Core Viewpoint - March Euro currency futures are presenting a selling opportunity due to recent price weakness and a bearish trend reversal indicated by technical analysis [1][2]. Group 1: Technical Analysis - The price action in March Euro currency futures has negated an uptrend, indicating that bullish momentum is fading [1]. - A bearish line crossover signal has been produced by the MACD indicator, with the blue MACD line crossing below the red trigger line [1]. - A move below the support level at 1.1750 would empower Euro bears and create a selling opportunity, with a downside price objective of 1.1500 or lower [3]. Group 2: Fundamental Analysis - Sticky U.S. inflation is likely to lead to a less dovish Federal Reserve in 2026, which is bullish for the U.S. dollar and bearish for the Euro currency [2]. - Concerns regarding budget deficits in European Union countries are also contributing to a bearish outlook for the Euro currency [2]. Group 3: Trading Strategy - Technical resistance is identified at the December high of 1.1586, where a protective buy stop should be placed just above this level [3].

Core Insights - The US economy concluded 2025 in a healthier state than most forecasts had anticipated [1] - Economic growth accelerated towards the end of the year [1] - Inflation rates decreased from their peak levels [1] - Financial markets performed robustly, with the S&P 500 index increasing by 16% [1]

Core Insights - The article discusses the ongoing inflation trends and forecasts, indicating that consumer price increases are expected to remain above pre-pandemic levels until at least 2026 [2][3][6] - Economists predict that core Personal Consumption Expenditures (PCE) inflation will stabilize but not return to the Federal Reserve's target of 2% for some time [5][6][11] Inflation Trends - Prior to 2021, core PCE inflation typically rose less than 2% annually, but surged to 5.6% in 2022, the highest in nearly four decades [3] - As of September, core PCE inflation was reported at 2.8%, indicating a slight increase over the year [5][11] Economic Predictions - The median forecast from economists suggests core PCE inflation will be 2.4% by the end of 2026, reflecting a cooling trend but still above pre-pandemic levels [6] - Deutsche Bank economists predict inflation will remain at 2.25% or more through at least 2028, despite lower tariff rates and a slowdown in housing costs [7] Varied Forecasts - Oxford Economics forecasts a more optimistic scenario, expecting core PCE inflation to cool to 2.2% by the end of 2026, driven by decelerating housing costs [8][9] - Conversely, Bank of America predicts core PCE inflation will remain at 2.8% through 2026, attributing this to ongoing tariff impacts [12]

Core Insights - The restaurant industry, particularly steakhouses, has been significantly impacted by changes in work patterns due to the rise of remote and hybrid work, leading to decreased office attendance and reduced foot traffic in office-dense areas [2][3] - McCormick & Schmick's, a steak and seafood chain, has experienced a drastic decline in locations from 60 at its peak to just 13, primarily due to these changing consumer behaviors and economic pressures [4][8] Industry Trends - The Federal Reserve of Kansas City noted that reduced in-person work has led to increased office vacancy rates, negatively affecting businesses that cater to office workers [2] - The New York Fed reported that many service establishments in city centers remained closed even after lockdowns, indicating a slow recovery for businesses reliant on office traffic [3] Company Performance - McCormick & Schmick's reported a 10.2% decline in sales in 2024, totaling $82.1 million, while closing 8.7% of its locations, reflecting broader struggles within the industry [8] - Other chains, such as Outback Steakhouse, are also closing locations, with 41 underperforming sites shut down as part of a strategic review [11] Consumer Behavior - A significant portion of American consumers are cutting back on discretionary spending, with 54% expecting to spend less on dining out in 2025 compared to 2024 [15] - The "lipstick effect" suggests that while consumers may indulge in small luxuries, steakhouses are increasingly viewed as a luxury that many are willing to forgo [13][14] Economic Factors - Inflation and high interest rates are straining household budgets, leading to increased credit card debt and declining consumer sentiment [17] - The cumulative economic pressures are making it difficult for consumers to justify spending on high-priced dining options, such as steakhouses [14]

