Nothing to See, Cut Rates

The latest U.S. consumer-price data came in softer than expected. That set off excitement, hope and spreadsheets full of rate-cut fantasies. Markets now put roughly a one-in-four chance on a Federal Reserve cut in January and are almost certain about one by April. Yet the same report came with missing data thanks to a government shutdown and some methodological quirks. Even the banks cheering the number admit it deserves a raised eyebrow.

The November inflation figures in the United States were so low that everyone thought: "Something's off." Except, of course, for those who took them at face value because the numbers suited either their convictions or their financial interests. Consumer price inflation had eased to 2.7% last month, compared with 3% expected. This is the lowest level since 2021, and it simultaneously bolsters Donald Trump's narrative about tariffs coming with all the upsides and no drawbacks and the prospect of monetary easing.

The trouble with the November data lies in its incompleteness, as acknowledged by the Bureau of Labor Statistics, which publishes it. The 43-day federal government shutdown skewed data collection and left glaring holes in several series. Moreover, the data primarily reflects the second half of November: a period when Black Friday sales temporarily depress prices across certain product categories

This matters because policymakers are trapped between what prices say and what jobs might soon say. Inflation is no longer the main villain. Employment may be next. President Trump is irritated by talk of an "affordability crisis," and he has a point. Prices are not exploding. But affordability is also about wages, job security and the fear of losing both. If that fear rises, politics will follow.

The Fed knows this. It cut rates by 25 basis points last week to 3.50–3.75%, then warned it was in no rush to do more. Officials want clarity on inflation and the labor market. Traders want cuts anyway. That gap explains much of today's market mood swings. It also explains why Treasury yields rose even after the soft inflation print, and why bond prices fell across the world. Japan helped with that.

The Bank of Japan raised interest rates to their highest level in three decades, nudging its economy further away from ultra-easy money. Japanese 10-year yields moved above 2% for the first time since 1999. That matters for Americans because higher Japanese yields can pull global borrowing costs upward, including in the U.S. Cheap money is becoming a scarcer global good.

Commodities tell a similar story of mixed signals. Oil is heading for a weekly loss of more than 2% as fears of oversupply beat geopolitical tension. Gold dipped on a firmer dollar but is still up for the week. 

Company news is sharper. Nike's problems are no mystery. China sales remains weak, tariffs are squeezing margins and sales are expected to fall again. Gross margins dropped for the second straight quarter, China sales for the sixth. Shares fell about 10%.

Tech looks livelier. Micron's strong forecasts revived optimism around artificial-intelligence spending after weeks of valuation angst. Nvidia, Tesla and Amazon rose. Even Oracle jumped after TikTok and its Chinese owner ByteDance agreed to form a new U.S. joint venture. Control of TikTok's U.S. operations will sit with a consortium of new investors, including Oracle, Silver Lake and MGX, each holding 15%.

Elsewhere, FedEx beat forecasts thanks to higher package volumes and raised the lower end of its guidance, yet its shares still slipped. OpenAI is seeking up to $100 billion in new funding and could be valued at as much as $830 billion if it gets everything it wants. On the political-corporate fringe, Trump Media is attempting a merger with a nuclear-fusion company, after already trying social media, streaming, finance and crypto. The strategy is simple: attach yourself to whatever investors are currently excited about.

In the Asia-Pacific region, Wall Street's rebound after Wednesday's rough day inspired markets. Japan gained 1%, while Hong Kong and South Korea advanced by 0.6%. Mainland China, Australia, and India posted more modest gains. However, European indices are mixed, and US futures are flattish.

Please note that this is the final column of 2025: the team has unanimously decided to take a break from 4:30 a.m. alarms for the next two weeks! We take this opportunity to wish you a joyful festive season and all the best for 2026. See you in the New Year.

Today's economic highlights:

On today's agenda: the PPI in Germany and France; in the United Kingdom, retail sales excluding auto fuel; in the United States, the annualized GDP, the Core PCE Price Index MoM and YoY, existing home sales, personal income, consumer spending, and the University of Michigan sentiment. See the full calendar here.

