December always feels like the grand finale of a very long movie. You’re exhausted, you’re emotional, and you just want the ending to be happy. Markets feel exactly the same right now.
We’re staring down the last trading month of 2025 with the usual mix of hope (Santa Claus rally, anyone?) and dread (because nothing ever does anything go exactly to plan in December?). The indexes are near all-time highs, the Fed meets in two weeks, silver is acting like it drank three espressos, and half the world’s most popular airplane just got an emergency software patch because of solar flares. Yeah, you read that right.
Buckle up. This month is going to be wild.
The Big Question Hanging Over Everything
Will the Federal Reserve gift markets a third rate cut of the cycle on December 17-18?
Right now the CME FedWatch Tool puts the probability of a 25 basis-point cut at roughly 70%. That’s not a lock, but it’s close enough that most trading desks are positioning for it. A cut would bring the fed funds rate to 4.25-4.50%, the lowest since early 2023, and — in theory — give stocks the fuel for the famous seven-day “Santa Claus rally” that historically delivers an average 1.3% gain for the S&P 500.
But here’s what keeps me up at night: inflation is still sticky in services, wage growth is firm, and the incoming administration has promised tariffs that basically act like a tax hike. If the Fed pauses instead of cutting, the air could come out of this balloon fast. I’ve seen December surprises before — they’re rarely pretty.
China Can’t Catch a Break
Across the Pacific, the latest manufacturing PMI printed 49.2 — technically an improvement from last month, but still the eighth straight reading below 50. Translation: Chinese factories are still shrinking, just a tiny bit more slowly.
Beijing keeps rolling out stimulus, but a lot of it feels like pushing on a string. Local governments are drowning in debt, property developers are still zombies, and export orders are getting squeezed by talk of 60% tariffs on Chinese goods. The Shanghai Composite is down more than 10% from its September peak. Until we see a PMI convincingly above 50, I’m treating any Chinese stock rally as a dead-cat bounce.
Meanwhile, India Is on Fire
On the brighter side of emerging markets, India just dropped an absolute banger of a GDP print: 8.2% year-over-year growth in the September quarter. Manufacturing, construction, and consumer spending all fired on all cylinders.
I keep telling anyone who will listen — if you’re underweight India exposure heading into 2026, you’re leaving money on the table. The demographics, the infrastructure push, and the China-plus-one trade diversion are all lining up perfectly.
Silver Quietly Going Parabolic
Everyone has been obsessed with gold this year (and for good reason), but silver has been the stealth winner. Spot prices just punched through $32 for the first time since 2012 and several banks are now calling for $40-$50 over the next 18 months.
Why? Industrial demand is exploding — especially solar panels and electric vehicles — is exploding while mine supply growth remains anemic. The gold-silver ratio is still above 90, historically stretched territory. If you’ve been waiting for an entry on the white metal, December dips could be your last decent chance for a while.
- Physical silver ETFs have seen record inflows
- Solar installations expected to grow 25% globally in 2026
- Mine disruptions in Peru and Mexico not helping supply
The Airbus Crisis Nobody Saw Coming
Imagine finishing Thanksgiving dinner, heading to the airport for that holiday weekend getaway, and discovering your flight is cancelled — because solar flares messed with the airplane’s software.
Welcome to the last 72 hours. Airbus issued an emergency airworthiness directive affecting roughly 6,000 A320-family jets worldwide after investigators linked a “pitch-down event” on a U.S. domestic flight to cosmic radiation flipping bits in the flight-control computers. Airlines from Delta to IndiGo to easyJet have been scrambling to apply patches, grounding hundreds of planes during one of the busiest travel periods of the year.
The disruption is a painful reminder that even “boring” infrastructure stocks can deliver body blows when you least expect it. Airbus shares dropped 8% in a single session — the biggest one-day move in years.
“We are working around the clock with regulators and our airline customers to restore full operations as quickly and safely as possible.”
— Airbus spokesperson, Friday statement
Geopolitical Wildcards Keep Piling Up
Just when you thought tariffs were the only thing to worry about, rhetoric around Venezuela has taken a sharp turn. Comments from Washington suggesting possible military options to secure oil assets sent crude prices jumping 3% overnight.
Add in ongoing tension in the Middle East and the never-ending drama in Ukraine, and the VIX — while still low historically — has started creeping back above 18. My rule of thumb: when geopolitics starts moving energy markets in December, you pay attention.
What I’m Watching This Week
- ISM Manufacturing PMI (Monday) — needs to stay above 48 or recession fears flare again
- JOLTS job openings (Tuesday) — still too high = Fed stays cautious
- Nonfarm payrolls (Friday) — consensus 200k, but a big miss either way moves markets
- Every single word from Powell at the post-meeting press conference
Honestly? I’m keeping a decent chunk in cash equivalents right now. The risk/reward into year-end feels skewed toward caution. If we get the cut and payrolls come in soft-but-not-terrible, I’ll deploy aggressively into quality growth and precious metals. If the Fed pauses or headlines deteriorate, I want dry powder.
Either way, December rarely disappoints when it comes to drama. In my fifteen years doing this, the last month of the year has delivered some of my best trades — and some of my most painful lessons.
So here’s to hoping 2025 goes out with a bang rather than a whimper. Keep your stops tight, your watchlist updated, and maybe pour yourself an extra glass of something strong holiday cheer.
You’re going to need it.
