🚀 Inflation at 2.6%

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Market Overview
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Year To Date Performances:

1. The December Consumer Price Index (CPI) report released Tuesday shows a cooling trend in core inflation, which rose at an annual rate of 2.6%, slightly below the 2.7% forecast, a welcome sign for a Federal Reserve struggling to hit its 2% target. While the headline inflation rate met expectations at 2.7% year-over-year, the "core" reading (excluding volatile food and energy) slowed to a 0.2% monthly pace, reinforcing hopes that the inflationary fever is breaking despite persistent stickiness in shelter costs and a record 1.2% spike in recreation prices. This "goldilocks" data immediately reignited political friction, with President Trump taking to Truth Social to demand "meaningful" rate cuts from "Jerome ‘Too Late’ Powell," even as traders and economists like Morgan Stanley’s Ellen Zentner predict the Fed will remain on hold until at least June to assess the lagging impact of recent tariffs. Despite the cooling in goods like used cars and household furnishings—the latter aided by the administration's decision to walk back certain tariff threats—the 0.7% jump in food costs and 0.4% rise in shelter ensure that "real wages" remain essentially flat, leaving the central bank in a delicate balancing act between a softening labor market and an inflation rate that refuse to fully retreat.

2. Standing as a unified front in Copenhagen, Greenland’s Prime Minister Jens-Frederik Nielsen and Danish leader Mette Frederiksen delivered a defiant rebuke to Washington on Tuesday, explicitly choosing their centuries-old partnership over U.S. annexation. Nielsen’s blunt declaration, "If we have to choose... we choose Denmark", marks a historic low in transatlantic relations, as Nuuk and Copenhagen attempt to stave off what they describe as "completely unacceptable pressure" from President Donald Trump. Following the U.S. military operation in Venezuela, Trump has pivoted his focus to the Arctic, ridiculing Denmark’s defences as "two dog sleds" and insisting that the U.S. must acquire the island to prevent a strategic vacuum that Russia or China would otherwise fill. While Denmark has attempted to pacify the administration by speeding up a $4.4 billion purchase of 16 additional F-35 fighter jets to bolster Arctic security, the rhetoric from the White House has only sharpened, with officials refusing to rule out "the hard way" for a takeover. This diplomatic standoff now moves to the White House on Wednesday, where Danish and Greenlandic foreign ministers will meet Vice President J.D. Vance and Secretary of State Marco Rubio in a high-stakes attempt to move the discussion from threats of military force to collaborative regional monitoring.

3. In a direct escalation of executive hostility toward the central bank, President Donald Trump labeled Federal Reserve Chair Jerome Powell "incompetent" or "crooked" on Tuesday, dismissing widespread concerns that a Department of Justice probe into the Fed’s headquarters renovation is a politically motivated attack on financial independence. While Trump signaled the imminent departure of the "jerk" in the face of bipartisan congressional backlash and warnings from banking giants like JPMorgan’s Jamie Dimon, the administration remains firm in its legal pursuit, with U.S. Attorney Jeanine Pirro vowing to press forward despite Powell’s insistence that the threat of indictment is a retaliatory strike against his refusal to lower interest rates on command.

   Headlines

   1. Oil prices rose as Trump signalled the US could provide military assistance to protestors in Iran.

   2. Boeing outsold Airbus last year for the first time since 2018.