Why the Fed could be on hold, volatility and the bull market, 2026 could be big for Waymo

Market Domination Overtime - December 29, 2025 - Summary

Key Concepts:

• Santa Claus Rally: A potential market upswing during the last five trading days of the year and the first two of the new year.
• Fed Funds Rate: The target rate set by the Federal Reserve for banks to lend reserves to each other overnight.
• AI Trade: Investment focused on companies involved in Artificial Intelligence development and application.
• Commodity Reversal: A change in the direction of price movement for raw materials like gold and silver.
• Tariffs: Taxes imposed on imported goods, impacting costs and potentially consumer prices.
• K-Shaped Recovery: An economic recovery where different segments of the population experience vastly different outcomes.
• Bull Market: A period of sustained increase in stock prices.
• Cyclical Bull Market: A bull market tied to the economic cycle, often driven by specific sectors.
• Robotaxi: Autonomous vehicles offering ride-hailing services.

Market Overview & Closing Bell Recap

The major indices closed lower on December 29th, 2025, marking the third consecutive day of declines. The Dow was down 0.1%, the Nasdaq down 0.2%, and the S&P 500 was mostly flat. Over the past five days, the S&P 500 is up 0.4%, needing a 1.3% gain over the final five trading days to confirm a “Santa Claus rally,” considered a positive indicator for 2026. Trading volume was low due to the shortened week.

Commodities Update

Gold experienced a reversal after a Monday sell-off. Silver saw its largest single-day drop in five years on Monday but rebounded significantly today, gaining over 8% due to a projected supply deficit and onshoring initiatives. Copper also showed positive momentum.

Federal Reserve Minutes Analysis

The Federal Reserve released minutes from its December meeting, revealing a split opinion regarding future rate cuts. While most participants believe cuts are appropriate if inflation declines, some advocate for maintaining current rates due to concerns about stalled inflation and the job market. The minutes stated, “Most participants judged that further downward adjustments to the target range for the Fed funds rate would likely be appropriate if inflation declined over time as expected.” Some officials were willing to hold rates steady pending further economic data. Kansas City Fed President Jeff Schmid believed a rate cut was not justified given the lack of significant deterioration in the job market. Fed officials anticipate inflation remaining “somewhat elevated” in the near term, with potential upward pressure from tariffs.

Political Risk – Trump & the Fed

Former President Trump threatened to sue Federal Reserve Chair Jerome Powell and expressed a desire to fire him. Experts believe a lawsuit could escalate to the Supreme Court, referencing a similar case involving Fed Governor Lisa Cook scheduled for January. While a lawsuit is possible, it’s considered improbable given the timing of potential chair nominations.

Stock Specifics & Analyst Insights

• Meta: Up 1% following a $2 billion acquisition of Chinese AI startup Manis.
• Intel: Up 2% after Nvidia took a $5 billion stake in the company.
• Planet Labs (PL): Recommended by Greg Pendy (Clear Street) due to its daily Earth mapping capabilities and the potential unlocked by AI analysis of its vast data set.
• GlobalStar: Positioned to benefit from the demand for satellite connectivity, particularly through its partnership with Apple, enabling text messaging on iPhones in remote areas.
• Intuitive Machines: Pendy raised his price target to $25, citing Trump’s space agenda and potential contracts for lunar infrastructure, including a lunar terrain vehicle.
• Tesla: Released preliminary Q4 delivery estimates, anticipating a 15% year-over-year decline, lower than Wall Street expectations. The stock’s performance is increasingly driven by AI and robo-taxi prospects.
• Whimo (Google): Pru Marian highlighted Whimo’s rapid expansion of its robo-taxi service, operating without safety drivers in multiple cities, and its plans for further expansion in 2026.

Economic Themes for 2026 (Bank of America Institute)

• Economic Resilience: The US economy has shown surprising resilience, but a “K-shaped recovery” is emerging, with higher-income households driving spending while lower-income households lag.
• Affordability Concerns: Inflation and rising costs are impacting consumer spending, with 30% of lower-income households living paycheck to paycheck.
• Shifting Consumer Preferences: Consumers are exploring alternatives to traditional wine and spirits, including beer, seltzers, and non-alcoholic options.
• Generational Shifts: Baby Boomers are adjusting spending habits, while Gen Z faces economic challenges and may have different consumption patterns.
• AI Impact: AI is transforming industries, but its energy demands and potential cost increases are concerns.

Wine & Spirits Industry Outlook

A 15% tariff on European Union wines is impacting the industry, potentially leading to price increases and reduced diversity on shelves. Wine sales are projected to decline by 8% in 2025. Consumers may seek value options or premium wines. The industry is focused on attracting Gen Z consumers.

New Year's Eve Champagne & Wine Recommendations (Wine Spectator)

• Argyle Brut Rosé (Oregon): $30.93, 93 points – A value option.
• Darm Chardonnay (California): $25, 93 points – A high-quality Chardonnay at an accessible price.
• Brunello di Montalcino 2020 (Italy): $80, 94 points – A splurge-worthy option with aging potential.

What to Watch – January 1st, 2026

• Initial Jobless Claims: Expected at 220,000, indicating a potential slowing of the job market.
• Mortgage Rate Data (Freddy Mac): Monitoring for continued declines that could stimulate housing demand.

Conclusion

The market faces a mixed outlook heading into 2026, with economic resilience tempered by affordability concerns and shifting consumer preferences. The AI trade remains a key driver, but risks related to valuations and competition are present. The Federal Reserve’s monetary policy and geopolitical factors, including potential tariff changes, will continue to influence market performance. The wine and spirits industry faces headwinds from tariffs and changing consumer habits.