The man from the Fed, he says “yes!”
After a month of handwringing over inflation, unemployment and a lack of federal economic data, Wall Street got its answer from the Federal Reserve on Wednesday. And it was yes says Bloomberg’s David E. Rovella.
The central bank’s officials delivered a third consecutive interest-rate reduction in a 9-3 vote that lowered the benchmark federal funds rate by a quarter point. Speaking after the meeting, Chair Jerome Powell suggested the Fed had now done enough to defend against threats to employment while leaving rates high enough to counter price pressures.
Wall Street seemed to take the news well with the US markets ending the day higher. The rate cut had been expected, although according to Rueters, markets are betting on a further easing down the road.
The Dow jones industrial average reached new heights on Thursday as the above rate cut followed by disappointing Oracle results prompted a move out of the tech stocks (which were correspondingly down) into names that can benefit from a growing US economy, so says CNBC. Oracle shares tumbled 14%.
The UK’s economy shrank unexpectedly in the lead up to the Budget, according to the latest official figures reports the BBC. The economy contracted by 0.1% in October, the Office for National Statistics (ONS) said, whereas economists had been expecting it to grow by 0.1%. The economy also shrank by 0.1% in the three months to October.
The cyber-attack at Jaguar Land Rover continued to affect car production, with only a slight recovery in October from the previous month’s fall, while analysts said uncertainty ahead of the Budget had slowed consumer and business spending.
The weaker-than-expected figures strengthen the case for the Bank of England to cut interest rates at its meeting next week, those analysts also said. [Ed – something that will hopefully benefit both equities and bonds!]
Market News
The investment houses are starting to put out their reviews of the year. I don’t know if they are downing tools early but last week was a normal one so its over to the usual suspects to take us through what went on.
The team at Tatton Investment Management cover why Jay Powell has offered some liquid cheer as the US central bank’s $240 billion liquidity injection over the next 6 months was a seasonal gift that cheered small caps, while there was some US AI tech disappointment.
But then just to spite me, Lothar Mentel takes a look at the outlook for 2026 commenting that despite Trump induced turbulence and domestic worries, 2025 still turned into a good year for investors. They take stock of 2026, a year of potential for regional change and rotation of market leadership
This week’s digest from Rathbones looks at the recent spate of bids for parts or all of Warner Brothers and considers whether this jump in M&A activity may be the signal of a top in the market that investors seem desperate to find.
These latest bellringers are Netflix, which last week agreed an $82bn bid for Warner Brothers’ film studios and streaming business, and Skydance Paramount, which has made a competing offer of $108bn for all of Warner Brothers Discovery. It’s possible that neither deal will be consummated, but the fact that they are on the table illustrates confidence on the part of the bidders and their backers.
But taking a step back to look at the historical context, merger and acquisition activity remains relatively subdued relative to past booms. As a percent of the value of all shares listed in the US market, M&A peaked at 3% ahead of both the 1990 and 2000 market crashes, 2% in 2007 ahead of the global financial crisis and 1% at the last market top in 2021. Our research suggests that this year it accounts for no more than 0.5%.
There are plenty of historic examples of ‘top of the market’ deals, which this week’s Digest shows. In the case of Netflix, at least it’s interest in Warner Brothers fits with its existing business, which can’t be said of some of the historical examples at past market peaks.
Looking Back Chart of the Week by 7IM
This year, the best performing company in the FTSE 350 has been Fresnillo, up ~340%! Owning a Mexican-based silver miner, in a year where the price of silver has more than doubled? No-brainer, right?
And the worst performing company in the FTSE 350 has been WPP, losing 65% in 2025. A global advertising giant struggling to keep up with AI revolutionising the industry. Again, pretty obvious?
Source: FactSet, data to 08/12/2025. Past performance is not a guide to future returns
Well. Not one person out of the 220+ people playing in our 2025 Bull and Bear competition chose either company!
“Aha” you say! “That’s because everyone picked US stocks!”
- Not true. Around 40% of picks were UK stocks.
- No-one picked the top performing US company (Sandisk,makes data storage for AI,up 500%).
