In this email:

• What’s at stake on Wednesday’s Fed meeting?

• Themes leading up to the meeting

• IMO: Good buys till March Fed meeting

What’s at stake on Wednesday’s Fed meeting?

This meeting isn’t about a rate cut. It’s about expectations control.

Key things the market is actually listening for:

• Any shift in language around “confidence” in inflation progress

• Whether Powell pushes back on early cut pricing

• How united the committee sounds about timing

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Themes leading up to the meeting

1. Soft-landing confidence is high
Growth has held up. Labor data is cooling but not breaking. Inflation is drifting lower, so the whole “we have to watch out for medium to long term risk in inflation due to tariffs” argument is over (for now).

2. March is the real decision point
This meeting sets the path to March. Powell knows it. The market knows it. Everything said Wednesday is really about optionality two months from now, which means this meeting’s press conference matters less for rates, more for narrative discipline.

IMO: Good buys till March Fed meeting

This feels like a range-bound, selective risk-on window, not a chase-everything market.

With rates expectations flat and March as the true inflection point, I prefer assets that:

• Don’t require cuts to work

• Benefit from policy uncertainty rather than clarity

• Hold value if narratives wobble

💡 A few that fit that box:

Read more

In this email:

• GWRE’s -6.66% drop in 1 day - was there a fundamental catalyst?

• What the next 2 months could look like.

• IMO: a naive method of trade.

GWRE’s -6.66% drop in 1 day - was there a fundamental catalyst?

Guidewire Software (GWRE) provides core software platforms to property & casualty insurance companies, covering policy administration, billing, and claims management. These are mission-critical systems with long implementation cycles and high switching costs - the kind of business where fundamentals typically change slowly, not overnight.

GWRE closed 6.66% lower in the first trading session of the year. Naturally, the first question is whether anything actually changed.

The short answer: no.

• No announcements around management changes.

• No updates to margin structure or long-term growth outlook.

• No earnings pre-release or guidance revision.

• No regulatory or customer-specific headlines.

The company’s next earnings date is 3/5/2026, so this wasn’t positioning ahead of results either.

What did stand out was liquidity.

During mid-day trading, only ~80k shares changed hands. That’s a ~93% collapse versus GWRE’s average daily volume of roughly 1.2 million shares.

In other words, the market cleared at a lower price - not because new information emerged, but because participation temporarily disappeared.

That’s the definition of a short-term price mismatch, and it sets the stage for looking at what typically happens afterwards.

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What the next 2 months could look like

Rather than speculate, we can look at this through a conditional probability lens:

Given a stock drops ~6% or more in a single session, how has GWRE historically performed over the following ~40 sessions?

We backtested this setup across the past 5 years, scanning for every instance where GWRE fell 6% or worse in one day, then measured performance over the next 40 trading sessions.

This isn’t a forecast — it’s simply asking how similar situations have resolved in the past.

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In this email:

• Polymarket’s back in the US - what is it?

• Easy “buys” from a year-end perspective

Polymarket’s back in the US - what is it?

The CFTC earlier this month approved Polymarket’s return to US markets after a 3-year absense. The platform can now offer real-money prediction markets through a registered intermediary — think betting on election outcomes, economic indicators, or major events, but under federal supervision.

• The regulatory shift: This marks a major CFTC policy change—the agency previously raised concerns about consumer protection and unregulated wagering, but now signals certain prediction markets can operate legally under the Commodity Exchange Act with proper oversight (reporting, surveillance, record-keeping).

• What makes it work now: Polymarket’s new model requires the same regulatory safeguards as traditional derivatives markets. Companies can now access US markets if they engage early with regulators and structure offerings within the federal framework — a potential roadmap for blockchain-based derivatives and prediction market platforms.

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Easy “buys” from a year-end perspective

With Polymarket back in the US, here are some low-risk plays expiring by end of the year.

These are binary contracts trading at 99+ cents that pay out $1.00 if correct, offering attractive annualized returns relative to risk. Keep in mind you can lose it all on a wrong call, but when you're buying at 99 cents for near-certain outcomes, the risk-reward math gets interesting for year-end cash deployment.

