For elderly Americans suffering through this affordability crisis, every little bit helps. Inflation and tariffs have made everything more expensive, so a boost to your Social Security monthly checks is welcome, but it's no cure for what ails us.

 

Given that inflation is "officially" hovering around 3 percent per year, a 2.8 percent boost in cost-of-living adjustment (COLA) for 2026 is good news. This follows a 2.5 percent increase in 2025. The Social Security Administration estimates that the average retirement benefit will jump by $56 a month, from $2,015 to $2,071, starting this month.

 

From my point of view (and I am sure yours), this raise will in no way cover the spike in consumer prices we are feeling. But before you can even count the money, remember that the standard monthly premium for Medicare Part B is going to hit you with a 9.7 percent increase. That means you need to subtract this additional $17.90 from the COLA benefit, so the cost to cover doctor visits and other outpatient care will climb in January from $185 to $202.90.

 

What could help retirees even more will be the 2026 federal senior "bonus" deduction. For the coming year (returns filed in 2027), seniors aged 65 and older can claim a new but temporary tax break. The deduction you can claim for individual filers is up to $6,000 and $12,000 for married couples filing jointly. However, there are income limits on this deduction.

 

For a married couple, your Modified Adjusted Gross Income can be no higher than $150,000; for single filers, $75,000. If you exceed those levels, there is a phase-out scheme in which benefits are reduced until an Individual earns $175,000 and $250,000 for couples. These benefits can be claimed whether you itemize or take the standard deduction on your taxes.

 

In addition to the new $6,000 bonus, standard deduction amounts have also increased for 2026. What that means is that if you are filing separately, you can deduct $16,100 from your taxes, up from $15,759 in 2025. For married couples filing jointly, the new amount is $32,200. There is also an additional senior deduction for anyone over 65. If you file as a single, singles receive an extra $2,50, while married taxpayers or surviving spouses receive $1,650 each.

 

As an example, a married couple over 65 taking the standard deduction could potentially shield up to $47,500 from federal income tax ($32,200 standard deduction plus $3,300 additional senior deduction plus $12,000 from the "bonus" payment.)

 

The affordability crisis has affected seniors in many ways. Over one-third of seniors 65 and older were struggling with housing affordability. Over 12 million households were paying more than 30 percent of their income on housing, according to a Harvard University joint study.

 

The bottom 20 percent of Americans aged 60 and older have no assets, and many of them are in debt. Almost half have an average income below what they need to cover basic needs. Failing health is a constant fear for 60 percent of all older adults. Most cannot afford two years of in-home, long-term services and support. Over 80 percent do not have the resources to pay for long-term care or be able to weather financial emergencies.

 

The affordability gap has just gotten worse. And as we enter 2026, 22 million Americans, many of them seniors, especially early retirees who are not yet eligible for Medicare, are facing the end of the enhanced premium subsidies under the Affordable Care Act. Some face a doubling of health-care coverage costs as a result.

 

All in all, most seniors are facing dire straits in this country. Legislators seem to be oblivious to their predicament. Even their scant remedies are temporary at best, like the "bonus" credit to Social Security that expires in 2028. The majority in Congress wants to get rid of Obamacare but has no alternative to the out-of-control costs of our failing health system. 

 

They say we can’t afford Social Security or Medicare but are at a loss for a workable alternative. Will anything change in 2026? I doubt it.

 

For those who have been wondering whether the Santa Claus Rally would occur this year, it appears that Santa is already on the roof. The stock market gained almost all of this holiday-shortened week on lighter volume. Can we expect the same next week?

 

Normally, investors can expect gains of 1-2 percent between now and the end of the first week in January. Markets were closed early on Wednesday and reopened on Friday. Six straight days of gains were a good start with the S&P 500 Index hitting a new record high.

 

I have advised readers not to put too much credence in these gains. The upward pressure on stocks stems more from global fund flows than from anything specific to the stock market. Still, it is a bit like having a snowfall on Christmas. It makes the holiday season a little more cheerful. And I hope you all had a wonderful week!

 

The big news had to be the third quarter release of Gross Domestic Product (GDP). Following a 3.8 percent gain in the second quarter, GDP grew by 4.3 percent on an annualized basis last quarter. That was way beyond economists' estimates.

 

The gains were largely driven by robust consumer spending, but since then, momentum has faded amid a rising cost of living. The administration is steadfast in its belief that GDP will rise by 3 percent in 2026. The Congressional Budget Office has estimated that the government shutdown could shave anywhere from 1-2 percent off GDP in the fourth quarter.

