CNBC Daily Open: Inflation and dot charts

This report is from today’s CNBC Daily Open, our international markets newsletter. CNBC Daily Open informs investors about everything they need to know, no matter where they are. Like what you see? You can subscribe here.

American government shutdown
The US government narrowly avoided shutdown after President Joe Biden signed interim state funding bill on Saturday. President-elect Donald Trump and Elon Musk thwarted the initial, negotiated financing plan on Wednesday by sharply criticizing its provisions, particularly insisting on suspending the U.S. debt limit for two years.

Slight cooling in price growth
Headline inflation in the US in November increased by only 0.1% compared to Octoberaccording to the price index of personal consumption expenditures. On the annual level, prices increased by 2.4%. Both readings were 10 basis points lower than expected. Core inflation was also 10 basis points below forecasts. PCE is the US Federal Reserve’s preferred measure of inflation.

The US and Asia Pacific markets are growing
On Friday, S&P 500 increased by 1.09 percent Dow Jones Industrial Average added 1.18% and Nasdaq Composite rose 1.03 percent. But all indexes fell for a week. Asia-Pacific shares rose on Monday, after a positive finish on Wall Street on Friday. of Japan Nikkei 225 advanced about 1.2% as Honda, Nissan and Mitsubishi allegedly informed the country’s industry ministry about the start merging conversations.

CEOs see the door
Blue-chip companies, such as Boeing, Intel and Starbuckshave announced changes in their chief executive officers this year. They are not alone. There were 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 the data in 2010.

[PRO] Betting on Broadcom
Nvidia is arguably the king of the AI ​​chip space and it’s hard to see any company dethroning it in terms of market cap. But one portfolio manager told CNBC that Broadcom is “the next Nvidia in terms of overclocking potential

Shares sold out on Wednesday after the Fed showed that it saw two rate cuts by a quarter of a point in the year ahead, less than the four previously predicted. “We’ve been moving sideways on 12-month inflation,” he said Fed President Jerome Powell at his press conference.

But November PCE was cooler than expected. “It seems that sticky inflation is a little less stuck this morning,” said Chris Larkin, director of trading and investments at E-Trade Morgan Stanley.

The Fed emphasized again and again that it is “data dependent”. Would the Fed, then, have presented the world with a slightly different dot plot if it had had a chance to review the PCE data first?

Lending some credence to that train of thought, Chicago Fed President Austan Goolsbee told CNBC’s Steve Liesman that he hopes November’s inflation reading “suggests that several months of strengthening have been more of a bump than a change in trajectory.” In other words, the economy is “still on track to hit 2%,” Goolsbee said.

Then again, Powell he said in July that the central bank would “depend on the data but not on the data” in determining when to cut rates. Even if the PCE index for November signals that inflation is returning to a downward trajectory, the data for one month would not move the dots. Maybe two consecutive months of cooler reading could be had?

Those questions are rhetorical. There are no answers to conditional questions, especially in markets. But because of their vagueness and roundabout nature, they highlight the fact that trying to time or play the market, especially in volatile times like these, may not be the best idea.

Instead, study the fundamentals—earnings, cash flow, future income—that drive stocks even as inflation and interest rates rise and fall. Remember the days when inflation reports and Fed meetings were just another day in the markets?

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