As we get into the final trading days before Christmas, with just ten left to deck the halls and fourteen before the New Year's confetti settles, the market's usual holiday lethargy suggests that stocks will tiptoe rather than leap. The 2024 calendar has us hanging stockings and hopes on December 18th, when the US central bank will deliver its monetary policy verdict to close out the year. Futures are jingling with an 86% chance of a quarter-point rate cut gift.

Investors are also hoping that Fed Chairman Jerome Powell will not dampen their hopes too much for further monetary easing in 2025. At present, reasonable people believe that the central bank will cut rates twice more in the first half of 2025. Not so long ago, forecasts of monetary easing were more optimistic, but the strength of the US economy and the expectation of an inflationary effect from Donald Trump II's policies have tempered expectations.

This morning's inflation figures were either gonna be a lump of coal or a gourmet cookie. Economists were eyeing a 2.6% rise year-on-year, and it came in just slightly above, at 2.7%. Month-on month, the CPI grew 0.3%, the biggest rise in seven months, in line with expectations. But that is unlikely to discourage the Federal Reserve from cutting interest rates for a third time next week, since data shows the labor market is cooling.

The Fed, with its eyes all aglow, is watching the core inflation figure, hoping that soon it'll inch closer to the magical 2% target. Core CPI increased 0.3% in November, rising by the same margin for the fourth consecutive month. In the 12 months through November, it gained 3.3%, in line with expectations.

Wall Street seems unfazed by the specter of high rates, having weathered them with aplomb over the past two years. Despite the economic divides deepened by Trump's era, US equities have been the belle of the global savings ball, waltzing to record highs.

Yesterday, however, the music paused, and Wall Street dipped slightly in anticipation of today's inflation data . Europe, too, was out of tune, with the Paris Bourse's 1.1% dip halting its curious eight-session winning streak amidst France's political drama, which is set to cast a new prime minister into the lead role.

Eyes now turn to the ECB's decision tomorrow, where another rate cut is likely on the menu to spice up the European economy's bland dish. Meanwhile, China's market, still hooked on the Politburo's teasers, awaits the Central Economic Work Conference's main act, even as the West's economic sanctions tango with hopes for China's recovery to lift global growth.

Oil prices got a jolt on whispers of new US sanctions on Russian oil, a move to put Putin's energy waltz out of step. The Bank of Canada will also step into the rate decision spotlight later today.

This morning, the Asia-Pacific markets painted a mixed picture, with South Korea's KOSPI in the green and Taiwan reeling from China's military posturing. Tokyo and Sydney shuffled in opposite directions, while China's CSI300 stood still, and Hong Kong's Hang Seng slipped.

In Europe, the mood is cautiously bearish, though US futures are looking to brighten the market's spirits. 

Economic highlights:

Canadian and Brazilian interest rates are scheduled for today, but it's November's US inflation figures that grab all the attention. See the full calendar here.

  • Dollar: EUR 0.9517 GBP 0.7849
  • Ounce of gold: USD 2,696
  • Brent crude: USD 72.93
  • US 10-year: 4.24
  • Bitcoin: USD 98,800

In corporate news:

  • GE Vernova reported mixed results with losses in its wind segment but strong demand for gas turbines and electrical grid equipment, while expecting $45 billion in revenue and a 14% adjusted EBITDA margin by 2028, resuming blade installations, approving a $6 billion share repurchase, and projecting robust sales and cash flow through 2028.
  • A US federal judge has blocked Kroger's $25 billion acquisition of rival Albertsons, citing concerns about reduced competition and potential higher prices for consumers, amidst other related corporate activities including insider trading and market reactions to holiday spending optimism.
  • Microsoft is expanding its AI and renewable energy initiatives through partnerships with OpenAI and Acadia Infrastructure Capital, while facing challenges from Google and its own shareholders regarding exclusive hosting deals and Bitcoin proposals.
  • Macy's has lowered its annual profit forecast amid weak demand and an accounting error, reported a decrease in Q3 earnings and revenue, identified a material weakness in financial controls, yet still managed to exceed Q3 earnings expectations, and projected fiscal year 2024 revenue between $22.3B and $22.5B with an EPS range of $2.25 to $2.50.
  • Walgreens Boots Alliance is reportedly in discussions to be acquired by private equity firm Sycamore Partners in a deal potentially valued between $7.5 billion and $9 billion, causing its shares to surge by 21%.
  • General Motors has discontinued its Cruise robotaxi business due to escalating costs and growing competition, while Tesla, experiencing robust sales in China, renews efforts to establish a showroom in New Delhi with real estate developer DLF.
  • Alphabet and Google are heavily investing in AI applications across various sectors including search and healthcare, while also partnering with Hub71 to support startups and managing online content like reviews.
  • United States Steel Corporation President Biden is poised to block the acquisition of US Steel by Nippon Steel pending the outcome of a national security review.
  • JPMorgan Chase has revised its 2025 net interest income guidance to be $2 billion above current estimates, expects a 45% increase in Q4 investment banking fees, and will maintain its quarterly dividend at $1.25 per share.
  • Blackstone is set to double its private equity exits in North America by 2025 amid an improving M&A and IPO environment, while also withdrawing from acquisitions of a London office tower and Bausch + Lomb due to high pricing, alongside Nippon Life Insurance's acquisition of Resolution Life Group for $8.2 billion.

