CNBC Daily Open: inflation and dot plots

This report is from today’s CNBC Daily Open, our international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Do you like what you see? You can subscribe here.

The US government shutdown is suspended.
The US government almost avoided a closure after President Joe Biden signed an interim government funding bill on Saturday. President-elect Donald Trump and Elon Musk thwarted an initial funding plan negotiated Wednesday by harshly criticizing its provisions and specifically insisting on suspending the U.S. debt limit for two years.

Slight cooling in price increases
US headline inflation in November increased only 0.1% since Octoberaccording to the price index of personal consumption expenditures. In annual terms, prices increased by 2.4%. Both readings were 10 basis points lower than expected. Core inflation was also 10 basis points lower than expected. The PCE is the US Federal Reserve’s preferred inflation indicator.

US and Asia-Pacific markets rise
On Friday, the S&P 500 rose 1.09%, the Dow Jones Industrial Average added 1.18% and the Nasdaq Composite rose 1.03%. But all the indexes fell in the week. Asia-Pacific stocks rose on Monday. after a positive end on Wall Street on Friday. Japan Nikkei 225 advanced around 1.2% as sling, nissan and mitsubishi reportedly informed the country’s Ministry of Industry about the start fusion talks.

CEOs see the door
Leading companies, such as boeing, Intel and starbucksannounced changes in its CEOs this year. They are not alone. There was 327 CEO departures in U.S. public companies this year through November, according to outplacement firm Challenger, Gray & Christmas. That’s the highest level since the company began tracking data in 2010.

(PRO) Betting on Broadcom
NVIDIA is undeniably the king of the AI ​​chip space, and it’s hard to see any company dethroning it in terms of market capitalization. But one portfolio manager told CNBC that Broadcom is “the next Nvidia in terms of superior performance potential

Stocks sold on wednesday after the Federal Reserve indicated that it sees two quarter-point rate cuts in the next year, less than the four previously projected. “We have been moving sideways in 12-month inflation,” saying Federal Reserve Chairman Jerome Powell at his press conference.

But November’s PCE was worse than expected. “Persistent inflation seemed to be a little less stagnant this morning,” said Chris Larkin, managing director of trading and investments at E-Trade Morgan Stanley.

The Federal Reserve has emphasized again and again which is “data dependent”. So would the Fed have presented the world with a slightly different dot chart if it had had the opportunity to review the PCE data first?

Lending slight credence to that line of thinking, Chicago Fed President Austan Goolsbee told CNBC’s Steve Liesman that he’s hopeful that November’s inflation reading “suggests that the two months of strengthening were more of a blip.” than a change of course.” In other words, the economy is “still on track to get to 2%,” Goolsbee said.

On the other hand, Powell saying in July that the central bank would be “reliant on data, but not data points” to determine when to cut rates. Even if November’s PCE index indicated that inflation was returning to its downward trajectory, one month’s data would not have changed the points. Maybe two consecutive months of more interesting reading could have done it?

Those questions are rhetorical. Conditional questions have no answers, especially in the markets. But in their indeterminacy and devious nature, they highlight the fact that trying to time or game the market, especially in volatile times like these, might not be the best idea.

Instead, delve into the fundamentals (earnings, cash flow, future revenue) that influence stocks even as inflation and interest rates rise and fall. Remember the days when inflation reports and Federal Reserve meetings were just another day in the markets?

— CNBC’s Jesse Pound, Brian Evans and Sean Conlon contributed to this report.