• With a rate cut for the December FOMC, policy rate sitting at 3.50-3.75%. Expect more cuts in 2026 albeit with less frequency.
• Data uncertainty is elevated: the US government shutdown delayed key releases (jobs, CPI), which complicates the Fed’s decision-making, data that has rolled in has been weak jobs and stagnant CPI.
• Key risk: If the Fed maintains restrictive policy too long while the economy weakens, growth could be impaired. Equally, cutting too quickly while inflation remains sticky could reignite. Hard challenge to navigate. 

• Headline CPI was approximately 2.7% YoY as of the latest available release.
• Core inflation fell to 2.6% in Nov 2025, although more data is needed to establush that trend.
• Goods inflation continues to ease, reflecting cooling demand and improved supply chains.

• Job creation has slowed significantly, with several months of weak private-sector hiring.
• The unemployment rate has drifted into the 4.4% range, reflecting a softer demand for labor.
• Corporate hiring freezes are becoming more common, and wage growth has moderated.
• Meaningful downside risks present even in a cooling scenario. 

• Tariffs remain an active geopolitical tool. While escalation is not the base case, tariff-related volatility can flare quickly, especially considering the Supreme Court's pending case.
• Tax policy remains in gridlock: extensions of existing tax cuts are still expected, but broader tax reform is unlikely in the near term.
• Fiscal deficits remain historically large, keeping upward pressure on inflation expectations and limiting the government's ability to deploy stimulative fiscal policy without cost.

Policy implication: More episodic volatility and a higher structural inflation floor.

• Fixed Income:  Continue to favor shorter durations given policy uncertainty and inflation risk.  Longer-dated bonds remain less attractive until inflation expectations decline and policy path becomes clearer. Real‐return (inflation‐adjusted) securities may be more interesting, but still challenged if inflation persists.
• Equities:  Quality companies with strong cash flow and pricing power remain key.  Innovation/technology exposures still compelling given secular themes. But valuations are elevated and growth is slowing, so selectivity is critical.
• Alternative/Strategic Assets:  Given inflation and policy risks, diversifiers (real assets, alternatives) continue to merit consideration.
• Digital Assets (e.g., Bitcoin):  If you still view them as strategic (as we do), the current volatility and policy backdrop may make them more interesting from a diversification/long-term adoption standpoint—but they require higher conviction and tolerate higher risk. As Global Liquidity (M2) continuously increases, our view is Bitcoin will appreciate.

• AI remains early in its adoption curve, driving capex cycles and productivity investments.
• The market is broadening beyond the “Magnificent 7,” with mid-cap innovators gaining traction.
• In a slower growth environment, winners will be defined not just by innovation but by execution, margin discipline, and scalability.

 Innovation leadership remains essential — but with higher scrutiny on earnings quality.

Domestic policy is becoming increasingly volatile under the current administration as compared to years past. This brings economic positives but also the possibility of social unrest, especially if the K-Shaped economy continues to widen the wealth gap. International policy has also heated up on two fronts:

• Venezuela: Political instability and uncertainty around sanctions, oil production, and election outcomes create episodic energy-market and emerging-market risk.
• Greenland: Rising geopolitical importance due to strategic location, Arctic shipping routes, and critical mineral resources adds long-term geopolitical and defense-related uncertainty.

Portfolio implication: A higher risk premium is justified, and portfolios should reflect a balance of offense (innovation) and defense (quality, shorter duration, diversifiers).