Inflation Data - Consumer prices rose 2.8% in November from a year earlier, up from a 2.7% annual pace in October, indicating persistent inflationary pressures [1][5] - Core prices, excluding food and energy, also increased by 2.8% year-over-year in November, slightly higher than October's 2.7% [1][4] Consumer Spending - Consumer spending climbed 0.5% in November from the previous month, suggesting a healthy economic growth pace in the final quarter of the year [2] - The economy expanded at a robust 4.4% annual rate in the July-September quarter, marking the fastest growth in two years [6] Federal Reserve Implications - The latest figures suggest that the Federal Reserve is less likely to reduce its key interest rate in the upcoming meeting, as the economy shows solid footing despite a cooling labor market [3][7] - Economists believe there is little urgency for the Fed to cut rates if growth remains strong and inflation continues above target levels [4]

Core Viewpoint - The PCE inflation rate has increased to 2.8% following the government shutdown, indicating potential economic implications and shifts in consumer spending patterns [1] Group 1: Economic Impact - The rise in PCE inflation suggests that inflationary pressures are persisting in the economy, which could influence monetary policy decisions moving forward [1] - The government shutdown may have contributed to disruptions in economic activity, affecting consumer confidence and spending [1] Group 2: Consumer Behavior - An increase in inflation could lead to changes in consumer behavior, as households may adjust their spending in response to rising prices [1] - The impact of inflation on disposable income could result in a shift towards more essential goods and services, potentially affecting various sectors differently [1]

Core Viewpoint - Turkey's central bank has continued its trend of reducing borrowing costs, marking the fifth consecutive meeting where the benchmark rate has been cut to 37% from the previous 38.0% [1] Group 1 - The central bank's decision reflects an ongoing strategy to lower interest rates in response to economic conditions [1] - The reduction in the benchmark rate is part of a broader monetary policy aimed at stimulating economic growth [1] - This move may influence borrowing and spending behaviors within the Turkish economy [1]

Core Viewpoint - The Vanguard Short-Term Treasury Index Fund ETF Shares (VGSH) may see benefits in 2026 if employment conditions deteriorate and the Federal Reserve decides to cut interest rates again [1] Group 1 - The ETF is positioned to potentially gain from a favorable price channel under adverse employment conditions [1]

Economic Overview - The Federal Reserve is unlikely to implement a rate cut in January, having indicated only one potential cut in its last meeting, but investors are hopeful for more cuts following recent economic data showing easing inflation in late 2025 [1][7] - High inflation has been a significant challenge for the Federal Reserve, compounded by a shrinking labor market raising concerns about economic weakness; however, recent data indicates that inflation eased in November while the labor market remains stable [2][4] Inflation Data - The Bureau of Labor Statistics reported that the consumer price index (CPI) rose by 0.2% in November, lower than the expected 0.3% increase; year-over-year, CPI climbed 2.7%, below the forecast of 3.1% [4] - Core CPI, excluding food and energy, also increased by 0.2% sequentially and 2.6% year-over-year, both figures beating consensus estimates of 0.3% and 2.8% respectively [5] - Food prices increased by 2.6% year-over-year, while shelter costs, which make up one-third of the CPI, rose by 3%; however, shelter costs have eased recently, suggesting inflation may be on track to meet the Fed's 2% target [6] Consumer Discretionary Stocks - Four consumer discretionary stocks are recommended for purchase: Amer Sports, Inc. (AS), Cimpress plc (CMPR), Planet Fitness, Inc. (PLNT), and Airbnb, Inc. (ABNB) due to positive earnings estimate revisions and favorable market conditions [2][10] - Amer Sports, Inc. has an expected earnings growth rate of 97.9% for the current year, with a Zacks Consensus Estimate improvement of 10.7% over the last 60 days, currently holding a Zacks Rank 1 [8] - Cimpress plc is expected to see over 100% earnings growth this year, with an 8.3% improvement in the Zacks Consensus Estimate over the past 60 days, currently holding a Zacks Rank 2 [11] - Planet Fitness, Inc. has an expected earnings growth rate of 16.2% for the current year, with a 0.7% improvement in the Zacks Consensus Estimate over the last 60 days, currently holding a Zacks Rank 2 [12][13] - Airbnb, Inc. has an expected earnings growth rate of 1.2% for the current year, with a 0.2% improvement in the Zacks Consensus Estimate over the last 60 days, currently holding a Zacks Rank 2 [14]

Economic Indicators - US November retail sales increased by +0.6% month-over-month, surpassing expectations of +0.5% [1] - US November PPI final demand rose by +3.0% year-over-year, exceeding expectations of +2.7% [1] - US December existing home sales rose by +5.1% month-over-month to a 2.75-year high of 4.35 million, stronger than the expected 4.22 million [4] Stock Market Performance - The S&P 500 Index decreased by -0.96%, the Dow Jones Industrials Index fell by -0.57%, and the Nasdaq 100 Index dropped by -1.53% [4] - Weakness in chip makers and the Magnificent Seven technology stocks is negatively impacting the broader market [3][15][16] - Energy producers are experiencing gains, with WTI crude oil reaching a 2.5-month high [17] Federal Reserve Commentary - Minneapolis Fed President Neel Kashkari indicated that the US economy shows "resilience" and does not see the need for an interest rate cut this month [5] - Philadelphia Fed President Anna Paulson mentioned potential for modest rate adjustments later in the year if inflation moderates and growth stabilizes [6] International Trade - Better-than-expected trade news from China, with December exports rising by +6.6% year-over-year and imports increasing by +5.7% year-over-year, supporting global growth prospects [7] Earnings Season - Q4 earnings season is beginning, with S&P earnings growth expected to rise by +8.4%, and +4.6% excluding the Magnificent Seven technology stocks [10]