 

That may be so, but a word of caution on the government data. There is no guarantee that the recent data released by the Bureau of Labor Statistics is as accurate or unbiased as it was in the past. Just so you know, the Congressional Budget Office has estimated that the government shutdown could shave anywhere from 1-2 percent from GDP in the fourth quarter.

 

While U.S. stocks did well this year, the real outperformers in 2025 were precious metals and other commodities. Over the festive dinner table this year, the topic of conversation among friends and relatives was not about crypto for a change. No, this year it was about gold and silver prices. "And what about palladium and platinum?"

 

Readers know that was my favored asset class throughout the year. The numbers speak for themselves: gold gained 70 percent, palladium 62 percent, silver 150 percent, and platinum 150 percent. A combination of central bank buying, inflation, tariff fears, and weakness in the dollar has catapulted this group to record high after record high.

 

Recently, new buying has surfaced due to the Section 232 investigations prompted by the White House. These investigations are a first step in determining whether tariffs should be applied to this asset class. If the answer is yes on tariffs, then expect more gains. But it is not just the rabbit and the hare (precious metals) that have attracted my interest; there is a turtle in this race that I am watching as well.

 

Copper, while "only" up 35-40 percent this year, appears to me to have a bright future. As a mining guy back in the day, I know that most often, where there are copper deposits, there is also silver and gold. The three metals are highly correlated, although only silver and copper have industrial uses.

 

In the case of copper, its uses are endless. This lowly metal is everywhere. A great conductor of electricity and heat, it has been part of human history for thousands of years. Today, the combination of mining outages and the need for massive quantities of copper to build new power grids, energy infrastructure, electric vehicles, and AI data centers should support copper prices in the coming years.

 

There is not much I can say about the coming week. It should be a replay of this past week — few players, less volume, fewer trading days, and higher global cash flows. That should propel markets to higher highs, but remember the party should end at least temporarily by the middle of January. Happy New Year to one and all.

 

In 2025, more than 1 million workers saved $2 billion-plus toward retirement through state-sponsored automated savings plans. Now, legislation introduced by a Massachusetts congressman would expand this program nationwide. Could this help solve the American savings crisis?

 

It is well known that American workers are not saving enough for retirement. Almost half of Americans have no retirement savings at all, according to recent surveys by AARP and Gallup. Low-income and older households are most at risk. Dependence on a bankrupt Social Security system is not the answer.

 

Congressman Richard Neal, a Democrat and a ranking member of the Ways and Means Committee, reintroduced the Automatic IRA Act. If passed, it could become a key way for nearly half of the private-sector workforce to begin saving for retirement. The concept is simple, and it works.

 

Neal, representing Western Mass and the Berkshires, was taking a leaf from the book of the 12 states that have already introduced some kind of automatic IRA worker deduction. Although state programs vary in detail, the basic premise is that they generally require employers to enroll employees in a state-facilitated IRA at a preset savings rate. Typically, workers have 3-5 percent of their paychecks automatically deducted and invested in a Roth IRA. In some cases, contributions are increased each year until they reach 10 percent of earnings.

 

The programs are typically available to individuals who don't receive employer-sponsored retirement benefits. Neal's new bill would require employers with more than 10 employees who do not sponsor a retirement plan to automatically enroll their employees in an IRA or another tax-deferred plan, such as a 401(k).

 

Oregon established the first such account back in 2017. Since then, the notion has caught on with saver and employer participation numbers steadily increasing. It took state programs six years to reach the billion-dollar mark, but just 18 months to double it. It helped that the market performance has been stellar. The record stock market rise spurred a 25 percent increase in savings accounts and higher average savings rates.

 

Many small business owners don't offer retirement benefits. Only about seven out of 10 workers in the U.S. have access to either a defined contribution or defined benefit pension plan, according to the Congressional Research Service. That means that 56 million workers can't take advantage of tax-deferred benefits at work.

 

The auto IRAs solve this problem. Small businesses that employ service and other workers in high-turnover industries such as leisure and hospitality have struggled to provide retirement benefits to their employees. The automatic IRA program, at least on the state level, provides a no-cost option for employers without the resources or time to offer a private retirement savings plan. The congressional plan would likewise offer small-business employers an auto tax credit, making its implementation cost-free.

