From cooling inflation to fusion power: Stocks push higher

Wake up sports fans - Inflation is falling — or at least that’s what the latest CPI just told us.

Expectations were for 3.0% headline and 3.1% core, but the numbers came in well below that at 2.7% and 2.6%, respectively. That was a clear upside surprise, and the market wasted no time reacting — stock futures immediately shot higher.

Then came Micron. MU surged more than 10% after delivering robust forward guidance — roughly 80% above Street expectations — driven by what management called “relentless demand for memory chips used in data centers.” Translation: the AI build-out is very real, and the infrastructure trade remains firmly intact. Futures pushed even higher.

Then the NYPost reported that Sammy Altman (OpenAI fame) is out there banging the drums looking to raise more money at a $750 billion valuation – a 50% jump in its valuation from just 2 months ago – fueling the speculation that Sammy is about to go public at a $1 trillion valuation sometime in late 2026. Now whether that IPO timeline proves accurate or not, the message is unmistakable: the AI arms race is accelerating, capital requirements are exploding, and investors are willing to write increasingly larger checks to stay in the game. And stock futures surged higher.

And then the wildcard headline – that no one (ok some did) saw coming…..

Trump Media & Technology (DJT) announced a $6 billion merger with TAE Technologies, creating the first publicly traded nuclear fusion company in the United States — and yes, fusion, not fission, and there is a difference. This isn’t traditional nuclear power; it’s next-generation energy technology with potentially transformative implications. The deal is backed by some very key names, including Google, Chevron, and Goldman Sachs.

And as Dan Ives – MD/Global Head of Tech Research at Wedbush tells us –

“TAE has more than 25 years of R&D in the lab and safely built and operated five fusion reactors and importantly proven major energy and fusion breakthroughs over the years.....putting TAE at the top of the mountain in the fusion global scene in our view. TAE will also clearly have major political support from President Trump in our view and this importantly will create a major nuclear fusion US energy domestic bet over the coming years…..The key task at hand for TAE is to help solve energy scarcity and now focus on building the world’s first utility-scale fusion power plant (50 MWe) in 2026 and additional ones in the 350-500 MWe range over time.”

Remember this comes just as we are grappling with major energy issues – issues that point to shortages in our ability to power AI data centers that are scheduled to be built over the next decade. And stock futures shot higher…..

And all that pre-mkt excitement sent stocks higher throughout the day….and by the time the bell rang at 4 pm – this is how it ended – the Dow gained 68 pts, the S&P gained 54 pts – taking it back above the trendline, the Nasdaq was a winner – rising 313 pts or 1.4%, the Russell added 15 pts, the Transports added 145 pts, the Equal Weighted S&P gained 17 pts while the Mag 7 was the clear winner – rising 667 pts or 2%.

The bottom line – at least for yesterday was that cooling inflation, accelerating AI demand, and a ‘surprise’ entrant into next-generation energy was a powerful message for risk assets.

Now, we can’t argue with Micron’s forecast — they have the data, and it clearly points to insatiable, real demand. And we can’t argue with the DJT/TAE merger either — it happened. It’s not a possibility; it’s a reality. And we can’t argue about Sammy banging the drums – because he is.

Where the debate does exist is around what the CPI actually told us.

Some on the Street aren’t fully convinced. The 35-day government shutdown meant the BLS couldn’t collect price data for five weeks, and when data collection resumed, it didn’t begin in earnest until later in November. That creates gaps, and gaps create uncertainty. On the surface, the CPI report looks great — but there’s enough here to justify a healthy dose of skepticism.

And importantly, nothing in that report suggests the Fed is suddenly on a January rate-cut schedule – but some on the street are suggesting a January rate cut. (I am not.)

Yes, the narrative they want you to believe is simple - Slowing inflation + a cooling labor market = green light for aggressive Fed cuts, to which I say – ‘not so fast, big boy.’

And the market agrees. Fed funds futures are pricing in just a 20% probability of a January cut. March? 40%. April? 27%. May? 55%.

And that lines up exactly with what I’ve been saying all along: the next rate cut likely comes when the new Fed Chair takes the ‘chair’ — unless, of course, the data completely falls off a cliff over the next two months – which does NOT appear to be happening. In the end the good news doesn’t automatically equal immediate Fed action. We want confirmation, not one data point — especially one collected under less-than-ideal conditions.

