December 12th, 2025: Weekly Market Review

1. The Federal Reserve delivered its third consecutive rate cut, bringing the Fed funds target range down to 3.5 percent to 3.75 percent, which aligned with market expectations. 

The central bank also announced that it will begin purchasing $40 billion in Treasury bills per month starting this Friday in order to rebuild bank reserves. These purchases will come in addition to the ongoing $20 billion per month that is reinvested from mortgage-backed securities into Treasury bills. Officials made a clear distinction between these actions and quantitative easing, stressing that the purchases are for reserve management only and that the pace is expected to slow after April.  Quantitative easing is a policy in which the Federal Reserve expands its balance sheet by purchasing longer-term securities to provide broad monetary stimulus beyond normal interest rate adjustments.

A subtle but meaningful adjustment appeared in the latest FOMC statement with the addition of the phrase “extent and timing” regarding future rate changes. This phrase was last used when the easing cycle was paused a year ago, suggesting that policymakers want flexibility as they approach the next phase of monetary policy. It signals greater uncertainty about how far and how quickly further adjustments may proceed. Taken together, the Fed is attempting to balance continued support for financial system liquidity with a more cautious and data dependent approach to the policy path ahead.  REF: DailyShot, Polymarket

As it stands now, the probability of a January rate cut is 20% according to Polymarket as of December 11, 2025.

2. Main story this week focuses on humanoid robots.  Approximately 150 to 200 companies worldwide are actively developing humanoid robots according to industry reports.  

This surge is driven largely by China’s rapid expansion, where over 150 firms, fueled by government policies like the Ministry of Industry and Information Technology’s (MIIT) 2024 roadmap for a full-stack ecosystem by 2027, have entered the space since early 2025.  McKinsey reports about 50 with declared ambitions and advanced prototypes, while broader tallies from sources like Forbes, IDTechEx, and Ross Dawson highlight 16–21 leading players, with hundreds more in early R&D or niche applications across the US.

Over 30 Chinese companies are rapidly scaling mass production of humanoid robots now, backed by MIIT policies targeting batch manufacturing this year and full ecosystem maturity by 2027. With billions in funding, hundreds of units delivered (UBTech to BYD and Foxconn, Agibot shipping its 5000th robot), and suppliers preparing for 100,000 to 1 million units annually by mid-2026, the domestic market is projected to hit $616 million, focused on logistics, manufacturing, and household tasks, and powered by China’s dominant actuator, sensor, and AI chip supply chain. In the United States, 6 leading players have raised over $2 billion and are shifting to revenue generating industrial pilots with emphasis on AI and safety. Agility Robotics and Figure AI are already shipping units, Tesla is deploying thousands of Optimus internally, Boston Dynamics is testing electric Atlas with Hyundai, and valuations have surged (Figure AI at $39 billion), though US firms still rely heavily on Chinese components and face workforce trust challenges.  Below is a comprehensive table of the 16 companies I picked for the most likely candidates to deliver humanoid robots to commercial and retail consumers within the next few years, see table below for additional information.  REF: McKinsey

Take a guess which humanoid robot will I most likely buy for home use…

 3. The sharp 11.63% increase in the Baron Focused Growth Fund Institutional Shares (BFGIX) NAV on December 5, 2025 (from $54.32 to $60.64) was not due to an accounting adjustment or realization of profits. Instead, it was directly triggered by an intraday upward revaluation of the fund’s significant private holding in SpaceX, prompted by breaking news of a proposed secondary share sale valuing the company at $800 billion. 

