Sean Conlon and Samatha Subin of CNBC report the Dow slides for a seventh straight day for longest losing streak since 2020: 

The Dow Jones Industrial Average fell for a seventh session on Friday, posting its longest run of losses since 2020.

The blue-chip index lost 86.06 points, or 0.2%, to close at 43,828.06. The Nasdaq Composite gained 0.12% to 19,926.72. The S&P 500 ended the session little changed, closing at 6,051.09.

For the week, the Dow posted a 1.8% decline, while the S&P 500 slid about 0.6% and ended a three-week winning streak. The Nasdaq rose 0.3% during the period.

“We’re kind of stuck in this trading range,” Jay Hatfield, CEO at Infrastructure Capital Advisors, told CNBC. “The Nasdaq will outperform, small caps will underperform, [and the] Dow will underperform till we get some catalyst.”

Nvidia fell more than 2%, and Meta Platforms shed more than 1%. Amazon shares were also marginally lower. On the other hand, Broadcom reached a market cap of $1 trillion, rallying more than 24% after posting fiscal fourth-quarter adjusted earnings that beat estimates and reporting that artificial intelligence revenue soared 220% for the year.

The moves come on the heels of a losing session on Wall Street for the three major averages. The Nasdaq Composite also broke below the 20,000 threshold.

Equities ‘remain constructive’ heading into year-end, Piper Sandler says

Stocks may be due for more upside in the coming weeks, according to Piper Sandler.

“As we approach mid-December, the equity markets remain constructive within their primary uptrends into year-end,” said chief market technician Craig Johnson, who has a year-end S&P 500 target of 6,100. His year-end 2025 target for the broad market index is 6,600.

“Alternating tactical rotations between large caps and SMID caps appears to be a developing short-term theme within the context of the broadening process,” he continued. “Use ‘healthy’ pullbacks that confirm support to add to positions.”

Dollar strengthens against yen

The dollar advanced 0.7% against the yen to trade at 153.73 on Friday. Week to date, the greenback strengthened 0.7% versus the yen.

Meanwhile, the euro rose 0.3% against the dollar on Friday and was last at 1.05. However, the euro is also weaker against the dollar for the week by 0.7%.

The South Korean won also depreciated 0.4% compared to the dollar ahead of the country’s second impeachment vote against President Yoon Suk Yeol on Saturday. The dollar was last trading at 1,435.80. Month to date, the greenback has climbed 2.9% against the won.

It was another wild week in markets and I am going to go fast and share a lot of charts and wisdom here so pay attention.

Not surprisingly, we are ending the year with more concentration risk as a handful of stocks are garnering all the attention led by Tesla (TSLA) which roared to another all-time high on Friday, capping off a huge week for the stock and CEO Elon Musk and Broadcom (AVGO) which soared more than 24% and reached $1 trillion market cap Friday as the chipmaker touted its “massive” opportunity in the artificial intelligence market during a quarterly earnings call the prior evening: 

Note the parabolic moves going into year-end and remember this kids, when portfolio managers are closing their year and under-performing their benchmark, everyone rushes to buy this year's winners no matter how high they've gone up.

Forget Elon's dance with Trump, that's all nonsense, the real reason hedge funds jammed Tesla up is because they knew it's widely shorted and squeezed the shorts hard to end their year on a positive note.

Broadcom was breaking out before the big "AI announcement" yesterday after the close and it had bad earnings last time so they pumped it up this time to make sure short sellers got whacked hard.

You can't make this stuff up, concentration risk is enormous but if you were able to trade Mag 7 stocks well this year, you're making a killing.

And it's not only Tesla and Broadcom, Google broke out this week to an all-time high:

Last week, it was Amazon rallying to new highs.

Nvidia is having a bad month but they'll probably jam that stock that up before year-end, we shall see.

But while all the attention was on large-cap tech shares once again, beneath the surface was a ton of speculation in some small-cap stocks.

