Goldman Sachs veteran trader Tony Pasquariello highlighted in his year-end review that 2025 witnessed exceptional strength in global commodity markets. Gold prices surged 68% year-to-date, while silver skyrocketed 139%, both marking their best annual performances since 1979. Copper prices also decisively breached historic highs.
Meanwhile, U.S. equities displayed pronounced structural fragmentation. Pasquariello emphasized that current stock valuations imply expectations of cyclical economic acceleration, which remains unconfirmed by broad macroeconomic data. In stark contrast, bond markets reflect a more cautious economic narrative, with the divergence between equity and fixed-income signals reaching rare levels in recent years.
He noted that six-month realized correlations within U.S. equities continue to decline, indicating extreme dispersion—a trend likely to persist in the next phase.
Citadel's Scott Rubner added that markets enter 2026 with solid macro foundations. Record household wealth, expanding equity ownership, and abundant cash balances collectively provide structural support, sustaining retail participation at elevated levels.
**Historic Bull Run for Precious Metals** 2025 proved a landmark year for precious and industrial metals. Gold's 68% annual gain marked its strongest performance since 1979. Pasquariello analyzed that multiple narratives may be at play: pricing in global fiscal dominance, reflecting growing fiat currency concerns, or simply unprecedented central bank demand. Silver's 139% surge was even more dramatic, nearing its legendary 1979 quintuple rally.
Copper's breakout to record highs further fueled related equities. The collective strength of these three key metals clearly signals structurally rising investor demand for hard assets in the current macro landscape.
**Stock-Bond Divergence Reveals Market Tensions** U.S. equities and bonds are sending conflicting economic signals. Pasquariello observed that 5-year Treasury yields remain tightly correlated with Bloomberg's U.S. labor market surprise index, suggesting bonds remain anchored to employment data.
However, the S&P 500 shows significant divergence from business surveys and cyclical indicators, prematurely pricing in an unconfirmed "cyclical acceleration." Pasquariello stressed this isn't about declaring either asset class right, but warning of potential equity repricing risks if expected H1 2026 growth fails to materialize.
Another notable breakdown emerged between JOLTS job openings and the S&P 500, potentially marking a major structural shift in the long-standing labor-equities relationship.
**Deepening Structural Trends in U.S. Equities** The growth-value divide continues widening, with the Nasdaq 100/Russell 2000 ratio hitting new highs, reinforcing the "winner-takes-all" dynamic. While small-caps may see tactical rallies amid potential Fed liquidity support, Pasquariello sees no structural case for sustained outperformance versus mega-cap tech.
The S&P 500's six-month realized volatility remains subdued, confirming recent high dispersion. The VVIX index traces a unique 2025 sentiment evolution pattern.
Goldman's hedge fund VIP basket maintained robust long-term performance. Apart from brief meme-stock deviations in 2021, it consistently outperformed the S&P 500, making 2025 a standout year for hedge funds.
Concluding with the S&P 500's post-pandemic uptrend, Pasquariello noted that despite 2025's reality checks, U.S. equities ultimately extended their long-term ascent. The critical question now is how risk-reward dynamics evolve as indices approach the upper bounds of this trend channel.