| Dear Reader,
We’re nearing the halfway point between Turkey Day and Christmas … and while shoppers are busy stocking up on gifts, investors are already looking towards the new year…
At the beginning of 2025, I predicted we’d see a solid year for stocks — with returns topping 15%. And that’s precisely where we’re looking to end up.
Meanwhile, looking ahead to 2026, I see plenty of reason for continued optimism. In today’s episode, I’m going to share a few key data points that will show you exactly why I think stocks and bonds are in for another great year.
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Population 2,128. One road in, one road out. Yet Spruce Pine, North Carolina controls something so critical that without it, every piece of modern technology stops working. MarketWatch, Tom's Hardware, and Business Insider all confirm: this tiny town is essential to the entire semiconductor industry. See the full story here… | Video Transcript: Hello, fellow Moneyball economists. I'm Andrew Zatlin.
On today's episode of Moneyball Economics, we're going to take a look at the latest and greatest economic data. We want to know, for example, does this economic data influence the Fed's decision next week and more critically to me, what should we expect next year?
Well, to cut to the chase, I believe that the economic data right now is pointing firmly to a strong economy in 2026, and that means to me a strong bond and stock market.
The data points we want to look at as they came out this week are the Challenger Gray snapshot of American company layoffs and hiring. Then we want to look at the jobless claims story because it also speaks to layoffs, and then we're going to talk about what the ISM story is telling us. ISM does a snapshot of manufacturing.
Last but not least, the fourth data point we're going to look at is my own proprietary data.
As I've shared before, I have been tracking the hiring at the individual companies that make up the S&P 500, and guess what? Hiring started to surge in November. Well, let's talk about all four because in essence, all four are pointing to a firming up of the labor market, and that likely means opportunities next year for significant growth.
Let's start off with Challenger Gray.
Challenger Gray is a company that's in the recruitment industry, but they like to capture a lot of data regarding announced layoffs and announced hiring. They do a great job with HR resourcing. They do a lousy job with data resources. They just don't know how to interpret their own data. So today I want to talk about that because you might've heard some news that said this is the worst state of affairs for layoffs since COVID. That's correct, but that's not really what the story of the data's saying.
So let's talk about it. Challenger Gray, there's snapshot layoffs through 2025 are pointing to 1.1 million layoffs. That's the most since COVID hit … but there's an asterisk there. It includes government layoffs, it includes the DOGE Trump layoffs. When you take those out, private sector layoffs, it's the same as last year, but even better because most of these announced layoffs came in the first half. More recently, they've been fading.
We're at the tail end of the layoff story. In fact, November was a lot lower than what was going on in October.
Bottom line, the layoff story is just like last year, no worse. And the hiring story, it's the same. Again, what they do is they grab hiring announcements. In this case, they're talking about the seasonal hiring. Typically, you get about half a million people hired by retailers over the course of October, November, and even into December. Okay?
If you talk to Challenger Gray, they're going to say, this year's retail hiring is way below last year's and way below other years, except that's not really being honest about the data.
See, what they're doing is they're comparing this year's announcements with last year's, and guess what? This year a lot of companies like a Walmart didn't announce their hiring plans, but rather than strip that out from the totals, when they compare last year and this year, Challenger Gray keeps it in. Walmart doesn't say anything about this year. Last year they hired a hundred thousand. Oh, that explains a lot of the shortfall.
When in fact you're honest with the data and you compare the retailers Amazon this year, Amazon last year, and so on and so forth. What you'll find is they're hiring the same. Okay, so we've got the layoff story. It's the same as last year. The hiring story, it's the same as last year.
Talking about layoffs, the jobless claims story incredibly bullish. So I've been saying to folks, maybe you subscribe to my Superforecast Trader report. We trade jobless claims. I told folks this was going to be an interesting divergence, consensus, expected claims to go up. I expected claims to go down, and they went down. In fact, they went down even further than I had modeled. They hit 191,000. This is a super low number. We haven't seen a number like this in years. So what does it mean?
Well, I happen to think this number off on the side. I happen to think this number is a little bit fudged because when you look at all the action that's holding back jobless claims, it's really tied to California and it's really tied to the fact that undocumented workers are being told, do not apply for claims because ICE will pick you up and they'll deport you.
This is the time of the year when seasonal workers in construction and farms, they're laid off and yet they're incredibly low. They're incredibly low in California. See, what's going on is you've got all these workers who should be filing, they're not filing, and so claims are coming down. If you net that out, if you adjust for that, doesn't matter. Claims are still going to be super low. They could be up 20,000, 30,000 for the week, and they would still be super low.
In other words, companies aren't firing. Challenger Gray is pointing to numbers that say it's about the same as last year. The latest snapshot in the jobless claims is saying they may be firing a little bit more than what the number says, but it's not really bad. You have a strong retention of workers, and it's the same thing. When we look at the other part of jobless claims, the continuing claims story, continuing claims are coming down again.
Bottom line, we have employers who have fired everybody they want to fire. They're retaining their workers and they're waiting for what comes next.
And speaking of that, the third data point, ISM. ISM looks at the manufacturing space and they do a lot of data collection. What they are saying is, in general, the manufacturing sector is still struggling with tariffs. There's still a lot of plans. There's still a lot of uncertainty, and so there's not a lot of hiring, but let's think about that.
What we're talking about is purely one factor that's holding everything back. It's like a cork in a champagne bottle, and that is tariffs. The tariff uncertainty is falling away day by day. Right now, we're just stuck with China. Everything else is more or less set, and as a result, businesses are starting to get a little bit more confident, a little bit more confident that cork in the champagne bottle is about to come out.
The tariffs issue goes away within a couple of months, and all these manufacturing businesses are going to come back online. Now you add to that all these commitments to start manufacturing more. Here we've got the stage is set. Companies spent the year firing everybody they needed to fire. They're now starting to lean in. That hiring story is looking just fine, and now you've got manufacturing eventually going to kick in.
The stage is set more hiring, and that brings me to the fourth and final data point. My own proprietary data.
I harvest each month the hiring at individual companies that make up the Fortune 500, and when I pull it together, let me tell you something folks, it surged in November. The big companies in America are hiring, and they are hiring a lot different from October. Much more hiring going on. So they have decided that they're ready to start leaning into the economy.
The catch, it's not yet going to happen. We're at the tail end of the year. They're not going to hire right now en masse, but they will starting in January and February, they're gearing up for growth.
And that's the interesting thing that brings us back full stop to what does the Fed see today versus what might the Fed see tomorrow in the data? It's still mostly September focused, and it's still indicates a soft patch. Except for jobless claims, there's no government data that's current that's been coming out, and that will come out prior to the Fed meeting. So the fed's just going to see a soft patch and they're going to do their rate cut.
But we're getting set up for some divergence. Over the next month. We're going to get more and more of the October, November data. We're going to get a better snapshot of retail spending, inflation and so forth. And I believe it's going to indicate things are actually firming up. Not off to the races yet, but firming up.
So when we come to January, the next meeting at the end of January, the Fed might not be as interested in a rate cut (another one). The markets right now, they pretty much priced in this coming rate cut, and they're starting to shift their attention to the next one, which means we're going to have a lot of volatility as the economic data starts talking, not about September, but about November and then December.
The market wants every rate cut they can get, and I think based on the data I've shared with you today, I think it's done. I think it's going to be a long time after this next rate cut between now and when we get another. Markets might not like that, but you know what? They will like all the profits that come from economic growth. Let's see what happens. We're going to win it. Zatlin out. 
Andrew Zatlin
Editor, Moneyball Economics | 
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