Key Points

Investors are getting mixed messages on health of the U.S. economy, leaving stocks in limbo ahead of next week’s Federal Reserve rate decision.

After being powered by the artificial-intelligence trade all year, stocks don’t seem to know where to head this month—traditionally one of the market’s strongest—thanks to data showing solid gains in some corners of the world’s biggest economy, and ongoing weakness in others.

Those conflicting signals are playing havoc with bets on how the Fed will proceed at next week’s rate-setting meeting—and how markets will react later this month once official economic data start filling in the blanks left by the government shutdown.

Lower Fed interest rates would almost surely support market valuations over the months ahead. But lukewarm jobs data and retailers’ shaky consumer outlooks could chip away at Wall Street’s projections for corporate earnings growth, which is key to the market’s

“Consumption isn’t just one of many factors in GDP … it is the factor, accounting for nearly 70% of all economic activity,” said Mark Malek, CIO at Siebert Financial.

“When the consumer wobbles, the economy wobbles. When the consumer spends, companies breathe. When the consumer tightens up, markets eventually follow,” he added.

That’s why the recent spate of economic data has been so vexing for Wall Street.

The Institute for Supply Management’s benchmark reading of activity around the services sector, the economy’s primary growth driver, expanded in November at the fastest pace since February, according to data released Wednesday. Input prices fell the most since March 2024—another positive for the sector.

Employment in services, however, contracted for a sixth consecutive month—echoing the weakness seen in payroll processing group ADP’s November employment report.

The ADP reading showed a net decline of 32,000 private sector jobs last month. In addition, wage gains for both workers remaining in their roles and those switching positions slowed notably from last year’s levels.

The official tally of U.S. job gains from the Bureau of Labor Statistics, usually published on the first Friday of each month, is delayed until Dec. 16 because of delays in collecting and processing data during the government shutdown.

The Bureau of Economic Analysis will publish official spending and inflation data on Friday, but the delayed report will only be comprised of data collected for September.

That leaves the Fed to focus on its own internal readings, ADP and other private sector readings, and anecdotal data, to calibrate both its Dec. 10 rate decision and its forecasts for near-term growth, inflation, and unemployment.

The CME Group’s FedWatch tool suggests markets are clearly anticipating a quarter-percentage-point reduction next week, but remain split as to how the central bank will signal its policy path into next year.

“Our expectation is that the doves will win out and we will see a number of rate cuts next year, but potentially fewer than are currently being forecast,” said Chris Zaccarelli, CIO at Northlight Asset Management.

Looser monetary policy could prove crucial for stocks. While the market has been powered by the artificial-intelligence trade, it also needs solid corporate earnings expansion over the whole of 2026 to justify the historically expensive valuations in nearly every sector of the S&P 500.

LSEG data suggest investors see collective profits for the benchmark rising 14.6% next year, with this year’s rate likely to climb to 13% once the fourth-quarter reporting season concludes in early March.

If the 2026 forecast is sound, aggregate earnings will rise to $309.28 a share. Wall Street’s biggest banks and investment groups, meanwhile, project the S&P 500 rising to around 7600 points by the end of 2026, based on forecasts collected by Barron’s. The benchmark index closed at 6850 points on Wednesday.

That would peg the S&P 500’s price-to-earnings ratio at 24.5 times, well north of the 10-year moving average of around 20 and above its current 23 times.

However, those earnings forecasts could be tested by a cautious consumer and a weakening job market—particularly if inflation pressures remain embedded in an economy that is already dealing with the highest nominal prices for food and energy in a generation.

“Earnings will do the heavy lifting next year,” said Savita Subramanian, Bank of America’s head of U.S. equity & quantitative strategy, who forecasts the S&P 500 finishing only at around 7100 points by the end of 2026.

“But we also worry about the tension between AI taking jobs verus consumption remaining resilient in 2026,” Subramanian added.

Some of the early signals on that front aren’t encouraging. Macy’s cautioned investors Wednesday that it’s expecting soft demand from low-income customers over the holiday season.

That view was also reflected in discount retailer Dollar Tree’s better-than-expected current-quarter outlook and Walmart stock’s record high close on Wednesday. Walmart holds a commanding lead in the middle-income market while taking an increasing share of more affluent consumers’ spending; its stock rally reflects investors’ bet that consumers will stay focused on value over discretionary spending.

Stocks are still within a whisker of their all-time highs. The combination of Fed rate cuts, the AI investment boom, and the tax and spending benefits from the One Big Beautiful Bill Act are expected to carry markets higher into next year.

Repeating the market’s recent run of near 20% annual gains, however, will be a lot tougher sledding with rising unemployment and shoppers’ increased caution.

“There’s plenty of concern right now for the state of the U.S. consumer,” said Bret Kenwell, U.S. investment analyst at eToro.

“While this group has buoyed the economy over the last few years, persistent inflation, falling confidence, and a cooling labor market has investors anxious that consumers can continue to shoulder such a heavy load.”

Read the full article HERE.

Gold has staged a dramatic rally this year as the US Trump administration’s unorthodox economic policies sent investors and central banks reaching for safe-haven assets. Right now, however, it’s silver that’s stealing the spotlight.

A squeeze in supply of the precious metal had catapulted it to a 100% gain as of early December, while gold was up 60%. Both have been experiencing a surge in demand from investors seeking to hedge against political turbulence, inflation and currency weakness.

