December 28, 2025

 

The S&P 500 rose 1.4% this week. The Bloomberg Aggregate Bond Index rose 0.2%, Gold jumped 4.4% and Bitcoin fell 0.6%. 

Recent US data paints a mixed but resilient picture: growth and production are beating expectations, while households remain cautious. Real GDP grew 4.3% in Q3, well above consensus estimates of 3.3%. This marked the strongest pace of growth in nearly two years. Capacity utilization ticked up to 76%. Consumer confidence declined again and is near the lowest level in five years, indicating a cautious consumer backdrop that contrasts with upbeat headline GDP.

 

 

 

The Main Source Of Economic Angst

 

 

Yes, GDP is growing fast. But according to recent Gallup Polls, 68 percent of Americans say economic conditions are getting worse, and only 29 percent say they’re getting better. Consumers feel bearish because the headline economic boom is hiding a personal bust.

GDP and corporate profits are up, yet real disposable income for households is essentially flat. This means the average citizen's purchasing power isn't improving. People see “the economy” surging on paper while their own paychecks barely move, so optimism collapses into distrust and despair. 

For many years after World War II, productivity growth led to higher wages. That's when the middle class thrived. Nowadays, we are traversing a different economic environment, where productivity gains flow more to corporate balance sheets than workers. GDP growth can coexist with stagnant real wages because the economy can expand without the gains flowing to typical workers. GDP measures total output and income, including profits, rents, and high-end salaries, so it can rise even if the median worker’s purchasing power is flat. When a larger share of that output goes to capital owners and top earners, average income and GDP per capita increase while typical wages barely move.

AI and automation is also enabling firms to grow output and earnings without adding as much headcount. Early evidence already shows a double‑digit relative decline in hiring for young workers in AI‑exposed roles. So the GDP print looks bullish, but the lived experience for many is “jobless growth.” The Fed can cut rates all it wants, but that stimulates asset prices more than wages. The modern economic system favors capital over the average worker. Own assets or be left behind. 

 

 

Get Ready For More Stimulus Checks In 2026

 

 

Don’t be surprised if Washington sends out more stimulus checks next year. In an election season, it’s practically political instinct—especially for a populist president dealing with shaky polls, a bifurcated economy, and a central bank that isn’t putting up much resistance.

The economy isn’t in recession, but things have definitely slowed. Tax collections have dipped—$204 billion in December compared to $207 billion last year—which suggests softer job growth and less overtime pay. Still, the government has cash to work with. Thanks to strong markets, capital gains taxes are expected to surge to about $350 billion this spring. That’s plenty of fuel for a little fiscal generosity.

The first sign? A $1,776 holiday bonus for military members. Next up are tax cuts under the One Big Beautiful Act, which could put an extra $1,000 a year back in the average household’s pocket. Add potential healthcare rebates and even “tariff dividend” checks, and 2026 is shaping up to be another year when Washington proves that politics and stimulus go hand in hand. We expect next year to be an inflationary boom that eventually sows the seeds of a deflationary bust. 

 

 

Silver Is Soaring

 

 

If you've been watching the markets at all lately, you probably know silver is on an absolute tear right now—up a whopping 170% in 2025 alone, its best year since the wild days of 1979. What's fueling this rally?

It all starts with a slumping US dollar, which is down 9% this year after a spate of Fed rate cuts and whispers of even looser policy under the next Fed chair. When the dollar goes down, commodities priced in dollars typically go up. Another factor is central banks are hoarding gold like it's going out of style—China's secretly stacking way more than reported, up to 240 tonnes YTD. This may be part of a broader plan to use gold and silver to back a new currency regime outside of the US dollar. Silver seems to be a strategic priority for China, which just slapped export controls on silver, creating a premium in Shanghai that's already juicing prices. Rising inflows into precious metal funds are just starting to pour gas on the fire. In this "own assets or get left behind" era, silver's shining as one of the ultimate hedges. It's scarce and a key ingredient to the industrial complex. 

In October, we said we thought silver would rise from $50 to $80 over the next 18 months. Well, we're already there! As of this writing, Silver is trading at $82. Given the torrid pace of gains, we will probably trim exposure in the coming days for Silverlight clients. SLV has become one of the largest positions in portfolios, and sharp corrections after this type of moonshot price action are inevitable. We remain bullish silver, gold and bitcoin over the secular horizon, mainly because debasement of the US dollar will likely continue to be a long-term tailwind. 

