Good Morning! The S&P 500 pulled off back-to-back 20% annual gains for the first time since the 1990s, defying nearly every bank's wildly inaccurate predictions. Meanwhile, experts foresee another tough year for the housing market in 2025.

The U.S. government sued Dave, the fintech that closed 2024 up 900% YTD, for misleading advertising. New York's congestion pricing will finally begin Sunday, and Squid Game 2 racked up 68 million views in its first three days of release.

2025 might pit the Fed against Trump, more companies could have influencers on the payroll soon, and how to supercharge your career with small, meaningful changes.

Navigate market volatility with private credit—sign up with Percent and diversify your portfolio today.

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Ackman’s 2025 Bet

Billionaire hedge fund manager Bill Ackman has unveiled his boldest investment thesis for 2025—placing a high-stakes bet on Trump’s return to the White House.

Ackman predicts a second Trump administration will finally end conservatorship for Fannie Mae and Freddie Mac, the nation’s largest government-backed mortgage companies.

In a post on X, Ackman, a major shareholder in both Fannie Mae and Freddie Mac, laid out his case: privatizing the lenders could generate $300 billion in profits for the federal government. For Trump, this could be a landmark financial restructuring, cementing his legacy with one of the largest privatization deals in U.S. history.

Markets liked the plan and shares of Fannie Mae surged 36%, while Freddie Mac gained 34%.

Ackman’s invested in Fannie and Freddie for a while now. He’s held their stocks for over a decade, posting flat returns while waiting for a breakthrough.

Now, with $168 billion in capital reserves built since 2019, Ackman sees a "credible path" to recapitalization and privatization within two years.

Still, the risks are substantial. Ackman cautioned that the outcome depends on navigating significant political and economic uncertainties. Similar privatization efforts during Trump’s first term, spearheaded by then-Treasury Secretary Steven Mnuchin, fell short due to time constraints.

Takeaway: It turns out that Fannie and Freddie aren’t relics of the 2008 financial crisis - they could make a major comeback in 2025. If it happens, it might turn Ackman’s ten-year waiting game into one of the most remarkable comebacks in investing history.

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Top Reads

• Stocks finish strong 2024 with a whimper (Axios)

• It's looking like 'one more year of pain' for the housing market (YF)

• M.T.A. Says Congestion Pricing to Begin on Sunday (NYT)

• U.S. files complaint against Fintech app Dave and its CEO (CNBC)

• Tesla stock surge runs up against a potential annual sales drop (YF)

• Blackstone, Carlyle and other PEs submit bids to unlock Access' majority stake (ET)

• Squid Game 2 is already breaking records (DL)

• How UnitedHealth became an American goliath (WSJ)

• How the Fed and Trump could collide in 2025 (YF)

• What to expect from the housing market in 2025 (CNN)

• The data center boom eats up a lot of land in Atlanta (WSJ)

• Are "Office Influencers" the future? (LinkedIn)

• Tokenization has become Wall Street's latest crypto buzzword (YF)

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Markets Rundown

Stocks Edge Lower on Year’s Final Day

U.S. equity markets closed slightly lower on Tuesday, with the S&P 500 down 0.4% and the NASDAQ shedding 0.9%. The energy sector led gains, supported by a spike in oil prices, while growth sectors like technology and consumer discretionary lagged.

Despite ending the year with four consecutive down sessions, the S&P 500 finished 2024 with a 23% gain, marking its second straight year of returns over 20%. Overseas, Asian markets were mostly lower, while European markets traded higher.

Bond yields edged up, with the 10-year Treasury yield rising to 4.58%, while the 2-year yield held steady at 4.24%. In commodities, oil prices rose over 1%, and gold gained 0.8%.

Bonds Deliver Positive Returns in 2024

U.S. investment-grade bonds posted positive returns in 2024, with the Bloomberg U.S. Aggregate Index up 1.4%, following a 5.5% gain in 2023. However, the index remains 9% below its August 2020 peak.

International bonds are set for a 4.9% gain, while cash is on track to close 5.3% higher. Lower-quality issuers outperformed, with high-yield bonds up 8.2% and emerging-market debt gaining 6.6%.

