Weekly Hotline: December 19, 2025
Volatility plagued the stock market this week as investors digested the first up-to-date jobs and inflation reports since before the government shutdown.
MACROECONOMIC UPDATE
- The long-awaited Jobs Report for November, released this Tuesday, showed unemployment rising to 4.6% from 4.4% and revealed significant underlying weakness in the labor market. However, it is important to take this report with a grain of salt as there could be some distortions due to residual effects of the shutdown. Read more in this Market Insight.
- The Consumer Price Index (CPI) also finally came out this week, and it showed overall CPI cooling from 3% year-over-year to 2.7% while the Core rate, which excludes the volatile food and energy components, also fell from 3% to 2.6%. However, many economists are concerned with the accuracy of the report due to statistical anomalies stemming from the skipped October data points.
- The National Association of Home Builders (NAHB) Housing Market Index ticked up one point to 39 in its December reading. This remains below the level of 50, indicating that most builders remain pessimistic about the current and near-term outlook for housing. In addition, the use of sales incentives rose to 67% – the highest post-Covid reading, and 40% of builders reported price cuts.
- In further trouble for the housing market, Existing Home Sales increased just +0.5% in the latest release, while inventory fell -5.9%. Housing remains largely stagnant with this figure sitting -1.0% below last year’s level.
- The final Consumer Sentiment release for December came in slightly lower than the preliminary reading, with Overall Sentiment now at 52.9 (up from 51.0 in November). Both the Current Conditions Index and the Future Expectations Index ticked down from their preliminary estimates, coming in at 50.4 and 54.6, respectively. These historically low levels of Consumer Sentiment continue to warn of potential trouble in the U.S. economy in the coming months.
TECHNICAL UPDATE
- InvesTech’s Housing [Bubble] Bellwether Barometer fell back toward its warning support level this week as homebuilders continue to grapple with price cuts and incentives that are squeezing profit margins. If this Indicator falls back below its key support level and continues downward, it could be a sign of further trouble to come in the housing market.
- InvesTech’s Artificial Intelligence Index has been extremely volatile and went into Friday’s open down over -4% for the week. These speculative AI-heavy stocks are likely to put up a fight, and we expect dramatic moves in both directions over the coming weeks. However, a continued fall in this Index could represent serious trouble for investor psychology.
InvesTech Model Fund Portfolio
There are no changes in the Model Fund Portfolio this week which has a net invested equity allocation of 53%. This is comprised of 58% long positions, 5% in an inverse index ETF, 5% in an intermediate Treasury ETF, and 32% cash held in short-term Treasurys or a money market fund.
Latest Issue of InvesTech Research Out This Afternoon!
Inside this issue we reveal that the Fed’s battle is far from over and expose why the U.S. consumer might be less resilient than most economists believe. More importantly, we provide a technical update of the “Big 3” InvesTech indicators to watch going into the new year and show how our Model Fund Portfolio is proving to be resilient (and positive) in this volatile market.
