Economy
Inflation rose 0.24% last month, bringing the trailing 12-month rate to 2.6%. Core prices, which exclude food and energy, were up 3.3%. This latest news should keep the Fed on track for another 0.25% rate cut when they meet a month from now. We'll still have one more important jobs report out in a couple of weeks, followed by the November inflation report a few days before the Fed's December 18 meeting. In recent months, the Fed's focus has shifted from taming inflation to keeping the labor market from cooling too much. Last month's jobs numbers may have been dramatically impacted by the recent storms as the Bureau of Labor Statistics reported only 12,000 net jobs were created in October.
The Fed's monetary policy will be a big story in 2025 as they'll look to continue to reduce rates amidst cooling inflation to keep the labor market afloat. However, with a new administration coming in which has promised even bigger tariffs than before, the Fed may see inflation reaccelerate. The Trump administration is calling for tariffs on foreign goods, and inflation may be a byproduct. If inflation reaccelerates, the Fed may deem it necessary to pause it's current rate cutting campaign, which has the potential to impact everything from stock prices to mortgage rates. It is important to note that although tariffs can be inflationary, that isn't always the case, as a recent report from LPL points out.
Markets
The S&P fell 2.1% this week in a post-election breather. For the year, the index is up 23% and has notched an impressive 50 new all-time highs. While earnings season is just about over, there's one more major company set to report in a few days. Nvidia's market cap (the number of shares outstanding multiplied by the price per share, is just over $3.8 trillion. For reference, the gross domestic product of the United Kingdom (the total value of all goods and services produced) is about $3.5 trillion. If Nvidia were a country and its market cap was equivalent to GDP, it would be the fifth largest nation in the world.
What We're Reading
- The $20,000 Reason to But a Used Car - WSJ
- How to Bring a Dead Nuclear Power Plant Back to Life - Vox
Have a great weekend.
Dogwood Wealth Management