Unlike gold, silver isn’t just scarce and beautiful: It also has many useful real-world properties that make it a valuable component in a range of products. With inventories near their lowest on record and investors still scrambling for more, there’s a risk of supply shortages that could impact multiple industries.

Who needs silver?

Silver is an excellent electrical conductor that’s used in circuit boards and switches, electric vehicles and batteries. Silver paste is a critical ingredient in solar panels, and the metal is also used in coatings for medical devices. Sustained high prices could erode the profitability of industrial users and spur efforts to substitute silver components for other metals.

Like gold, silver is still a popular ingredient for making jewelry and coins. China and India remain the top buyers of silver, thanks to their vast industrial bases, large populations and the important role that silver jewelry continues to play as a store of value passed down the generations.

Governments and mints also consume large quantities of silver to produce bullion coins and other products. As a tradable asset, it’s much cheaper than gold per ounce, making it more accessible to retail investors, and its price tends to move more sharply during precious metal rallies.

What makes the silver market unique?

Silver’s varied uses mean its market price is influenced by a wide array of events including shifts in manufacturing cycles and interest rates and even renewable energy policy. When the global economy accelerates, industrial demand tends to push silver higher. When recessions loom, investors can step in as alternative buyers.

The market is thinner than with gold. Daily turnover is smaller, inventories are tighter and liquidity can evaporate quickly. The silver stored in London is worth just shy of $50 billion, while the gold is worth $1.2 trillion, though much of both are not available to borrow or buy for investors. For gold, the London market is underpinned by around $700 billion of bullion held mostly by the world’s central banks in vaults of the Bank of England. This can be lent out when a liquidity squeeze hits, effectively making the central banks lenders of last resort — but no such reserve exists for silver.

Why has silver rallied so much this year?

Silver often moves in tandem with gold, but with more violent price moves. After the yellow metal surged in the early months of 2025, some investors pointed to the stretched ratio of prices between the two metals of more than 100-1. Silver’s apparent cheapness relative to gold was enough to encourage some investors to pile into the white metal.

Heavy debt loads in major economies such as the US, France and Japan and a lack of political will to solve them also encouraged some investors to stock up on silver and other alternative assets this year, in a wider retreat from government bonds and currencies dubbed the debasement trade.

Meanwhile, global silver mine output has been constrained by declining ore grades and limited new project development. Mexico, Peru, and China — the top three producers — have all faced setbacks ranging from regulatory hurdles to environmental restrictions.

Global demand for silver has outpaced the output from mines for five consecutive years, while silver-backed exchange-traded funds have drawn in new investment.

What was the silver squeeze that hit the market this year?

Speculation earlier this year that the US would levy tariffs on silver led to a flood of the metal into vaults linked to the Comex commodities exchange in New York, as traders sought to take advantage of premium prices in that market.

That contributed to a dwindling of available silver stocks in London, the dominant spot trading hub. Those stocks were further eroded as more than one hundred million ounces flowed into ETFs backed by physical bullion.

With a spike of demand during the Indian festive season in October, the market suddenly seized up. The cost of borrowing silver surged to a record, while prices jumped.

That tightness pushed London prices above other international benchmarks, helping to ease the squeeze. Traders are still monitoring for any potential US tariff on silver after the precious metal was added to the US Geological Survey’s list of critical minerals in November.

Read the full article HERE.

All that stands between the U.S. and a debt-market freakout is the dollar. Having the world’s reserve currency isn’t the unbreakable shield many assume.

Politics and debt don’t mix well. Americans would be wise to look across the Atlantic to see how tough things can get.

The U.K. government demonstrated the problem with its annual budget, where it is stuck in a trilemma, unable to please lenders and voters while also doing the right thing for the economy. Something had to give, so on Wednesday the government ignored its promises to go for growth, and focused on the bond market and its political base.

France has the same trilemma, only worse. Government debt is higher than in the U.K., the fiscal deficit is higher, and not only are tax rises politically impossible but taxes are already so high that raising them further might be self-defeating.

Spending cuts are even more difficult than in Britain—where welfare cuts have proved to be a political nonstarter—and securing a budget at all in a deeply riven French Parliament is a challenge. At least in London the bond panic during the supershort term of Prime Minister Liz Truss has shown the politicians that they have to pay attention to lenders.

Already some of the same issues are visible in the U.S.—along with a lack of political will to do anything to prevent the problem from festering. For now, all that stands between the U.S. and a debt-market freakout is the dollar. Having the world’s reserve currency, however, isn’t the unbreakable shield many assume.

Go back to the U.K. to see how dysfunctional politics limits action. The government floated the idea of an economically efficient income-tax rise in the run-up to the budget, and the bond market loved it. But politics made Chancellor of the Exchequer Rachel Reeves abandon the idea in favor of a series of smaller, delayed tax rises on pensions, corporate investment and driving that each slice a little off potential growth—but, she hopes, will get less attention from voters. The money raised goes into welfare spending forced on the government by its own members of Parliament, after it lost a fight earlier this year.

The parallel issue in the U.S. is tariffs: An inefficient tax on the purchase of certain foreign goods is possible (though the legality of the biggest tariffs is still to be determined), and even briefly popular. But U.S. politics is just as fragile as in the U.K., and when the bond market or voters objected, tariffs have been rolled back.

