Can you feel it? That strange mix of holiday excitement and end-of-year anxiety that always hits when the calendar flips to December.
For most people it’s about gifts, family dinners, and wondering where the hell 2025 went. For anyone with money in the markets, though, December feels more like the final lap of a very long, very bumpy race. One last chance to lock in gains, dodge landmines, and maybe – just maybe – ride that legendary Santa Claus rally into the new year.
This year the stakes feel unusually high. We’ve got a Federal Reserve meeting in two weeks, fresh economic data from the world’s two biggest economies landing on the same morning, a white-hot commodity quietly hitting all-time highs, and – because 2025 wouldn’t be complete without some chaos – thousands of passenger jets suddenly grounded worldwide because of solar flares. Yeah, you read that right.
A December Unlike Any Other
Let’s start with the big picture. Markets are exhausted but still greedy. The S&P 500 and Nasdaq have spent most of the autumn climbing a wall of worry built from inflation fears, geopolitical noise, and the nagging feeling that AI valuations got ahead of themselves. Yet every dip keeps getting bought. Classic late-cycle behavior – or the setup for the final melt-up before something breaks?
History says December is usually kind to stocks, especially the last two weeks of the year. Since 1950 the S&P has averaged a 1.3% gain in December, and the so-called Santa Claus rally (the last five trading days of the year plus the first two of January) has been positive 79% of the time. Traders are praying 2025 doesn’t become one of the ugly exceptions.
The Fed’s Christmas Gift (We Hope)
Right now the futures market is pricing in roughly an 85% chance of a 25-basis-point rate cut at the mid-December FOMC meeting. Not a slam dunk, but close. A cut would bring the fed funds rate to 4.25-4.50% and mark the third easing move of the cycle.
Why does this matter so much? Because lower rates act like rocket fuel for risk assets in the short term. Borrowing gets cheaper, discount rates fall, future earnings are worth more today – you know the drill. In my experience the market usually prices in the cut weeks ahead and then squeezes higher the day it actually happens, especially if the statement and Powell’s press conference sound even mildly dovish.
The risk, of course, is that the Fed surprises everyone and pauses. Inflation is still sticky in services, the labor market remains remarkably resilient, and the incoming administration is promising fiscal stimulus and tariffs – all potentially reflationary. One wrong sentence from Jerome Powell and the Grinch stealing Christmas.
China Hits a Speed Bump – Again
While Wall Street dreams of rate cuts, Asia woke up Monday to disappointing numbers out of China. The Caixin manufacturing PMI unexpectedly dipped into contraction territory at 49.8, down from 50.3 the prior month. For anyone keeping score, that’s the first contraction reading since July.
Weak domestic demand remains the culprit. Consumers are saving instead of spending, the property sector is still on life support, and local government debt issues keep policymakers walking a tightrope. Beijing has rolled out stimulus measures all year, but so far nothing has managed to reignite animal spirits.
“China’s recovery is losing momentum exactly when the rest of the world is looking for growth leadership.”
– Senior Asia economist at a major investment bank
The bright spot? India. GDP growth for the July-September quarter came in at a stronger-than-expected 8.2%, powered by manufacturing, construction, and a rebound in rural consumption. Someone in emerging markets is picking up the baton.
Silver Quietly Goes Parabolic
Everyone has been obsessed with gold this year – and for good reason – but silver has been the stealth winner. As of last week the white metal hit a fresh 12-year high and several commodity desks are now calling for $50+ over the next 18-24 months. That would be roughly double the current price.
What changed? Three things:
- Industrial demand (especially solar panels and EVs) is exploding
- Mine supply growth has completely stalled
- Investors are finally waking up to the gold/silver ratio sitting near 90:1 – historically extreme
I’ve always liked silver in environments where real yields are falling and industrial activity is picking up. We might just have both heading into 2026.
The Airbus Crisis Nobody Saw Coming
And now for the plot twist of the month: solar flares.
Last Friday aviation regulators issued an emergency airworthiness directive affecting roughly 6,000 Airbus A320-family aircraft – more than half the global narrow-body fleet in service. A software glitch linked to recent intense solar activity caused an “uncommanded pitch-down event” on a U.S. carrier flight in October. Scary stuff.
Airlines have been ordered to install a software patch immediately, which means pulling planes out of service during the busiest travel period of the year. We’re talking thousands of canceled flights, stranded passengers, and surging ticket prices on remaining routes.
Budget carriers in Asia and Europe that rely almost entirely on A320s are getting hit hardest. Some analysts estimate the grounding could shave 0.1-0.2% off global GDP growth in Q4 just from reduced travel and logistics disruption. Crazy how a cosmic event can move markets these days.
What Should Investors Actually Do?
Here’s my personal take after two decades watching year-end shenanigans:
- Stay long risk assets into the Fed meeting but keep stops tight – the rally could extend hard if we get the cut plus dovish guidance
- Add selective exposure to silver and silver miners on any pullback – the structural stories are too strong to ignore
- Avoid airline stocks for now – the grounding mess will pressure margins into 2026
- Keep some dry powder. January 2025 is going to be wild with a new U.S. administration walking into the White House
Perhaps the most interesting aspect of this December is how many moving parts we have at once. Normally year-end feels scripted – rates down, liquidity up, buy everything. This time we’ve got real economy cross-currents that could make or break the traditional script.
Either way, buckle up. The final month of 2025 is going to be anything but boring.
Happy trading – and may your eggnog be spiked and your portfolio green.
