Stocks closed lower yesterday, making it four down days in a row for most of the major indexes.

Tuesday's Employment report was a mixed bag. November showed better-than-expected job gains. But October saw a sharp decline in jobs. And prior months all saw downward revisions, whether it was fewer jobs gained or more jobs lost.

While it suggests another rate cut should be coming earlier in 2026, rather than later, the uneven performance left the timing of it still up in the air.

It's true that the Fed sees more risk to the labor market than inflation. But with inflation still stubbornly higher than what they'd like, it remains a check on cutting rates too quickly.

Although, we'll get another look at inflation today with the Consumer Price Index (CPI). The headline number is expected to be up 0.3% m/m with the y/y rate at 3.1%, up slightly from the previous 3.0%. The core rate (ex-food & energy) is expected to be up 0.3% m/m with the y/y rate at 3.0%, in line with the previous reports 3.0%.

A benign report would augur well for a rate cut sooner. But a hotter-than-expected reading would suggest a pause, or at least wait for more info.

More info, however, is what we'll be getting either way with the Personal Consumption Expenditures (PCE) index on Friday. They are largely expected to mirror what the CPI is expected to say. But CPI comes first. And we'll see if the PCE estimates change afterwards.

In addition to the CPI report today, we'll also get Weekly Jobless Claims, the Philadelphia Fed Manufacturing Index, E-Commerce Retail Sales, and Leading Indicators.

Things to watch in the coming weeks/month: the continuing resolution to fund the government (in the absence of a 2026 budget, which shut the government down for a record 43 days), expires on January 30^th. So the debate on the budget, will once again be up for consideration. The biggest sticking point will be the ACA subsidies, which expire at the end of the year. It was decided yesterday that the House will vote on the measure, likely in the early part of January. If passed by the House, it'll then go to the Senate. If no agreement is made, we could very well see another shutdown come the end of January. Or not. Either way, it's something to watch.

We could soon hear how the Supreme Court rules on the President's use of tariffs. At one time, some expected a ruling this year. But that was adjusted to next year. The Supreme Court heard arguments in November. A ruling is expected by no later than the end of June, as that's when the Court's annual term concludes. But Treasury Secretary Scott Bessent believes we could get a decision in January.

And we're expected to hear next month who the President selects as the new Federal Reserve Chairman, when Jerome Powell's term ends in May.

Lots of stuff on the docket for the near-offing.

In the meantime, there's just 8½ more trading days left in the year.

Solid year so far, in spite of some backfilling over the last week. YTD, the S&P is up 14.3%, while the Nasdaq is up 17.5%.

Still expecting an end-of-year rally. And for the S&P to finish up 20% or more for the year.

Time is ticking. But there's plenty of time to see that happen.

And a better-than-expected inflation report today could get that party started.

See you tomorrow,