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A year after DeepSeek roiled markets, this week, software stocks faced a reckoning as investors questioned their future in an AI world. We cover this and a lot more in this week’s Bespoke Report newsletter. Give the full report a read by starting a trial here.
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Small-caps continued to widen their lead against large-caps this week, which we cover in detail in this week’s Bespoke Report newsletter along with macro coverage and updated earnings analysis. Give the full report a read by starting a trial here.
To read our weekly Bespoke Report newsletter and access everything else Bespoke’s research platform offers, start a two-week trial to Bespoke Premium. This week we muse about a return to normalcy across markets, the economy, and society that is rapidly progressing but not quite complete. A review of equity markets from across the globe shows that normal might mean lower given valuations and price action that investors have gotten used to. We also dive into early earnings reports, US economic data, and some notable releases from the rest of the global economy this week.
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Ever since the Covid outbreak shutdown the US and global economy in early 2020, it’s been hard to look at a lot of trends and policies (especially in retrospect) and not think the world lost its mind. Even now, five years later, you can still walk into some stores and see the stickers on floors for where patrons are supposed to stand so that they keep proper distance from others. In some parts of the world, curfews were put in place after dark to help limit the spread of Covid, even though it was obviously not a nocturnal virus. Who can forget the policies early on where golf courses were closed, but liquor stores were deemed essential and could remain open (not that we thought liquor stores should be closed)? Then there were the vaccine cards which became “get out of jail” cards. If you had one, you could return to a normal life, but without one, there were significant limits in the activities you were allowed to do and where you could work.
In the financial markets and economy, Covid also caused widespread policies and trends which would have made most people dumbfounded if they occurred prior to 2020. From a fiscal standpoint, remember the multiple rounds of ‘stimmy checks’? How about the super-sized unemployment benefits which, for many people, made it more rational to stay at home and collect $600/week than it was for them to go to work? How much fraud do you think there ultimately was with the PPP loan program? From a monetary perspective, zero interest rate policies around the world and massive QE pushed interest rates on many global debt instruments below zero!
Equity markets provided no escape. Remember SPACs? How about meme stocks? GameStop (GME), the OG meme stock, can see its market cap swing by billions of dollars a day based on X-posts from “Roaring Kitty”. There’s even ETFs where the sole investment strategy is to find and invest in meme stocks.
As crazy as some of these policies were, or at least seem in hindsight, at the time some were justified, especially early on when there was so much uncertainty, and no one knew what to expect. Our point here is not to judge their necessity but just to highlight them. Five years later, we’re thankful to be back in a much more normal environment. As much as things have improved, though, we’re still quite a way from the way things were before Covid. A recent example of the markets remaining more than a little bit crazy is the insane volatility in metals and memory stocks to start 2026. Time always marches forward, so we’ll never get back to the way things were – for better or worse. The reality is that markets are made up of people, so they’ve always been and always will be a little crazy. That’s one thing that won’t change (or maybe when robots control everything, even that will change too).
For an escape, there’s always sports, or at least that’s what we thought. Then last night as we watched the Miami Hurricanes, a team that many experts argued shouldn’t have even been in the college football playoff, knock Ole Miss out and earn a spot in the championship, commentator Chris Fowler commented that Miami QB “Carson Beck is in his seventh year of eligibility”. Comments like that remind us that even in sports, Covid has left its mark, so there’s no escape. Fowler was incorrect in his comment. Carson Beck is actually “only” in his sixth year of college, but since when was a college career six years! If Miami doesn’t win the championship on January 19th will that mean, in the words of Bluto Blutarsky in Animal House, that it was “Seven Six years of college down the drain”? Maybe the market is one of the more rational escapes after all!
What’s also crazy is how strong of a start the market has gotten off to this year for the S&P 500, and more specifically, both the equal-weight index as well as the Russell 2000.
This week’s Bespoke Report is packed with interesting market trends, so give the full report a read by starting a trial here.
Our Bespoke Report – 2026 Global Macro Outlook is now available for Bespoke subscribers. This report is a top-down perspective on the global economy and the big narratives driving financial markets around the world as we head in to the new year.
You can read our 2026 Pros and Cons by signing up for a two-week trial to our Bespoke Premium plan. You can review our membership plans here to help make your decision.
To read our weekly Bespoke Report newsletter and access everything else Bespoke’s research platform offers, start a two-week trial to Bespoke Premium.
The first full week of December was modestly positive, but what really added to the good feelings was a blackout of Federal Reserve speakers.
Futures currently price a 95% chance of a 25-basis point (bps) rate cut at Wednesday’s meeting, which is essentially the exact same as in late October. Given the lack of significant official economic data during this period, the stability in expectations makes logical sense. Without fresh data, how could Federal Open Market Committee (FOMC) members really change their outlook? Sometimes, though, what experts at the Fed —or elsewhere—say doesn’t fully make sense.
Expectations for Wednesday’s meeting haven’t changed from point to point, but the interim saw some dramatic shifts in sentiment, swinging from “they will cut” to “they won’t cut” and back to “they will cut.” Just over two weeks ago, market pricing for a cut at Wednesday’s meeting had dropped significantly to 34%. Accompanying these shifts in sentiment were major swings in stock prices. All of the major index ETFs we track in our Trend Analyzer went from overbought to oversold and back to overbought, driven almost entirely by the words of various Fed officials rather than any fundamental shifts in the US economy. Perhaps Scott Bessent was correct when he said this week, “I think it’s time for the Fed to just move back into the background like it used to do, calm things down, and work for the American people, set monetary policy on a good path…This isn’t sport, it’s people’s lives.”
This week’s Bespoke Report is packed with interesting market trends, so give the full report a read by starting a trial here.
