As far as cliffhangers go, central-bank meetings rarely qualify. Yet this week's Federal Reserve decision is being billed as the most contentious in decades. Investors have already placed their bets: U.S. stock futures inched upward on Monday, buoyed by an 86–87% probability that the Fed will trim rates by 25 basis points. A rate cut once seemed distant - markets assigned barely a 30% chance in November - but a mix of softer consumer spending, patchy labor-market data, and a sense that sticky inflation has lost some of its menace has tipped expectations decisively.

Still, unanimity is hardly guaranteed. In the view of Societe Generale's analysts, dissent is likely, and the hawkish flank seems prepared to weaponize the dot plot to signal that December may be the last cut for a while. The Fed is poised to issue a message of restraint: one that diverges notably from market expectations for a brisker easing cycle. Changes to the SEP, meanwhile, should be modest enough to avoid fanning hopes of a rapid pivot.

Underpinning this caution is a run of U.S. data that offers little reassurance. November's ADP report showed private payrolls shrinking by 32,000 - the sharpest decline since early 2023 - while wage growth slowed to its weakest pace since 2021. At the same time, jobless claims dipped unexpectedly to 191,000, even as continuing claims stayed elevated, reinforcing the sense of a labor market stuck in a "no-hire, no-fire" equilibrium. For a Fed eager to keep optionality, such ambiguity argues for a slow walk rather than a sprint.

The cut itself is only half the story; Chair Jerome Powell's remarks are the real event. As mentioned earlier, traders want confirmation that more easing is ahead. But economists caution that Powell could instead point to 2026 as a year of slower, more conditional cuts. Mixed labor signals and delayed data from the government shutdown have only added to the uncertainty.

This ambiguity has left markets in a tentative two-step: rising on optimism one moment, pausing to squint nervously at inflation risks the next. Small-caps, sensitive to borrowing costs, managed gains last week, while the S&P 500 and Nasdaq also notched a second week of advances. Treasury yields, meanwhile, nudged higher as traders tried to decode what “data dependent” really means this time.

The week also places tech valuations squarely in the spotlight. Broadcom shares jumped after reports of talks with Microsoft on custom chips. Oracle rose too, buoyed by hopes that its own AI ambitions will eventually justify its debt-funded strategy. The enthusiasm is not universal: tech-led selloffs earlier this year proved that markets remain wary of companies financing AI dreams with balance sheets that increasingly resemble maxed-out credit cards.

Indeed, artificial intelligence seems to have taken a breather after a stunning bull run. Recent exuberance has even prompted Ed Yardeni - renowned for his long-standing bullish stance - to trim his overweight on tech stocks, a position he has held since 2010. He's particularly wary of the "Magnificent Seven", whose earnings dynamics are shifting. Yet he maintains a broadly constructive view on the sector, believing newer players will challenge the dominance of hyperscalers. To rebalance his allocation, Yardeni has upped his overweight in financials (whose earnings share in the S&P 500 is significantly underrepresented), as well as in industrials and healthcare.

IBM added a plot twist, with news it is nearing an $11 billion deal to acquire Confluent—sending the latter's shares surging nearly 30%. Meanwhile, Marvell was left out of the S&P 500 and promptly dropped over 6%. Carvana, by contrast, was granted entry and leapt more than 9%. Tesla, however, found no such magic. A downgrade from Morgan Stanley pushed its shares lower.

While America leans toward easier policy, investors expect Japan, Canada and Australia to tighten by 2026. China, meanwhile, announced a trade surplus topping a trillion dollars for the first time: a staggering milestone rooted in exports ranging from high-end EVs to simple T-shirts. Yet not all is rosy: Chinese auto sales continue to slump at home, even as exports remain strong.

Staying in the region, tensions between Japan and China escalated following a provocative air encounter between fighter jets over the weekend. The diplomatic spat was triggered by an unfiltered statement from Japan's Prime Minister on Taiwan, prompting a cascade of retaliatory measures from Beijing, particularly targeting Chinese tourism to Japan and import-export flows. China, incidentally, announced a sharp rise in exports this morning, which will do little to alleviate the trade deficits of either the US or Europe with the former Middle Kingdom.

European leaders are gathering in Germany today in a bid to support their Ukrainian ally, as part of a US-backed peace plan that conspicuously favors Russia.

In the macro calendar,  the Fed's rate decision on Wednesday threatens to overshadow the rest of the economic newsflow. Other central banks - including those of Australia, Canada, Switzerland, Brazil and Turkey - are also due to meet. In the US, the delays in data release caused by the recent shutdown are gradually being cleared. Labour market indicators are on the docket this week, alongside September data on international trade and wholesale commerce.

The week began on a mixed note in Asia-Pacific. Japan, South Korea and Taiwan are up, while India and Australia are retreating slightly. European indices are mixed. Futures on Wall Street are slightly bullish.

Today's economic highlights:

On today's agenda: the seasonally adjusted industrial production in Germany. See the full calendar here.

