Daily Memo (23-Dec-2025)

Top News

• US Domestic Policy/Politics

  • Large batch of Epstein files released; many references to Trump — significant media/political risk potential. [Epstein files]
  • Trump administration orders recall of 30 US ambassadors, major reshuffle underway. [ambassadors]
  • Trump announces “Trump-class” warships, signaling renewed defense spending focus. [Trump-class warships]
  • Judge ruling: Venezuelan deportees given legal recourse in US — signals volatility around US immigration/removal policy. [Venezuelan deportees]

• Energy/Geopolitics

  • US actively seizing Venezuelan oil tankers; explicit White House intent to force regime change in Venezuela. [oil tankers]
  • China voices strong opposition to US oil seizures as legal overreach.
  • Russian missile/drone attacks on Ukraine: Nationwide power outages and casualties. [Russian air attack]
  • Ongoing and intensified Bay Area/SoCal storm systems prompting significant flood risk and operational/network interruption in West Coast US. [Bay Area storm, Redding flooding]

• M&A/Corporate Activity

  • Paramount renews bid for Warner Bros, touting $40B financing from Larry Ellison; signals escalation in media sector M&A. [Paramount renews bid]
  • Wegovy (oral) weight loss drug receives FDA approval; Novo Nordisk up on first-in-class pill. [Wegovy pill approved]

• Macro/Market Moves

  • Equities and precious metals up; yen in focus for potential FX intervention. [stocks, precious metals]
  • Treasury, jobs, and CPI data releases coming up; positioning ahead of year-end.

Upcoming Catalysts

• Nov 2025 CPI (US): 11-Dec — Confirmation of core disinflation could reinforce rally in rate-sensitive growth, or surprise could reignite inflation fears. [November 2025 CPI]
• Q3 2025 GDP (US third estimate): 20-Dec — Will shape cyclical/defensive sector rotation and influence next Fed move expectations. [Q3 2025 GDP]
• December FOMC Meeting & Summary of Economic Projections: Mid-Dec — Any change to rate cut/timing outlook is highly consequential for risk assets and USD.
• Nov PCE inflation (Fed's preferred gauge): 24-Dec — Strong/weak reading carries major weight for market-implied 2026 rate path. [November 2025 PCE]
• Nonfarm Payrolls (Dec): 2-Jan — Wages and job growth will dictate "soft landing" vs stagflation/recession narrative. [December 2025 Jobs Report]
• US government shutdown deadline: 19-Jan — If not resolved, would immediately hit risk and USD; healthcare, defense, and contractors most exposed.
• ECB, BoJ early 2026 policy meetings: Jan — Global flows into EUR, JPY, carry trades, and eurozone equities will be affected. [ECB Jan meeting][BoJ Jan meeting]
• Major Tech Earnings (Q4 2025): Late Jan–Feb — Large-cap tech (NVDA, GOOGL, MSFT, AAPL, AMZN, META) will drive broad market sentiment.
• OPEC+ 2026 production meeting: Feb — Potential risk for a spike in oil volatility and inflation expectations.
• US Supreme Court 2025–26 regulatory decision window: April–June — Decisions could hit/lift tech, health, energy, and ESG sector valuations. [Supreme Court docket]
• 2026 Debt Ceiling/Extraordinary Measures: 1H 2026 — Renewed T-bill and yield volatility, potentially severe if brinkmanship emerges.

Macro: US Growth, Inflation, Policy

• Labor Market & Growth

  • Payrolls have plateaued above pre-2025 levels; Nov saw moderate hiring (flat YoY) with unemployment now at 4.6% (highest since 2021). [Unemployment Rate]
  • Job openings (JOLTS) stable-to-down vs early 2025, reinforcing labor softening. [Job Openings (JOLTS)]
  • GDP growth set for >3.5% in Q3 2025; short-term recession odds remain low. Indicators suggest continued, but slower expansion into 2026. [Q3 2025 GDP]
  • Consumer sentiment is weak (Univ. of Michigan index below 55), suggesting caution for retail/cyclical/consumer discretionary exposure. [Consumer Sentiment]

• Inflation & Rates

  • Core CPI/PCE trends are decelerating; YTD core CPI sequential growth is modest. FRED: Nov Core CPI index edge up (YoY slowing). [CPI (Core)] [PCE Price Index (Core)]
  • Breakevens, TIPS curves, and prediction markets see US 2025 annual inflation coming below target; risk of upside in 2026 modest but not zero.
  • Fed Funds Rate currently drifting lower, last at 3.88%, with recent cuts confirmed in FRED data. Curve is positively sloped — sign of "policy normalization." [Fed Funds Rate]
  • 2Y and 10Y yields are both steady; spread (10Y-2Y) back in positive territory, signaling stabilized forward growth/risk premium. [2Y Treasury Yield] [10Y Treasury Yield] [10Y–2Y Yield Spread]

• Fiscal Dynamics

  • No high-probability expectation of large 2025 government spending/tax cut shocks. Debt outstanding growth is gradual; debt ceiling/extraordinary measures will re-emerge as a known 1H26 risk.
  • Shutdown threat risks back on table in Jan if political impasse escalates.

Macro: Global FX & Energy, Geopolitical Risk

• USD, JPY, EUR

  • USD index inches lower (broad TWI 120.5); market expects range-bound behavior unless major political/fiscal events. [USD Index]
  • Yen on FX intervention watch. No immediate policy shifts but narrative risk around BoJ/JPY policy remains high-impact for global flows. [BoJ Policy]
  • ECB subdued, minimal movement in EURUSD. China deflation risk not yet contagious abroad.