This adjustment aligned with Baron Funds’ policy of marking private investments to recent transaction prices, amplifying the fund’s concentrated exposure (SpaceX comprises ~11% of assets).  Baron’s Q3 shareholder letter (updated post-Q3 with December NAVs) explicitly states: “We value SpaceX using prices of recent stock transactions.” The $800B tender directly informed this, boosting the private asset’s marked value. (Note: Elon Musk disputed the $800B figure as “not accurate” on December 6, but the initial news drove the December 5 reaction; subsequent tender details pegged it closer to $750–$800B.)  REF: BFGIX

NOTE: Not investment advice or recommendations. Investors should carefully consider the investment objectives, risks, charges, and expenses before investing. For additional information about the securities mentioned above, please visit the respective fund’s documents pages for the fund’s prospectus. Please read all materials carefully before investing.

https://www.baroncapitalgroup.com/product-detail/baron-focused-growth-fund-bfgix#section-documents

SpaceX’s future looks exceptionally bright because artificial intelligence is poised to transform every layer of its business in space: autonomous Starship landings and in-orbit refueling will slash costs and enable rapid reuse; AI-driven trajectory optimization and collision avoidance will make mega-constellations like Starlink safer and denser; onboard edge AI will turn satellites into real-time data-processing platforms (defense, Earth observation, and eventually scientific research); and most importantly, the same Full Self-Driving-like neural networks powering Tesla’s robotaxi vision are being adapted for deep-space navigation, asteroid prospecting, and eventual Mars base operations, creating a flywheel where AI breakthroughs on Earth directly compound SpaceX’s lead in low-cost access to orbit, bandwidth dominance via Starlink, and the only realistic path to multi-planetary infrastructure. With AI accelerating both revenue (Starlink + government contracts) and capability (point-to-point Earth transport, lunar/Mars missions), SpaceX is positioned to capture a disproportionate share of the coming trillion-dollar space economy.  REF: ProjectMuse, ApplyingAI

With the current macro-economic backdrop, below are areas we currently favor:

• Fixed Income – (Corporates & Muni) High Yield as Opportunistic Allocation (Low-Beta)
• Fixed Income – Short-term Corporates & Muni (Low-Beta)
• Businesses that contribute to and benefit from AI & Automation (Market-Risk)
• Small-Cap & Bio-Technology (Market-Risk)
• Neo-Cloud Computing (Market-Risk)
• Fintech & Financials (Market-Risk)
• Digital Asset – Bitcoin (Market-Risk/Hedge)
• Cyber-Security & Software (Market-Risk)
• Quantum Computing (Market-Risk)

4. World Watch

4A.  The iGEM program is an international research and competition platform that introduces high school students to the field of synthetic biology. 

Through iGEM, students form teams to design, build, and test genetically engineered biological systems that address real world challenges in health, agriculture, energy, and environmental stewardship. Participants gain experience in wet lab techniques, project design, scientific communication, and the ethical responsibilities associated with biotechnology. The program also provides access to standardized genetic components known as BioBricks and offers a structure that mirrors collegiate level research.

Each year, teams compete at the iGEM Grand Jamboree, where they present their work, collaborate with peers from around the world, and contend for awards based on innovation, execution, and impact. A notable distinction in global participation is the size of national contingents. China has well over one hundred (100) active high school iGEM teams, reflecting its strong institutional investment in early STEM training and synthetic biology initiatives. By contrast, the United States has roughly fourteen (14) high school teams, resulting in a far smaller presence on the international stage. This difference highlights the disparity in infrastructure, support, and prioritization of hands-on biotechnology education between the two countries. Through participation in iGEM, however, students everywhere gain access to a cutting-edge scientific community and a pathway toward advanced study and careers in STEM.  Click onto picture below to access video.  REF: iGEM, BioBricks

4B. Folks don’t want to hear it, but the “4th industrial revolution,” led by AI and other innovation platforms, is ultimately the largest trickle-down economic event that will benefit everyone. 

The most recent inflation spike was largely caused by global governments’ COVID spending policies and the forced shutdown of manufacturing, which choked supply. Directly handing people money created too much demand and not enough supply of goods and services.  The good news is this: AI and other innovation platforms will, in due time, erase that inflation through meaningful increases in productivity and output. Proper growth, and tech booms in general, are deflationary, as history shows, because we do more with less. Click onto picture below to access video with Dan Ives and James Bianco.  REF: CNN

4C. An updated snapshot of the current global state of economy.

