INTERIM REPORT: If That Was A Bullish Fed, then the Doves Have Nothing to Fear

Thoughts on the Market

December 11, 2025

If That Was A Bullish Fed, then the Doves Have Nothing to Fear 

In my last write-up I reconfirmed my view that the Dollar Index is a good short.  I noted that the recent rally was corrective, and that the decline was set to resume.  As you can see from the chart below, the decline has resumed in earnest.  There will be periodic bounces and corrections, but the corrective high of 99.32 should be safe for a while.  As I noted, this could easily be the start of move of a test, and possible break, of the lows that were posted in September of 2025 at 96.21.  If you want to be ultra-conservative, then I would recommend that you take profits on half your position around current levels (98.38) and put a stop on the balance at 99.35.  This will guarantee you a profit on the trade.

I will write more about the Fed’s decision in my next full update. Frankly, I found some of Powell’s answers to reporters’ questions very disturbing.  In particular, I was appalled by the Fed’s dismissive attitude towards “one-time” price rises and their impact on consumers.  Put simply, we have experienced a total price rise of 21% since 2021, and wages have not even come close to matching these costs hikes.  What is inflation if it is not a series of many “one-time price rises?!!”  The prices don’t decline after the rise, so being dismissive of them – as Powell was when he described the impact of tariffs – is insulting to anyone who has to pay bills. It was during this question-and-answer session that Powell reminded me why I was so upset by his handling of inflation in 2021 and 2022.  He is an exceedingly wealthy man who clearly is not personally impacted by the real – and often brutal – affordability challenges facing most Americans. 

Anyway, enough of my complaints.  You will get a more in-depth analysis next week.  Please note that my primary focus will be on the Yen, which may be close to a very, very significant turn.  The Bank of Japan is nearing a decision to hike rates as the import costs of food and energy are really hurting Japanese consumers.  In any event, it is still a little early in the process, but interest rate differentials are definitely narrowing.  Moreover, Japan has many problems due to their massive build-up of debt over the past thirty-five years, but the economy is still massive, and the Japanese people have massive savings.  Never underestimate the power of Japan and its people! 

I will leave you with one thought:  what if the disastrous financial reporting of Oracle is not an isolated case?  In other words, Oracle stock is down nearly 13% in after-market trading.  What will happen to the broader market if we start to see more serious cracks in the earnings and profits of companies that have borrowed and invested massive funds in AI?  Profitability may be more elusive than first thought.

Wishing you the best of luck with your trading. 

Andy Krieger