Proflex Market Update - Wk 52

Dear Subscribers,

Welcome to another weekly review of markets as we come to close of another great year for markets.

Hawkish Fed Rocks Markets

Last week, the Federal Reserve brought back the “higher for longer” narrative, rattling stock markets with a more hawkish tone. The Fed cited concerns over persistent inflation and pivoted once again, just weeks after signaling a more dovish stance during the September 50 bps rate cut.

This was the first Fed meeting since the political landscape shifted following Donald Trump’s election victory, and some analysts suggest the hawkish turn may be in response to anticipated policies like deportation of illegal immigrants and new tariffs, which are viewed as inflationary risks.

While this adjustment likely puts an end to hopes for a Santa rally, the broader market is still poised to finish the year as one of the best-performing years for stocks in recent history.

Market Resilience in the Face of Uncertainty

Despite initial negativity, markets rebounded strongly on Friday, recovering some of the week’s losses. As we’ve been discussing with our subscribers, the trajectory of rate cuts is less consequential to the overall stock market performance.

We had a great discussion with Proflex community members after FOMC meeting and discussed key reasons why it may not be as much of a real impact on markets in medium term. We discussed key items as follows:

• Mega-cap stocks drive the index more than rate policy does. Even in a high-rate environment, mega-caps have thrived due to AI spending, earnings momentum, and strong GDP growth.

• Recession fears have faded: With sustained high growth rates, concerns about an impending recession are no longer top of mind for most investors. The high yield spread is still low even though it has climbed up slightly since FOMC meeting.

Bitcoin’s Healthy Correction

Bitcoin experienced a major correction following the Fed’s decision to slow down rate cuts, a natural pullback after its strong rally this year. While this has raised concerns among some investors, we believe this correction is healthy and reflects Bitcoin’s typical bull market behavior.

Key points:

• Historically, Bitcoin bull runs have seen 30-40% drawdowns. In this cycle, the correction has been limited to 15-20%, demonstrating reduced volatility thanks to ETF inflows and sustained corporate demand.

• The long-term tailwind for Bitcoin remains intact. With Donald Trump set to take office in 2025, the crypto market could see renewed optimism as policies align with pro-digital asset narratives.

This stabilization bodes well for the future of Bitcoin and digital assets as they continue to mature.

Holiday Week Ahead

Happy Holidays to all our subscribers! This week will be a short trading week, with markets closing early on December 24th and closed entirely on December 25th.

As we enter the final stretch of the year, we hope you take the time to reflect, relax, and enjoy the holiday season. The last week of the year promises to be an exciting time, with plenty of market action still to come.

Thank you for being part of our community, and here’s to a prosperous 2025 ahead!

🎄✨

Proflex All-Access Performance Hits New Highs

Proflex All-Access market out-performance and success underscores the importance of our growth-focused strategies and proactive risk management during both bullish and uncertain market periods.

Best regards,

Raman Bindlish

Editor-in-Chief,

Blockstart Research

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