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Inflation Cools in Latest CPI, but Data Gaps Raise Questions
Why a “Cool” Inflation Report Isn’t the Whole Story
December 19, 2025
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A closer look at inflation data as markets react to a softer CPI reading
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Good Morning, Markets jumped after a softer than expected inflation report suggested price pressures may be easing. But the data came with caveats, including delays and missing pieces that have economists urging caution. We break down what the CPI really showed, why stocks reacted so strongly, and what this uncertainty could mean for rates, bonds, and indexed investors.Social Security updates for 2026 include a 2.8% COLA increase and new senior tax breaks but raise concerns over reduced in person access, OpenAI and Nvidia team up with the U.S. government under the Genesis Mission to accelerate AI powered scientific innovation, and softening PMI data heightens fears of a 2026 recession and a potential AI-driven S&P 500 correction. Don't forget to voice your opinion in my polls below. Here are your Morning Bullets. – Truly yours, Fred Frost |
📈 Yesterday's Market RecapYesterday, Wall Street broke a four-day losing streak for the Dow and S&P 500, fueled by Micron Technology’s blockbuster earnings and a softer inflation report. The Nasdaq soared as much as 2% before trimming gains, while AI-related stocks stole the show. Here’s what moved the needle.
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📈 Daily Performance Snapshot
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🔭 What to Watch TodayToday’s calendar has a few critical items that could sway markets. Keep your eyes on these developments for potential volatility or opportunity. |
💡 Opportunity WatchAmidst the economic crosswinds, a few sectors and stocks are showing promise. Here are three areas worth a closer look for potential upside.
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🔥 The Big BulletDelayed CPI report shows cooler inflation, but questions followWhat happened: The U.S. government released a delayed Consumer Price Index (CPI) report showing inflation came in lower than many investors expected. Markets reacted fast, and stocks jumped after the CPI update hit the tape. The report was delayed because earlier data collection was disrupted, so the release landed later than normal. Some parts of the report looked “too calm,” especially the housing-related readings that usually move slowly. That calm result set off debate about whether the report captured real price trends or quirks from missing inputs. Several economists said the headline number may not tell the whole story this month. CNBC noted that economists are already questioning how much weight to put on the downbeat CPI print. In short, investors got a “better” inflation number, but confidence in the details is not solid. Why it matters: CPI is one of the main data points that shapes expectations for interest rates, so a surprise can move markets quickly. A cooler CPI reading can make investors think rate cuts are more likely, which often lifts stocks and pulls bond yields down. But if the data is noisy, traders can end up pricing in a story that later gets reversed. Fortune reported that some economists think the shutdown disruption distorted the report, including an odd assumption that pushed housing inflation readings lower than expected, calling it a “wacky number” and pointing to measurement problems. That matters because housing costs are a big part of inflation, and small changes there can swing the total. Bonds have already had a strong year, and the outlook for 2026 may depend on whether inflation truly keeps easing. If later data shows inflation was not actually cooling, bond prices and rate-cut bets could get hit. For conservative investors, this is a reminder to treat a single “good” print as one data point, not a verdict. What’s next: Watch for follow-up inflation releases and any revisions that clarify what was estimated versus directly measured. If future CPI or related reports bounce back upward, markets may rethink the current “cool inflation” reaction. Investors will also be watching how the Federal Reserve talks about inflation progress in upcoming speeches and meetings. Market moves may stay choppy as traders decide whether the rally is durable or just a one-day reaction. MarketWatch noted that major indexes were trying to snap losing runs late in the session, which shows how quickly sentiment can flip. Keep an eye on labor market signals too, because jobs data can change the rate outlook even if inflation looks calmer. Fox Business highlighted that officials are still presenting the job market as firm, even as unemployment has risen, with the labor secretary downplaying warning signs and stressing “strengthening”. The key question for markets is whether the next few reports confirm a real slowdown in inflation without a sharp drop in hiring.
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Reader Feedback
Yesterday, I asked you: Which statement comes closest to how you feel about tariff-funded checks?
The majority of you at 29% said "They raise prices and hurt consumers”
Kevin from Iowa replied: "I think tariff checks sound nice, but they really just make things cost more for regular people."
Here's what I'm asking you today:
As always if your opinion is not here, or you want to throw your two cents at me, reply to the E-mail, and let me know your exact thoughts.
🧭 Policy & Market Ripples
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📜 This Day in History – December 19December 19 has a planner’s temperament — legal frameworks, transportation links, and cultural systems quietly locking in long-term returns. It’s the sort of day that reminds you progress is mostly paperwork, rails, and repeatable formats.
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Today's Trivia
Yesterday, 84% of you chose the right answer to the trivia question: They raise the price of imported goods, often protecting domestic producers
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