Market Overview - Markets are experiencing a comeback driven by cooler inflation data, with NASDAQ showing significant gains, particularly influenced by AI and major tech stocks like Micron [1] - The recent inflation report has been viewed positively, despite some concerns regarding data quality, indicating a potential disinflation trend in the economy [2][3] Economic Indicators - Key factors contributing to disinflation include oil, labor, and shelter, with shelter data in the CPI report being particularly encouraging [3] - The market has seen one of the largest six-month returns in history, with technology stocks rising approximately 70% from their lows [5] Market Trends - The NASDAQ has been fluctuating between 22,000 and 24,000, while the S&P 500 has been stuck between 6,500 and 6,900, indicating a period of consolidation [3][4] - Historical analysis suggests that following bull markets, gains are typically observed in the subsequent year, with seven instances since 1950 showing this trend [6] Earnings Outlook - Projections indicate that the S&P 500 could rise more than 10% by the end of next year, with a target of 7,850 [8] - Strong earnings growth is anticipated for the upcoming year, the best since 2021, with Q4 estimates showing positive trends [8][9] - There is an expectation of modest multiple expansion due to rising margins, contradicting the notion of multiple compression in the current market environment [10]

Now, as I mentioned, markets staging a comeback today thanks to cooler inflation data. NASDAQ's the big standout, pushed higher by AI, MAG7, and of course, Micron. Is this a sign we're going to see a rotation back into these names or have investors moved on.Joining me now are Keith Learner from Truest Wealth and Warren Pives from 314 Research. Guys, welcome. Warren, how good was this inflation report versus what some of the fears were out there.Disinflation perhaps. Yeah, thanks for having me, John. I I thi ...

Market Performance - Stocks rebounded strongly on Thursday, with the Nasdaq leading the recovery, jumping 313.04 points or 1.4 percent to 23,006.36 [1] - The S&P 500 advanced 53.33 points or 0.8 percent to 6,774.76, while the Dow closed up 65.88 points or 0.1 percent at 47,951.85 [1] Economic Indicators - The Labor Department reported a slowdown in the annual rate of consumer price growth, with consumer prices in November up by 2.7 percent year-over-year, down from 3.0 percent in September [2] - Core consumer prices, excluding food and energy, also slowed to 2.6 percent in November from 3.0 percent in September, contrary to expectations of remaining unchanged [3] Sector Performance - Semiconductor stocks rebounded significantly, with the Philadelphia Semiconductor Index surging by 2.5 percent, driven by Micron Technology's 10.2 percent increase after better-than-expected quarterly results [6] - Software and networking stocks also showed strength, contributing to the Nasdaq's rise [6] - Airline stocks performed strongly, while energy stocks declined after a previous rally [7] International Markets - In overseas trading, the Asia-Pacific region showed mixed performance, with Japan's Nikkei 225 Index down by 1.0 percent and China's Shanghai Composite Index up by 0.2 percent [7] - Major European markets moved upward, with the German DAX Index increasing by 1.0 percent, the French CAC 40 Index by 0.8 percent, and the U.K.'s FTSE 100 Index by 0.7 percent [8] Bond Market - Treasuries rose in response to the inflation data, leading to a decrease in the yield on the benchmark ten-year note by 3.5 basis points to 4.116 percent [9]

Economic Outlook - The consensus in the market suggests that next year will see robust economic growth, supported by fiscal and monetary tailwinds, as well as deregulation [7] - Clarity around trade policy and a government focused on economic performance ahead of midterm elections may reduce the need for significant Federal Reserve rate cuts [7] Inflation Trends - Current inflation data is viewed with skepticism, and there is an expectation of a higher inflation number in the next report due in mid-January [4] - Despite concerns, there is a belief that the pace of inflation is moderating, indicating a disinflationary trend [4] Federal Reserve Policy - The Federal Reserve's approach to interest rates will depend on economic growth and inflation rates, with modest rate cuts possible if labor market softness is observed [8] - The Fed is unlikely to make drastic changes unless there is significant evidence of economic downturns, particularly in small businesses, which have not been hiring [8][9] Small Business Impact - Small businesses, which account for 46% of employment in the U.S., are a key area to monitor for hiring trends and overall economic health [9] - The NFIB small business sentiment survey will be an important indicator; stabilization and improvement in hiring from small companies could signal a bullish market outlook [10]

