Economic Overview - The Conference Board's consumer confidence index has declined for the fifth consecutive month, indicating a negative trend in consumer sentiment [2] - The index consists of two components: the present situation and the expectations index, with the latter showing a significant shift as consumers now express concerns about future economic conditions [2][3] Consumer Confidence Insights - For the first time this year, the expectations index has flipped, with consumers feeling that their current situation is good but anticipating a decline in the future [3] - Consumer confidence varies significantly by income level; those earning below $125,000 annually reported a decrease in confidence, while those above this threshold experienced an increase [4] Economic Disparities - There are two distinct economic experiences: high-income consumers are driving spending, while lower-income consumers are feeling the strain [4][5] - The current economic landscape is characterized by rising food prices despite decreasing gas prices, leading to consumer disappointment regarding inflation expectations [6] Small Business Challenges - Small businesses, which often operate on personal credit, are facing significant challenges, contrasting with larger businesses that are performing well [8] - The burden of tariffs is highlighted as a regressive tax impacting lower-income Americans and small businesses, suggesting a need for potential policy adjustments [7][9] Labor Market Dynamics - The labor market is showing signs of weakness, particularly in the service sector, which is unusual for a traditionally manufacturing-driven economy [11] - Despite the weakening labor market, productivity in the service sector is contributing positively to economic indicators, indicating a shift in economic structure [11]

Consumer Confidence & Economic Outlook - The Conference Board's consumer confidence index has declined for the fifth consecutive month, signaling potential economic concerns [2] - Consumer confidence is diverging based on income levels, with those below $125,000 annually showing decreased confidence, while those above that level show increased confidence, indicating a K-shaped economic recovery [3][4] - Expectations for the future (expectation index) appear to have bottomed out, with consumers starting to feel the impact of current economic conditions [3] Inflation & Pricing - Consumers express concern that prices, particularly food prices, are not decreasing as expected, despite discussions of inflation coming down [6] - Tariffs are considered a regressive tax, impacting lower-income Americans and are reflected in prices [7] Small Business & Economic Sectors - Small businesses are facing challenges, with owners often relying on personal credit, while large businesses are performing well, highlighting a disparity between Main Street and larger corporations [8] - The current economy is service-driven, showing productivity gains in the service sector despite a weakening labor market, differing from past manufacturing-driven economies [11] Potential Economic Drivers - Larger tax refunds and potential increases in Obamacare health premiums could influence consumer spending in the near future [4] - Decreasing gas prices are providing some relief to consumers, while rising food prices continue to be a concern [5]

Economic Growth - GDP exceeded 4% [1] - Inflation is near 2% [1] Trade Policy Impact - Tariffs did not cause a Great Depression [1] - Shelves are not empty, and the economy did not crater [1]

Core Viewpoint - The Federal Reserve is facing significant challenges in achieving its dual mandate of maximum employment and stable prices, leading to divisions within the central bank and complicating future monetary policy decisions [6][19]. Group 1: Federal Reserve Leadership Changes - Fed governor Adriana Kugler stepped down, and Stephen Miran was appointed to complete her term, raising concerns about the independence of the Fed [1] - President Trump expressed frustration with the Fed's interest rate policies, leading to tensions and threats regarding the removal of Fed Chair Jerome Powell [2] - A new Fed chair is expected to face difficulties in building consensus, especially if inflation remains high while the job market is soft [4][20] Group 2: Economic Conditions and Monetary Policy - The Fed has cut interest rates three times in 2025, but future cuts may be complicated by ongoing inflation concerns and a cooling job market [5][13] - The impact of tariffs on inflation has been less severe than anticipated, with some Fed officials expecting inflation to peak in early 2026 [12][18] - The labor market showed signs of cooling, prompting discussions about preemptive rate cuts to support employment [8][9] Group 3: Future Outlook - Officials anticipate only one more rate cut in 2026, as inflation remains above the 2% target and economic growth is expected to rebound [17] - The upcoming year may see continued divisions within the Fed, particularly if the new chair advocates for lower rates while others oppose [21][22] - The uncertainty surrounding official data due to the government shutdown is complicating the Fed's ability to make informed policy decisions [10][14]

Market Outlook - The market is expected to experience a period of clarity and normalization in 2026, following a foggy and uncertain 2025, which is reflected in current market highs [2][6] - The administration's policies, particularly regarding tariffs, have positively influenced GDP and market performance, contradicting previous doomsday scenarios [4][6] Risks and Challenges - Policy risks remain a concern, but the focus is shifting towards unforeseen risks that could impact market optimism [3][4] - Potential inflationary pressures from tariffs are anticipated in the first quarter, but they are considered manageable within a strong economy [5][6] Monetary Policy - There is ongoing discussion about the appropriateness of cutting rates next year, especially with current GDP levels, as the Fed is on a trajectory to lower rates [7][9] - The administration is exploring innovative fiscal reforms, which may influence future monetary policy and economic conditions [8][9] Economic Innovations - The potential for transformative technologies such as longevity, AI, and power is highlighted, suggesting that these innovations could lead to a robust economy and possibly higher interest rates in the future [9]