April’s so-called reciprocal tariffs were delayed and then slashed when the bond market panicked. They dropped from a peak effective rate of 28% to the current 18% calculated by the nonpartisan Budget Lab at Yale—far lower, although still the highest since 1934.

Likewise, rising voter concern about food prices has led to tariffs on imports of coffee, bananas and some beef being ditched. It was sensible to remove those, but it was especially bizarre to introduce charges on foodstuffs not even produced in the U.S. in the first place.

The U.S. doesn’t yet have the trilemma created by conflicting demands on tax, spending and borrowing, thanks to global demand for dollars funneling money into Treasurys. But there are worrying signs, and the fiscal situation suggests a growing chance of trouble ahead—despite faster economic growth than elsewhere.

Warnings of bond pressure have shown up in extreme situations. Most recent was the April revolt, where 10-year Treasury yields jumped and concern grew about a self-fulfilling liquidation of borrowing, akin to the U.K.’s Truss moment, before President Trump pulled back. In 2020, lockdowns showed how bad such a selling spiral can be, and the Federal Reserve was forced to buy more than $1 trillion of bonds to stabilize the market.

The fiscal situation in the U.S. is far worse than what Reeves has to deal with in Britain. The International Monetary Fund estimates that total U.K. government debt will hit 95% of gross domestic product this year, with a deficit of 4.3%. U.S. debt is expected to be a smidgen below 100%, with a deficit on course to be one of the biggest in the developed world at more than 7%.

What saves American finance is the dollar’s status as the must-have global asset and trading currency. Both roles face challenges, though, and the more the U.S. exploits foreigners, the higher the risk they look elsewhere.

There are four overlapping threats to the dollar: supply, China, reserve safety and the pushing away of allies.

Supply is the big one, as the U.S. runs near-record peacetime deficits on top of a bulging current-account deficit. America has to attract a constant flow of foreign capital to finance government and imports, an unstable position.

China has shifted a little more trade into yuan, although the dollar remains by far the dominant currency for international payments. China, Russia and others including Turkey have been replacing some of their reserves with gold in the midst of rising concern about dollar-based reserves being frozen or confiscated by Washington. And while allied governments haven’t obviously cut their dollar exposure, they were spooked by Trump’s tariffs and talk of unilateral fees on reserves held in Treasurys.

None of these has, so far, dealt significant damage to the dollar’s reserve status. But they all hurt. The risk is that the market senses a shift coming and pushes up Treasury yields in anticipation of foreign buyers drifting away.

On the plus side, it is economically easy for the U.S. to head off the problem. It raises the lowest tax as a share of GDP of any Group of Seven country, at just 30%, so higher taxes are likely to damage growth less than elsewhere. Government spending, also the lowest in the G-7, is harder to cut, as the failure of Elon Musk’s Department of Government Efficiency demonstrated.

If the problem sounds familiar, it should be. Former Luxembourg Prime Minister and European Commission President Jean-Claude Juncker once said: “We all know what to do, we just don’t know how to get re-elected after we’ve done it.”

It isn’t clear that today’s politicians do, in fact, know what to do. But whether they know or not, getting re-elected while staying within the strictures of the bond market is going to be tough. America has the dollar to lean on—but probably not forever.

Read the full article HERE.

The U.S. dollar slid on Tuesday as a slew of mixed economic data, some delayed and therefore dated, reinforced expectations that the Federal Reserve will cut interest rates next month.

The euro was last up 0.40% against the dollar at $1.1566, while sterling gained 0.45% to $1.3162.

The dollar index, a measure of its performance against its major counterparts, fell 0.31% to 99.83 following the release of September retail sales and producer price data, after it initially held on to its gains from last week when the index rose nearly 1%.

“Producer prices were stable and retail sales showed a modest consumer slowdown, and this keeps a December rate cut on the table,” said Scott Helfstein, head of investment strategy, at Global X, in emailed comments.

Data showed U.S. retail sales rose 0.2% in September, less than 0.4% forecast by economists polled by Reuters and slowing from an unrevised 0.6% gain in August.

Producer prices, on the other hand, increased 0.3%, in line with expectation, after an unrevised 0.1% drop in August; however, at the core level prices inched up 0.1%, below the consensus forecast of 0.2%.

In addition, the latest U.S. consumer confidence number declined to 88.7 in November, from an upwardly revised 95.5 in October, which further hurt dollar sentiment. Economists polled by Reuters had forecast the index edging down to 93.4 from the previously reported 94.6 in October.

“More worries about what lies ahead … hence, putting purchases for major items on hold,” wrote Jennifer Lee, senior economist at BMO in emailed comments.

The economic data followed dovish comments from policymakers in the past few days that helped cement rate cut expectations.

On Monday, Fed Governor Christopher Waller said the job market was weak enough to warrant another quarter-point rate cut in December, though action beyond that depended on a flood of data that was delayed by the federal government shutdown.

Waller’s comments followed similar remarks by New York Fed President John Williams on Friday.

Traders are now pricing in an 83% chance of a cut next month, up from 50% a week earlier, CME FedWatch showed. That huge swing underscores the challenge the market faces in pricing in near-term rates in the absence of economic data caused by the longest-ever U.S. government shutdown, which ended on November 14.

Francesco Pesole, currency analyst at ING, said some “year-end rebalancing flows before Thanksgiving may be getting in the way” of dollar weakening.

