Dec. 1st Market Overview

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Happy Monday

We slid a bit to start December after Japan said they're hiking rates December 19th. Investors borrowed cheap yen for over a decade to buy stocks and bonds - Wall Street calls this the "yen carry trade."

Higher rates mean that borrowed money gets expensive, forcing asset sales to pay back loans. I'm watching if this gets worse before the Fed meeting next week.

Let's dig in...

Today's Big Picture

Japan Signals Rate Hike, Carry Trades Unwind

Bank of Japan Governor Ueda signaled a rate hike at the December 19th meeting. Markets now price 75% odds for December, 95% by January. Japanese 10-year yields hit 1.88%, highest since 2008. The 20-year reached 2.88%, not seen since 1999.
Cheap yen has funded trillions in global speculation. When that funding gets expensive, leveraged assets collapse first.

Retail Strong, Manufacturing Weak

Black Friday online sales reached $11.8 billion, up 9% year-over-year. ISM manufacturing dropped to 48.2, the ninth straight month of contraction. ISM chair Susan Spence: "It really is all about tariffs."

Bitcoin Crashes Below $85,000 on $600M Liquidations

Bitcoin dropped below $85,000, down 30% from October's $126,000 high. $600 million in leveraged longs liquidated in 12 hours.

Bitcoin trades 24/7 so it moves first when borrowed money unwinds. Cheap yen funded everything - crypto, stocks, bonds. Japan just made that expensive.

Market Overview

Chart of the Day

Stock Spotlight

Synopsys $SNPS ( ▼ 0.58% ) 
jumped after Nvidia $NVDA invested $2 billion at $414.79 per share in a strategic partnership on AI chip design tools.

Coinbase $COIN ( ▼ 1.04% ) 
and Strategy $MSTR both tracked bitcoin lower. Strategy fell to its lowest level in 14 months.

Shopify $SHOP ( ▲ 1.44% ) 
fell after its platform went down on Cyber Monday. The Admin system outage lasted well into the afternoon.

Big Name Updates

Tesla $TSLA ( ▲ 1.74% ) 
set an all-time sales record in Norway with 28,606 vehicles through November, beating Volkswagen's previous record. TD Cowen maintained buy rating with a $509 target after testing RoboTaxi rides in Austin.

Apple $AAPL ( ▼ 1.21% ) 
got an overweight reiteration from JPMorgan with a $305 target. iPhone 17 base model lead times remain in double digits and increased across most models versus last week.

Nvidia $NVDA ( ▲ 2.12% ) 
received a sell rating from Seaport Global with a $140 target on growing competitive pressure. The analyst noted Nvidia has $26 billion in cloud compute service agreements not fully reflected in financials.

Broadcom $AVGO ( ▲ 0.11% ) 
got a $460 price target from Bank of America. The analyst sees Google TPU prices reaching $12-15k per unit next year on 3 million units, up from $5-6k on 2 million units this year.

Other Notable Company News

Moderna $MRNA ( ▲ 1.23% ) 
and Novavax $NVAX fell after an internal FDA memo said staff judged at least 10 of 96 pediatric deaths as possibly linked to COVID vaccines. Findings aren't peer reviewed yet.

Wynn Resorts $WYNN ( ▼ 4.42% ) 
made Goldman's conviction buy list on strong Las Vegas operations and Macao recovery potential.

Airbus $AIR ( ▲ 1.39% ) 
fell after regulators ordered urgent fixes on thousands of planes. A suspected production flaw is also delaying new aircraft deliveries.

Barrick Gold $B ( ▲ 1.01% ) 
said its board will study spinning off North American gold assets into a separate company.

AMC Entertainment $AMC ( ▲ 2.19% ) 
said Thanksgiving week was its busiest of 2025 with 6.9 million guests. "Zootopia 2" and "Wicked: For Good" drove record traffic.

Sector Watch

Bond Market

The 10-year Treasury settled at 4.10%. Japan's rate hike signal pushed yields higher along with heavy corporate bond issuance.

Tomorrow: ADP employment report. Friday: September PCE inflation data, the last inflation print before the Fed's December 10 decision.

Policy Watch

Fed Chair Speculation

Trump said Sunday he's picked his Fed chair nominee but didn't reveal the name. Prediction markets:

• Kevin Hassett: 75% odds (Kalshi and Polymarket) prediction markets have been fairly accurate for this kind of stuff

• Christopher Waller: 8%

• Kevin Warsh: 14%

Hassett leads the National Economic Council and is viewed as most likely to cut rates aggressively.

Fed Meeting Next Week

• CME data shows traders expect a 25 basis point cut December 10

• Bank of America expects that cut with terminal rate unchanged

• Powell speaks tonight at 8pm but is in blackout period

Manufacturing

ISM manufacturing hit 48.2, ninth straight month of contraction. New orders fell, backlogs declined, supplier deliveries dropped 4.9 points to 49.3. ISM chair Susan Spence: "It really is all about tariffs."

Trade

US and UK announce zero tariffs on pharmaceutical products today.

International

• OPEC+ paused output increases through 2026 despite crude at $63

• Ukrainian drones hit Russia's shadow fleet vessels and a Black Sea export terminal

• European defense stocks fell after US and Ukraine made progress on ending the war

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What to Watch

ADP Employment Report Wednesday

November private sector jobs data drops Wednesday morning. A weak print challenges the soft landing narrative heading into the Fed decision.

PCE Inflation Data Fridayw

September PCE arrives Friday at 10am, the last inflation print before the Fed's December 10 decision.

Retail Earnings This Week

Dollar Tree and Macy's report Wednesday. Dollar General Thursday. Any guidance disappointment pressures the consumer sector.

Japan Rate Decision December 19

BOJ meets December 19 with markets pricing high odds of a hike. If they deliver, investors who borrowed cheap yen to buy other assets will keep selling. The yen strengthens further.

Thanks for reading 🙂

- John

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