Core Viewpoint - Corporate earnings are projected to rise close to 12% according to Anastasia Amoroso, chief investment strategist of Partners Group [1] Group 1: Corporate Earnings - Corporate earnings could see an increase of nearly 12% [1] Group 2: Federal Reserve and Interest Rates - The Federal Reserve has the potential to cut interest rates [1] Group 3: Precious Metals - There is a discussion on the outperformance of precious metals [1]

Trade and Tariffs - President Trump announced a 25% tariff on goods from any country conducting business with Iran, affecting major trading partners like China, the UAE, India, and Turkey [3][4] - China is identified as the top global importer of Iranian crude, which may face increased costs due to the new tariffs [3] Federal Reserve and Interest Rates - Federal Reserve Bank of New York President John Williams indicated there is no urgency for a fourth consecutive interest rate cut, with the next meeting scheduled for the end of the month [5][6] - The Federal Open Market Committee (FOMC) has already reduced the federal funds rate by a cumulative 75 basis points last year, moving towards a neutral monetary policy stance [6] Aldi's Expansion Plans - Aldi plans to open over 180 new stores across 31 states by the end of 2026, celebrating its 50th anniversary in the U.S. [7][8] - This expansion will increase Aldi's total U.S. store count to nearly 2,800, with a target of 3,200 stores by the end of 2028 [8] - Aldi is also expanding its distribution network by 20% with new centers planned in Florida, Arizona, and Colorado over the next three years [9]

Market Overview - World shares exhibited mixed performance with U.S. futures declining slightly ahead of the U.S. consumer price update [1] - In early European trading, the FTSE 100 rose less than 1% while Germany's DAX and France's CAC 40 fell by 0.2% and 0.5% respectively [2] Inflation and Consumer Prices - U.S. consumer prices are expected to have risen by 2.6% in December compared to the previous year, according to economists' estimates [2] - Inflation pressures are likely to remain high due to increased costs in electricity, groceries, and clothing [3] Regional Market Performance - Asian shares mostly gained, with Japan's Nikkei 225 surging 3.1% to a record close of 53,549.16, driven by technology-related stocks [3] - Hong Kong's Hang Seng index advanced 0.9% to 26,848.47, while shares of GigaDevice Semiconductor jumped 54% in its trading debut [5] - South Korea's Kospi closed 1.5% higher at a record 4,692.64, and Australia's S&P/ASX 200 gained nearly 0.6% [5] U.S. Federal Reserve and Interest Rates - Concerns over the Federal Reserve's independence in setting interest rates were somewhat mitigated by investor expectations of potential rate cuts [6] - Tensions between President Trump and Fed Chair Jerome Powell escalated following a subpoena from the Department of Justice regarding Powell's testimony [7] - Trump has advocated for further interest rate cuts, which could benefit stock prices by lowering borrowing costs [8] Company-Specific Developments - Alphabet, Google's parent company, saw a 1% increase in market value, surpassing $4 trillion, following a deal with Apple to enhance Siri using Google's technology [8] - Credit card companies faced losses after Trump proposed a cap on credit card interest rates, impacting their profit margins [9]

Core Insights - The upcoming December CPI data is expected to show persistent inflation pressures, with overall CPI projected to rise by 0.3% month-over-month and 2.7% year-over-year, while core CPI is also expected to increase by 0.3% month-over-month and 2.7% year-over-year [1][4] Group 1: Economic Context - The Cleveland Fed's Nowcast model predicts a slightly lower core CPI growth of 0.22%, but the mainstream view on Wall Street suggests inflation has not significantly cooled [4] - The government shutdown last year has complicated data interpretation, as some data collection was disrupted, leading to potential upward bias in December's data due to comparisons with earlier prices [5] - November data may have been artificially depressed due to early holiday promotions, with expectations of a mechanical rebound in December core prices as these effects fade [6] Group 2: Federal Reserve Policy Outlook - Market expectations indicate a 95% probability that the Federal Reserve will maintain interest rates in January, supported by stable labor market indicators [7] - The absence of a sharp deterioration in the labor market suggests the Fed is unlikely to rush into rate cuts while inflation remains close to 3% [7] - Political pressures may also influence the Fed's cautious stance, as there are concerns about potential investigations into Fed Chair Powell by the Trump administration [7] Group 3: Long-term Inflation Outlook - Companies are planning to pass on tariff-related cost increases to consumers starting in early 2026, which could trigger a new wave of price increases [8] - Shelter inflation remains the largest component of CPI, and if it does not decrease as expected, it will continue to support high core inflation levels [8] Group 4: Market Reactions - Despite potential inflation data being slightly above expectations, the investment community's reaction has been relatively muted, with a prevailing sentiment of a "soft landing" for the economy [9] - The December CPI report is likely to confirm the challenges of achieving the final stages of inflation reduction, with various factors contributing to the Fed's patience in resuming rate cuts, potentially delaying until mid-2026 [9]