Economic Challenges - Many Americans are struggling to accumulate sufficient savings and afford emergency expenses as costs for home repairs and hospital stays increase faster than inflation [1] - In 2024, 13% of adults reported being unable to pay a $400 emergency expense, while 37% indicated they would cover it by borrowing money or selling items [5] Retirement Savings Impact - The percentage of employees taking hardship withdrawals from retirement accounts more than doubled from 2% in 2018 to about 5% in 2024 [2][10] - Hardship withdrawals, while not penalized, reduce retirement savings and cannot be repaid, potentially delaying retirement or reducing future funds [4] Rising Costs of Emergencies - Vehicle maintenance and repair costs rose by 7.7% in September 2025 compared to September 2024, significantly outpacing general inflation of 3.0% [7] - The average cost of car repairs reached $838 in early 2025, influenced by supply chain disruptions and tariffs on parts [8] - Hospital stay costs increased by nearly 25% over the past five years, with hospital service costs rising almost twice as fast as general inflation [9][11] Home Repair Expenses - Increased frequency and severity of natural disasters have led to higher spending on home repairs [13] - From July 2024 to July 2025, the cost of home reconstruction, including materials and labor, increased by 4.2% due to rising prices from tariffs [14]

Core Viewpoint - Tyson Foods Inc. is facing challenges due to high beef prices and legal issues, but it has received a positive outlook from S&P and Fitch due to debt reduction and profitability improvements in chicken production [2][3]. Company Overview - Tyson Foods Inc. is one of the largest packaged food companies in America [2]. - The company's shares have remained flat year-to-date [2]. Legal and Regulatory Issues - The company is under investigation for price fixing as demanded by President Trump [2]. - Tyson Foods paid $85 million in October to consumers following a lawsuit related to similar allegations [2]. Financial Outlook - S&P has changed its outlook for Tyson Foods to Positive and Stable, affirming a BBB credit rating [2]. - Fitch also reiterated the BBB rating and Stable outlook in December, noting potential beef losses of up to $500 million in fiscal year 2026 [2]. Market Conditions - Beef prices are at record highs due to low cattle herd numbers, which are the lowest in 50 years [3]. - Beef prices have increased by 21% for the year and 7% for the month [3]. - Tyson Foods is rationalizing its workforce to improve profitability amidst these challenges [3].

Core Viewpoint - The stock market has experienced significant gains over the past three years, but concerns are rising about a potential market crash in 2026, primarily driven by inflation and rising bond yields rather than AI stocks [1][2]. Inflation Concerns - Inflation peaked around 9% in 2022, and despite the Federal Reserve's efforts, the latest Consumer Price Index (CPI) shows inflation at approximately 2.7%, still above the Fed's target of 2% [5]. - Many economists believe the actual inflation rate may be higher due to incomplete CPI reporting, which could lead to consumer perceptions of persistent high prices [6]. Federal Reserve's Dilemma - The Federal Reserve faces a challenging situation where lowering interest rates could support the labor market but risk increasing inflation, while raising rates could control inflation but harm employment and slow economic growth [7]. Bond Yields and Market Fragility - Higher inflation is likely to lead to increased bond yields, with the U.S. 10-year Treasury bill currently yielding around 4.12%. Yields approaching 4.5% or 5% could create market instability [8]. - Rising yields result in higher borrowing costs for consumers and the government, which can negatively impact stock valuations as the cost of capital increases [9][10]. Future Inflation Projections - Some Wall Street banks predict inflation will rise above 3% in 2026 before declining, with JPMorgan Chase forecasting 3% inflation peaking and Bank of America predicting a peak of 3.1% [11]. - If inflation peaks and shows signs of deceleration, the market may stabilize; however, high inflation can become entrenched, leading to persistent high prices that affect consumer behavior [12]. Market Timing Advisory - Predicting inflation trends in 2026 is uncertain, and attempting to time the market is discouraged. A sustained rise in inflation and yields could significantly impact market stability [13].