Analyst recommendations:

  • Axis Capital Holdings Limited: Wells Fargo upgrades to equalweight from underweight with a target price raised from USD 78 to USD 89.
  • Blackstone Mortgage Trust, Inc.: Wolfe Research upgrades to outperform from peerperform with a target price of USD 20.
  • Curtiss-Wright Corporation: Stifel downgrades to hold from buy with a target price of USD 370.
  • Eastgroup Properties, Inc.: Raymond James upgrades to strong buy from outperform with a price target raised from USD 185 to USD 200.
  • Fastenal Company: Stifel downgrades to hold from buy with a target price of USD 86.
  • General Dynamics Corporation: Wolfe Research downgrades to peerperform from outperform.
  • Ingersoll Rand Inc.: Stifel downgrades to hold from buy and reduces the target price from USD 112 to USD 107.
  • Principal Financial Group, Inc.: Wells Fargo downgrades to underweight from equalweight with a price target reduced from USD 84 to USD 75.
  • Prologis, Inc.: Raymond James downgrades to outperform from strong buy with a price target reduced from USD 130 to USD 125.
  • Sirius Xm Holdings Inc.: Seaport Global downgrades to neutral from buy.
  • Southstate Corporation: Stephens upgrades to overweight from equalweight with a target price raised from USD 118 to USD 130.
  • The Travelers Companies, Inc.: Wells Fargo downgrades to underweight from equalweight with a price target reduced from USD 256 to USD 217.
  • Albertsons Companies, Inc.: Morgan Stanley maintains its market weight recommendation and reduces the target price from 24 to USD 19.
  • American Airlines Group Inc.: Morgan Stanley maintains its overweight recommendation and raises the target price from 18 to USD 22.
  • Aptiv Plc: Goldman Sachs maintains its buy recommendation and reduces the target price from USD 92 to USD 71.
  • Axis Capital Holdings Limited: Roth Capital maintains its buy recommendation and raises the target price from USD 90 to USD 110.
  • Digital Realty Trust, Inc.: Mizuho Securities maintains its outperform recommendation and raises the target price from 170 to USD 211.
  • Docusign, Inc.: Daiwa Securities maintains its outperform recommendation and raises the target price from USD 65 to USD 108.
  • Lattice Semiconductor Corporation: Baird maintains its outperform rating and raises the target price from USD 44 to USD 68. 
  • Mongodb, Inc.: President Capital Management Corp maintains its buy recommendation and raises the target price from USD 300 to USD 400.
  • Newell Brands Inc.: Citigroup remains neutral recommendation with a price target raised from USD 9.50 to USD 11.50.
  • Reddit, Inc.: Baird maintains its neutral recommendation with a price target raised from 100 to USD 160.
  • Rivian Automotive, Inc.: Goldman Sachs maintains a neutral recommendation with a price target raised from 10 to USD 13.
  • Tesla, Inc.: Goldman Sachs maintains its neutral recommendation with a price target raised from USD 230 to USD 345.
  • United Airlines Holdings, Inc.: Morgan Stanley maintains its overweight rating and raises the target price from USD 88 to USD 130.
  • Ashtead Group Plc: Goldman Sachs downgrades to neutral from buy with a target price reduced from GBX 6800 to GBX 6600.
  • Domino's Pizza Group Plc: Redburn Atlantic downgrades to sell from neutral with a target price reduced from GBX 283.39 to GBX 271.
  • Genus Plc: Shore Capital upgrades to buy from not rated with a target price of GBX 2250.
  • International Consolidated Airlines Group, S.a.: Deutsche Bank upgrades to buy from hold with a target price raised from GBX 215 to GBX 400.