 

Sounds good, doesn't it, but instilling the desire to save for retirement among workers is a daunting task. Many employees who do have access to plans don't take advantage of them. Only 56 percent of all workers and 53 percent of private sector workers participate in a plan. From my experience, many of those workers chose to spend their paychecks and not worry about the future, especially among those in younger generations. Others don't want to be bothered or suffer from inertia or confusion.

 

However, research shows that people are far more likely to save for retirement if they can set aside money automatically, through payroll deductions. I often urged new clients with an employee savings plan to contribute a set amount automatically. Sort of a set-and-forget-it approach.

 

"But what if I can't live on what's left?" they would say. "Give it three months," I would answer. By then, most workers found that they could adjust quite easily to the 3-5 percent deduction. What's more, after making a little money from their investments, the protests quieted down.

 

In this Congress, some may say there are bigger fish to fry, but that is, in my opinion, short-sighted. Anything that encourages Americans to save more is truly a gift, and something politicians on both sides should be able to agree upon.

 

Friday was the end of the final full week of trading for the year. The next two holiday-shortened weeks will top off a good year for stocks. Will Santa show up for the finale?

 

The much-vaunted Santa Claus Rally is supposed to begin this coming week and carry us through to the New Year. Does it really matter? For the most part, if you had stayed invested through 2025's ups and downs, you should be pretty happy now. Especially so if you had followed my advice and bought some precious metals and mining stocks.

 

Of course, I won't turn my nose up at an extra percent or two into January if Mr. Claus does visit. Now that the president has made the day before and after Christmas a federal holiday, the normally skeleton staffs and anemic volume of this period will be that much lower. That means traders can push stocks up and down to suit their whims while booking additional profits from day trading chasers.  

 

As you know, I did not join the Wall Street crowd predicting what the markets would do this year. It is, in my opinion, a useless exercise that strategists rarely, if ever, get right. The average forecast was for a 7-10 percent gain, and we doubled that.

 

I will be writing about the coming year in time, but let's stick with what is happening so far in December for right now. There has been a deluge of economic data this week. It feels like a tsunami after weeks of a data desert during the government shutdown. The non-farm payroll report for November rose by 64,000 after falling by 105,000 in October. The unemployment rate ticked up to 4.6 percent, the highest level since September 2021.

 

The payroll report is signaling that the labor market is weakening. The Fed would call it "normalizing." Retail sales were OK if you subtract out autos and gasoline. Both the services and manufacturing Purchasing Managers' Indexes were still in the 51.8 percent and 52.9 percent ranges, signaling expansion.

 

However, it is hard to take these numbers at face value because the shutdown had certainly jiggled the data, missed some crucial inputs, and may be subject to partisan doctoring. No surprise, given that the Bureau of Labor Statistic's head was fired by the president and the BLS still lacks a suitable replacement. Remember to subtract 60,000 jobs from every job report; that is the number of jobs the Fed believes are overstated in any given month. So the real number was a gain of 4,000 jobs.

 

On Thursday and Friday, we also received our first inflation numbers. The Consumer Price Index for November rose 2.7 percent, less than most expected (present company excluded). Readers may recall I have been predicting weaker inflation numbers and expect more of the same when the December CPI is announced next month.

 

The president's mid-week speech to the nation was largely ignored by the markets. Rather than paying down the deficit with the tariff money he is collecting from consumers and corporations, President Trump is using some of it to reward those he needs in the upcoming mid-term elections.

 

In this era of expanding state capitalism, the president followed up last week's $12 billion bailout fund for farmers with $2.5 billion in "warrior dividend" paychecks to 1.45 million military service members. His list of beneficiaries of tariff money seems to be getting longer. In addition to paying off the farmers and now, the military, he has proposed redirecting tariff money to voter dividend checks, tax cuts, paying down the national debt, enhanced childcare benefits, a possible end to the income tax, and a victory fund for Ukraine.

 

I warned investors to expect volatility in December, and thus far, I have been correct. There were exceptions. While AI and tech were getting slaughtered, cannabis stocks had some eye-popping gains. Thanks to another executive order: this time to ease marijuana classifications. Back in September 2023, my column "Rescheduling cannabis could boost profits for U.S. marijuana companies" discussed how rescheduling marijuana from a Schedule 1 drug to a Schedule 3 designation could boost grass sellers' bottom line from 20 to 30 percent per annum.