💡 IMO: Any extra cash till end of the year, I’d spread out across these markets for diversified risk.

Read more

In this email:

• Fed x SPY Pattern Breakdown (2021~Present)

• Why “good cuts” drive rallies while hiking kills momentum

• What December’s FOMC decision could mean for 2026

Fed x SPY Pattern Breakdown (2021~Present)

The past five years reveal how SPY performed across different Fed policy regimes.

🔴 Red zones (Fed hiking/raising rates)

• 2022 ~ early 2023: The 2022 hiking cycle saw SPY drop 23% (peak-to-trough) as the Fed fought 9.1% inflation with aggressive rate increases. Markets made virtually no all-time highs during this period, struggling under the weight of rapidly rising rates and recession fears.

⚪ Grey zones (Fed pausing/maintaining rates)

• 2021: Following the pandemic stimulus, SPY rallied strongly in 2021 while rates remained near zero.

• Mid~late 2023: The 2023 pause allowed markets to digest the hiking cycle and eventually recover, though progress was choppy.

🟢 Green zones (Fed cutting/lowering rates):

• 2020: The emergency cuts during the COVID crash preceded a massive rally once stimulus kicked in, with SPY recovering from March lows to hit new all-time highs by August. (not in plot above)

• 2024~early 2025: The recent cutting cycle has coincided with SPY hitting frequent all-time highs, boosted by the post-election rally and soft landing optimism - though this was before tariff concerns emerged in April 2025.

Why “good cuts” drive rallies while hiking kills momentum

Higher rates increase the discount rate for future cash flows, making stocks mathematically less valuable.

• The 2022-2023 hiking pain: Rates jumped from 0.25% to 5.5% in just 16 months. Every rally attempt was crushed by another hike, and SPY couldn’t sustain momentum until the Fed signaled they were done.

But when it comes to lowering rates, not all cuts are created equal: there’s a huge difference between “we’re cutting because inflation is under control” versus “we’re cutting because the economy is collapsing.”

• “Good cuts” vs panic cuts: The 2024-2025 cuts came with inflation cooling toward target and the economy still growing - a soft landing scenario. Compare that to the 2020 emergency cuts during a pandemic crisis, which initially failed to stop the bleeding.

• Direction matters more than levels: Markets rallied in 2023 even with rates at 5.5% once the Fed paused.

  • It’s not the absolute rate that matters — it’s whether rates are moving up (pain), sideways (uncertainty), or down (relief).

What December’s FOMC decision could mean for 2026

Markets have whipsawed on December cut expectations - from over 90% to 49% after Powell’s warnings, down to 29% following hawkish comments from Logan and others, then back to 90% as of writing after dovish remarks from Miran and Waller.

This potential pivot from cutting to pausing could change the market’s trajectory heading into 2026.

Read more

In this email:

• Government shutdown is over. What did we get from it?

• Where are markets pricing December FOMC?

• What data will we get before December Fed meeting?

Government shutdown is over. What did we get from it?

The 43-day shutdown ended on 11/12 with Trump signing a funding bill that extends through 1/30/26, provides backpay for federal workers, and fully funds SNAP through Sept 2026. Democrats were not able to secure the ACA health insurance subsidy extension they fought for, instead accepting a promise from Senate Majority Leader John Thune to hold a vote by mid-December.

💸 Two-thirds of Americans expect health insurance premiums will increase in the coming months now that the shutdown ended without the subsidy extension

✈️ 670k federal employees were furloughed and the FAA reduced flights by 6% due to air traffic controller staffing

🔄 We’re funding the government for just 75 days before potentially doing this all over again in late January

Where are markets pricing December FOMC?

Markets shifted from over 90% to just 49.4% probability for a December rate cut as Powell explicitly warned it’s “not a foregone conclusion.”

The October FOMC meeting saw a deeply divided committee vote 10-2, with Stephen Miran dissenting for a bigger 50bp cut while Jeffrey Schmid wanted no cut at all.