According to TradingEconomics as of 12/8/2025 (REF: TradingEconomics):

• Japan’s GDP contracted 0.6% qoq in Q3 2025, deeper than the flash estimate of a 0.4% decline and market forecasts for a 0.5% drop.
• The Reserve Bank of India (RBI) lowered its key repo rate by 25 bps to 5.25% during its December 2025 meeting, in line with forecasts amid confidence in a softer inflation outlook.
• The unemployment rate in Canada fell to 6.5% in November of 2025 from 6.9% in the previous month, the lowest in 16 months, and contrasting sharply with expectations that it would rise to 7%.
• The Brazilian gross domestic product expanded by 0.1% from the previous quarter in the three months to September of 2025, slowing from the downwardly revised 0.3% growth rate in the second quarter, and missing market expectations of a 0.2% expansion.

5. Quant & Technical Corner – A selection of quantitative & technical data we monitor on a regular basis to help gauge the overall financial market conditions and the investment environment.

5A. Most recent read on the Fear & Greed Index with data as of 12/8/2025 – 8:00 PM-ET is 31 (Fear).  Last week’s data was 23 (Extreme Fear) (1-100).  CNNMoney’s Fear & Greed index looks at 7 indicators (Stock Price Momentum, Stock Price Strength, Stock Price Breadth, Put and Call Options, Junk Bond Demand, Market Volatility, and Safe Haven Demand).  Keep in mind this is a contrarian indicator!  REF: Fear&Greed via CNNMoney

5B. St. Louis Fed Financial Stress Index’s (STLFSI4) most recent read is at –0.3964 as of December 4, 2025.  Previous week’s data was -0.1331.  A big spike up from previous readings reflecting the turmoil in the banking sector back in 2023.  This weekly index is not seasonally adjusted.  The STLFSI4 measures the degree of financial stress in the markets and is constructed from 18 weekly data series: seven interest rate series, six yield spreads and five other indicators. Each of these variables captures some aspect of financial stress. Accordingly, as the level of financial stress in the economy changes, the data series are likely to move together.  REF: St. Louis Fed

5C. Consumers revealed reduced confidence across jobs, incomes, and financial situations, both now and in the future, potentially due to the government shutdown.  The Conference Board Consumer Confidence Index® declined by 6.8 points in November to 88.7 (1985=100) from 95.5 in October. “Consumer confidence tumbled in November to its lowest level since April after moving sideways for several months,” said Dana M Peterson, Chief Economist, The Conference Board. “All five components of the overall index flagged or remained weak.  REF: ConsumerConfidence

5D. The Chicago Fed National Activity Index (CFNAI) increased to –0.12 in August from –0.28 in July. Three of the four broad categories of indicators used to construct the index increased from July, but three categories made negative contributions in August. The index’s three-month moving average, CFNAI-MA3, increased to –0.18 in August from –0.20 in July.  REF: ChicagoFed, August’s Report

5E. (9/18/2025) The Conference Board Leading Economic Index (LEI) for the US declined by 0.5% in August 2025 to 98.4 (2016=100), after a small 0.1% increase in July (upwardly revised from an originally reported 0.1% decline). The LEI fell by 2.8% over the six months between February and August 2025, a faster rate of decline than its 0.9% contraction over the previous six-month period (August 2024 to February 2025). The composite economic indexes are the key elements in an analytic system designed to signal peaks and troughs in the business cycle. The indexes are constructed to summarize and reveal common turning points in the economy in a clearer and more convincing manner than any individual component. The CEI is highly correlated with real GDP. The LEI is a predictive variable that anticipates (or “leads”) turning points in the business cycle by around 7 months. Shaded areas denote recession periods or economic contractions. The dates above the shaded areas show the chronology of peaks and troughs in the business cycle. The ten components of The Conference Board Leading Economic Index® for the U.S. include: Average weekly hours in manufacturing; Average weekly initial claims for unemployment insurance; Manufacturers’ new orders for consumer goods and materials; ISM® Index of New Orders; Manufacturers’ new orders for nondefense capital goods excluding aircraft orders; Building permits for new private housing units; S&P 500® Index of Stock Prices; Leading Credit Index™; Interest rate spread (10-year Treasury bonds less federal funds rate); Average consumer expectations for business conditions.  REF: ConferenceBoard, LEI Report for August (ReceesionAlert)  (Released on 9/30/2025)

