The Ugly Truth About Plausible Deniability

You know what's remarkable about this market right now? Nobody has to lie anymore. They don't need to. The S&P 500 scratches a new all-time high while consumer confidence plummets, unemployment expectations soar, and we all just... nod along. The beauty of having sufficient momentum is that contradiction stops being a problem.

Let's look at what actually happened over the past two days.

The S&P 500 closed Friday at 6,929.94 with a shrug—down 0.03%. Flat. A third straight day of sideways action near an all-time peak. Volume is thin. Everyone's staring at the calendar. And yet the narrative remains bulletproof: AI is working, earnings will be fine, the Fed will cut rates eventually, and 2026 will be better.

Is it? Let me propose something uncomfortable: we've constructed an economy that explicitly cannot deliver what markets are currently pricing in, and we're all fine with that.

Take the data from the last week. Q3 GDP came in at 4.3%—unexpectedly strong. That was supposed to be negative for stocks. Instead, it was positive. Why? Because nobody seriously believes the Fed is cutting in January anymore. Jerome Powell's replacement hasn't even arrived. The market caught a whiff of economic stability and decided that good news was still good news for equities, which is what happens when you've already excised all rate-cut fantasies from your model.

Then there's the labor market. The University of Michigan's final consumer sentiment reading shows nearly two-thirds of respondents expect unemployment to rise next year. Two. Thirds. But the Magnificent Seven are still here, making new highs. Nvidia has a market cap of $4.6 trillion (a thirteenfold jump since end of 2022) and nobody's asking hard questions about whether data centers can justify another expansion cycle. Western Digital, Micron, and Seagate are up more than 230% year-to-date. The AI infrastructure play isn't priced for moderation—it's priced for perpetual acceleration into a labor market that allegedly can't handle it.

Here's where the plausible deniability comes in: the S&P 500 is up 17.9% for the year. Broad market. Record highs. Fourth weekly advance in five weeks. But ask yourself what actually drove those returns. The Semiconductor sector. Palantir. Robinhood. The usual suspects. Non-U.S. equities actually outperformed last week. Smaller caps are getting interesting. The market breadth is quietly shifting, which should make anyone paying attention slightly nervous about whether this is broadening optimism or concentrated momentum masquerading as health.

Meanwhile, precious metals are doing something you should care about. Silver climbed to another all-time high. Gold is on its 54th record close of the year. Silver is up roughly 155% year-to-date. To put this in perspective: it briefly became the world's third-largest asset by market cap, and it's closing in on Nvidia. China is tightening silver export controls from January onward, there's a real supply crunch, and the rally isn't speculative—it's structural.

That's the thing nobody wants to articulate. You've got stocks at record highs based on AI capex cycles and tech earnings multiples that assume single-digit rates forever. You've got precious metals surging on legitimate supply concerns and currency debasement fears. These aren't supposed to rally together. But they are, because inflation remains sticky enough to justify hedges, growth is strong enough to justify equities, and rates are high enough that nobody's going back to the 2020-era playbook anytime soon.

Bitcoin, of course, is caught in the middle. Bitcoin rose over 2% on Monday, trading above $90,000, as hopes for a Russia-Ukraine peace deal diminished. It's down 4% for the year. Limping. Google Trends shows global Bitcoin searches at a six-month low of 19 (just one point above 2025's nadir). The normies have checked out. And yet institutions keep accumulating through spot ETFs, stablecoins are growing, and Coinbase Institutional argues that 2025's "structural progress collided with stagnant price action" is actually healthy—a sign that the leverage excesses have been wrung out and the market's ready to scale under more disciplined conditions.

In other words: Bitcoin is being reframed from a boom-bust asset into a slow-grind institutional holding. Matt Hougan, the chief investment officer of crypto investment provider Bitwise Asset Management, said the four-year Bitcoin price cycle was being replaced by a 10-year grind. That's either the most insightful observation or the most convenient excuse for underperformance. Could be both.

Here's what nobody's willing to say plainly: we're in a regime where everything works, but nothing works together, and the moment that fracture becomes visible, the entire structure gets tested. The S&P 500 can keep printing all-time highs while consumer confidence falls because enough people are betting that "the data doesn't matter, only the direction." Precious metals can surge while growth remains strong because inflation's not supposed to be a problem anymore, except that nobody's actually solved it. Bitcoin can be down for the year while Ethereum climbs above $3,000 because the institutional thesis has shifted from lottery ticket to portfolio insurance.

The plausible deniability is perfect. Every contradiction has an explanation. Every warning sign has a caveat. And that's exactly when you should stop listening to explanations and start asking questions about what breaks first.

The Santa Claus rally is still theoretically on. Historically, the last five trading days of December plus the first two of January average 1.3% gains going back to 1950. We're at 6,929 on the S&P. A move to 7,000 would be roughly 1% from here. Easy money.

But easy money is what got us here in the first place.

---

Follow along as we head into 2026. The real volatility doesn't start until everyone stops pretending the contradictions matter.