Mortgage Market - The average rate on the benchmark 30-year fixed mortgage decreased to 6.15% from 6.18%, marking the lowest level of 2025 [1] - The average 30-year fixed-rate mortgage started the year around 7%, indicating a significant decline in borrowing costs [2] Housing Market - Home sales in November rose by 3.3% across all U.S. regions, suggesting an improvement in the housing market [3] - Lower borrowing costs may enhance housing affordability, which has been a concern for the economy [5] Economic Indicators - The Bureau of Economic Analysis reported a third-quarter GDP growth of 4.3%, surpassing economists' expectations of 3.3% [6] - The consumer price index rose by 0.2% in November month-over-month and 2.7% year-over-year, both figures lower than economists' forecasts [7] - In November, employers added 64,000 jobs, with the unemployment rate increasing to 4.6%, the highest since September 2021 [8]

Summary of FOMC Minutes Industry Overview - The document pertains to the Federal Open Market Committee (FOMC) and its monetary policy decisions, particularly regarding interest rates and inflation expectations. Core Points and Arguments 1. **Interest Rate Decisions**: - Most participants supported lowering the fed funds rate in December due to increased downside risks to the labor market and lower or unchanged upside risks to inflation. A few participants had a finely balanced view on this decision, while some preferred to keep the rate unchanged due to concerns about stalled inflation progress [2][3][4] 2. **Inflation and Employment Risks**: - Participants generally believed that upside risks to inflation remained elevated, while downside risks to employment had increased since mid-2025. Most participants thought further rate cuts would be appropriate over time if inflation slowed as expected [3][4] 3. **Labor Market Outlook**: - The labor market was expected to stabilize under appropriate monetary policy, but the outlook remained uncertain. Most participants saw risks to employment skewed to the downside, with rising unemployment among vulnerable groups and potential for higher layoffs [4] 4. **Inflation Projections**: - Participants expected inflation to remain somewhat elevated in the near term before gradually declining to the Fed's 2% target. Many anticipated that tariff pressures on core goods inflation would subside, and a majority expected disinflation in housing services [8] 5. **GDP Growth Forecasts**: - The Fed staff projected moderately faster GDP growth through 2028 compared to previous forecasts, reflecting easier financial conditions and stronger potential output growth. The inflation forecast was slightly lower for 2025 and 2026, but risks to growth and labor market forecasts were skewed to the downside [8] 6. **Reserve Management Purchases**: - The FOMC decided to start reserve management purchases (RMPs) at the December meeting, with participants generally supporting flexibility in adjusting the size and timing of RMPs to accommodate demand for Fed liabilities. RMPs were emphasized as a tool for interest rate control and market functioning [9] Other Important Content - The document includes various disclosures and regulatory information related to Goldman Sachs and its analysts, emphasizing the importance of considering this report as one factor in investment decisions [6][10][11][12][20]

Core Insights - Dividend Kings are stocks that have increased dividends for 50 or more consecutive years, providing stability and reliability for long-term investors. With easing inflation, certain Dividend Kings may perform particularly well [1]. Group 1: Federal Realty Trust (NYSE: FRT) - Lower inflation could lead to a higher valuation for Federal Realty Trust, as REITs are sensitive to interest rates, which are influenced by inflation. A recent Consumer Price Index report indicates easing inflation, which may benefit Federal Realty Trust shares if the trend continues [3]. - If lower inflation results in the Federal Reserve lowering interest rates, Federal Realty Trust could experience a rerating. The current forward dividend yield is 4.42%, compared to a historical range of 3% to 4% when interest rates were lower, suggesting potential for moderate valuation expansion [4]. - Easing inflation could also positively impact the retail sector, which is crucial for Federal Realty Trust's operations, potentially increasing its net operating income and allowing for improved dividend growth if cash flow enhances [5]. Group 2: Hormel Foods (NYSE: HRL) - Hormel Foods has a history of 60 consecutive dividend increases, but recent years have seen weak dividend growth due to high inflation affecting profitability. A return to lower inflation could enhance earnings, potentially driving dividend growth and share price appreciation [6][7]. Group 3: Target (NYSE: TGT) - Lower inflation may improve the prospects for a successful turnaround for Target, as easing inflationary pressures could positively influence the company's performance [6].