What’s driving the doubt:

📊 Inflation remains stuck at 3% – well above the Fed’s 2% target

🔀 Powell said the committee has “strongly differing views about how to proceed in December” and noted “there are no risk-free paths now”

What data will we get before December Fed meeting?

This is where things get ugly. The Fed might be making its December 9-10 decision essentially blind (in the worst case scenario).

Jobs Reports: National Economic Council Director Kevin Hassett confirmed we’ll get October payroll numbers but no October unemployment rate. The September jobs report will be released on 11/20.

• IMO: We’ll likely get the October payroll data before the December 10th FOMC meeting, but it’ll be missing the unemployment rate – a critical piece of the labor market puzzle.

Inflation Data: White House Press Secretary Karoline Leavitt said the October CPI report is “likely never being released” because the BLS went dark during the shutdown. We might get lucky and see November CPI data before the December FOMC date, but even that’s uncertain given the delayed restart of data collection.

The Bottom Line: Powell’s own words at the October meeting sum it up: “what do you do if you’re driving in the fog? You slow down” – a clear signal that missing data could force a pause. Two-thirds of the pricing data that feeds into CPI is collected by in-person visits to brick-and-mortar stores, making retroactive collection nearly impossible.

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Disclaimer

The information provided on Ask a Wise Ape (the “Substack”) is strictly for informational and educational purposes only and should not be considered as investment, financial, trading, or any other type of advice. Investing in financial markets involves substantial risk, including possible loss of principal. Past performance is not indicative of future results. Ask a Wise Ape makes no representations or warranties about the completeness, accuracy, reliability, suitability, or availability of the information provided.

This Substack may contain links to external websites not affiliated with the author, and the accuracy of information on these sites is not guaranteed. Nothing contained in this Substack constitutes a solicitation, recommendation, endorsement, or offer to buy or sell any securities or other financial instruments. Always seek the advice of a qualified financial advisor before making any investment decisions.

In this email:

• What happened to US stocks on Friday?

• How did different assets perform?

• How does that compare to Liberation Day?

• What’s the play?

What happened to US stocks on Friday?

Friday was a bloodbath driven by Trump threatening a “massive increase of Tariffs” on Chinese imports. The catalyst? China announced new export controls on rare earths (effective December 1st) requiring licenses for any product containing more than 0.1% rare earths sourced from China.

Trump’s response was swift and hostile – not only threatening tariffs but also canceling his planned meeting with Xi Jinping at the APEC summit in South Korea. This matters because China controls roughly 70% of the global rare earths supply, which are critical for semiconductors, defense systems, EVs, and AI hardware.

How did different assets perform?

• SPY (S&P 500): Down 2.67%. Broad market selloff as tariff fears repriced equity risk across all sectors.

• GLD (Gold): Up 1.01%. Classic safe-haven bid when geopolitical and trade tensions spike.

• USO (Oil): Down 4.30%. Tariff threats = economic slowdown fears = lower energy demand. Oil traded like a recession indicator.

• BITO (Bitcoin): Down 3.75%. Risk-off sentiment hit crypto hard. So much for the “digital gold” narrative when real selling pressure hits.

• UTEN (Treasury): Up 0.78%. Bonds provided stability but the modest rally suggests markets aren’t in full panic mode yet.

How does that compare to Liberation Day?

If Friday felt familiar, that’s because we’ve been here before recently on April 2 — Trump’s so-called “Liberation Day” when he announced sweeping tariffs on basically everything coming into the US.

Markets absolutely cratered, triggering the largest global market decline since the 2020 crash. Friday’s 2.7% drop was nasty, but it wasn’t Liberation Day nasty. That event was a legitimate market crash. Friday was more like a warning shot – markets saying “not this again.”

The difference? In April, we got a 90-day pause that triggered the Nasdaq’s biggest single-day gain in 24 years – a 12% rally. This time? No pause button in sight yet.

What’s the play?

Here’s the thing about tariff tantrums: they create volatility, and volatility creates opportunity.

🛡️ Long-term no-brainer:

• SPY (S&P 500): Start DCA’ing in small amounts now to build your position.

