Comments based on information available as of 5:45am CT on 12/05/2025
Growth: Icy Conditions 
Black Friday sales surprised to the upside, but private-sector payrolls shrank in November. ISM manufacturing weakened, even as services held up better than expected. With the data sending mixed signals, investors may feel like they’re driving on ice—where overreacting in either direction can be just as dangerous. Momentum is clearly fading, but for now, the economy still seems to be moving forward.
Inflation: Indigestion
September import price data suggest tariffs may be causing more indigestion than outright inflation. With the dollar weaker, import prices should arguably have climbed much more than they did. Their muted response implies that foreign exporters are absorbing a greater share of the tariff costs than is immediately visible, while profit margins in many import-heavy industries are also helping shield consumers. The greater risk, therefore, may not be a renewed wave of consumer inflation, but mounting profit pressure on firms that lack pricing power or cost control.
Policy: Worst Kept Secret
Chalk one up for the prediction markets. It isn’t official yet, but it might as well be: NEC Director Kevin Hassett is poised to be the next Fed Chair. President Trump essentially confirmed it by calling him “a potential Fed chair” while the two stood side-by-side. Investors seem to love the idea of a more accommodative Fed. Rumor also has it that Treasury Secretary Bessent could take on the additional role of NEC Director—another move investors would likely welcome.
Looking Ahead: Follow The Money
The U.S. and China both want to win the artificial intelligence race, and that race isn’t just about smarter chatbots or better image generation. It’s about opening new data sources and pushing AI into a broad range of digital and physical applications. Those ambitions are already shaping where capital is flowing. The upfront investment could be massive, drawing on both public- and private-sector funding. If it pays off, the rewards could be higher productivity and structurally stronger growth. It’s a long, uneven road, but one with a positive long-term view for the economy and markets.