However, he added in a note to clients, “unless markets have a hawkish rethink, the dollar looks too strong relative to short-term rate differentials at these levels, and we see some material downside risks.”

In other currency pairs, the yen, which has been on the defensive since hitting 10-month lows last week, firmed on Tuesday to 156.09 per dollar, leaving the dollar down 0.51% against the Japanese currency.

Investors have been waiting for any signs of official buying from Tokyo to support its currency, which has weakened by nearly 10 yen since the start of October after fiscal dove Sanae Takaichi took over as Japan’s prime minister.

Pesole said thinner liquidity around Thanksgiving could present good conditions for the Bank of Japan to intervene in USD/JPY, ideally after a market-driven correction in the pair.

Read the full article HERE.

Key Points:

The first glimpse of official consumer spending data in two months is in: retail sales rose at a slower pace than expected in September.

Retail sales increased at a monthly pace of 0.2% from August to September. Economists polled by FactSet were expecting a 0.4% jump. Sales rose 0.6% in August from July.

Stripping out sales of vehicles, car parts, and gasoline, retail sales rose just 0.1%, below forecasts for a 0.4% increase.

The report was delayed because of the 43-day government shutdown, which ended mid-November. While the September data may be a bit “stale” this close to the end of the year, the results nonetheless provide insights about the health of U.S. consumers heading into the all-important holiday season.

The main takeaway is that while spending is resilient, growth slowed toward the end of the summer—particularly for discretionary purchases—as economic uncertainty weighs on consumers. Of the 13 categories that the Census Bureau tracks, five recorded monthly decreases in sales: sporting goods, hobby, instrument, and book stores; clothing and accessories stores, nonstore retailers, electronics and appliance stores, and motor vehicle and parts dealers.

“With wage growth slowing and tariffs now fully in place, we think higher prices will start to weigh on consumption,” wrote Michael Reid, senior U.S. economist at RBC Economics, ahead of the report.

Last week, many big-box retailers reported fiscal third-quarter earnings. The results were a mixed bag, with some topping analysts’ earnings expectations and others falling short. But given the dearth of official spending data, investors were more eager to hear what they had to say about the consumer economy.

The main takeaways are that Americans are selective in their spending and are prioritizing value as concerns over inflation and affordability mount among lower- and middle-income consumers.

Home Deport CEO Ted Decker said on Tuesday that macroeconomic pressures had hampered the home improvement market’s expected recovery in the third quarter.

“We were expecting interest rates and mortgage rates to come down, which they did, that would have been some assistance to housing,” Decker said. “But we really just saw ongoing consumer uncertainty and pressure in housing that are disproportionately impacting home improvement demand.”

Target’s Chief Commercial Officer Rick Gomez followed up on Wednesday saying that consumers remained cautious approaching the holiday season, with consumer sentiment ranging at three-year lows.

“Guests are choiceful, stretching budgets and prioritizing value,” he said. “They’re spending where it matters most, especially in food, essentials, and beauty, while looking for trend-right deals in discretionary categories.”

Retailers also flagged that spending had been slightly affected by the closure of the federal government—a fact that won’t be reflected until October and November’s data. The Census Bureau has yet to set a date for both releases.

Most official government releases have been pushed back or canceled altogether—a fact that has complicated matters for investors, economists, and policymakers.

The September data will likely provide Federal Reserve officials additional information as they decide whether to cut interest rates or not at their meeting in December. But unfortunately for the Fed, the timelier releases won’t come until after, Reid added.

Read the full article HERE.

Albert Edwards, the outspoken Global Strategist at Société Générale—a figure who even refers to himself as a “perma bear”—is certain that the current U.S. equity market, driven largely by high-flying tech and AI, is experiencing a dangerous bubble. (Société Générale, to be clear, does not hold the view that U.S. stocks or AI stocks are in a bubble, noting that Edwards is employed as the in-house alternative view.) While history often repeats itself, Edwards warned recently that the circumstances surrounding this cycle’s inevitable collapse are fundamentally different, potentially leading to a deeper and more painful reckoning for the economy and the average investor.

“I think there’s a bubble but there again I always think there’s a bubble,” Edwards told Bloomberg’s Merryn Somerset Webb in a recent appearance on her podcast Merryn Talks Money, noting that during each cycle, there is always a “very plausible narrative, very compelling.” However, he was unwavering in his conclusion: “it will end in tears, that much I’m sure of.”

Edwards told Fortune in an interview that previous theories about a bubble were “very convincing in 1999 and early 2000, they were very convincing in 2006-2007.” Each time, he said, the “surge in the market was so relentless” that he just stopped talking about bubbles, “because clients get pissed off with you repeating the same thing over and over again and being wrong,” only to change their tune after the bubble bursts. “Generally, when you’re gripped by a bubble, people just don’t want to listen because they’re making so much money.”

As he himself frequently points out, Edwards is known as a very bearish market strategist who has made some high-profile and dramatic predictions, often warning about major stock market crashes and recessions. His track record includes famously calling the dot-com bubble, but it also includes warnings that haven’t panned out, such as predicting a potential 75% drop in the S&P 500 from peaks—worse than the 2008 financial crisis lows. When The New York Times profiled Edwards in 2010, they noted that the chuckling, birkenstocks-wearing analyst had been predicting a Japan-style stagnation for U.S. equity markets since 1997 (a prediction he repeated in his interview with Fortune).