Check out the action in these quantum computing stocks this week, most of them were penny stocks a month ago:

The volume is impressive, big funds are pumping these stocks up and there's a lot of volatility to capitalize on so good traders can make a killing trading them (I traded RGTI a couple of times this week).

What else? Biotech Land, my favourite, there were some crazy wild moves this week:

When I tell you I've been trading biotech for years and it's by far the most corrupt, most manipulated sector in the stock market, these three were perfect case studies this week.

First, on Thursday, Aptevo Therapeutics (APVO) announced 100% of patients achieved remission* within 30 days, in Cohort 1 of the RAINIER frontline acute myeloid leukemia (AML) Phase 1b trial, including two patients who experienced complete remission.

The stock soared to a high of $14.90 and then in the afternoon before the end of day, the company announced an exercise of warrants to net approximately $6.2 million.

It was criminal, I was waiting for it after the bell but when I saw the stock drop fast, I knew hedge funds pumped it in the morning and shorted the hell out of it in the afternoon.

And I wouldn't be surprised if they were tipped off before the announcement, hedge funds are routinely pumping and dumping biotech stocks with impunity. That's why they get the big fees, they have insider information and use it to their advantage and retail sheep get slaughtered.

Next, shares of Candel Therapeutics (CADL) surged 68.1% on Wednesday after the company reported phase III results showing superior efficacy of CAN-2409, an investigational adenovirus immunotherapy candidate, compared to standard of care (SOC) radiation therapy alone in a late-stage study to treat prostate cancer:

The phase III study enrolled intermediate-to-high-risk, localized prostate cancer patients who either received the combination therapy of CAN-2409+prodrug (valacyclovir)+SOC or SOC alone. The study met its primary endpoint, demonstrating statistically significant improvement in disease-free survival (DFS) in patients receiving the combo therapy compared to SOC alone.

Per Candel, in the United States, over 100,000 men are diagnosed annually with localized prostate cancer, with more than 50,000 receiving radiotherapy. Despite being the second leading cause of cancer death among men, there has been no major advancement in treatment for localized, non-metastatic cases in over 20 years. The addressable market for CAN-2409 in this area is valued at over $10 billion, representing a significant opportunity for Candel.

Fantastic news! The stock actually opened up 170% as euphoria set in (hedge funds pumped it in after hours market). 

Immediately everyone was comparing this to Janux Therapeutics (JANX) which has soared this year after it recently reported great Phase I results for its prostate cancer treatment:

The problem? Janux has $658 million in cash whereas Candel only has $21 million so you knew a big offering was coming and to my surprise they waited till after the close on Thursday to announce it and the stock got hammered today.

When it comes to biotechs, cash balance matters, it gives them a run time to carry out their studies and those with little cash either partner up with someone bigger or keep issuing offerings (at lower prices) to raise more cash. 

That brings me to my third case study this week, Keros Therapeutics (KROS). The stock plummeted 73% on Thursday after the company said it stopped giving higher doses in a lung disease study after some patients experienced unexpected side effects.

This was a huge move down and it caught my attention because it is owned by top institutional investors:

 

Then you read the stock boards and it was all misinformation, most likely spread by hedge funds, about how the trial was halted but it wasn't halted, nobody bothered reading the details:

The company is testing a drug called cibotercept in patients with pulmonary arterial hypertension, or PAH, a condition in which high blood pressure occurs in the lungs. But, in some patients, the higher doses caused excess fluid to build up in the sac around the heart, known as pericardial effusion.

Keros voluntarily stopped giving the 3 milligram and 4.5 milligram per kilogram doses of its drug, but is continuing to test the 1.5 milligram dose.

Now, I have no clue what will happen with this trial and maybe the smaller dose will prove effective with no adverse reactions, but I can tell you this biotech has a great pipeline and more than $531 million in cash and it's trading near cash levels after that huge dip.

So get ready for February 15th when 13F become public because I want to see who dumped it and who scooped it up this week.

You should keep your eye on all these biotechs and many, many more that got hurt badly this month as big hedge funds shorted the hell out of them.

