The markets look to close the week higher after stumbling out of the starting blocks on Monday. The gains are largely founded on the assumption the Federal Reserve (Fed) will cut rates another 0.25% next week when it concludes its two-day meeting Wednesday. To a lesser extent, it is typical that around this time of the year a lot of portfolio positioning is undertaken for various reasons. Some advisors use this time for tax loss harvesting, while others may be dumping the stocks that did poorly and replacing them with winners to make year-end statements look better. Regardless, I am happy to say that the Christmas rally tradition appears to be holding true this year.
With Thanksgiving in the rearview mirror, many are now off to the races buying Christmas presents. If Black Friday is an indication, this year will be another banner year in terms of spending despite fewer sales and perhaps less inventory. U.S. online sales hit $11.8 billion on Black Friday, marking a 9.1% year-over-year increase per Adobe Analytics. However, if we dig a little deeper, we find that order volume fell 1% while prices rose 7%. Clearly, inflation is being felt as buy now, pay later usage increased 8.9% year-over-year, driving $747.5 million in online sales. With the early data in, It appears sales are robust, while consumers push debt into 2026.
This brings us to the FOMC meeting next week and whether the Fed will decide to cut interest rates again. The odds are currently 85% that it will cut rates, driven by a faltering job market. While inflation remains sticky, the anecdotal evidence suggests that job losses are mounting. While the November jobs report surprised to the upside, the December report (which comes out the week after the FOMC meets) is expected to show a more dire picture. So far this year, companies have laid off more than 1.1 million U.S. workers – the most since the pandemic in 2020 according to Challenger, Gray & Christmas. That represents a 54% increase in layoffs from 2024, and it is only the sixth time since 1993 that there have been more than 1.1 million job cuts through November. I’m on team rate cut but the important part will be the Fed’s outlook for 2026. That could move markets depending on what it says.
In company news, we learned that Netflix may be the winner in a bid to purchase Warner Bros. and HBO Max for $72 billion, plus debt. If the deal doesn’t meet antitrust approval, it could end up costing Netflix billions of dollars in a breakup fee. In other company news, if you struggled with the name change from Facebook to Meta, there may be hope yet. Mark Zuckerberg, CEO of Meta, said plans are in place to slash the resources devoted to the metaverse, likely to go full speed into AI. The company plans to cut its metaverse budget by as much as 30% next year, with layoffs expected as early as January. The cuts will target teams that work on the virtual reality headsets and the immersive online space, Meta Horizon Worlds, that failed to attract customers. In 2021, Zuckerberg said the metaverse will be the successor to the mobile internet. His enthusiasm may have been misplaced.
In closing, I bring you the word of the year according to Oxford. This year it chose “rage bait”, which simply means online content deliberately designed to elicit anger or outrage by being frustrating, provocative, or offensive. This does seem about right for 2025. Some of the runners up include aura farming and biohack. The last few winners include brain rot, rizz, and goblin mode. While this year’s word is particularly apropos, let’s take a minute to remember that we have agency and don’t need to take the bait. Here’s to a little less rage in 2026. Now you know.
Bruce J. Mason, MBA
