The Confidence Collapse Nobody's Talking About

Here's the thing about markets during the last two weeks of December: they're running on fumes and auto-pilot. So when the S&P 500 hits another all-time high at 6,909, and when Nvidia and Broadcom each climb another 2-3%, and when algorithms are quietly buying because it's been four straight days of gains—don't confuse momentum with momentum.

What we're actually watching is a holiday-week version of musical chairs, played in a room where half the players have already left.

The Disconnect You Should Be Staring At

The Conference Board's consumer confidence reading tanked yesterday. Down 3.8 points to 89.1. For the fifth. Consecutive. Month. Let that sink in for a second. While equities are making fresh records, Americans are pulling back on optimism about right now—not the future, not some abstract tomorrow. They're bearish on current business conditions, spooked by inflation talk, tariffs, politics. The things that actually govern spending decisions and hiring.

And the stock market responded to this bad news about consumer sentiment by... doing what it always does lately: shrugging and pushing higher on the AI tape.

This shouldn't be weird anymore, but somehow it is. We've gotten so used to the disconnect between what Main Street feels and what Wall Street does that we barely blink. The Fed's latest data showed GDP crushing expectations at 4.3%—the fastest pace in two years, with consumer spending up 3.5% in Q3. Great data. Legitimately strong. But here's the punchline: traders immediately pared bets on a January rate cut in response. The odds of the Fed standing pat climbed above 85%.

Think about that. Growth is roaring. But because growth is roaring, we're convinced the Fed will keep rates higher for longer. So inflation remains a ghost in the machine. Consumers get nervous. Markets climb anyway.

The Real Estate of the Holiday Week

There's a structural element that matters here worth naming directly. Volume on Tuesday was below the three-month average. Markets close early today (Wednesday) at 1 p.m. ET, stay shut Thursday for Christmas, and don't fully reopen until Friday. That's a 72-hour window where the vast majority of serious capital has gone dark—year-end books are closing, traders are mentally on beaches, institutional money is sitting in T-bills and cash equivalents.

Into that vacuum, algos fill the void.

The broad-based rally we've watched—all three major indexes up, tech dragging us forward, breadth actually improving—it's happening on footsteps. The Nasdaq-100, which is now flirting with a third consecutive year of 20%+ returns, is being propped up by a handful of mega-cap names running on pure conviction that 2026 will bring AI capex that dwarfs anything we've seen before.

Microsoft is dropping $80 billion on capex in 2025. Goldman Sachs thinks AI infrastructure spending hits $1 trillion by 2028. That's the bet. And for the first time in a while, nobody's seriously challenging it out loud. There's no argument in the room. Just the hum of automated buying.

Crypto's Honest Moment

In crypto, at least, there's no pretense. Bitcoin tested $90,000 earlier this week—a technical ceiling that mattered—and got rejected hard. Now it's consolidating below that level while $28.5 billion in options expire on Deribit come Friday, the largest expiry in the exchange's history. Bitcoin options account for $23.6 billion of that. That's not abstract. That's market makers hedging massive positions into a thin holiday window, which means anyone with a position right now is basically waiting for December 26 to see what happens.

The Fear & Greed Index is at 24—extreme fear. Bitcoin is down 5.25% year-to-date after hitting $126k in October. Spot outflows from BTC hit $3.33 billion while stablecoin inflows spiked $168 million—a textbook rotation from risk to liquidity.

Ethereum is holding just below $3,000 but keeps failing to sustain it. ETH is down 9.8% year-to-date despite being up nearly 50% in August. The October crash wiped out $1.3 trillion in crypto market value and apparently nobody's forgotten it.

What's honest about this? The market's not bullshitting you. It's saying: we don't know what comes next, we're tired, we're holding cash, and we're waiting. You can't create forced conviction in a holiday week. The money that believes in the stories has either already bought or has already left.

What Actually Matters in 72 Hours

Consumer confidence down for five straight months. That's data. That breaks. That's the thing that causes labor costs to stick, wage growth to soften, and discretionary spending to roll over. Companies will feel that in Q1. The Fed sees it too—which is why the market's still pricing cuts for 2026, even though today's Fed funds futures suggest standing pat through Christmas.

Gold just hit a new all-time high. Up 53 record closes so far this year. Silver's nearly 45% above its 200-day moving average. Both of those are votes of no confidence in fiat. Both of those are insurance policies for people who don't buy the "AI will solve macro" thesis.

Meanwhile, equity index futures are hovering at 6,955.25, down only 5.75 from Tuesday's close. The S&P's being held together by threads, but the threads haven't snapped.

So here's where we sit on Christmas Eve 2025: Stocks at records. Confidence in free fall. Crypto waiting for an options expiry. Gold screaming. The Fed stuck in amber. And everyone who has access to actual capital is off the desk.

The real market resumes Monday. When actual money comes back, we'll see whether this was a genuine push or a hallucination of thin volume and automated buying. Until then, the holiday rally is doing what holiday rallies do: fill time while humans aren't paying attention.

That's not bullish. It's just honest.