We have experienced a “rolling recession” since June 2022 and are only now emerging from it. However, authorities are not labeling it a recession due to high employment data from June 2022-2025.

5F. Probability of U.S. falling into Recession within 3 to 4 months is currently at 63.49% (with data as of 12/01/2025 – Next Report 12/15/2025) according to RecessionAlert Research.  Last release’s data was at 46.3%.  This report is updated every two weeks. REF: RecessionAlertResearch

5G. Yield Curve as of 12/8/2025 is showing Normal.  Spread on the 10-yr Treasury Yield (4.17%) minus yield on the 2-yr Treasury Yield (3.59%) is currently at 58bps.  REF: Stockcharts   The yield curve—specifically, the spread between the interest rates on the ten-year Treasury note and the three-month Treasury bill—is a valuable forecasting tool. It is simple to use and significantly outperforms other financial and macroeconomic indicators in predicting recessions two to six quarters ahead.  REF: NYFED

5H. Recent Yields in 10-Year Government Bonds.  REF: Source is from Bloomberg.com, dated 12/8/2025, rates shown below are as of 12/8/2025, subject to change.

The 10-Year US Treasury Yield… The 10-Year Yield is indirectly related to inflation and prospect of the economy. I expect the 10-Year Yield to drop towards the support line.  REF: StockCharts1

10-Year Real Interest Rate at 1.56911% as of 10/24/25.  Last month’s data was 1.56046%.  REF: REAINTRATREARAT10Y

ICE BofA US High Yield Index Option-Adjusted Spread (BAMLH0A0HYM2) currently at 2.85 as of December 8, 2025.  This is a key indicator of market sentiment, particularly regarding risk and economic health.  At its core, the spread reflects the extra return investors demand to hold riskier corporate debt over safer government securities. High-yield bonds are issued by companies with lower credit ratings (below investment grade, like BB or lower), meaning they carry a higher chance of default. The spread compensates for this risk. When the spread is narrow—say, around 2.5% to 3%, as seen recently—it suggests investors are confident, willing to accept less extra yield because they perceive lower default risk or a strong economy. Narrow spreads often align with bullish markets, where cash is flowing, growth is steady, and fear is low.   REF: FRED-BAMLH0A0HYM2

5I. (12/8/2025) Today’s National Average 30-Year Fixed Mortgage Rate is 6.36% (All Time High was 8.03% on 10/19/23).   Last week’s data was 6.32%.  This rate is the average 30-year fixed mortgage rates from several different surveys including Mortgage News Daily (daily index), Freddie Mac (weekly survey), Mortgage Bankers Association (weekly survey) and FHFA (monthly survey).  REF: MortgageNewsDaily, Today’s Average Rate

The recent spike in the 30-year fixed-rate jumbo mortgage to 6.36%, compared to Freddie Mac’s rate at 6.19% and the Mortgage Bankers Association (MBA) rate at 6.32%, highlights key differences in the mortgage market. Jumbo mortgages, which exceed the conforming loan limits set by government agencies like Freddie Mac, typically carry higher interest rates because they are riskier for lenders. These loans are not backed by government entities, which increases the risk for lenders and, consequently, leads to higher rates. In contrast, Freddie Mac and MBA provide averages for conforming loans, which meet federal guidelines and have lower risk due to government backing, keeping their rates lower.