Elevated yields suggest healthy returns for investment-grade bonds in the coming years.

Housing Market Resilience: Prices Hit All-Time Highs

Housing market data showed continued strength, with the S&P/Case-Shiller National Home Price Index rising 0.3% in October and 3.6% annually, while the FHFA Home Price Index increased 0.4% monthly and 4.5% yearly.

Both indexes hit all-time highs, supported by low inventory and strong household balance sheets. Despite higher borrowing costs, home prices are expected to rise at a steady pace of 3%-4% annually, in line with wage growth.

Movers & Shakers

• (+) Nutriband ($NTRB) +13% after the biotech company announced they expect an expedited review process for its abuse-deterrent opioid patch.

• (+) Biohaven ($BHVN) +4% because a director purchased an additional 29,000 shares.

• (–) Sangamo Therapeutics ($SGMO) -56% after Pfizer terminated a licensing agreement with the genomic medicine company.

For more PE, VC & M&A deals, subscribe to our Buysiders newsletter.

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The Entrepreneurial State

According to conventional wisdom, innovation is best left to the bold entrepreneurs of the private sector, and government should get out of the way. But what if that wasn't case?

What if, from the inventions of Silicon Valley to medical breakthroughs, the public sector has actually been the most courageous and valuable risk-taker of all?

Critically acclaimed and influential thinker and scholar Mariana Mazzucato argues comprehensively against the myth of a lumbering, bureaucratic state versus a dynamic, innovative private sector with remarkable original and deep research.

In a series of case studies—from nanotechnology to the emerging green tech of today—Mazzucato reveals that the opposite is true: the private sector only finds the courage to invest after an entrepreneurial state has made the high-risk investments.

The Entrepreneurial State reveals how every technology that makes the iPhone so “smart” was actually funded by the government—from the Internet and GPS technology, to touch-screen displays and voice-activated Siri.

In the history of modern capitalism, the State has not only fixed market failures, but has also actively shaped and created markets. In doing so, it sometimes wins and sometimes fails.

Yet by not admitting the State’s role in active risk taking, we've created an "innovation system" where the public sector socializes risks while privatizing reward, as Mazzucato controversially argues.

This bold and provocative book considers how we adopted this dysfunctional dynamic, and then how we can overcome it so that economic growth can be not only "smart" but "inclusive" as well.

“Award-winning economist Mariana Mazzucato’s famously incisive international bestseller debunking the pervasive myth of the inept state versus an innovative private sector.”

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Comparing Public and Private Markets

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Micro-napping

Imagine unlocking a secret superpower that gives you an instant energy boost, sharpens your focus, and leaves you feeling refreshed—all in just 10 minutes. Welcome to the world of micro-napping, the ultimate hack for busy lives.

These tiny power naps are like a reset button for your brain, packing the benefits of a full nap into a fraction of the time. Whether you’re battling the afternoon slump, juggling a hectic schedule, or just need a quick pick-me-up, micro-napping is your go-to solution.

Here’s the magic: research shows that even a brief nap can skyrocket your mental alertness, turbocharge your memory, and supercharge your cognitive function. It’s like giving your brain a mini-vacation without the guilt of “wasting time.”

And the best part? You don’t need a cozy bed or hours to spare. A quiet corner, a comfy chair, or even your desk will do. Close your eyes, drift off for a few minutes, and wake up feeling like a brand-new person.

Worried about oversleeping? Don’t be. Your body has an internal alarm clock that’s surprisingly reliable. Plus, the beauty of micro-napping is that it’s short enough to fit into even the busiest day.

Think of it as a quick pit stop for your mind—a chance to recharge and refuel so you can tackle the rest of your day with unstoppable energy.

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Short Squeez Picks

• How to transform your career through small and powerful changes

• This word will make you a better coworker and boss

• The 50 greatest innovations of 2024

• Silicon Valley realized remote workers weren’t working

• 8 behaviors of men who don’t have any friends outside of work

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Memes of the Day