  • Dollar index: 98,991
  • Gold: $4,207
  • Crude Oil (BRENT): $62.98 (WTI) $59.34
  • United States 10 years: 4.13%
  • BITCOIN: $91,618

In corporate news:

  • Netflix's $72 billion deal to acquire Warner Bros Discovery faces growing political and regulatory scrutiny, including concerns from President Trump and bipartisan lawmakers about market concentration and consumer impact.
  • In addition, Paramount has launched a hostile $30-per-share all-cash bid for Warner Bros. Discovery—touting it as richer, faster, and more likely to clear regulators than Netflix's competing $27.75-per-share deal.
  • NextEra Energy raised its adjusted profit outlook for 2025 and 2026, driven by rising electricity demand from data centers and strategic growth plans.
  • Tata Electronics secured Intel as its first major customer for its $14 billion semiconductor venture in India, signaling confidence in India's chip manufacturing ambitions.
  • Structure Therapeutics reported its obesity pill achieved up to 11.3% weight loss in a mid-stage trial, positioning it to compete with Novo Nordisk and Eli Lilly in a market projected to reach $150 billion.
  • IBM will acquire Confluent in an $11 billion deal to strengthen its cloud and AI data infrastructure offerings, with the transaction expected to close by mid-2026.
  • Meta will offer EU users more control over personalized ads on Facebook and Instagram to comply with the Digital Markets Act, following pressure and prior fines from EU regulators.
  • Bank of America filed to issue up to $30 billion in debt, while its unit BofA Finance may issue up to $50 billion in unsecured senior debt.
  • Recursion Pharma, backed by Nvidia, reported its AI-developed therapy significantly reduced colon polyp growth in a rare disease, validating its AI drug discovery platform.
  • SPX Technologies is acquiring Crawford United in a $300 million deal, with shareholders receiving $83.42 per share.
  • JPMorgan Chase appointed Todd Combs, a top Berkshire Hathaway executive, to lead its $1.5 trillion national security investment initiative and formed a high-profile advisory council chaired by CEO Jamie Dimon.
  • NextEra Energy and Google Cloud expanded their strategic partnership to develop AI-powered data center campuses and energy products, with offerings expected by mid-2026.
  • Australia will sign a A$1 billion contract with Boeing Australia to produce six Ghost Bat drones, marking the first locally designed military aircraft in over 50 years.
  • ServiceNow announced a CA$110 million investment in Canada's public sector to support AI adoption and digital infrastructure, including creating 100 jobs.
  • Meta has committed to offering EU users new personalized ad options starting January 2026, aligning with DMA regulations.
  • Antero Resources will acquire HG Energy's upstream assets and sell its Ohio Utica shale assets, executing a $2.8 billion strategic reshuffle including midstream asset transactions by Antero Midstream.
  • CRH is set to join the S&P 500 index on December 22, following its primary listing move from London to New York.
  • Carvana will enter the S&P 500 after a dramatic rebound, with shares soaring over 8,000% from 2022 lows and surpassing GM and Ford in market cap.
  • Eli Lilly will have Mounjaro included in China's national health insurance reimbursement list starting January 1, 2025.
  • Brookfield Asset Management and GIC agreed to a $4.5 billion takeover of Australian self-storage REIT National Storage.

Analyst Recommendations:

  • 3M Company: Deutsche Bank downgrades to hold from buy and reduces the target price from USD 199 to USD 178.
  • Allison Transmission Holdings, Inc.: Raymond James upgrades to strong buy from outperform with a price target raised from USD 105 to USD 110.
  • Boston Scientific Corporation: Nephron Research LLC downgrades to hold from buy and reduces the target price from USD 120 to USD 105.
  • Devon Energy Corporation: JP Morgan upgrades to overweight from neutral and reduces the target price from USD 49 to USD 44.
  • Exxon Mobil Corporation: BNP Paribas upgrades to neutral from underperform with a price target raised from USD 105 to USD 114.
  • Five Below, Inc.: Truist Securities upgrades to buy from hold and raises the target price from USD 179 to USD 216.
  • Generac Holdings, Inc.: JP Morgan upgrades to overweight from neutral with a target price of USD 200.
  • General Motors Company: Morgan Stanley upgrades to overweight from equalwt with a price target raised from USD 54 to USD 90.
  • Incyte Corporation: Mizuho Securities upgrades to outperform from neutral with a price target raised from USD 90 to USD 121.
  • Inspire Medical Systems, Inc.: Oppenheimer upgrades to outperform from market perform with a target price of USD 175.
  • Jefferies Financial Group Inc.: Morgan Stanley upgrades to overweight from equalwt and raises the target price from USD 74 to USD 78.
  • Marvell Technology Group Ltd: Benchmark Co., LLC downgrades to hold from buy.
  • Mastercard, Inc.: HSBC upgrades to buy from hold and raises the target price from USD 598 to USD 633.
  • Medtronic Plc: Nephron Research LLC upgrades to buy from hold and raises the target price from USD 100 to USD 120.
  • Netflix, Inc.: Rosenblatt Securities Inc. downgrades to neutral from buy and reduces the target price from USD 152 to USD 105.
  • Occidental Petroleum Corporation: JP Morgan downgrades to underweight from neutral and reduces the target price from USD 51 to USD 44.
  • Oklo Inc.: Seaport Global upgrades to buy from neutral with a target price of USD 150.
  • Pinterest, Inc.: Wedbush downgrades to neutral from outperform and reduces the target price from USD 34 to USD 30.
  • Rivian Automotive, Inc.: Morgan Stanley downgrades to underweight from market weight with a target price of USD 12.
  • Tesla, Inc.: Morgan Stanley downgrades to market weight from overweight and raises the target price from USD 410 to USD 425.
  • Thermo Fisher Scientific, Inc.: KeyBanc Capital Markets upgrades to overweight from sector weight with a target price of USD 750.
  • Ulta Beauty, Inc.: TD Cowen upgrades to buy from hold and raises the target price from USD 600 to USD 725.
  • W. P. Carey Inc.: RBC Capital downgrades to sector perform from outperform with a target price of USD 69.