Stagflation Is Going Global
December is supposed to be bullish... The market has work to do... Why Japan matters... R.I.P. Fed balance sheet decline... Good news, bad news... Silver hits a new high... Three bargain gold stocks...
December is typically a good month for stocks...
Since 1950, the U.S. benchmark index has averaged a 1.5% return in the year's final month. That might not sound like a lot, but it's the third-highest average performance of any month over the past 75 years.
Throw in the "Santa Claus rally" that often comes between Christmas and just past New Year's Day – with average gains above 1% about 80% of the time – and market "seasonality" believers have reasons to be bullish.
But today, the stock market didn't begin the month particularly strong.
The U.S. indexes were all lower today, with the Dow Jones Industrial Average and small-cap Russell 2000 Index losing around 1%. Cryptocurrencies also took another plunge in the past 24 hours, with markets seeing more forced liquidations of leveraged long positions.
For us to see positive returns this month, the major U.S. indexes have some work to do.
Meanwhile, economic concerns persist worldwide...
This morning, a report showed that U.S. manufacturing activity shrank for a ninth straight month in November, behavior at least partially tied to the impacts of tariffs.
In China, it's the same story...
Today, an S&P Global survey of Chinese factory activity showed declines in the world's second-largest economy. That survey followed an official Chinese government report over the weekend that showed activity contracting for the eighth straight month.
And in Japan, investors are wondering what the central bank will do next – with inflation rising while its economy has been dragging with exports declining. A new prime minister is expected to boost government spending. This probably sounds familiar.
It's the same "stagflation" stew we're seeing in the U.S. From our November 17 Digest...
Overall... we're looking at slowing growth, sticky and/or rising inflation, plus rising unemployment. That's the definition of "stagflation."
So, while few have probably enjoyed seeing stock prices go down in the past few weeks, the better news right now is that the market's slide makes some sense.
What's going on in Japan, like in the U.S., matters to global markets. Ten Stock Trader editor Greg Diamond noted the implications of continued rising interest rates in Japan in an update for his subscribers today.
The Japanese 10-year interest rate hit its highest level since 2008 last night, which is notable, but it's the pace of the rate increase that is the biggest thing to pay attention to. Greg writes...
So the speed of global interest rates rising creates uncertainty. That uncertainty curtails speculation and investment, which causes volatility. (There are other implications regarding the Japanese interest-rate market as well as the Japanese yen on things like the carry trade, but I won't get into that just yet.)
Greg's watching this story, among others, heading into 2026, which he expects to be a rocky year for stocks.
What comes next?...
Well, in the really short term, "help" is on the way...
As we reported last week, a few high-profile Federal Reserve officials have been suggesting that the central bank is going to cut interest rates again next week, though the voting committee appears to have divided opinions.
So the market will be hanging on Fed Chair Jerome Powell's remarks at an economic event tonight in California for a signal of which way things might go, before the central bank heads into a media blackout period before its December 9-10 meeting.
It might also be Powell's last speech with any teeth, as President Donald Trump said yesterday that he has decided who he wants to replace Powell as central bank head when his term ends in May... and will "be announcing it" soon.
The White House's director of the National Economic Council, Kevin Hassett, is thought to be Trump's choice from a shortlist of five candidates. Hassett was a Fed economist from 1992 to 1997 and later economic adviser for the presidential campaigns of John McCain, George W. Bush, and Mitt Romney before working for Trump. If Hassett is the pick, expect a bent toward lower interest rates.
Meanwhile, the Fed's three-year-plus run of quantitative tightening officially ended today. Since mid-March 2022, the Fed has let securities run off its portfolio. Its balance sheet has declined from near $9 trillion to around $6.5 trillion today.
But Powell said the central bank would stop decreasing its balance sheet on December 1 (which means it will inevitably grow again). R.I.P. Fed balance sheet decline.
That's good news, bad news. This shift in policy means one less significant headwind for the economy. But it's happening because the Fed thinks the economy could use a boost again, which raises its own questions.
