In the short-to-intermediate term, the U.S. economy appears to be emerging from a post-Labor Day “soft patch” in economic data brought on by the latent effects of 2Q trade policy announcements, the Fed’s tardiness (remember Aug?) to address the resulting dislocation from those trade announcements, labor market unevenness, and a protracted government shutdown. Mercifully, global corporate profits have largely held up; top-line strength has broadened among U.S. shares. Consumer data in the run-up to the year-end holidays have been on the better side of mixed. This could be taken as more concerning if not for the mountain of tax refunds (~$150 billion) coming to the U.S. consumer during the upcoming April’26 filing season. The key will be to “bridge the gap” between now and then. Possible? Yes. But likely not without choppiness in the capital markets. The keys – as always – are earnings and interest rates. Profits, as noted, are largely behaving. We believe suspicion is warranted over the vendor-financed alchemy that appears to be aiding M7 hyperscalers and adjacent AI ecosystem distributaries. Thus, the continued improvement in the non-Tech revenue stack is important.

Stock market strong but experiencing leadership rotation. Profit support remains intact. The consumer is “OK” for now and waiting on a boost.

Global rates may be telegraphing a more nuanced message. At the short-end, accommodative monetary policy is aiding and abetting a global economy grappling with latent supply chain dislocation, simmering inflationary pressures, softer labor markets and deeper-seeded concern for the expanding stock and quality of credit in its opaque corners, i.e., private credit and broadly syndicated loans. Spreads, while off the tights, are not screaming but do bear watching. Wealth clients should approach esoteric credit “opportunities” with caution. (Remember there are two types of “alts,” those that are not stocks, or bonds and their transparent derivatives, e.g., gold, real estate, and two, those in an opaque wrapper, that use leverage and carry high fees).

The long-end of the yield curve, however, is telling us something different. Yields on Japanese government bonds (JGBs) are up notably on the back of several under-covered auctions in the last year. We suspect the Bank of Japan, the originators of monetary intervention, are at it again. The Bank of Japan appears to be undertaking a painstakingly controlled effort to fan inflation to curb its debt burden by weakening the Yen. Some observers have suggested the BOJ has “lost control.” We’re not so sure. They could but it’s not clear that they have or will.  What does appear to be happening is the floor at the long-end of the sovereign yield curve has shifted higher. Also notable is the interplay between global central bank selling of long-dated U.S. Treasury paper and the increased buying of GENIUS Act-compliant stable coins. If the Bessent Treasury has found their marginal buyer, they may well be able to stave off any increased concern of weakening Dollar hegemony but the implications for “traditional” 60/40 portfolios are already being felt.

While not “new” news, two interesting inversions may be looked back at as signposts of a shift in the structural composition of the asset blend across household portfolios.

The U.S. government now spends more money per annum (~$970 billion) to pay the interest expense on its outstanding debt obligations than it does in provision of the national defense (~$920bn). This strikes at the heart of the De-Globalization narrative we see as carrying significant momentum into decade’s end… if not beyond. The problem is not just government but all debt – government debt, corporate debt, private debt, consumer debt, all of it. At a point, the debt level and more importantly the interest carry on the debt becomes too high to service, while maintaining the requisite levels of saving and investment necessary to keep the economy expanding.

Data through Nov. 2025 / Source: Strategas & Bloomberg

More recently, the value U.S. households carry in their stock portfolios has exceeded the aggregate capital of their homes. This has happened only twice before. They ran to par in 1969 and straight through in 2001. The market environments that followed would not be described as spectacular for shareholders. 

The diversification and hedging merits of an appropriate risk-adjusted mix, e.g., aggressive growth, conservative, capital preservation, no longer present as reliable. Readers of our work and investors in our tactical allocation suite know that we have been building a structural position in Gold and Commodities (in the not stocks or bonds “Alternatives” sleeve) over the last several years.  Last month we took the portfolio share to 10% for a 60/30/10 baseline. We would expect further reductions to both the equity and debt stack as the relapsing, remitting evolution of De-Globalization plays out.

Looking into 2026, we continue to see five themes with sufficient thematic momentum to warrant inclusion in our Macro Thematic Opportunities portfolio:

1)    Cash Flow Aristocrats – companies with the ability to self-fund, particular in periods of economic uncertainty. 

2)    Artificial Intelligence – the investable focus of which is shifting, in our view, beyond the hyper-scalers and to a period defined by “agentic productivity.”

3)    The Industrial Power Renaissance – answering the need for America’s (and the World’s) insatiable demand for electricity to turn things on, to make things we want and to ship things where we need and want them.

4)    De-Globalization – understanding the implications accruing the breakdown and fracture of long-held and long-relied upon geo-political operating conventions.

5)    The 2026 Consumption Wave – fueled, in no small part, by billions of Dollars of tax credits and refunds, the build-up to the FIFA World Cup and America’s celebration of the 250^th anniversary of the Declaration of Independence.

Nicholas Bohnsack

This communication was prepared by Strategas Asset Management, LLC ("we" or "us" or “our”). This communication represents our views as of 12/18/2025 which are subject to change, and are presented for illustrative purposes only. The information contained herein has been obtained from sources we believe to be reliable, but no guarantee of accuracy can be made. This communication is provided for informational purposes only and should not be construed as an offer, recommendation, nor solicitation to buy or sell any specific security, strategy, or investment product. This communication does not constitute, nor should it be regarded as, investment research or a research report or securities recommendation and it does not provide information reasonably sufficient upon which to base an investment decision. This is not a complete analysis of every material fact regarding any company, industry, or security. Additional analysis would be required to make an investment decision. This communication is not based on the investment objectives, strategies, goals, financial circumstances, needs or risk tolerance of any particular client and is not presented as suitable to any other particular client. Past performance does not guarantee future results. All investments carry some level of risk, including loss of principal.

Strategas Asset Management, LLC is an SEC Registered Investment Adviser affiliated with Strategas Securities, LLC, a broker-dealer and FINRA member firm, and an SEC Registered Investment Adviser. Both Strategas Asset Management, LLC and Strategas Securities, LLC are affiliated with Robert W. Baird & Co. Incorporated ("Baird"), a broker-dealer and FINRA member firm, and an SEC Registered Investment Adviser, although the firms conduct separate and distinct businesses.