• GLD (Gold): Safe-haven asset that historically holds value during geopolitical chaos. A solid hedge when trade wars heat up.

⚡ Slight risk-forward:

• USO (Oil): DCA’ing into crude for mid-long term recovery. Oil got punished on recession fears, but energy demand doesn’t disappear – it just gets repriced. Patient accumulation here pays off when economic anxiety fades.

• BITO (Bitcoin): Same DCA strategy. Crypto sold off hard in the risk-off move, but if you believe in the long-term thesis, these pullbacks are accumulation opportunities.

• UTEN (Treasury): Timing bond entries and exits around volatility spikes. When panic hits, treasuries rally. When optimism returns, they fade. Trade the fear cycle.

💡 IMO:

Start DCA’ing small amounts into SPY now – don’t try to time the bottom perfectly. Once we see a pause button equivalent (tariff delay announcement, Xi meeting back on, trade negotiation headlines, or Trump walking back the threats), that’s when you deploy the bulk of your extra cash into SPY.

I’d also throw a little into SSO (2x leveraged S&P 500) when that pause signal hits, with a tight 5% profit target. Once you hit that 5%, get out. The idea is to capture the explosive relief rally (like the 12% Nasdaq rip after Liberation Day’s pause).

For now, this is a market that rewards patience over panic.

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Ask a Wise Ape is a reader-supported newsletter. Since you’re here already, consider signing up for a paid subscription for $5/month which will give you access to the full archive (posts are archived after three months). Thank you for your contribution!

Upgrade to paid

It’s a crazy world - we Apes will keep you informed.

Disclaimer

The information provided on Ask a Wise Ape (the “Substack”) is strictly for informational and educational purposes only and should not be considered as investment, financial, trading, or any other type of advice. Investing in financial markets involves substantial risk, including possible loss of principal. Past performance is not indicative of future results. Ask a Wise Ape makes no representations or warranties about the completeness, accuracy, reliability, suitability, or availability of the information provided.

This Substack may contain links to external websites not affiliated with the author, and the accuracy of information on these sites is not guaranteed. Nothing contained in this Substack constitutes a solicitation, recommendation, endorsement, or offer to buy or sell any securities or other financial instruments. Always seek the advice of a qualified financial advisor before making any investment decisions.

In this email:

• What is ULTY?

• When does it do well? When does it do poorly?

• Why is it worth including in one’s portfolio?

Read more

In this email:

• Biggest losers in S&P 500 YTD

• Reasons not to buy

• Which tickers could be a buy

Read more

In this email:

• What “any given 1-year” holding period means

• TECL vs TQQQ

• TECL, a stats breakdown

Read more

In this email:

• Quick recap of post-liberation day stock market

• Historical swings - a visual comparison

• What to do till end of year?

Read more

In this email:

• What is QQQM?

• What’s the difference between QQQM and QQQ?

• Why do I like QQQM better than QQQ?

Read more

In this email:

• What is UUP?

• Pre-Trump vs first two months of Trump 2.0

• IMO: DCA UUP

Read more

In this email:

• A full circle moment

• What’s weighing the market down? Will they continue?

• How “big” is this sell-off historically speaking?

Read more

In this email:

• Outlook for AI in the new administration

• The Utilities sector in relation to AI

• Interesting ticker from the XLU ETF

Read more

In this email:

• It’s inauguration month - how does that look historically for stocks?

• What’s the key focus for January in macroeconomics?

• Earnings to watch out for

Read more

In this email:

• Why the sell off since Wednesday?

• Which sectors have remained resilient?

• What now?

Read more

In this email:

• Australia’s social media ban

• The specifics and technology

• What are the potential risks?

Read more

In this email:

• What exactly is Dogecoin?

• What are the fundamentals?

• Correlations: New presidency, Dogecoin, Bitcoin, Nasdaq…?

Read more

In this email:

• How have gold prices moved this year so far?

• What’s driving the rally?

• Looking 6~12 months ahead

Read more

In this email:

• What is open source vs closed source AI?

• The good and bad of open source

• The good and bad of closed source

Read more