• Dollar index: 98,678
• Gold: $4,325
• Crude Oil (BRENT): $59.62 (WTI) $55.84
• United States 10 years: 4.14%
• BITCOIN: $88,155

In corporate news:

• Meta Platforms plans to release two new AI models in H1 2026, "Mango" for image/video processing and "Avocado" as a large language model.
• FedEx expects $175 million in costs due to the grounding of Boeing MD-11 aircraft, impacting Q3 results, though it raised the lower end of its annual profit outlook after beating Q2 estimates.
• Instacart is under FTC investigation over its AI-driven pricing tool, and separately was ordered to pay $60 million to settle deceptive-practices claims by the FTC.
• ByteDance signed a deal to transfer control of TikTok's U.S. operations to a joint venture with Oracle, Silver Lake, and MGX, with ByteDance retaining just under 20%.
• Ford is recalling 272,645 vehicles in the U.S. due to a park function defect that could increase crash risk.
• Alvotech and Teva reached a settlement with Regeneron for the U.S. launch of AVT06, a biosimilar to Eylea, in Q4 2026 or earlier.
• Palo Alto Networks and CyberArk Software received German antitrust approval for their merger.
• Citigroup got partial relief from a 2024 OCC consent order, though the original 2020 order remains in place.
• OpenAI, backed by Microsoft, is aiming to raise up to $100 billion in a new funding round potentially valuing the company at $830 billion, and joined the U.S. Department of Energy's Genesis Mission alongside partners like Oracle, Nvidia, and Google.
• RTX unit Raytheon secured a $168 million contract to supply Patriot air defense equipment to Romania.
• IBM pledged to skill 5 million Indians in AI, cybersecurity, and quantum technologies by 2030.
• Dominion Hosting Holding completed an accelerated bookbuilding, raising €8.2 million and announced a partial, paid capital increase up to €10 million.
• Odfjell Drilling signed a contract for its Deepsea Aberdeen rig, securing its deployment for upcoming projects.
• Nike reported modest sales growth in Q2 2025, surpassing revenue forecasts, but faces continued margin pressure and weak performance in China.
• Micron's strong Q2 forecast lifted AI-focused tech stocks, boosting market sentiment in the sector.
• Pershing Square invested $1 billion in non-voting exchangeable perpetual preferred stock of Howard Hughes Holdings.
• Pangaea Logistics Solutions appointed Eugene I. Davis to its board of directors.
• Artis Real Estate Investment Trust and RFA Capital received final court approvals for their plan of arrangement.
• Adobe partnered with Runway to deliver the next generation of AI video tools for creators and studios.
• Sony Group is acquiring a 41% stake in Peanuts Holdings, taking control of the Snoopy and Charlie Brown franchise from WildBrain.
• Robinhood expanded into sports betting, with over 11 billion event contracts traded on its platform.
• Coinbase partnered with Kalshi to enter the prediction markets business as part of its "everything exchange" vision.
• Trump Media & Technology Group will merge with nuclear fusion firm TAE Technologies in a $6 billion deal.

Analyst Recommendations:

• Lockheed Martin Corporation: JP Morgan downgrades to neutral from overweight and raises the target price from USD 465 to USD 515.
• Paccar, Inc.: JP Morgan upgrades to overweight from neutral with a price target raised from USD 108 to USD 133.
• Rocket Companies, Inc.: Jefferies initiates coverage with a buy rating and a target price of USD 25.
• Uwm Holdings Corporation: Jefferies initiates coverage with a hold rating and a target price of USD 5.
• Carmax, Inc.: BNP Paribas maintains its underperform recommendation and reduces the target price from USD 25 to USD 19.
• Crowdstrike Holdings, Inc.: KGI Securities Co Ltd maintains its outperform recommendation and raises the target price from USD 400 to USD 680.
• Factset Research Systems, Inc.: Stifel maintains its hold recommendation and reduces the target price from USD 372 to USD 295.
• Fedex Corporation: Stephens maintains its overweight recommendation and raises the target price from USD 260 to USD 330.
• Lam Research Corporation: Deutsche Bank maintains its buy recommendation and raises the target price from USD 160 to USD 195.
• Micron Technology, Inc.: CTBC Securities Investment Service Co LTD maintains its add recommendation and raises the target price from USD 188 to USD 265.
• Servicenow, Inc.: Stifel maintains its buy recommendation and reduces the target price from USD 1150 to USD 230.
• Sps Commerce, Inc.: Cantor Fitzgerald maintains its neutral recommendation and raises the target price from USD 80 to USD 100.