gain +2.6%
- 2021, Dec gain +4.4%
Become a Member To Access FS Insight Research
FS Insight gives individual investors access to Tom Lee's research, previously only available to banks and hedge funds.
|
|||
| Join Now |
|
|||
| Join Now |
What's included in your FSI Membership?
Thomas J. Lee
Head of Research
| Type | Publication | Mon | Tue | Wed | Thu | Fri | Monthly | |
|---|---|---|---|---|---|---|---|---|
| Reports |
First Word The best market research out there -- on a near-daily basis. |
|
|
|
||||
|
Intraday Alerts These are released periodically after crucial market developments. |
Real-Time | |||||||
|
Weekly Roadmap Weekly summary of market events and updates on our key theses. |
|
|||||||
| Webinars & Videos |
Macro Minute Video Daily video commentary on market conditions & key events. |
|
|
|
|
|||
|
Outlook Webinars We host over 12 LIVE webinars per year with our research team and high-profile special guests. Incredible value and market insights! |
Yearly | |||||||
| Granny Shots Webinars |
|
|||||||
| CEO Interview Webinars | Quarterly | |||||||
| Appearances Archive | Real-Time | |||||||
| Allocation Tools |
"Super Granny" Shots Stock List Granny Shots we expect to tactically outperform and underperform. |
|
||||||
|
Granny Shots Stock List Thematic investment stock picks that aim to outperform the S&P 500. |
|
|||||||
|
Sector Allocation A sector allocation strategy that is designed to outperform the S&P 500 while taking minimal risk. |
|
|||||||
| Market Alerts |
⚡️FlashInsights Real-time market commentary about macro and crypto events from our research heads. |
|
|
|
|
|
Real-Time |
Mark L. Newton
Head of Technical Strategy
| Type | Publication | Mon | Tue | Wed | Thu | Fri | Monthly | |
|---|---|---|---|---|---|---|---|---|
| Reports |
Daily Technical Strategy Daily commentary on market trends and short term opportunities. |
|
|
|
|
|
||
|
Weekly Roadmap Weekly summary of market events and updates on our key theses. |
|
|||||||
| Webinars & Videos |
Daily Technical Strategy Daily commentary on market trends and short term opportunities. |
|
|
|
|
|
||
| Live Technical Analysis |
|
|||||||
|
Outlook Webinars We host over 12 LIVE webinars per year with our research team and high-profile special guests. Incredible value and market insights! |
Yearly | |||||||
| Appearances Archive | Real-Time | |||||||
| Allocation Tools |
Newton's Upticks Stock List Technically derived, intermediate-term picks of attractive risk/reward opportunities from the S&P 500. |
|
||||||
| Market Alerts |
⚡️FlashInsights Real-time market commentary about macro and crypto events from our research heads. |
|
|
|
|
|
|
L. Thomas Block
Washington Policy Strategy
| Type | Publication | Mon | Tue | Wed | Thu | Fri | Monthly | |
|---|---|---|---|---|---|---|---|---|
| Reports |
US Policy Weekly update on developments in Washington DC and how they may impact Wall Street. |
|
|
|||||
|
Weekly Roadmap Weekly summary of market events and updates on our key theses. |
|
|||||||
| Market Alerts |
⚡️FlashInsights Real-time market commentary about macro and crypto events from our research heads. |
|
|
|
|
|
Real-Time |
Sean Farrell & Crypto Team
| Type | Publication | Mon | Tue | Wed | Thu | Fri | Monthly | |
|---|---|---|---|---|---|---|---|---|
| Reports |
Market Update Stay on top of the crypto markets with macro commentary, technical analysis, and the most relevant news. |
|
|
|
|
|
||
|
Weekly Strategy Weekly summary of market events and updates on our key theses. |
|
|||||||
|
Funding Fridays Are you looking for investment opportunities in the crypto space? We explore early-stage crypto opportunities in this note about where the smart money is being invested! |
|
|||||||
|
Crypto Concepts We periodically provide in-depth research on the leading protocols, companies, and funds shaping the crypto ecosystem. |
|
|||||||
|
Liquid Ventures A recurring research note focused on delivering unique insights into high-risk investment opportunities within the crypto ecosystem, primarily centered on early-stage or small-cap tokens. |
|
|||||||
|
Deep Research We periodically provide in-depth research on the leading protocols, companies, and funds shaping the crypto ecosystem. |
Quarterly | |||||||
|
Weekly Roadmap Weekly summary of market events and updates on our key theses. |
|
|||||||
| Webinars & Videos |
Outlook Webinars Ongoing webinars exploring crypto opportunities, in depth research, and exclusive research offerings from our team of analysts and leading cryptocurrency firms. |
Yearly | ||||||
| Crypto Comments |
Daily Technical Strategy From Bitcoin, Ethereum and Solana to other coins, our Head of Technical Strategy highlights important price movement to help give you an edge. |
|
||||||
| Allocation Tools |
Crypto Core Strategy A powerful tool designed to help crypto investors build a crypto portfolio that outperforms the industry’s king – bitcoin – regardless of market conditions. |
|
||||||
| Market Alerts |
⚡️FlashInsights Real-time market commentary about macro and crypto events from our research heads. |
|
|
|
|
|
Real-Time |
FS Insight Research Team
| Type | Publication | Mon | Tue | Wed | Thu | Fri | Monthly | |
|---|---|---|---|---|---|---|---|---|
| Reports | First to Market |
|
|
|
|
|
||
|
*Earnings Daily This note provides investors with a myriad of useful metrics to measure the progress of earnings season |
|
|
|
|
|
|||
|
Signal From Noise Highlights timely market themes and sectors with corresponding stocks, cutting through the day-to-day market “noise” for a distinct perspective. |
|
|||||||
|
FS Insight Academy Our main goal is to make you a better investor! This series will guide you through key financial concepts and topics in an understandable way. |
|
|||||||
| Webinars & Videos |
Free Macro Webinars Live webinars and Q&A with our research team and high-profile industry leaders. |
Quarterly | ||||||
|
Free Crypto Webinars Live webinars and Q&A with our research team and high-profile industry leaders. |
Quarterly |
*Daily reporting during each quarterly earnings season.
More from the author
Articles Read 2/2
🎁 Unlock 1 extra article by joining our Community!
You’ve reached your limit of 2 free monthly articles. Please enter your email to unlock 1 more articles.
Already have an account? Sign In 66d5a6-d19325-40064c-21352c-3f3ee9
Already have an account? Sign In 66d5a6-d19325-40064c-21352c-3f3ee9
Articles Read 2/2
🎁 Unlock 1 extra article by joining our Community!
You’ve reached your limit of 2 free monthly articles. Please enter your email to unlock 1 more articles.
Already have an account? Sign In 66d5a6-d19325-40064c-21352c-3f3ee9
Already have an account? Sign In 66d5a6-d19325-40064c-21352c-3f3ee9