Monday Takeaways: Markets Drift Higher Into Fed’s Make-or-Break Meeting

Shah Gilani|December 8, 2025

This week’s Fed meeting isn’t as straightforward as markets think…

Yes, the Fed has already cut twice this year – in September and October. And yes, markets are drifting higher in anticipation of cut number three. But the real story is what’s happening beneath the surface.

Here’s what you need to watch…

• FOMC consensus is splintering
• Labor market softening accelerating
• Markets positioned for year-end rally but vulnerable
• Tech giants loading up on debt

The takeaway from third quarter earnings was clear: margins excellent, numbers strong. But can tech maintain profitability as capital expenditures explode?

I’ll explain what the Fed is likely to do on Wednesday, what “wishy-washy” markets mean for your positioning, and why Powell’s Q&A could matter more than the rate decision itself.

Click on the image below to find out if this is your year-end rally or a sell-the-news moment.

Transcript

Hey, everybody. Shah Gilani here with your Monday Takeaways. I’m going to keep it brief because the takeaways from last week were pretty straightforward. Markets are drifting higher.

What does that mean? It means they anticipate a Fed rate cut this week, and they want to get into the starting blocks for a year-end rally. Now we’re inches away from all-time highs. So the markets, I think, are preparing themselves for a rate cut and what could be a nice year-end rally.

That takes us to this week. So last week, yeah, pretty good numbers. Some of the earnings that came out were good. Overall numbers for the third quarter have been really good. Margins have been excellent. Lots of good numbers. Yes, stocks that didn’t beat or didn’t meet or guided poorly got hammered. That’s to be expected because that’s where the internal volatility lies. But the big names that did well have done well and will likely continue to do well.

The last takeaway from third quarter earnings – and this is about going forward, people – is about moving forward with this ball because it’s going to be about the tech leadership that was. Are they going to be the same? They’ve gone from asset-light to heavy capital expenditures, really heavy. Like, they’re spending like utilities. So will they still have and be able to maintain the same kinds of margins and profitability? Or will that start to be impacted by their debt-to-equity ratios, by increased debt, by the burden of debt service, et cetera, et cetera? So those are what we take away from third quarter and last week.

Again, markets wanted to drift higher. There were a couple of moments where things looked like maybe we could slip back. But no, no, let’s drift higher, drift, drift. So here we are this week. What’s the big deal? Yes, it’s the Federal Reserve meeting.

Now, the Fed’s already cut twice this year in September and October. The October cut – well, yes, while it was mostly expected because we’ve got Steve Miran in there and he is certainly voting for cuts. I think he voted for a 50-basis-point cut in October. Now, he doesn’t run the FOMC. Jerome Powell still does. And consensus seems to be splintering. That was pretty obvious in the Q&A after the October statement was read and Chairman Powell made his comments. In the Q&A, he essentially addressed the issue of the dissension and more or less said, “Hey, people don’t expect that we’re going to continue on some automatic cutting path” – a warning.

And here we are this week. Well, markets drifted higher in anticipation that we’re going to get a cut. If we don’t, it could get bumpy out there. By the way, it also could be a sell-the-news moment because if we do get a cut but forward guidance from the Fed is tepid, as in “we’re done for now, maybe for a long time, because we don’t have enough data.” Yes, they’re likely to cut, in my opinion, this time because the private sector labor market indicators are softening and the trend is softening. So while they don’t have all of the metrics that they normally lean on, you’ve got to go with what they do have. And that’s been softening.

Unemployment is rounding up, rounded up to close to 4.5% when you round up. So that’s the highest since the post-pandemic period. They’re going to be aware of these kinds of things. They’re going to be aware of consumer sentiment plumbing lows. So they’re going to err, in my opinion, on a cut as a proactive move. So we’ve got that to worry about.

Markets are probably going to be rather wishy-washy until we get that Fed statement and we hear in the Q&A where the Fed will likely continue on into 2026, even though it’s going to have a new chairman. So that’s it for your Monday takeaways. It’s going to be a rocky – perhaps great – road this week, or perhaps maybe a sell-the-news moment. Wish you had your stops in kind of thing.

And I know some of you hate when I say this, but good luck out there.