Still, Edwards insists that the current parallels to the late 1990s NASDAQ bubble are clear: extremely rich valuations in tech, with some U.S. companies trading at over 30x forward earnings, justified by compelling growth narratives. Just as the TMT (Technology, Media, Telecom) sector attracted vast, sometimes wasted, capital investment in the 1990s, Edwards argued that today’s enthusiasm echoes that earlier era. There are two key differences that could lead to a much worse outcome this time, though.

The Missing Trigger and the Meltup Risk

In previous cycles, Edwards explained, the catalyst for a bubble’s demise was usually the monetary authority’s tightening cycle—the Federal Reserve hiking rates and exposing market froth. This time, with the Fed lowering rates, that trigger is conspicuously absent. Bank of America Research has noted the rarity of central banks cutting rates amid rising inflation, which has occurred just 16% of the time since 1973. Ominously, BofA released a note on the “Ghosts of 2007” in August.

Instead of tightening, Edwards anticipates the Fed will move away from quantitative tightening and likely shift to quantitative easing “quite soon,” due to issues in the U.S. repo markets, another ghost from the Great Recession. The Fed itself issued a staff report in 2021 on repo issues, writing in 2021 that trading between 2007 and 2009 “highlighted important vulnerabilities of the US repo market.” Repo issues reemerged in the pandemic, with the Richmond Fed noting that interest rates “spiked dramatically higher” starting in 2019.

Edwards told Bloomberg that the absence of hawkish policy could lead to a “further meltup,” making the eventual burst even more damaging. Poking fun at himself, Edwards said, “I just got bored being bearish, basically rattling my chains saying, ‘This is all a bubble, it’s all going to collapse.’” He said that he can see how the bubble can actually keep going for much longer than a perma bear like himself would find logical, “and actually that’s when something just comes out the woodwork and takes the legs from out from under the bubble.”

“What’s more worrying about the AI bubble,” Edwards told Fortune, “is how much more dependent the economy is on this theme, not just for the business investments, which is driving growth,” but also the fact that consumption growth is being dominated far more than normal by the top quintile. In other words, the richest Americans who are heavily invested in equities, are driving more of the economy than during previous bubbles, accounting for a much larger proportion of consumption. “So the economy, if you like, is more vulnerable than it was in the ’87 crash,” Edwards explained, with a 25% or greater correction in stocks meaning that consumer spending will surely suffer—let alone a 50% lurch.

Edwards told Bloomberg he was concerned about the widespread participation of retail investors who have been dragged into the market, encouraged to “just buy the dips.” This belief that “the stock market never goes down” is dangerous, Edwards warned, arguing that a 30% or even a 50% decline is very possible. The inequality of American society and the heavy concentration among high earners whose wealth has been “inflated by the stock market” is a major concern for Edwards, who pointed out that if there is a major stock-market correction, then U.S. consumption will be “hit very, very badly indeed” and the entire economy will suffer. This view is increasingly shared by less uber-bearish voices on Wall Street, such as Morgan Stanley Wealth Management’s Lisa Shalett.

In many ways, Edwards told Fortune, we’re overdue for a correction, noting that apart from two months during the pandemic, there hasn’t been a recession since 2008. “That’s a bloody long time, and the business cycle eventually always goes into recession.” He said it’s been so long that his perma-bear instincts are confused. “The fact I’m less worried about an imminent collapse [right now] makes me worried,” Edwards added with a laugh.

Edwards told Fortune that he’s been through various cycles and bubbles and he gained his perma-bear status in the mid-1990s, when he felt a distant earthquake happening in Asia. “You’ve been around the block a few times, you just do become cynical,” he said, before correcting himself: “That’s not the right word. You become extremely skeptical of the full narrative.” He proudly repeats the story about how, when he was at Dresdner Kleinwort in the ’90s, he wrote with skepticism about Malaysia’s economic boom at the time, only to be surprised when Thailand blew up first. Nevertheless, he said, “we lost all our banking licenses [in Malaysia] because of what I wrote,” adding that the story is still proudly pinned to his X.com account.

“I had to sort of basically hide under my desk,” Edwards said of the inward reception to the emergence of his inner bear. “Corporate finance banking departments certainly didn’t appreciate losing all their banking licenses. But in retrospect, you know, they avoided a final year of lending to Malaysia before it blew up. They didn’t thank me afterwards.”

Fiscal Incontinence and Cockroaches

Beyond equity valuations, Edwards has been highlighting two other major underlying risks point to systemic vulnerability. First, Edwards highlighted the long-term risk of inflation in the West, driven by “fiscal incontinence.” Despite short-term cyclical deflationary pressure emanating from China—which has seen 12 successive quarters of year-on-year declines in its GDP deflator—Edwards said he believes the path of least resistance for highly indebted Western politicians will be “money printing.” At some point, the mathematics for fiscal sustainability “just do not add up,” forcing central banks to intervene through “yield curve control” or quantitative easing to hold down bond yields.