Alright, I can go on and on but nobody really reads my market comments, and nobody would ever understand how it feels trading these stocks unless they ever traded them for a living.

All I know is the market feels bubbly, very bubbly, and Jerome Powell and company might pour some cold water on it this week when the Fed meets (probably won't as they don't want a repeat of 2018 when all hell broke loose at Christmas).

Below, on Wednesday, Tom Lee, Fundstrat Global Advisors managing partner and head of research, joined CNBC's 'Closing Bell' to discuss his playbook for 2025, why he thinks DOGE could potentially hurt the economy, and more.

Also on Wednesday, Ed Yardeni, president of Yardeni Research, joined CNBC's 'Closing Bell' to discuss whether sentiment for 2025 is too bullish, why he thinks stocks could slide to start the year, and more.

Third, today, Shannon Saccocia, NB Private Wealth CIO; Courtney Garcia, Payne Capital Management senior wealth advisor; and Jordan Jackson, JPMorgan Asset Management global market strategist, join CNBC's 'Closing Bell' to discuss market outlooks.

Fourth, Morgan Stanley Chief US Equity Strategist Mike Wilson talks about his outlook for stocks in 2025. He says there could be a correction next year and volatility will pick up in the first part of next year, then clear. He still sees the S&P 500 hitting 6,500 by the end of 2025. He's on "Bloomberg Open Interest." (great interview)

Fifth, Pershing Square Capital Management CEO Bill Ackman joins 'Squawk on the Street' to discuss President-elect Trump's appearance at the New York Stock Exchange, what to look forward to in the incoming Trump administration, top administration priorities, state of the economy, economic and market outlook, and more.

Lastly, President-elect Donald Trump speaks to CNBC's Jim Cramer at the New York Stock Exchange.

Catherine Morrison of the Ottawa Citizen reports PSAC is spreading 'misinformation' about surplus, says Treasury Board president:

Treasury Board President Anita Anand is accusing Canada’s largest federal public sector union of spreading misinformation about the government’s pension surplus. 

At a press conference on Dec. 9, Anand told reporters that the Public Service Alliance of Canada (PSAC) was sharing “completely inaccurate” information about the government “stealing the pensions from public servants.”

On Nov. 25, Treasury Board president Anita Anand tabled a report in the House of Commons showing a “non-permitted” surplus of around $1.9 billion in the Public Service Pension Fund as of March 31, 2024. Anand said the government planned to transfer the surplus to its Consolidated Revenue Fund — a central government bank account. The minister said in a statement that it would remain there “while next steps are considered.”

The government is required by law to take action as the Income Tax Act limits the amount of surplus a pension fund can have. 

While the government didn’t say what it would do with the surplus, PSAC denounced “any attempts to unilaterally allocate these funds” and said they should go towards benefiting the workers and retirees who are members of the pension.

PSAC also launched what it called a “national pension campaign” with the goal of urging the government “to respect workers and keep its hands off pensions.” The union claimed that the government’s plan was to “raid” $9.3 billion from the federal public service pension surplus. PSAC asserted that the government plans to pause employer contributions to the pension plan.

TBS spokesperson Martin Potvin said in an email statement that the government would not be ceasing employer contributions.

At the press conference, Anand said democratic institutions like PSAC had a role to share “accurate and genuine information” with its members and the public.

“The non-permitted surplus is required to be transferred under legislation,” Anand said, noting that the government is engaging with stakeholders as it considers next steps. “I would expect that the PSAC would take the time to correct the misleading information being shared with its members about the public service pension plan which is fully guaranteed by the government of Canada on behalf of Canadian taxpayers.”

On the same day as the press conference, Anand sent a letter to PSAC president Sharon DeSousa accusing the union of “sharing misleading information with its members and Canadians” about the pension plan since the pair last spoke on Nov. 25.

Anand said information about the “non-permitted surplus” has been shared with DeSousa and her team “on several occasions.”

Anand wrote that “the union has continuously misled Canadians to believe that the non-permitted surplus is over $9 billion. This is incorrect.” She said that number represented projections and was “not reflective of any deliberate or predetermined government decision” and that it was misleading to suggest to members their pensions are at risk.

