The Morning I Stopped Understanding Which Way Was Up

The CPI number hit at 2.7% on Thursday—softer than expected, softer than the 3.1% people were bracing for—and for about four hours, everything made sense. S&P 500 went up 0.8%. Tech rallied. Micron crushed earnings with 15% gross margins we're probably never seeing again, and nobody questioned it. People talked about rate cuts in 2026 like that was a normal thing we'd decided on democratically.

Then the market kept going up on Friday.

Then the Bank of Japan hiked rates to 0.75%—highest in 30 years—and the 10-year Treasury shot to 4.15%, and somehow the market still kept going up. Oracle bounced 6.5% after the TikTok deal. Nvidia caught a bid on reports about H200 chips maybe possibly getting to China in some regulatory window nobody fully understands. Bitcoin futures up 4%. Actually wait—3%. I can't remember which number I read first.

The Dow down 0.6% for the week, though. So something broke. Just not the things everyone was buying.

This is what they don't tell you about financial markets: the moment you think you've mapped the logic, it doesn't matter anymore because everyone else is still guessing too. We're just pretending louder.

Here's what's real:

Micron is selling memory chips into a void-like demand from data centers that may or may not justify the capex being thrown at AI infrastructure. Their gross margins are a hallucination propped up by shortage economics. Sanjay Mehrotra went on the call and said they've locked in pricing and volume commitments with customers for all of 2026 HBM supply, which either means the industry is that confident or nobody wants to get caught holding the bag when the music stops. Maybe both.

Bitcoin is trading around $88,150, down from where it was two days ago, but also everyone acts like this is the stable part of the cycle? CryptoQuant analysts are literally saying Bitcoin demand has entered a bear market phase after what they're calling "three waves" of institutional interest this year. But also Citi's forecasting $143,000 by next year because of ETF flows. Pick your poison. The prediction market at Robinhood is probably packed with retail money betting on $88K because it feels safe relative to the $100K ATH everyone's fixated on.

Target is on a 12-day winning streak. Twelve. The retailer is apparently using AI-driven shopping strategies and positioning itself to fight Walmart in some ChatGPT-integrated future nobody's actually seen work yet. But equities go up when retail gets momentum, and momentum is the only variable that consistently prints. So Target just keeps printing. At some point someone's going to ask if the stock itself justifies the price or if we're just riding the wave of traders following the wave of traders, and by then it won't matter because the streak will either break or extend to 20 and everyone will have new things to worry about.

Nike got demolished in earnings—fell double digits—but literally nobody cares because shoe companies aren't where the money is pretending to be. DoorDash is now integrating with OpenAI's ChatGPT to build a grocery app and Instacart is also doing that same thing and investors looked at this bifurcation and said "yes, this validates the AI thesis." Maplebear's stock fell 6%, which technically means the market thought one of these plays was worth less after both companies got the same news, which makes perfect sense if you're willing to accept that markets price in sentiment and sentiment is whatever someone with capital decides it means this morning.

The liquidity situation is genuinely weird right now. The Fed's been buying T-bills ($23.13 billion this week). The Treasury's been doing its thing with $51 billion in liquidity injections. There's $20.8 billion in QE-adjacent moves that nobody's calling QE because the label matters more than the mechanics. China dumped 1.05 trillion Yuan into their system. It's like everyone globally just decided stimulus was on the menu and stopped pretending otherwise. Money is looking for a home. Gravity's turned off. The job market is supposed to be weakening, which should feel scary, but instead everyone's interpreting it as permission for the Fed to cut more than the official one-cut-in-2026 forecast, which somehow makes weakness bullish.

That's the thing eating my brain right now: weakness is bullish. Inflation cooling is bullish. The BOJ raising rates—which should compress spreads and unwind carry trades and drain yen liquidity from global markets—is also apparently bullish because it means the BOJ is confident enough to tighten, which means the world isn't actually falling apart. Pick that apart.

