Conflicting Signals into Year-End

Weekly Investment Update | By Brian Schreiner

Last week U.S. stocks, commodities, gold and bitcoin were down and bonds were flat. On Friday, and this morning, investors are in a positive mood as we enter Christmas week.

On Wednesday, December 24, the stock market will close at 1:00 PM and reopen for a full day of trading on Friday, December 26. Next week the stock market is open for a full day on Wednesday, December 31 and will be closed on Thursday, January 1, New Year’s Day.

Slowing Job Market & Wage Growth

Uncertainties for U.S. companies continue as the impacts of tariffs and artificial intelligence continue through the end of the year. Last month the unemployment rate reached the highest level in four years to 7.8 million or 4.6%, as many companies have stopped hiring and some are shedding workers.

As demand for workers has eased, employers haven’t had to offer pay raises and while this has helped keep inflation in check, albeit around 3%, it’s little comfort to workers who are trying to stretch their pay after years of higher-than-normal inflation.

Lower Inflation, Maybe

In November, the Consumer Price Index (CPI) showed that prices rose at their slowest annual pace in years, with the cost of housing and rent finally starting to moderate. This "cooler" inflation data is a welcome sign for consumers since it means the rate of living cost increases is declining. Still, the inflation rate remains too high and lower-wage workers continue to be under heavy pressure.

Core inflation, which strips out volatile food and energy prices, was 2.6% per cent last month but the report came after the recent government shutdown halted data collection for a six-week period, forcing the BLS to estimate many prices rather than using observed data from surveys.

“You’ve got to take it with a grain of salt,” said Diane Swonk, Chief Economist at KPMG. “Things that should be going up are going down and things that should be going down are going up. So it’s confusing and it doesn’t quite square with prices that we’ve observed.”

Consumer Confidence Low; Investor Confidence High

Consumer sentiment is near an all-time low, down nearly 30% over the last 12 months and business activity in December hit a six-month low. Both manufacturing and service industries are seeing slower growth as they face a more challenging environment and rising price pressures. 

As the year draws to a close, the U.S. economy appears to be in a transition phase: inflation is successfully coming down, but the pace of hiring and business expansion is cooling off. With consumer confidence and business activity declining, you’d expect investor confidence and market analysts to be in a cautious mood, but that is not the case. This is just one of many interesting contradictions and interesting dynamics at play as we move into 2026, which I will explore in more detail in my upcoming 2026 Investment Outlook.

Wishing you a wonderful holiday season surrounded by warmth and great fellowship. I hope you find time to rest, reflect and recharge for the year ahead!

“We think AI is a bubble. Figuring out exactly when a bubble is going to burst is reallty hard, but we would rather be investing almost anywhere on earth besides the U.S. these days.”

• Ben Inker, Head of Asset Allocation at GMO on CNBC, Friday, Dec 19, 2025

• Wall Street’s Bullish Consensus is Concerning (Bloomberg)

• Fundamentals should start to matter again: Ben Inker, GMO (CNBC)

• Passive Portfolios: More Exposed to AI Than Ever Before (Apollo)

• How Double Agent Spies Turned WW2 for the Allies (Get.factual)

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