What else we're watching this week...
A backlog of economic data is flowing...
Tomorrow, the government will publish the state Job Openings and Labor Turnover Survey from August. A private payrolls report for November from ADP follows on Wednesday. The government's November jobs report – with an updated employment rate – originally scheduled to come out on Friday, will be published on December 16 instead.
Later this week, we'll also have a report on Black Friday/Cyber Monday shopping trends and what they might indicate about the state of the U.S. economy and consumer... and we continue to watch commodities, too.
Silver notably hit another new all-time high today above $58 per ounce, with tight supply and rate-cut bets boosting the price of gold's more volatile little brother. And speaking of gold, it recently pulled back from around $4,300 to $3,900 per ounce, but is now on its way back up near an all-time high.
In This Week on Wall Street, our Director of Research Matt Weinschenk explains why the time to get into gold investing is now and shares three gold stocks with huge potential upside...
Watch the video on our YouTube page, and be sure to like and subscribe to get more of our free video content. While you're at it, be sure to follow Stansberry Research on our social media channels, too.
New 52-week highs (as of 11/28/25): Applied Materials (AMAT), Amgen (AMGN), Broadcom (AVGO), Barrick Mining (B), ProShares Ultra Nasdaq Biotechnology (BIB), Alpha Architect 1-3 Month Box Fund (BOXX), EnerSys (ENS), EQT (EQT), Equinox Gold (EQX), Ero Copper (ERO), Cambria Foreign Shareholder Yield Fund (FYLD), iShares Biotechnology Fund (IBB), Kinross Gold (KGC), Lumentum (LITE), VanEck Morningstar Wide Moat Fund (MOAT), New Gold (NGD), Annaly Capital Management (NLY), Nucor (NUE), Omega Healthcare Investors (OHI), Pan American Silver (PAAS), Sprott Physical Silver Trust (PSLV), Sibanye Stillwater (SBSW), Skeena Resources (SKE), iShares Silver Trust (SLV), SPDR Portfolio S&P 500 Value Fund (SPYV), Sempra (SRE), UGI (UGI), Vale (VALE), and Telefônica Brasil (VIV).
In today's mailbag, thoughts on holiday shopping... the next stage of the AI race that we wrote about last week... and a note about Palantir (PLTR) stock, which Chaikin Analytics founder Marc Chaikin wrote about in Saturday's Masters Series... Do you have a comment or question? As always, e-mail us at feedback@stansberryresearch.com.
The reports I am hearing on my local news here in Los Angeles (not business reports, just local news) are that Black Friday and holiday shopping are going to be huge this year (we've actually contributed to this ourselves, as the TV in our family room, which we have had for more than 20 years, died on Thursday, so we went out and bought a new one over the weekend). This would seem to be inconsistent with the information provided by Stansberry, and I think that's because you all drill much deeper into these issues than the local news, which is why I find these daily reports so valuable. Keep up the good work." – Subscriber Sherwin R.
Corey McLaughlin comment: Thanks, Sherwin. We'll publish an analysis of Black Friday and Cyber Monday shopping trends later this week. Meantime, enjoy that new TV.
"NVDA is King and will continue to be so. Just as the dudes rushed into Oracle and AMD [were] too excessive, this will prove true for Google, and NVDA will in mid- and long-term be the ruler." – Subscriber Gerald B.
I was wondering if you could pass on to Mark that my wife and I purchased 100 shares of Palantir (PLTR) stock at $24.33 on June 24, 2024. We have continued to hold this stock and monitor its progress doing detailed research about its future prospects. It is now selling for $168.45, a 600% increase. We recently sold 50 shares of the stock and will continue to hold our other 50 and watch this great company improve its AI expansion." – Stansberry Alliance members Nick and Charlene P.
All the best,
Corey McLaughlin with Nick Koziol
Baltimore, Maryland
December 1, 2025