Inflation & Pricing - Gradual pass-through of tariff costs onto CPI inflation and consumer prices, with core goods prices rising at a 14% clip annually [2] - Services less energy are showing disinflation, rising at a 3% pace, driven by shelter cost disinflation, but this may be overstated [3][4] - Alleviating tariff cost pressures is a key lever to reduce pressures on businesses and potentially lower prices for consumers [9] - Since 2019, inflation has accumulated to approximately 25% [10] Economic Outlook & Growth - The US economy is supported by three "Apillars" of growth: affluent consumers, AI investment, and asset price appreciation (stock market gains) [11] - These pillars create a virtuous cycle but also represent a narrow and fragile foundation, with risks of an AI-related bubble and stock market correction [12][13][14] - Expects US growth of 19% next year, roughly on par with this year, supported by this narrow foundation [14] - Consumer spending is expected to grow at a moderate 15% pace [15] - Greater investment in AI-connected areas is anticipated [16] Economic Polarization - Expects greater polarization within and between economies, with the well-offs and AI-focused businesses driving most of the spending and investment [16][17]

Core Insights - US inflation slowed more than expected in November, with the headline Consumer Price Index (CPI) rising 2.7% year over year, below market expectations of 3.1% [1] - Core CPI, excluding food and energy, increased 2.6% year over year, also missing forecasts of 3.0%, indicating a notable deceleration in price pressures [2] Market Implications - The softer-than-expected inflation data suggests that inflation is cooling faster than anticipated, which may lead to a shift in Federal Reserve policy towards a more accommodative stance sooner than previously expected [3] - Markets are likely to interpret the data as supportive of rate cuts, particularly for early 2026, as lower inflation reduces pressure on real yields and the US dollar, benefiting risk assets [4] Crypto Market Reaction - A downside inflation surprise typically acts as a macro tailwind for the crypto market, improving liquidity conditions and risk appetite [5] - Short-term price action in the crypto market will depend on how quickly markets adjust Fed policy expectations and whether follow-through buying occurs after the initial reaction [5]

China’s export of excess domestic capacity is adding to the disinflationary impulse in India, and may be helping RBI keep rates lower for longer. Read for free with your email on what could move markets today https://t.co/OBpKBeZM34 ...

Core Viewpoint - The current sentiment in the energy sector is mixed, with some analysts viewing the situation as a potential value trade while others express concerns about a value trap, particularly in relation to crude oil prices and their impact on energy stocks [1][3]. Group 1: Crude Oil Market Outlook - Analysts predict that crude oil prices could decline to around $40 per barrel, with some suggesting it may even drop lower, influenced by geopolitical factors and market dynamics [4][11]. - OPEC's decision to reverse production cuts and increase supply, along with non-OPEC countries like Brazil and the US producing at record levels, is contributing to a potential glut in the market [5][10]. - The overall sentiment is that the energy sector may face challenges, with expectations of lower commodity prices impacting the profitability of energy companies [5][8]. Group 2: Energy Stocks and Investment Strategy - Despite the challenges, there is still perceived value in major energy companies such as Chevron and ExxonMobil, particularly due to their operational efficiencies and lower break-even costs [3][5]. - The energy sector constitutes only 2.7% of the S&P 500, indicating limited influence on the broader market, yet the dividend yields from these stocks may become more attractive in a lower interest rate environment [6][11]. - The outlook for energy stocks remains cautious, with analysts suggesting that owning these stocks outright may be difficult in a declining oil price scenario [8][10]. Group 3: Broader Economic Implications - The declining oil prices may have positive implications for other sectors, such as airlines and industrials, potentially benefiting from lower energy costs [9][10]. - A disinflationary trend could lead to a more accommodative Federal Reserve, which may further influence investment strategies across various sectors [9][10].

Core Viewpoint - Federal Reserve Governor Steven Myron advocates for sharper rate cuts, arguing that current policy is too tight and could negatively impact the labor market and increase unemployment [3][10]. Inflation Measurement - Myron believes that underlying inflation is closer to the Fed's target than commonly perceived, citing that much of the perceived inflation excess is due to measurement quirks [4][10]. - The housing market's lagging measurement of inflation is a significant factor, as rent adjustments occur infrequently, leading to a delayed reflection of current market conditions [5][6]. Contributing Factors to Inflation - Myron highlights that market rents have been growing at about 1% for the past few years, suggesting a downward convergence in shelter inflation is forthcoming [6]. - Imputed prices for non-market services, such as portfolio management fees, have contributed approximately 25 basis points to inflation over the last year, despite a long-term downward trend in actual fees [8][10]. Disagreement with Tariff-Induced Inflation - Myron disagrees with Fed Chair Powell's assertion that tariffs are a major driver of persistent inflation, arguing that he does not see tariffs as significantly impacting inflation levels [11][12].

RT Bloomberg Opinion (@opinion)@Claudia_Sahm @AllisonSchrager “There’s a disinflationary aspect to AI. You could make that case, but for the Fed to actually act on it, they’ll need to see some evidence,” @Claudia_Sahm says.“I don’t know that’s a 2026 phenomenon.”https://t.co/UP7Z2ybT22 ...