Anand also stressed that the transfer of the funds had no impact on public servants’ pension benefits and that contributions to the pension fund would continue without any interruption.

“At the same time, contrary to the claims made by PSAC, doing so does not represent any financial benefit or windfall for the government,” Anand said.

In an interview, DeSousa said Anand is the one who has been misleading people about the pension surplus, arguing the minister could have taken different courses of action.

“She chose to take the option that doesn’t benefit workers,” said DeSousa. “That’s the sad part considering it’s workers who actually contribute 50 per cent to this pension plan, like the employer.”

A government actuary report released in late November projected a multi-year pause in employer contributions to the pension plan. DeSousa said there should in that case also be a pause for workers’ contributions.

“If that wasn’t their intention, then why is that there? You have to give actuaries instructions as to what they’re projecting,” DeSousa said.

The Treasury Board told Policy Options that the government has no plans to take a contribution holiday. According to Policy Options, the projections for them were done because the government is required by law to pause contributions if there’s a non-permitted surplus.

DeSousa said the government should have been more transparent and fair about the surplus issue.

“This wasn’t new, this was something that was ongoing in which we brought it to the government’s attention that there will be a surplus, we checked with our own actuary and we knew it would be there,” DeSousa said. “The fact that they chose to remove it from the plan is extremely disappointing.”

Kathryn May of Policy Options also reports a $9.3-billion pension surplus could be the cushion Ottawa will need:

The federal government could tap into a more than $9.3-billion surplus in the public-service pension plan over the next four years to ease mounting fiscal pressures – a move that could spark a showdown with workers who say they deserve a share.

A newly released special report by Canada’s chief actuary confirms widespread speculation that the public-service pension plan now exceeds legal limits and is projected to reach similar levels through 2028 after years of running a surplus.

The report sets the stage for a clash between public servants and taxpayers. Public servants see part of the surplus as theirs. Taxpayers fund the government’s contributions. In an era of fiscal restraint, the balance between the two appears to be shifting in favour of taxpayers.

The surplus could become a crucial source of funds for the Liberals and the next government, said Sahir Khan, executive vice-president of the Institute of Fiscal Studies and Democracy (ISFD) at University of Ottawa.

It offers a potential cushion for a slowing economy and rising fiscal pressures, particularly from the incoming Trump administration, he said.

“In the face of competing and increasingly urgent pressures, do you really think increasing public-service compensation will take priority over a soft economy, tariffs dragging the economy, defense spending, and other pressing macro issues?”

A $38.8-billion surplus

Treasury Board President Anita Anand commissioned the report to assess the plan’s finances and projections. It revealed a $38.8-billion surplus, with $1.9 billion as of May 2024, exceeding the allowable limit under the law.

Anand tabled the report in Parliament this week and immediately announced that she was transferring the $1.9 billion to the consolidated revenue fund – the government’s bank account – “where it will be held while next steps are considered.”

The same report also forecasts that the “non-permitted” surplus will continue to grow over the next four years and projects that the government could eliminate it by halting its contributions to the plan, saving up to $9.3 billion.

In that scenario, the government could partly pause its contributions for a few months in 2025, stop them completely in the following two years and take another pause in 2028, the report shows, with the surplus returning to an allowable level by 2029.

Anand said nothing about taking a contribution holiday in her announcement. The unions, however, have come out swinging.

A one-sided break?

The Public Service Alliance of Canada, which hired its own actuaries to study the report, said the report shows the government plans to pocket another $7.4 billion “to give itself a pay holiday.”

It argues the government must have requested a forecast on the impact of a contribution holiday, a sign it interprets as an intention to scoop the surplus.

“Workers and employer contribute together to this fund, so why should only the boss get a break? This is about fairness plain and simple,” said PSAC President Sharon DeSousa. “The government flat-out lied to us. No wonder. It turns out the biggest holiday present the government is giving this year is to itself.”