This is where Edwards’ long-held thesis about Japan comes in, what he calls “The Ice Age.” Around 1996, he said, he started thinking that “what’s happening in Japan will come to Europe and the U.S. with a lag.” He explained that the bursting of the Japanese stock bubble led to all kinds of nasty things: real interest rates collapsing, inflation going to zero, bond yields going to zero. Ultimately, it was a period of low growth that Japan still has not been able to break out of. The difference with the U.S., he added, is that Japanification actually started happening in 2000 with the dot-com bubble bursting, but “the relationship broke” between the economy and asset prices as the Fed began “throwing money” at the problem through QE. The U.S. has essentially been in a 25-year bubble since then that is due to burst any day now, he argued—it’s been due any day for a quarter-century.

“We’re going to end up with runaway inflation at some point,” Edwards told Fortune, “because, I mean, that’s the end game, right? There’s no appetite to cut back the deficits. We bring back the QE, if and when this bubble bursts, the only solution is more QE, and then we end up with inflation, maybe even worse than 2022.”

Edwards also sees a smoking gun in home prices. “You look at the U.S. housing market, you think, ‘Well, actually, is the Fed just too loose relative to everywhere else?’ Because why should other housing bubbles have deflated in terms of house price earnings ratio, but the U.S. is still stuck up there at maximum valuation or close to it?” In a flourish that shows why Edwards is so respected despite his broken-record reputation, he notes that in a Bloomberg Opinion piece from 2018, legendary former Fed chair Paul Volcker “eviscerated the Fed just before he died.” The central banker who famously slew inflation in the 1980s argued that the modern era’s loose monetary policy was “a grave error of judgment … basically just kicking the can down the road.” Edwards shared an OECD chart with Fortune to show just how much U.S. housing has decoupled from global markets because the Fed has been too loose.

The analyst also said he applied his skepticism to private equity, an asset class that he sees having benefited immensely from years of falling bond yields and leverage. Private equity’s advantage has been its tax treatment and the fact that “it doesn’t have to mark itself to market, so it isn’t very volatile.” However, the sector is highly leveraged, and if the global environment shifts to a secular bear market for bonds, he said that would be a “major problem.” Recent high-profile bankruptcies have started to leak into bond markets, prompting concern of “credit cockroaches,” as JPMorgan CEO Jamie Dimon recently labeled the issue.

Drawing on the metaphor that “you never have just one cockroach,” Edwards warned that these bankruptcies signal deeper issues in a highly leveraged sector that has spread its “tentacles… deeply into the real economy.”

Fortune notes to Edwards that more mainstream, less bearish voices are sounding similar warnings, Mohamed El-Erian at the Yahoo Finance Invest conference and Jeffrey Gundlach, the “bond king,” who takes a similarly skeptical view of private equity. Edwards agreed that something is in the air. “I would say there are more voices of skepticism. And again, this is one thing which makes me worry. This bubble can go on. If it is a bubble can go on quite a long while. Well, we can kick the can down the road many times. Normally, the skeptics are swept aside.”

For investors trapped between the fear of a collapse and the fear of missing a meltup, Edwards told advised investors to take him with a grain of salt but be mindful of potential warning sings. “I say that I predict a recession every year, don’t listen to me, but these are the things you should be looking out for.” Paraphrasing an infamous quote from former Citi CEO Chuck Prince that summed up the bubble mentality with a metaphor about a dance party, Edwards recommended: “In terms of dancing while the music’s still playing, you have to decide whether to be in front of the band, pogoing, or dancing close to the fire escape, ready to get out first.”

Read the full article HERE.

US consumer sentiment fell in November to one of the lowest levels on record as Americans’ views of their personal finances soured.

The final November sentiment index dropped to 51 from 53.6 in October, according to the University of Michigan. The figure was only slightly better than the preliminary figure.

The current conditions gauge slid 7.5 points to a record low of 51.1. Views of personal finances were the dimmest since 2009.

“Consumers remain frustrated about the persistence of high prices and weakening incomes,” Joanne Hsu, director of the survey, said in a statement.

Consumers expect prices to rise at an annual rate of 4.5% over the next year, easing for a third month, data released Friday showed. They saw costs rising at an annual rate of 3.4% over the next five to 10 years, compared to 3.9% in October.

While Americans’ inflation worries have ebbed, they remain anxious about the high cost of living and job security. The report showed the probability of personal job loss climbed to the highest since July 2020.

Continuing claims for unemployment insurance — a proxy for those receiving benefits — rose early this month to a four-year high, suggesting jobless Americans are finding it harder to land new jobs.

The University of Michigan report touched on the growing divide between wealthier consumers and those with less income.

“The wealthiest consumers appear equipped to continue spending, while the financial positions of non-stockholders are deteriorating,” Hsu said. “These trends indicate that aggregate economic statistics can obscure vulnerabilities within certain parts of the population.”

Consumers became slightly more downbeat about the near-term economic outlook despite the end of the longest government shutdown in US history. Buying conditions for big-ticket goods dropped to the lowest on record.

The survey was conducted from Nov. 3 to Nov. 17.

Read the full article HERE.

Having surged nearly 80% in 2025, platinum has become one of the best-performing commodities. The latest report from the World Platinum Investment Council (WPIC) indicates that although the market may move towards balance in 2026, fragile supply chains, volatile investment demand, and intense competition for physical metal between the US and China are pushing the platinum market into an unprecedented period of high volatility.

The core issue in the current platinum market is a persistent structural supply shortage. WPIC data shows that the global platinum market is expected to see a supply deficit of 692,000 ounces in 2025. Although this is slightly narrower than previous estimates, the tight situation remains severe.

