The Fed Stokes Inflationary Fires, Midterms Thoughts, & Market Positioning

A 360 View to Round Out 2025

“History never looks like history when you are living through it. It always looks confusing and messy, and it always feels uncomfortable.” — John W. Gardner, 1968

It feels like a while since I last discussed positioning and sentiment in detail, but turns out it was just a few weeks ago in The Worm Has Turned and When Fast Markets & Tighter Funding Collide. While Thanksgiving may feel like ancient history, if you missed those notes, I would suggest a quick skim. Also if you missed last week’s Make Seasonality Great Again please read that as well, as today’s note ties elements of that seasonality into my outlook for 2026 and how I am thinking about my own portfolio throughout the year. I will set the table with a look at inflation and growth first, and then address positioning and sentiment.

“In short, if you really know what’s going on, you don’t even have to know what’s going on to know what’s going on.” — The Money Game, Adam Smith, 1967