The Weekly Edge

U.S. stocks are holding up as conflict escalates in Iran, but rising oil prices and weakening consumers could change that fast. Here’s what investors need to watch.

Occasionally, instead of being optimistic about the future, equity markets become thoroughly “freaked out” by the future (singing along to “The Future Freaks Me Out” with those slightly neurotic synth-punk-emo purveyors, Motion City Soundtrack).

This week’s Edge (which you can probably read while listening to the entire 18 minutes of the “MacArthur Park Suite”) will look at the recent run in Value outperformance and examine the drivers that could make this run in Value sustainable (like in the early 2000s) or just another flash in the pan.

This “Lonely Hearts Club” for non-tech sectors has disbanded to start 2026, with huge outperformance by non-tech sectors and huge underperformance by tech areas (the broad tech sector, Mag 7, and, most painfully, software).

The Federal Reserve has trimmed its policy target by 175 basis points (1.75%) since September 2024, but longer-term Treasury yields are actually higher today than they were then.

U.S. consumers are so emo right now that they are reporting their worst, most sour, most negative sentiment since the depths of COVID and the Great Financial Crisis.

Why are long-term interest rates rising? From Fed leadership uncertainty and resilient growth to Japan’s bond shock and geopolitics, we break down the “usual suspects” driving today’s rate volatility.

Of the things from 2025 that we would like to see more of in 2026, at the top of the list is Oasis reunion concerts (maybe with even more B-side cuts, like those included on the band’s The Masterplan 1998 compilation album).

Though the initial critical reception of 1992’s The Muppet Christmas Carol was mixed (a thumbs down on Siskel & Ebert!), modern wisdom and taste have caught up to the precious pointedness of the pint-sized production, with the movie now being lauded as “the greatest Christmas film ever made”.

This week, the Federal Reserve’s Open Market Committee (FOMC) held its final monetary policy gathering of the year, and it used the occasion to slash its policy target rate one more time. While the economic data flow remains impaired by the 43-day government shutdown, the committee saw enough weakness in the labor market to feel it needed to ease policy for the third time in as many meetings.