Most investors pay attention to monetary policy given its influence on economic activity and asset prices. However, it is not clear that everyone has appropriately contextualized recent developments from the Fed, which changed its stance in the fourth quarter more than headlines would suggest, likely paving the way for continued economic expansion and higher equity prices.
On December 10, 2025, the Federal Open Market Committee announced its sixth rate cut since the peak range of between 5.25% and 5.50%, a level lasting from July of 2023 until September of 2024. The title of the story appearing above the fold in section A1 the next day in the WSJ read, “Fed Cuts Rates, Signals a Pause.”1 This apparently hawkish headline, as well as the article’s text, came off as though the Fed was done easing for the time being, which could not be farther from the truth.
News outlets are in the business of generating clicks, which incentivizes controversial, punchy headlines and salacious stories often limited by authors’ perspectives, contextual knowledge or incentives unbeknownst to readers. A punchy headline failing to capture the full story was indeed the case in the aforementioned article, written by “The Fed Whisperer,” a journalist who many investors consider to have the authoritative inside track on machinations within the Fed.2
The article went on to flag dissension around the future path of rate cuts and compared the “pivot” to what happened in December of 2024, when the FOMC cut its target rate and then held steady for almost nine months. It failed entirely to mention the end of quantitative tightening, or allowing treasuries and mortgages owned by the Fed to mature without reinvestment. This liquidity headwind has in fact been in place since the spring of 2022, when the Fed balance sheet peaked at nearly $9 trillion in assets. Between then and December of 2025, policymakers have been draining approximately $50 billion per month in liquidity from the system in an attempt to put a damper on inflation that spiked with demand as humans reemerged from the pandemic only to meet shuttered supply chains. Now, the Fed is expected to purchase at least $40 billion in securities this January, with “tapering” likely to occur later this year.3
The change in monetary policy is far more significant than headlines suggest, as the shift is more akin to what happened in September of 2019, when policymakers reversed course from years of removing liquidity to then firing up the printing presses on the heels of major stress in short-term funding markets. Signs of similar liquidity strains began to crop up this fall as banking system reserves fell to dangerous levels in our view due to a combination of the government shutdown and the aforementioned quantitative tightening.
Despite misguided political attacks about the need to “lower rates,” it appears the underappreciated shift to heavy accommodation from policymakers is the right move. Unlike rate changes, which affect the cost of floating-rate loans and work with more of a lag, direct asset purchases are the fastest and most direct way to shore up liquidity and change behavior throughout the system, especially when those purchases represent a stark reversal of what has been going on for years. Urgency is indeed important — last year, average monthly job growth was nearly 71% below its 2024 level, and the unemployment rate continued to tick higher while the ratio of unemployed workers to job openings dropped below 1.
The good news is the Fed recognizes this and has room to act. According to data from Truflation, which tracks inflation on a real-time basis, the rate of inflation at the end of 2025 was 1.85%, its lowest level in two-and-a-half years, and below the Fed’s long-term target of 2%. Meanwhile, wages in December grew at 3.8%, implying an increase in real purchasing power. The spread between the two-year government note and the ten-year yield, a data point often considered a signal of whether monetary policy is on the right track, ended 2025 at its highest level in almost four years, a very positive sign of what may be to come.
Expanding liquidity, economic acceleration and a strengthening labor market could, if they occur, all bode well for our strategies, which continue to favor small- and mid-cap value names that are more sensitive to marginal economic activity and trade at large valuation discounts to the market as a whole. Remember too that Bitcoin, a technology we have exposure to in our portfolios via an investment in Strategy Inc., also historically has often been a major beneficiary of printing press engagement.
As always, we remain the largest investors in our funds and thank you for your partnership.
Bill Miller IV, CFA, CMT
January 13, 2026
Jump to Fund Updates:
Miller Income Fund ·
Miller Value Partners Appreciation ETF (MVPA) ·
Miller Value Partners Leverage ETF (MVPL)
Miller Income Fund
The Miller Income Fund (LMCLX) returned 2.92% during the fourth quarter, outperforming the ICE BofA High Yield Index’s total return of 1.37%. View current month-end performance. The fund initiated a new position in Millrose Properties (MRP), which was spun off from homebuilder Lennar (LEN) and currently resides as the only US public land-banking REIT, trading at less than 12x FY25 FFO estimates and offering a ~10% dividend yield. MRP appears set to capitalize on the trend of US homebuilders seeking to become increasingly “land-light” in recent years to improve operational efficiency and returns on capital.
The fund exited 5 positions during the quarter. British American Tobacco (BATS LN) and Buckle (BKE) approached our internal estimates of fair value. Semler Scientific (SMLR) agreed to be acquired in all-stock deal by Strive Inc (ASST). The fund exited its modest position in Total Energies (TTE) as oil prices continued to decline, slipping below $60/barrel in the quarter. Lastly, the fund sold its Venture Global 9% unsecured perpetual bonds after an adverse court ruling implied unanticipated potential future liabilities. View holdings as of 12/31/25.
Miller Value Partners Appreciation ETF (MVPA)
Miller Value Partners Appreciation Fund (MVPA) fell -3.81% (market price) during the quarter, underperforming the S&P 500’s 2.66% gain. View current month-end performance. The fund initiated two new positions in the quarter. Figure Technology Solutions (FIGR) is a fintech company utilizing blockchain technology to disrupt the consumer lending and digital asset industries. The company can fund a home equity loan at a median of 10 days (vs. industry median of 42 days) and on-chain registration drives a 93% reduction in total production costs compared to traditional mortgage origination. Management cites a $185B market opportunity in front of them (versus year-end market cap of <$9B) and expects steady progress towards their long-term Adjusted EBITDA margin target of 60% (vs. 42% over last 12 months), which we believe justifies the stock’s premium forward (FY26) EV/EBITDA multiple of ~23.6x. MercadoLibre (MELI), the Amazon of Latin America, trades near an all-time low EV/Sales multiple and offers a >8% free cash flow yield, despite 27 consecutive quarters of 30% or higher revenue growth.
The fund exited four positions during the quarter. As mentioned in the Income Fund’s commentary, Semler Scientific (SMLR) agreed to be acquired in all-stock deal by Strive Inc (ASST), while an adverse court ruling implied unanticipated potential future liabilities for Venture Global (VG). The fund eliminated Bumble (BMBL) as concerns arose regarding the founder’s alignment with the long-term economic value of the underlying business at a time when operational performance continues to deteriorate. Dropbox (DBX) was eliminated as growth and competitive concerns overshadowed the stock’s cheap valuation. View current holdings.
Miller Value Partners Leverage ETF (MVPL)
Miller Value Partners Leverage Fund (MVPL) returned 0.46% (market price) in the fourth quarter, underperforming the S&P 500’s 2.66% gain. View current month-end performance. After entering the quarter in a leveraged position, the fund flipped to a leverage-off position two separate times in the quarter. Market volatility and disadvantageous leverage-off timing for the fund detracted from performance. While we were disappointed with the fund’s performance this quarter, the fund still outperformed its benchmark in 2025 by 775bps on a market price basis, and we remain confident in its long-term potential. View current holdings.
Stay connected with us for updates and insights. Subscribe.
Follow us here, here and here.
The performance data quoted represents past performance and is no guarantee of future results. Investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. For the most recent month-end performance, please call 888.593.5110 or visit the Fund’s website at millervaluefunds.com