Tax Policy Changes - The child tax credit received a $200 boost to the maximum amount for the 2025 tax year [2] - Individuals with tipped income can deduct that on their tax return, effective for 2025 [3] - A new $6,000 deduction per senior is available, subject to income thresholds [5][6] Impact of Tariffs - In 2025, tariffs amount to an estimated $1,100 burden per US household on average [7][8] - If tariffs remain in effect, the burden is projected to grow to about $1,400 per household next year [8] - Customs duties on Christmas lights alone have risen to $45 million this year [9] - Tariffs on holiday items have climbed to upwards of $500 million through the first 9 months of 2025 [11] - Toys and board games are subject to tariffs, increasing their cost [13][15] Offsetting Factors - Tax cuts passed by Congress last year will result in larger refunds [16] - The Treasury Department will adjust withholding tables for lower taxes from each paycheck [16] - Tax cuts in aggregate have a larger revenue impact than the tariff hikes [17]

Market Performance - The S&P 500 index funds returned over 18% in 2025, marking their third consecutive year of significant returns [2] - Despite initial fears from tariff announcements, the market rebounded, aided by strong profit reports and three interest rate cuts by the Federal Reserve [5] Tariff Impact - Trump's unexpected tariffs in April led to a nearly 5% drop in the S&P 500 on April 3, followed by a 6% drop the next day due to fears of a trade war with China [3] - The tariffs also caused a decline in the U.S. dollar and affected the U.S. Treasury market [3] Federal Reserve Relations - Trump's lobbying for lower interest rates created tension, as the Fed traditionally operates independently from political influence [6] - The Fed maintained steady rates through August despite inflation concerns, which drew criticism from Trump [7] Global Market Trends - Foreign markets outperformed U.S. stocks, with South Korea's KOSPI experiencing its largest gain in over two decades, driven by technology investments [11] - Japan's Nikkei 225 and Germany's DAX also saw double-digit gains, supported by national elections and stimulus plans [12] Cryptocurrency Developments - Bitcoin experienced volatility, initially dropping due to trade policy fears but later rebounding as support for digital assets grew [14][15] - Bitcoin peaked at around $125,000 in early October but fell to approximately $89,400, down 28% from its peak [16] Future Outlook - Analysts expect S&P 500 earnings per share to rise by 14.5% in 2026, an acceleration from the 12.1% growth estimated for 2025 [17] - Concerns remain regarding the profitability of investments in artificial intelligence technology, which may affect stock prices [18] - Strategists at Vanguard predict U.S. stocks may yield annualized returns of only 3.5% to 5.5% over the next decade [19]

Consumer Confidence and Economic Outlook - Consumer confidence data for December came in at 89.1%, below the expected 91, but higher than November's reading, which was the second lowest since the pandemic [6][8] - The current conditions index has significantly declined, indicating consumers are feeling worse about their financial situation, with a notable drop into negative territory for the first time in four years [11][12] - A slowdown in economic growth is expected going into 2026, influenced by high inflation and tariffs impacting consumer prices [14][19] Restaurant Industry Trends - The restaurant industry is experiencing a shift, with a 10% move away from dining out towards grocery shopping due to high prices, particularly in the QSR burger segment, which has seen over 50% price increases since 2019 [44][45] - Domino's Pizza is identified as a top pick for 2026, having only increased prices by about 27% since 2019, making it more affordable compared to QSR burger chains [47][48] - The value meal strategy is becoming crucial as QSR chains like McDonald's aim to regain lost customers by suppressing check growth to align with grocery inflation [51] Venture Capital and AI Investment - In 2025, 40% of deals and 65% of capital invested were in AI companies, indicating a strong focus on AI across various sectors, including life sciences and fintech [79][80] - The investment environment for AI companies is expected to remain robust in 2026, with a quality gap emerging where only companies meeting high growth benchmarks will attract significant funding [82][83] - The IPO landscape is anticipated to be favorable for sectors like crypto and AI, with companies like Circle benefiting from regulatory support [84][86] Tax Implications for Consumers - The child tax credit has been increased by $200, and a new $6,000 deduction for seniors will be available, providing some tax relief for families in 2026 [21][25] - Tariffs are estimated to cost US households an average of $1,100 in 2025, expected to rise to $1,400 in 2026, impacting consumer spending and sentiment [27][29] - Despite tax cuts, the burden of tariffs may lead consumers to feel worse off, as the perception of affordability is affected by rising prices [40][42] Future of Circle and Economic Infrastructure - Circle's CEO envisions the company playing a significant role in the future economic infrastructure, focusing on AI-driven productivity gains and the frictionless exchange of value [70][72] - The company aims to be foundational to a new economic system that integrates AI and enhances global economic prosperity through innovative financial solutions [75][76]

Joining us now here at Post9 is John Lvalo, senior US home building and building products equity research analyst at UBS. Uh John, any any thoughts on kind of what we could see from this this big new plan that could impact affordability. >> Thanks Leslie.Yeah, so I think there's a few things. It could be short-term, intermediate, and then housing emergency. In the short term, we could utilize the GSC's to subsidize mortgages, to buy more NBS for their portfolio, and to reduce G fees.G fees could be 60 basis ...

With 2025 set to end, investors may hear more about the "Santa Claus indicator," which tracks the last five trading days of a year and the first two trading days of a new year. A leading market expert tells Benzinga the indicator is fun, but the real story to follow in 2026 is the Supreme Court ruling on tariffs.Santa Claus IndicatorFreedom Capital Markets Chief Market Strategist Jay Woods told Benzinga the Santa Claus indicator is "a fun little indicator" during a recent interview."It's not as important as ...