Housing Affordability Index for Sep = 104.5 // Aug = 100.5 // July = 98.8 // Jun = 94.4 // May = 97.2 // Apr = 101.0 // Mar = 103.2 // Feb = 102.2. Data provided by Yardeni Research.  REF: Yardeni

5J. Velocity of M2 Money Stock (M2V) with current read at 1.392 as of (Q2-2025 updated September 25, 2025).   Previous quarter’s data was 1.386.  The velocity of money is the frequency at which one unit of currency is used to purchase domestically- produced goods and services within a given time period. In other words, it is the number of times one dollar is spent to buy goods and services per unit of time. If the velocity of money is increasing, then more transactions are occurring between individuals in an economy.  Current Money Stock (M2) report can be viewed in the reference link.   REF: St.LouisFed-M2V

M2 consists of M1 plus (1) small-denomination time deposits (time deposits in amounts of less than $100,000) less IRA and Keogh balances at depository institutions; and (2) balances in retail MMFs less IRA and Keogh balances at MMFs. Seasonally adjusted M2 is constructed by summing savings deposits (before May 2020), small-denomination time deposits, and retail MMFs, each seasonally adjusted separately, and adding this result to seasonally adjusted M1. Board of Governors of the Federal Reserve System (US), M2 [M2SL], retrieved from FRED, Federal Reserve Bank of St. Louis; Updated on November 25, 2025.  REF: St.LouisFed-M2

Money Supply M0 in the United States increased to 53,615,000 USD Million in October from 5,478,000 USD Million in September of 2025. Money Supply M0 in the United States averaged 1,222,051.25 USD Million from 1959 until 2025, reaching an all time high of 6,413,100.00 USD Million in December of 2021 and a record low of 48,400.00 USD Million in February of 1961.   REF: TradingEconomics, M0

5K. In September, the Consumer Price Index for All Urban Consumers rose 0.3 percent, seasonally adjusted, and rose 3.0 percent over the last 12 months, not seasonally adjusted. The index for all items less food and energy increased 0.2 percent in September (SA); up 3.0 percent over the year (NSA). No announcement was made on October 2025’s CPI data.  REF: BLS, BLS.GOV

 5L. Technical Analysis of the S&P500 Index.  Click onto reference links below for images.

• Short-term Chart: Trend Bullish/Falling on 12/8/2025 – REF: Short-term S&P500 Chart by Marc Slavin (Click Here to Access Chart)

• Medium-term Chart: Trend Bullish on 12/8/2025 – REF: Medium-term S&P500 Chart by Marc Slavin (Click Here to Access Chart)

• Market Timing Indicators – S&P500 Index as of 12/8/2025 – REF: S&P500 Charts (7 of them) by Joanne Klein’s Top 7 (Click Here to Access Updated Charts)

• The S&P500 is sitting at all-time-high levels, rebounding from two V-shaped recoveries.  REF: Stockcharts

• CBOE Total Put/Call Ratio as of 12/8/2025.  REF: MacroMicro

• S&P500 and CBOE Volatility Index (VIX) as of 12/8/2025.  REF: FRED, Today’s Print

5M. Most recent read on the Crypto Fear & Greed Index with data as of 12/8/2025 is 25 (Fear).  Last week’s data was 16 (Extreme Fear) (1-100).  Fear & Greed Index – A Contrarian Data.  The crypto market behavior is very emotional. People tend to get greedy when the market is rising which results in FOMO (Fear of missing out). Also, people often sell their coins in irrational reaction of seeing red numbers. With the Crypto Fear and Greed Index, the data try to help save investors from their own emotional overreactions. There are two simple assumptions:

• Extreme fear can be a sign that investors are too worried. That could be a buying opportunity.
• When Investors are getting too greedy, that means the market is due for a correction.

Therefore, the program for this index analyzes the current sentiment of the Bitcoin market and crunch the numbers into a simple meter from 0 to 100. Zero means “Extreme Fear”, while 100 means “Extreme Greed”.  REF: Coinmarketcap.com, Today’sReading

Bitcoin – 10-Year & 2-Year Charts. REF: Stockcharts10Y, Stockcharts2Y