De Sousa called the move a betrayal. Unions see the surplus as deferred wages that should be shared with workers, not used as a “financial windfall” for the government.

“The decision by the government to put itself ahead of workers is wrong. They’re suspending employer contributions to the plan but not investing in fairer pensions or a contribution break for workers,” said DeSousa. “This is a disappointment but not a surprise.”

It’s kind of like a gift card

Treasury Board officials don’t see a windfall. They see the surplus as an asset on the books and argue removing it will only weaken the government’s overall fiscal position. Same for the freezing of any future contributions.

Yes, technically there will be a hit to the balance sheet, ISFD’s Khan says. But the move frees up cash for short-term spending that would otherwise remain trapped in the pension fund.

“It’s like the pension money is a gift card for Tim Hortons,” quipped one senior financial bureaucrat. “You can only spend it at Tim Hortons. And now they’ve given you cash and you can spend it wherever you want.”

But over the long term, the fund could fall back into deficit as markets shift, Khan notes, and the government could be forced to inject money back into it.

The chief actuary’s projections will be reviewed annually to see if surpluses even materialize, a Treasury Board official said. Lower market returns, rising public-service salaries, or a pay-equity settlement could shrink any future surplus.

There are no plans to take a contribution holiday, a TBS official said. Projections for them were done because the law mandates the government take such a holiday in the event of a non-permitted surplus.

DeSousa argues the government should be offering employees a contribution holiday too or using some of the surplus to improve benefits for workers.

The push for a single-tier pension

PSAC has long lobbied for a reversal of Harper-era pension reforms that created a two-tier system: those who joined before 2013 can retire at 55 with 30 years of service. Those hired after 2013 must wait until age 60.

PSAC wants to go back to a single-tier pension with retirement possible at age 55.

Treasury Board says the reversal would increase costs, as tier-two members have been paying less for their pension benefits. This means taxpayers and public servants would face higher contribution costs indefinitely, even after the surplus funds are exhausted.

And so the battle lines are drawn.

The government’s defined-benefit pension plan is public servants’ most prized asset, offering benefits superior to what most Canadians have.

The latest clash echoes a historic battle led by unions and retirees 25 years ago over a pension surplus that reached the Supreme Court. The unions lost that fight. It ultimately led to the creation of the pension fund now holding the surplus in question.

It is also bringing up many of the issues that were raised then.

The plan isn’t jointly managed with employees. Public servants have zero investment risk. Their pensions are guaranteed by statute, regardless of how the pension fund performs or if it runs a deficit. The government is on the hook for any deficit, so it claims it is entitled to the surplus.

In the end, Anand has the final say on any surplus, with decisions informed by a pension advisory committee that includes union, retiree, and government representatives.

Under the plan’s funding policy, the government is only required to address the non-permitted surplus. The rest of the surplus is supposed to remain in the plan as a cushion. Anand, however, can override this policy.

Last Thursday, I discussed what PSP's former CEO, Neil Cunningham, thinks the government should do with the $9 billion surplus. I also shared my views on what can be done and you can read that comment here.

Today I want to discuss why I completely disagree with PSAC and agree with Treasury Board President Anita Anand.

In short, PSAC is full of it and spreading misinformation.

It's critically important to note that the Public Sector Pension Plan is not a jointly sponsored DB plan in the sense that members (retired and active) do not share the pain or gain of that plan.

What does that mean? Well, let's say PSP Investments was doing a lousy job and they were not producing the requisite returns to keep the plan solvent, and they were running a deficit.

At other jointly sponsored plans (like OTPP and HOOPP), when the plan experiences a deficit they have several options including increasing contributions but what they typically choose is partial or full removal of inflation indexation for a period of time until the plan is fully funded again.

This is called conditional inflation protection, and it works and is fair especially for plans where there are more retired workers than active ones.

In the case of the Public Sector Pension Plan, if there is a deficit, the Government of Canada (ie. Canadian taxpayers) is on the hook to make it up, although they can also increase contributions to make up some of the shortfall (contributions from employees and government but that rarely goes well with unions).