 

 

AeroVironment Thesis To Own

 

 

Modern warfare is evolving faster than many investors appreciate. Tanks and fighter jets still matter, but conflicts are increasingly shaped by drones, loitering munitions, and the systems designed to defeat them. In that environment, AeroVironment (AVAV) occupies a very different lane than traditional defense primes. AVAV is a rare pure-play on how wars are being fought today—and how they’re likely to be fought tomorrow.

At its core, the company designs and manufactures small unmanned aircraft systems, loitering munitions like Switchblade, ground robotics, and counter-drone technologies. These are deployed, proven, and increasingly vital solutions to U.S. and allied forces in live combat settings. The BlueHalo acquisition significantly broadened that footprint. It moved AeroVironment beyond a “drone company” and into a more comprehensive defense-technology platform spanning air, land, space, cyber, and directed energy. Management now guides to roughly $1.95–$2.0 billion in FY26 revenue, underscoring that this is no longer a niche supplier. Defense spending is cyclical, but priorities endure. Drones and counter-drone systems now sit near the top of that list. The U.S. Army’s goal to field roughly one million drones over the next few years highlights how central unmanned systems have become to modern defense strategy. AVAV is well positioned for that shift. Record bookings near $1.4 billion and a funded backlog around $1.1 billion provide unusually strong visibility, with roughly 93% of FY26 revenue already committed. That level of visibility supports the case for sustained, multi-year growth as programs become embedded in military doctrine.

Despite this backdrop, the stock sold off sharply following Q2 FY26 results. The primary issue was margin compression, with adjusted gross margins falling into the high-20% range versus the high-30s prior to the BlueHalo deal. Earnings missed expectations, and near-term EPS guidance was reduced. Stepping back, the sell-off appears driven more by transition dynamics than weakening demand. The backlog remains intact. Sole-source positions are still in place. Exposure to high-growth areas like counter-UAS and directed energy continues to expand. In other words, the market repriced AeroVironment for near-term margin noise, not for a deterioration in its strategic position. For long-term investors, that distinction is critical. With expectations reset and valuation more reasonable, investors have a chance to own a scaled defense-technology compounder tied to the future of warfare. Silverlight recently initiated a new investment in AVAV after observing technical signs of downside exhaustion that often precede bullish reversals.

 

 

Humans Can Learn A Lot From Dolphins

 

 

A heartwarming story popped up on our X feed this week. Rob Hoey was swimming in the ocean with his daughter off New Zealand’s North Island, when something extraordinary happened. 

Out of the open water, a pod of dolphins materialized. They began circling tightly, gently guiding Rob and his daughter back toward the center of the formation. When Rob instinctively tried to swim away, two dolphins intercepted him and nudged him back. Not aggressively. Purposefully. It was clear they weren’t playing—they were protecting. The reason soon became obvious.

A great white shark, close to three meters long, was moving into the area. When its fin surfaced, the mood shifted instantly. The dolphins snapped into a coordinated defense, slapping the surface with their tails, accelerating in sharp bursts, forming a living wall between the swimmers and the predator. What had felt serene moments earlier now felt strategic—almost tactical. For nearly forty minutes, the dolphins held their ground. They refused to let Rob or his daughter break formation. Nature’s most charming guardians literally encircled the humans, creating a living shield until danger passed. It’s the kind of story that reminds us how powerful cooperation can be — especially when the water gets rough.

In today’s increasingly fractured world, we’re facing our own kind of sharks: economic strain, polarization, and social division. But if dolphins can set aside instincts and species boundaries to protect one another, what’s stopping humanity from doing the same? Community isn’t just about proximity or political party affiliation; it’s about having each other’s backs when fear or uncertainty circle close. Given how well dolphins work together, perhaps our politicians should spend less time arguing with each other, and more time swimming with Flipper and friends.

 

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This material is not intended to be relied upon as a forecast, research or investment advice. The opinions expressed are as of the date indicated and may change as subsequent conditions vary. The information and opinions contained in this post are derived from proprietary and non-proprietary sources deemed by Silverlight Asset Management LLC to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Silverlight Asset Management LLC, its officers, employees or agents. This post may contain “forward-looking” information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any of these views will come to pass. Reliance upon information in this post is at the sole discretion of the reader.​​