• Oil & Commodities

  • WTI ~ $57–$60: supply/demand fundamentals muted; price is below stress zone for inflation-linked assets/Energy equities. [WTI Crude Oil]
  • Venezuelan crude geopolitics: US seizures/pressure on Maduro presenting upside risk for longer-dated oil; any escalation or regime turnover could amplify supply uncertainty. [oil tankers]
  • Gold up strong, record high close highly likely into year-end per prediction data (top performance among alternatives appears possible by year-end). [Will Gold close at $3,200 or more at the end of 2025?]

• Geopolitical Stability

  • Russia/Ukraine war: fresh missile attacks, power grid disruption, but no imminent unexpected escalation (nuclear or direct NATO involvement remains low probability for 2025; moderate for 2026). [Russian air attack]
  • Ongoing US-Venezuela, Iran, Israel, and MENA flashpoints; incident risk (oil, defense, airline exposure) trending higher into Q1.
  • Strong weather/flood events in West US may impact regional REITs, insurance, utilities. [Bay Area storm]

Sectors & Thematic Flow

• Tech & AI

  • Fragmented AI leadership race: Google expected to retain top model into early 2026 [Google have the top AI model], with xAI, OpenAI, and Anthropic surging as disruptive competitors, with IPO and M&A waves driving capital flows into NVDA/MSFT/GOOGL.
  • No near-term AI 'bust' risk (AI correction prediction remains low); continued capital recycling toward semis/cloud/infra remains the base case.
  • Major M&A in streaming (Paramount, Warner Bros) — prioritization of blockbuster deals, focus on adtech/distribution models. [Paramount renews bid]

• Healthcare

  • Strong catalyst from Wegovy/GLP-1 oral FDA approval — upward pricing/volume for drug sector, risk for traditional obesity/diabetes names. [Wegovy pill approved]
  • Pandemic risk/pricing low, but vaccine hesitancy, rising measles cases, and regulatory saber-rattling (RFK Jr. vaccine policy threats) could create isolated volatility in mid-2026. [RFK Jr. vaccine policy]
  • No significant ACA/tax credit extension — policy stability for healthcare providers/insurers.

• Energy/Industrials

  • Defense: US and Israel rearmament, new “Trump-class” warships — signals upside demand for defense primes, naval shipbuilding ecosystem. [Trump-class warships]
  • Oil: OPEC+ supply discipline window coming up Feb-2026; mild near-term price risk, but regime-change (Venezuela) could spark renewed upside surprises. [oil tankers]

• Real Estate/Housing

  • Housing starts stable-to-soft (troughing, but not collapsing), home price index slightly down, mortgage rate expectations stabilized by fixed-rate curve. [Housing Starts] [Case-Shiller U.S. Home Price Index]
  • Fannie Mae/Freddie Mac IPO path re-confirmed for 2026; mortgage finance sector will get new public equity overhang.

• Consumer, Retail, Financials

  • No evidence of severe consumer retrenchment but watch for sudden consumer spending drop if labor market reverses. [Retail Sales]
  • Bank financial conditions easing per Chicago Fed Index; no broad acute risk. Major US bank/failure bailout probability remains low in H1 2026. [Chicago Fed Financial Conditions Index]
  • Casino/gaming and sports betting sector: regulatory/prediction market clampdown risk very low.

• Alternatives: Crypto, Commodities

  • Bitcoin, Ethereum, Solana: near-term volatility, but catastrophic downside or parabolic upside both remain unlikely by year-end; crypto flows, stablecoin market stress, or forced liquidation events not anticipated.
  • Gold: sharp upside in 2025 expected; risk-off flows, lingering real yield compression, and systemic event hedges dominate allocation thesis. [Will Gold close at $3,200 or more at the end of 2025?]

Single-Name/Corporate Situations

• Paramount, Warner Bros, Oracle (Larry Ellison): Escalation of hostile offers has direct implications for media valuation re-rating and risk arbitrage capital deployment in the sector. [Paramount renews bid]
• Novo Nordisk: First-mover GLP-1 oral approval is a material positive to volume/penetration story and likely to drive incremental rerating for obesity/weight-loss therapeutics. [Wegovy pill approved]
• Tech “Magnificent 7” (NVDA, GOOGL, AAPL, etc.): Further rotation among mega-cap leadership into 2026; no abrupt reversal evident pre-earnings season, but any AI chip supply chain hiccup could trigger sector-wide derisking. [Magnificent 7 shrinks below 25% of S&P 500 in 2025?]

Bottom Line

• Macroeconomic risks are receding into year-end. US economy remains on stabilization/slow-growth track into 2026 — “soft landing” scenario priced in. [US recession in 2025?]
• Watch for market-moving policy headlines on the US federal shutdown, debt ceiling, Venezuela, and OPEC+ meetings — these are the likeliest sources of volatility or value dislocation for the next 2–3 months.
• Sectors best positioned: defense/aerospace, select pharma/obesity drug plays, gold.
• Risks: large weather/flood disruption in California (regional REITs/utilities/insurance), Venezuela regime escalation (energy), untimely political bombshell from ambassador/diplomatic reshuffles or Epstein file fallout. [Epstein files]

No immediate posture change required, but risk remains two-sided into early Q1.