I like the new format here with bolt headlines, as it’s easier to read for me.
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Weekly Macro Brief – week of 17–24 Nov 2025
- Fed cuts are no longer guaranteed — and the data is messy: The delayed jobs report showed hiring slowing (119K jobs) and unemployment rising to 4.4%, but not enough weakness to force a cut. Fed officials disagree sharply: some want to pause, others want to cut again. Markets now see December as a 50/50 chance instead of a sure thing. Shutdown-distorted data makes the Fed’s job harder. [WF][JPM-WM]
- AI profits remain strong — but investors are questioning the “quality” of those earnings: S&P 500 earnings keep rising, and AI-linked companies still drive most upgrades. But there’s debate about whether tech giants are using slow depreciation (5–6 years instead of 2–3) to make profits look better. Risky AI-themed assets (Bitcoin, meme ETFs) also sold off, showing nerves around the theme. [EY][MER]
- Consumers look okay overall — but the gap between rich and poor is widening fast: Spending grows 2–3%, but mostly because wealthy households are flush with stock-market and housing gains. Lower-income households face weak wage growth, unaffordable housing and rising delinquencies. Consumer sentiment is at recession-like lows (51) even though stocks are near record highs — a disconnect we’ve never seen before. [JPM-AM][MER][CB]
- Tariffs and energy: inflation is sticking around, but not spiraling: Tariffs are keeping goods prices elevated (coffee +20%, canned goods +5%). The government rolled back some food tariffs, but they’re too small to move overall inflation. AI data-centers will push electricity demand up, with some regions seeing 40–60% higher power prices by 2030 — but energy is such a small share of consumer budgets that the national impact stays limited. [WF][MER]
- Europe looks cheap and is slowly reforming — but still best used selectively: European stocks trade at large discounts vs the U.S. Activity is stabilizing and some major reforms are underway. BlackRock stays neutral overall but prefers financials, utilities and healthcare, with defense and AI-adoption opportunities on the radar. [BLK]
Sources:
https://mlaem.fs.ml.com/content/dam/ML/ecomm/pdf/CMO_Merrill_11-17-2025_ada.pdf
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Weekly Macro Brief Ending December 2, 2025
- Fed on track for a third “risk-management” cut – with a softer but still intact labor market: Backlogged data and the shutdown make the economy harder to read, but what we do see is a “no hiring, no firing” stasis: payroll growth slowing, unemployment at 4.4%, jobless claims still low and wage growth moderating. That combination gives the Fed cover to cut again on Dec. 10 without obviously “cutting into strength.” BlackRock expects another 25 bp cut next week and room to trim further in 2026 if the labor market keeps cooling in this orderly way. [BLK][CB]
- Earnings and AI capex are still driving the cycle – but leadership is broadening and quality is under scrutiny: S&P 500 EPS is growing ~13% y/y (about 2x the long-run average) with profit margins near or at record highs and forward earnings at all-time highs. AI-related stocks have powered roughly 75% of total S&P returns, ~80% of earnings growth and ~90% of capex growth since late 2022, but the latest pullback showed the market is becoming more selective on who actually monetizes the AI build-out. Yardeni’s work shows that both the Magnificent 7 and the “impressive 493” are contributing to earnings growth, with forward EPS for the full index above $300 already. [JPM-WM][CB][EY]
- Roaring 2020s base case intact – melt-up odds trimmed, bear tail slightly fatter: Yardeni keeps a 55% subjective probability on a “Roaring 2020s” scenario (productivity-led expansion, no classic recession, S&P 500 reaching ~10,000 by 2029) but cuts the odds of a near-term melt-up from 25% to 15% after last week’s AI correction, reallocating the 10% to a higher bear-scenario probability (20% → 30%). He still sees productivity rising toward 3–4% per year, real wages rising and profit margins staying high, but acknowledges more room for valuation air to leak out of AI leaders. [EY]
- Household balance sheets and real wages are a powerful shock absorber: Bilello highlights record U.S. household net worth (~$160T vs. ~$26T in the mid-1990s), a record number of 401(k) and IRA millionaires, and 29 consecutive months of positive real wage growth after a long squeeze. Rents, when adjusted for wages, are at their most affordable level since at least 2017, and it is ~40% more expensive to buy than rent – effectively encouraging “patient renters” and slowing housing-related stress. [CB]
Sources:
Weekly Macro Brief Ending December 10, 2025
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Fed will almost certainly cut – but the split and the path after that matter more than the cut itself: Both Wells Fargo and JPM AM expect a 25 bp cut this week to 3.50–3.75%, but flag unusually open dissent: several regional presidents may vote against easing, and at least one governor wants faster easing. The median 2026 dot is expected to stay around 3.375%, well above market pricing of multiple cuts. A cut with 3–4 hawkish dissents would be a hawkish outcome for markets and could push the next cut out to March or later. [WF][JPM-AM][CB]
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Growth is slowing, not stalling – services still carry the torch as goods, capex and labor cool: Q3 real GDP is tracking roughly 2½–3½% annualized, but Q4 looks close to zero as auto sales, “old-economy” capex (trucks, drilling, housing) and government output soften. Services and the consumer still drive growth, helped by 29 straight months of real wage gains, but payroll growth has practically stalled and unemployment has crept up to ~4.4–4.5%. [WF][JPM-AM][CB]
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Inflation is sticky around 3%: tariffs and energy on one side, rents and gas on the other: Headline and core inflation prints through September are roughly in line with expectations: CPI ~3%, PCE just above 3%. Tariffs are feeding into core goods, electricity and gas prices, but falling gasoline, soft travel/auto demand and rising rental vacancies are restraining overall inflation. JPM expects PCE to edge up slightly in early 2026 as tax refunds boost spending, then drift back toward (or slightly below) 2% by late 2026–27. [WF][JPM-AM][CB]
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Markets are priced for perfection: The S&P 500 is up ~17–18% YTD with earnings up ~13% in 2025 and 17% pencilled in for 2026, profit margins at a record ~13.6% – and valuations stretched: price/peak earnings ~26x (50% above median), price/sales at an all-time high, and CAPE around 40, a level only seen around 1999–2000. Historically, this combination implies lower long-run equity returns even if it tells you very little about the next 6–12 months. [CB]
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AI is now a genuine macro force – and a financing problem: BlackRock frames AI as “micro is macro”: an unprecedented, capital-intensive build-out front-loads capex and leverage while back-loading earnings and productivity gains. The bulls’ case (AI breaks the 2% U.S. growth trend) is now embedded in risk assets; any disappointment on growth, earnings or the ability to fund capex at current yields is a key macro risk. They stay pro-risk and overweight U.S. equities on the AI theme but underweight long bonds. [BLK][CB]
Sources:
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