South Africa, the world’s largest platinum producer, is plagued by soaring costs and operational disruptions, leading to a 5% year-on-year decline in global mine supply, which is 10% below the pre-pandemic five-year average. Despite a 7% increase in recycling supply to 1.619 million ounces, it still cannot compensate for the shortfall in primary supply.

On the demand side, while automotive sector demand (accounting for about one-third of the total) remains stable due to resilience in the fuel-powered vehicle market, industrial demand is expected to fall sharply by 22%. However, investment demand has emerged as a key variable driving prices, forecast to grow 6% to 742,000 ounces in 2025.

A new variable in the platinum market in 2025 stems from the competition for platinum between the US and China, which is reshaping the global supply chain and exacerbating market tightness. Tariff threats and the inclusion of platinum on the US critical minerals list have prompted large flows of platinum into US warehouses. In just the last three weeks, New York warehouses absorbed nearly 290,000 ounces of the metal. This phenomenon of “inventory transfer” rather than “inventory increase” has led to physical shortages in traditional trading hubs like London and Zurich.

As the world’s largest platinum consumer, China’s imports hit a record of 1.2 million ounces in the second quarter, consistently exceeding estimates of domestic consumption. The imminent launch of platinum futures on the Guangzhou Futures Exchange, which will for the first time publish inventory data, will enhance transparency in the Chinese market and could also strengthen China’s influence over international pricing.

Analysts point out that the tightness in the platinum market is most evident in lease rates. The recent one-month implied lease rate remains above 10%, down from a peak of 35% in July but still far above the normal level near zero. These “crazy lease rates” have sharply increased costs for industrial users, even causing market liquidity to dry up at times. Tim Murray of Johnson Matthey admitted that in his 36-year career, he has never seen such sustained tightness in the platinum market.

The WPIC forecasts that the platinum market will achieve a small surplus of 20,000 ounces in 2026, but this “balance” is actually very fragile. Firstly, if global trade tensions ease, an estimated 150,000 ounces of platinum is expected to flow back from US warehouses to London, creating an illusion of balance without solving the fundamental supply shortage. Secondly, prices need to rise significantly further to stimulate new production. Craig Miller, CEO of Valterra Platinum, stated that while about 90% of mines are now profitable, prices would still need to increase by about 50% to incentivize new project investment.

In conclusion, the platinum market is at a crossroads of structural transformation. On one hand, years of underinvestment and production challenges in South Africa limit supply elasticity. On the other hand, US-China geopolitical competition is distorting inventory distribution and amplifying physical tightness. Even if the market statistically moves towards balance in 2026, the fragility of the supply chain and the major powers’ scramble for strategic resources will likely keep platinum prices trading at elevated levels.

Read the full article HERE.

Key Points:

Gold is having a bad month. The struggles will likely turn out to be a blip rather than the start of a sustained downturn, Goldman Sachs says.

All in all it has been a great year for gold, with the precious metal up nearly 75%. Starting about a month ago, however, investors began to show some doubts. Gold reached a record high of $4,336 an ounce on Oct. 30. Since then, it’s tumbled about 6% to $4,062 on Tuesday.

One culprit has been a strengthening U.S. dollar. Since gold is priced in dollars, a stronger dollar makes gold more expensive for global buyers who need to swap out of local currencies to acquire the metal.

A separate, but related, factor is the outlook for U.S. interest rates. A month ago, markets were all but certain the Federal Reserve would issue another interest-rate cut in December. In the past few weeks, those odds have fallen below 50%. Higher U.S. interest rates help strengthen the dollar and make gold, which doesn’t pay any interest, comparatively less attractive than Treasuries.

The question weighing on gold investors: Is this just a bull market gut check, or the start of a bigger selloff?

Put Goldman Sachs clearly in the blip camp.

On Monday, the investment bank forecast gold prices would hit $4,900 by the end of 2026, representing a gain of about 21% on Tuesday’s price. The metal could go even higher, according to Goldman analyst Lina Thomas. She sees “significant upside if the private investors diversification theme were to gain more traction”—a reference to more U.S. and international investors buying gold to complement their stock-and-bond portfolios.

What’s behind all the bullishness? The current gold rally has been driven by heavy buying from two key sources—central banks and private investors, such as retirement savers, investment funds and more. Goldman doesn’t see either one changing their behavior.

Central banks began buying gold to move away from dollar-denominated assets in 2022, after the U.S. froze Russian assets in response to the country’s invasion of Ukraine. That rationale hasn’t changed, notes Goldman, which says central banks’ purchases appear to have ticked up in September, the latest month for which it has data.

Gold buying by investors, such as Main Street retirement savers, also appears to be on the rise. So far this year, investors have poured more than $41 billion into SPDR Gold Shares and other exchange-traded funds. While ETF investors have pulled some money out in the past month, the turnaround hasn’t been dramatic, with the funds seeing outflows of only around $1.2 billion. Thomas expects ETF investors, alongside ultrahigh net worth individuals who buy physical gold, to continue accumulating the metal.

Goldman isn’t the only one that remains bullish despite the pullback. Last week, strategists at UBS predicted gold could hit $5,000 in 2026 or 2027.

Read the full article HERE.

The S&P 500 was set for its longest losing streak since August, as a six-month rally shows signs of cracking following a $1.2 trillion selloff in cryptocurrencies and fears around stretched artificial intelligence valuations.