So if the employees do not share in the pain (deficit) of the plan, why should they share in the gain (surplus) of the plan? 

That is an important point that isn't properly addressed.

Yes, they contribute equally to the plan, but unlike OTPP or HOOPP members, they don't share the pain if the plan goes into a deficit so unlike them, why should they get increases in the benefits if there are surpluses?

Also keep in mind, back in December, 2012, the Supreme Court of Canada decided public unions were not entitled to a $28-billion pension surplus that the government hived off to help pay down the deficit:

The high court ruled 9-0 that the government is not obliged to return funds to the public sector unions.

"The government was not under a fiduciary obligation to the plan members, nor was it unjustly enriched by the amortization and removal of the pension surpluses," Justice Marshall Rothstein writes for the court.

The complex 73-page ruling ends a long legal battle that dates back to the 1990s in which unions representing public servants, the RCMP and the military wanted the surplus money returned.

The unions and professional associations were attempting to overturn an Ontario Court of Appeal ruling that said they weren't entitled to the money.

The unions argued that the government improperly took their money, from the mandatory, defined benefit plans.

The plans are among some of the most handsome pensions in the country.

Meanwhile, many private sector companies are struggling with underfunded pensions.

"The plan members' interests are limited to their interest in the defined benefits to which they are entitled under the plans," writes Rothstein.

The unanimous ruling comes as the government is attempting to slay the deficit and control public spending.

If the unions had won their appeal, it could have forced a massive federal expenditure that could have affected its long-term economic planning.

Fast-forward 12 years later and we are still arguing about how to spend the surplus. Back then they used it to pay down the deficit and they might do the same thing again, but there are wiser policy options. 

Do plan members have a say in their plan? Of course they do and they will even obtain a few seats on PSP Investments' board of directors next fiscal year to make their views known, but the surplus doesn't belong to them, it clearly belongs to the government which backstops these plans.

Now, last Friday, The Treasury Board of Canada Secretariat posted this on LinkedIn:

You can read the link here to get more information. 

I shared this post with PSP's former CEO Neil Cunningham who noted this:

TBS posted this? They make a mistake in the 1st paragraph by saying the surplus is created when the assets surpass 25% of the liabilities. It should say either 125% or that the total assets surpass the total liabilities by 25%. Pretty sloppy, do they have anyone proof read before they post?

He's right, it was sloppy on their part but it doesn't change that TBS is right about having to shift the non-permitted surplus (any surplus beyond 125% funded status) to government accounts.

I also shared the TBS post with Eduard van Gelderen, PSP's former CIO, who shared this:

I am actually puzzled by this LinkedIn post; do they think the discussion is now over? I would expect the exact opposite: the discussion is just starting! There are so many questions. Even if the claim is that plan members (which I believe don't even exist; the pension benefits are part of the individuals' labor contract and that's it, but I might be wrong) don't benefit from the upside and don't suffer from the downside, they still pay a pension contribution. Who decides and how fair is this contribution really? And how fair is it that all taxpayers are contributing to an unlimited deficit? According to Keith Ambachtsheer the risk profile is for that reason too high. Now that there is a surplus, his argument is even stronger. Especially, when you think the pension contributions are at the right level. That discussion is not going away with TBS' LinkedIn post.

Great insights from both these gentlemen and I too think we need a wider, more transparent discussion on the surplus (not just the non-permitted excess surplus above the 125% funded status) and how it can be used to best benefit our country over the long run.

Lastly and importantly, a quick note on contribution holidays.

I loathe them and every time in the past pension plans implemented one, they always ran into problems and got into major deficits. 

In my simple world, contribution holidays should be illegal, forbidden by law.

Alright, crazy week in markets keeping me very busy, I'll cover all that tomorrow but I definitely don't get paid enough for covering all these issues and more on my blog. 

Below, Donald Trump brushed off Ontario's threat to cut off its energy on Thursday. Jeremie Charron has the latest on the tariffs tiff. 

This isn't headed in the right direction and we will all suffer the consequences (Canadians and Americans).