Bonds rose, yields fell on all the excitement…. The TLT and TLH rose 0.4% and that sent yields a bit lower…. The 10-year Treasury ended the day yielding 4.12% while the 30-year sat at 4.81%. This morning – though – yields are ticking a bit higher – the 10 yr at 4.14% and the 30 yr at 4.83%.

Oil continues to churn. This morning it is trading at $56….and remains in the $55/$58.80 trading range.

Gold was trading at $4,325 yesterday and this morning it’s at $4,327. That move tells you exactly what the gold bugs are betting on: more rate cuts. Not when — just more.

And that shouldn’t surprise anyone. The market is already pricing in two rate cuts in 2026, largely in the back half of the year. If that plays out, the Fed Funds rate would fall into the 3.00%–3.25% range, levels that do not make sense to me given the current — and expected — strength of the economy.

Recall: GDP is expected to grow north of 3%, with some forecasts calling for 4%, and a few even arguing that 5% growth is not unrealistic. If that’s even remotely close to reality, then there is no economic justification for continued rate cuts.

Why? Because strong growth tells us three critical things: Demand is healthy, corporate profits can absorb higher borrowing costs and most importantly - the economy is NOT under stress. Cutting rates on the back of this story wouldn’t be “normalization” — it would be unnecessary stimulus, and that risks reigniting the very inflation pressures the Fed has spent years trying to contain.

So, while Gold may be betting on more cuts, a strong GDP and aggressive easing don’t belong in the same sentence. I sound like a broken record!

This morning futures are higher - Dow futures are +5, S&P +13, Nasdaq +100, while the Russell is +4.

It’s the end of the final full week of trading, and it also happens to be quadruple witching — a day when four sets of derivatives either expire or get rolled:

stock index futures, stock index options, single-stock options, and single-stock futures. Does it matter for long-term investors? Absolutely not.

Yes, trading volume will surge — that means nothing. Yes, volatility can increase — can, not will. Yes, price moves can be exaggerated if someone mismanages positioning. But in the end, these moves are purely mechanical. There is nothing fundamental driving them. So, the answer is simple: NO — quadruple witching means nothing to the long-term investor.

Expect noise. Expect volume. Just don’t confuse either with something real or fundamentally meaningful.

Remember – the next two weeks are holiday shortened weeks, players will be away, volumes will decline and moves will become even MORE amplified – in either direction.

This is not the time to make emotional decisions…. stick to the plan – Capisce?

European markets are churning lower…. Italy is the only winner up 0.3% - all the other centers are down about 0.1% - nothing to write home about. The ECB and BoE did as expected.

The S&P closed at 6,774 up 54 pts on the day. Now on Wednesday – we failed to hold the trendline, the algo’s kicked in and down we went. Yesterday, the news was positive, the algo’s kicked in (going the other way) and we took it back and this morning it appears as if it is going to hold that line.

We are in the final days of 2025, my view remains constructive. Volatility aside, I expect we finish the year closer to 6,850, give or take. Do not discount the year-end window dressing that will take place over the next 8 trading days.

Italian wedding soup

We are now in the ‘Holiday zone’ – and this dish is always on the menu for Christmas day dinner.

For the soup – homemade chicken soup, 1 cup of tubettini (small pasta) fresh baby spinach, washed and trimmed.

For the meatballs: 1 lb. ground veal, fresh breadcrumbs, minced garlic (2 cloves), chopped fresh parsley leaves, freshly grated Pecorino Romano, freshly grated Parmesan, milk, 1 extra-large egg, lightly beaten, s&p.

Put the soup on the stove on med low and allow it to heat up.

Now – make the meatballs.

Place the ground veal, breadcrumbs, garlic, parsley, Pecorino, Parmesan, milk, egg, s&p in a bowl and combine. With a teaspoon, drop 1 to 1 1/4-inch meatballs into a frying pan and cook until nice and browned. (You should have about 40 meatballs. They don’t have to be perfectly round.). Set aside.

Bring a pot of salted water to a rolling boil and add the tubettini and cook for 6 mins. Now strain and add to the soup.

Next - add the meatballs to the soup and simmer for 1 minute. Taste for s&p. Stir in the fresh spinach and cook for 1 minute, until the spinach is just wilted. Ladle into soup bowls and sprinkle each serving with extra grated Parmesan. A nice piece of garlic bread on the bottom of the bowl is always a favorite.