The 10-year yield is at 4.15% and the 30-year is at 4.83%, which should concern people more than it does. Bonds are repricing harder than they have in months. Traditional diversification is dead. Long-duration Treasuries are no longer the "safety" they were supposed to be, and nobody's found a replacement yet except just kind of accepting that you need to ride the AI megaforce or accept lower returns. BlackRock literally published this, very politely, in their weekly. "The diversification mirage." Meaning: you're not actually hedged, you're just in a different flavor of concentration.

Earnings season is giving us Paychex, Carnival, Conagra, Winnebago. Which is to say: mid-tier corporates that mostly matter to people managing retirement accounts who are trying to decide if 2025 was real or a sugar rush. Winnebago popped 19% in early trading on better-than-expected results, which tells you something about how starved we are for "better than expected" outside of Magnificent Seven names. A company that makes RVs exceeds expectations and suddenly momentum traders have a new vector. This is where we are. This is the texture of the market right now.

Coinbase and Robinhood are both launching stock trading with zero fees, which is fine, but more importantly they're both rolling out prediction markets because apparently 2025 was the year we collectively decided that betting on binary outcomes was a crucial infrastructure for price discovery. There's going to be $23 billion in Bitcoin options expiring next week, and positioning is genuinely split between bulls and bears, which either means we've reached equilibrium or the market's about to shatter one direction and nobody wants to admit they're on the wrong side.

The thing that gets me is the pace. CPI misses expectations Thursday. Micron crushes earnings Thursday night. Market rips Friday. BOJ hikes Friday morning. Yields spike. Market rips anyway. TikTok news comes in. Oracle bounces. By the time you've processed one input, three more have stacked on top of it and the market's already repriced everything and moved on to the next uncertainty. There's no time to actually think. There's only time to position, react, and hope your conviction—which is already fragile before you started—holds up against whatever's about to hit the tape in the next five minutes.

Somewhere, a fund manager is probably looking at their year-end number and doing the math on whether closing out 2025 flat with "reasonable risk management" beats taking one more swing at the Santa rally and potentially spiking returns or potentially ending the year red. That's the real decision happening right now. Not whether the fundamentals are sound. Not whether valuations make sense. Whether catching the last 3% of upside is worth the chance of being down 5%.

We're at the calendar edge of a holiday week. Markets officially giving days off to federal employees while Wall Street stays open. Trump Media merged with Tae Technologies (a fusion company) for $6 billion, which tells you everything about where speculative capital goes when it has nowhere else to be: literally anywhere. Someone will make money on that. Someone else will lose a lot. The outcome isn't knowable yet.

Bitcoin defending $88,000 feels meaningful until you remember it defended $60,000 and then didn't, and the entire narrative flipped from "institutional adoption is irreversible" to "retail traders are facing losses at close of 2025" in the span of a few months. The Truth Market is always repricing. You're just trying to be on the right side of it when it does.

I don't have a conclusion. That's what's making this harder than it should be. If I'm writing this at 9:47 AM on a Friday before Christmas, with the Fed effectively in QE mode through T-bill purchases while maintaining rates above 4%, with the BOJ signaling more hikes, with inflation data suggesting maybe the worst is behind us, with prediction markets suggesting both bullish and bearish outcomes with equal conviction, with Bitcoin ranging, with Target's streak tightening, with Micron's supply guarantees potentially pointing to an industry that's too confident about demand...

What's the coherent narrative? There isn't one. There's just momentum, liquidity, and people trying to catch it before the music stops. And the music feels like it's stopping soon. But it's been feeling that way for eight months and the market keeps dancing anyway.

So Friday closes and we're into the final trading days of the year. The S&P is up 0.1% for the week. The Nasdaq is up 0.4%. We're all pretending this is normal. We're all pretending we know what's coming next.

Nobody does.

The only thing you can do is stay liquid and stay alert. Because when the repricing happens, it'll happen faster than you can respond to it, and the only edge you have is not being caught holding the bag when the music actually, genuinely stops.

And that moment? Could be today. Could be January. Could be six months from now when the implications of 1.05 trillion Yuan injections and 23 billion in T-bill purchases finally catch up to us.

For now, we just watch the tape and wait for the next catalyst.

It's coming. It's always coming.

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Liquidity is the only real thing left. Everything else is a story we're telling ourselves.