- And while TWO people DID pick the WORST US company (Fiserv, payment processing & cybercrime, down~70%) … both chose it as their TOP performer ☹☹☹
What’s easy in hindsight, is difficult at the time. Which is where diversification comes in – check out that nice, middle-of-the-road, double digit return from the FTSE 350. It doesn’t look as clever as buying Fresnillo would have, but it certainly isn’t as painful as having bought WPP. And it’s a lot simpler!
Trilemmas!!
It’s the classic ‘trilemma’, according to Fidelity, particularly for those in their 40s and 50s: should you overpay your mortgage, invest in an ISA, or pay more into your pension?
With interest rates higher than they have been for much of the past 10 years, it may be tempting to take the guaranteed return of overpaying your mortgage over the unpredictability of stock markets. However, our number crunching suggests that doing so could potentially leave you £33,000 worse off after 20 years.
Let’s take an example. Emma is 45 earning £40,000 a year with £300 a month in excess savings. She has £150,000 in her pension already and £100,000 left to repay on her mortgage over the next 15 years. Her mortgage rate is 4%.
Emma considers three options for her excess savings:
- Put it towards overpaying her mortgage (once the mortgage is paid off, she puts the £300 a month into her pension)
- Put it into a stocks and shares ISA
- Put it into her pension
We assume in all scenarios that she is putting 5% of her pay into her pension and her employer puts in 3% – with any additional contributions being on top of that. We also assume her salary goes up by 2% per year until she retires at age 65.
| Action | Cash | ISA | Pension | Total financial wealth |
| Do nothing | £106,378 | £0 | £376,218 | £482,596 |
| Overpay the mortgage (then £300 p/m into pension) | £80,294 | £0 | £427,577 | £507,871 |
| Invest in an ISA | £53,476 | £85,469 | £376,218 | £515,163 |
| Pay into pension | £42,063 | £0 | £498,866 | £540,929 |
Source: Fidelity International, December 2025, based on cash returns of 1% per year and stock market returns within an ISA or pension of 5.7% after fees.
Please remember this is not financial advice. The decision on whether to overpay your mortgage or invest in an ISA or pension will be completely individual and based on your personal circumstances. If you’re unsure of what to do, it could be worth speaking to a qualified financial adviser.
We agree, so please speak to your usual JB Wealth advisor if you have any queries.
Miscellaneous
The most serious and urgent issue that needs addressing is the long-term sustainability of the pension system, according to Ben Franklin, deputy chief executive at the International Longevity Centre. Appearing in front of the Work and Pensions committee, Franklin felt the UK should be looking to other pension systems to understand how they are solving the problems of pension inequalities and rising life expectancies. He explained: “We have managed to raise the pension age successfully in the past without there being huge political outcry. But we could potentially do better by looking at examples like Denmark. “It has an automatic mechanism every five years to review this based on life expectancy at 60. It has some built in flexibility, it is a really interesting model that we should consider.” Franklin added there were also more radical options the UK could consider like the Swedish model, where they have a notional defined contribution system. “It affectively works like an annuity for individuals based on what they’ve contributed over their working life. And they can access it between ages 63 and 69 and the timing with which they access that obviously determines how much they get during retirement,” he said. Expect more information in this area in the coming moths and years.
Almost half (45%) of high-net-worth individuals do not keep any written record of money they have gifted to loved ones, new research has found. The survey by Charles Stanley found that of those individuals, 29% said they keep mental notes on what they’ve already gifted or plan to, while 17% simply have no record of what they’ve gifted. Charles Stanley highlighted that while gifts are a popular way to pass on wealth and mitigate inheritance tax (IHT) in the UK, keeping written records is essential to avoid leaving loved ones with unexpected tax bills. Harry Bell, director of financial planning at Charles Stanley, said “With IHT thresholds also remaining frozen and private pensions set to be included in estate valuation from 2027, gifting will only become more popular as a tool for families to pass their wealth on. However, our research shows that there is a concerning lack of understanding around gifting and the potential unintended consequences if not done appropriately. “Making gifts by the book is what really matters. While many claim to keep a record of what gifts have been made, it’s only those with written records that HMRC can track. Any other gifts made without justification will be liable to IHT if the estate threshold exceeds £325,000.”
I’m off to watch (or probably just listen, because the chances of getting a seat that isn’t behind a pillar in the church, is slim) the school choir in the carol concert. ‘Oh, come all ye faithful,’ to the last bulletin of the year next week and I hope to catch up with you then.