The S&P 500 and NASDAQ briefly sliced through their 50-day moving average (DMA) guardrail on above-average volume on Wednesday but quickly rebounded, closing back above this critical support level. That swift recovery is an encouraging signal that the bulls remain in control, and the primary uptrend remains intact.
The Federal Reserve announced plans to purchase approximately $40 billion per month in Treasury bills—effectively ending quantitative tightening (QT) and restarting quantitative easing (QE). Markets typically welcome balance-sheet expansion, as increased money supply adds liquidity to the financial system. Historically, excess liquidity has often flowed into risk assets, supporting higher equity prices.
Looking ahead, a potential leadership change at the Federal Reserve in March could further reinforce this trend. If a more accommodative Fed Chair is appointed, markets may begin to anticipate lower interest rates, increased debt monetization through money creation, and rising inflation expectations—conditions that have historically been supportive of tangible assets such as gold.
That said, renewed money printing also raises longer-term inflation risks. As a result, gold continues to attract investors and central banks seeking protection against currency debasement and rising inflation expectations. Gold is up over 64% year-to-date, is trading near all-time highs around $4,300 per ounce, and remains our largest portfolio position.
Globally, Japan recently raised interest rates to the highest level in 30 years, with the 10-year Japanese Government Bond approaching 2%. Rising Japanese yields are placing upward pressure on global interest rates and testing government budgets and institutional balance sheets worldwide. As yields rise, the long-standing yen carry trade—borrowing yen to invest in risk assets—continues to unwind. At the same time, some Bitcoin traders appear to be rotating toward silver, supported by strong physical demand from India and renewed interest in tangible stores of value. Silver is extended and up more than 130% year-to-date.
Energy prices remain constructive for economic growth. Oil near $55 per barrel and natural gas near all-time lows should act as a tailwind for GDP growth into 2026. Additionally, the “Big Beautiful Bill,” which eliminates taxes on tips, overtime, and Social Security benefits, is scheduled to take effect in January. This could help incentivize capital currently in money markets—estimated at nearly $8 trillion—to gradually rotate back into risk assets.
Our second-largest position is the AQR Long-Short Equity Fund (QLEIX), managed by a team of four Ph.D.-level portfolio managers. This 5-Star fund has delivered an average annualized return of approximately 26% over the past five years. While QLEIX typically requires a $5 million minimum investment, we can access it for our clients without minimums. Just as important, we actively monitor its trend and are prepared to exit when conditions change.
Our philosophy is to manage the managers—partnering with skilled investment teams when they have a clear edge and stepping aside when that edge deteriorates. Nothing should be held forever. While no one knows how severe the next bear market will be, history consistently shows that protecting capital during major downturns is essential to long-term financial success.
Our objective is to capture most bull-market gains while avoiding the life-changing losses that can occur in a brutal bear market. Risk management remains our top priority.
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The Lord himself will give you a sign: the virgin will conceive, have a son, and name him Immanuel. Isaiah 7:14