Futures tracking the S&P 500 were down 0.4% at 8:26 a.m. in New York after earlier dropping as much as 0.8%, putting the benchmark on course for a fourth day of declines as investors reconsider their optimistic expectations for Federal Reserve interest-rate cuts. Futures on the technology-heavy Nasdaq 100 Index also slipped 0.5%.

Asian and European stock indexes fell, while Bitcoin briefly dropped below $90,000 for the first time in seven months. Meanwhile, a Bank of America Corp. survey showed that fund managers’ cash holdings have fallen to low levels that have triggered a sell signal in the past.

“Appetite for AI is under pressure from circularity worries and bubble fears,” said Ipek Ozkardeskaya, a senior analyst at Swissquote. “The bad news is that some of the more bullish vibes — AI enthusiasm, massive government stimulus, dovish central-bank expectations — are starting to fade.”

The chorus of warnings about a possible AI bubble grew even louder on Tuesday after JPMorgan Chase & Co. Vice Chairman Daniel Pinto warned that valuations in the industry could be due for a correction. “That correction will also create a correction in the rest of the segment, the S&P and in the industry,” Pinto said at the Bloomberg Africa Business Summit in Johannesburg.

US stocks have come under pressure this month as investors worried the AI-led rally has run too hot. The S&P 500 is trading at about 22 times forward earnings, above its 10-year average of 19. Concerns are also rising about the economic impact of the longest US government shutdown.

Cryptocurrencies, meanwhile. have slumped, with many smaller coins nursing losses in excess of 50% for this year. Digital tokens have lost a combined $1.2 trillion of market value since Bitcoin peaked in October, figures from CoinGecko show.

Dip Buyers

Investors have so far been keen to buy the dip given underlying optimism about US economic growth. On Friday, the S&P 500 reversed losses of as much as 1.4% to end the day little changed and a similar swing looked possible on Tuesday too, as futures rebounded off their session lows.

“We tend to treat market retrenchments as a buying opportunity,” said Marija Veitmane, head of equity research at State Street Global Markets. “The economy is strong enough to support robust earnings growth and yet weak enough to warrant rate cuts.”

Still, results from Home Depot Inc. offered a warning to investors about the strength of US consumers after the world’s largest home-improvement retailer cut its full-year earnings outlook. There’s also higher demand for bearish bets on technology stocks, suggesting faltering confidence in a sustainable rally.

Heavy spending on AI is also raising worries about companies’ capacity to finance such bills. Credit spreads for Oracle Corp. have soared to the highest in nearly three years. In a further sign of growing worries about the space, Microsoft Corp. and Amazon.com, Inc. were both downgraded to neutral from buy at Rothschild & Co Redburn, which said the bull case for generative AI is no longer clear.

BofA’s warning of a potential sell signal came as fund managers’ average cash holdings fell to 3.7%, something that has only occurred 20 times since 2002. Stocks fell and Treasuries outperformed in the following one to three months each time that has happened in the past, BofA strategists said in a note. The survey also showed that for the first time in 20 years, investors said companies are overinvesting.

Nvidia Test

The S&P 500 is now about 3% below its October peak. On Monday, the benchmark index closed below its 50-day moving average for the first time since April. Market breadth has also weakened, with only 54% of S&P 500 constituents trading above their 200-day moving average, according to data compiled by Bloomberg.

All eyes are now on AI bellwether Nvidia Corp.’s quarterly earnings report due Wednesday. Meanwhile, swaps traders have pared bets on the possibility of a Fed rate cut in December.

For Matt Britzman, senior equity analyst at Hargreaves Lansdown, the longer-term outlook for stocks remains intact.

“Pullbacks are never fun but are often healthy, especially in a market that’s showing signs of frothiness,” he said.

Here’s what other market participants are saying about the outlook for US stocks:

Homin Lee, a senior macro strategist at Lombard Odier

“We believe that the nervousness will persist until the September employment report provides greater clarity. At the current juncture, a soft US labor market data or a large beat in Nvidia earnings could help.”

Ulrich Urbahn, head of multi-asset strategy and research at Berenberg

“Crypto market turmoil has increased equity volatility, while the Fed’s mixed signals on rates keep investors wary. AI remains a key growth driver, but concerns over potential earnings disappointments and valuation pressures persist. Overall, stocks face a delicate balance between positive AI momentum and macroeconomic caution as the year closes. We remain cautiously optimistic though, given likely strong buyback and flow support over coming weeks.”

Mary-Sol Michel, a director a Swiss Life Gestion Privée in Paris

“We were expecting a drawback to occur but a bit earlier earlier than this. We had therefore already cut some positions, notably on ASML and Alphabet. The selling isn’t usual in terms of seasonality as typically at this time of the year people are expecting a year-end rally. We’re staying invested in tech, but we decided to take profits to secure our performance this year. There’s a lot of nervousness in the tech segment.”

Eric Bleines, a fund manager at SwissLife Gestion Privée

“The question is whether the selloff will continue after Nvidia’s results: this will make the difference between the market just taking a breather or going for a correction.”

Joachim Klement, a strategist at Panmure Liberum

“Stock markets in the US and UK are still underpinned by solid fundamentals and in the US, weaker jobs data for September could revive the bets for a December rate cut by the Fed. US stocks will be supported by Fed rate cuts, though these will benefit US value stocks more than the expensive tech sector.”

Read the full article HERE.