 

But do not confuse a reclassification with making marijuana legal under federal law. It is also completely different from the SAFE Banking Act, which would allow banks to provide financial services to the industry.

 

During the Biden presidency, the on-again, off-again prospects of rescheduling left industry stocks for dead, with short sellers having established huge positions. The prospect of higher after-tax profits and declining expenses has led to a re-rating. Buyers are stepping in, and short sellers are covering their sales. Trump's decisiveness in some situations like this one has to be admired.

 

On Friday, more than $7.1 trillion in options expired. December's quadruple witching event occurs when options on four types of securities expire on the same day. This was the largest options expiration on record. It means little to you if you are a long-term investor, but for traders, it was a day to stay on your toes.

 

I am still betting we do get a bounce higher in the markets based on global money flows at the end of the year. Don't chase, just count your shekels, and if not, don't sweat it. You made a lot this year. Remember that old saying, there are bulls, bears, and pigs, and pigs get slaughtered.

 

Last week's half-point interest rate cut by the Federal Open Market Committee, overshadowed what I believe is an even more important development. The Fed has kicked off a series of what they called "reserve management purchases" by committing to buy $40 billion per month in short-term Treasury bills and notes.

 

In essence, the Fed is expanding its balance sheet by buying these securities. They were quick to point out that this was not the beginning of a quantitative easing program, which is aimed at explicitly stimulating economic activity, although it has the same impact on financial markets. In essence, the Fed is providing a steady stream of additional liquidity to markets.

 

Why is that so important? More liquidity means banks, corporations, stock and bond market participants, even Mom and Pop to some extent, can borrow more, buy more, and invest more. It will also influence the direction of interest rates on the short end of the yield curve.

 

The Fed's reserve balances (the amount they own in Treasuries and the like) are huge but have declined over the past three years, now totaling $2.8 trillion. Low bank reserves can sometimes cause short-term funding pressures in the financial system, but it's hard for me to believe that with that much money sloshing around the system, there should be any difficulty at all in the credit markets.

 

Some economists say what the Fed is doing makes sense because if they expect additional economic growth in 2026, demand for reserves will need to grow as well. The Fed's action will also benefit bond yields across the board. Short-term yields dropped immediately after the announcement, but over time, even longer-dated bonds such as the U.S. 10-year Treasury bond may also decline. Investors believe the odds of another Fed interest rate cut in the first half of next year are low, at least until the new Federal Reserve Chairman takes office. However, I'm guessing the continued monthly injections of funds by the Fed will have a similar easing impact on the economy as another rate cut.

 

The additional liquidity should also contribute to the traditional Santa Claus Rally that occurs in the last few weeks of the holiday season. It is a time when bonuses are paid, contributions are made to savings accounts, and central banks provide additional liquidity. Some of those cash flows end up in the equity markets.

 

Given that I am not an economist nor a monetary expert, forgive me if I go out on a limb here. Our national debt is off the charts, at more than $39 trillion. Accepted wisdom holds that to reduce debt, a combination of spending cuts, tax reforms, and economic growth strategies is essential.

 

The last time I looked, this government is increasing spending and reducing taxes. And while the administration is attempting to increase growth, it is still nowhere near the rate necessary to impact our debt. That leaves either default or monetizing government debt. A U.S. default would bring down the world's financial system, so I don't think that is a viable option, which leaves monetization.

 

Monetization is the permanent increase in the monetary base to fund the government. Any government that issues its currency can create money without limit. Monetization occurs when a central bank buys interest-bearing debt with non-interest-bearing money. It is a permanent exchange of debt for cash.

 

For a simpleton like me, what I see is this: The U.S. Treasury auctions off billions in short-term debt each month to fund our debt. As of Dec. 12, the U.S. central bank is now purchasing those same securities in the open market. The net result is that the interest rates the U.S. will pay for these new obligations will be lower. The government will be selling short-term paper while simultaneously buying it back. Are we seeing the first trial balloon of things to come?

 

The only difference between what the Fed is doing now, and monetization is the question of permanency. The Fed has not given the markets any indication of how long its government purchases will continue. And no one has even mentioned the "M" word. That is understandable given that fears of money printing would trigger a collapse in the dollar and skyrocketing gold.

 

I will be curious to see how and what the new Fed chief and his committee will do in May 2026. Will they extend this program or even increase its purchases. Will the U.S. Treasury continue to only auction short-term paper now that they have found a ready buyer? Questions aplenty, to keep me watching and writing.