The Dividend Cafe - Thursday - December 18, 2025

Episode Date: December 18, 2025

Market Recap: Thursday, December 18 - Modest Gains and Inflation Insights In this episode of Dividend Cafe, host Brian Szytel provides an update on the market movements for Thursday, December 18. The DOW closed with a modest gain of 65 points (0.14%), S&P increased by 0.8%, and NASDAQ saw a tech-led rally with a 1.38% rise. Despite a rebound, the week is expected to end negatively for stocks overall. A key focus is the release of the latest CPI print, which showed a surprisingly low inflation rate of 2.7% versus the expected 3.1%, but the numbers are questionable due to a government shutdown affecting data collection. Initial jobless claims came in line with consensus at 224,000, while continuing claims were slightly below expectations. The Philly Fed Index reported a weaker-than-expected manufacturing number at -10 versus the expected +3. Brian also discusses the interplay between inflation rates and the role of the Fed, emphasizing that market forces and money supply are critical factors. He wraps up with light-hearted remarks about holiday shopping and extends holiday greetings to viewers. 00:00 Market Update: December 18th 00:10 Stock and Bond Performance 00:59 CPI Report Analysis 02:01 Economic Calendar Highlights 02:45 Inflation and The Fed's Role 04:24 Closing Remarks and Holiday Wishes Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Welcome to the Dividend Cafe, weekly market commentary focused on dividends in your portfolio and dividends in your understanding of economic life. Welcome in to Dividend Cafe this Thursday, December the 18th. Brian Saitel with you here. On an update in markets, we had that sell-off yesterday, so we got some follow-up today with the rebound, although we closed far off of the highs for the day. The Dow ended up notching 65-point gain, which is about $1,000. 0.14% these days. So not a lot. S&P was up more, about 0.8%. And NASDAQ, which is more tech-heavy, was up 1.38%. So this was more of a tech-led rally. You had some earnings and some comments from some of the semiconductors and AI-related components that were positive in the market. So you had a rebound

and some of those names from yesterday's large sell-off. That said, this week will still end up being a negative week for stocks. Rates weren't all that changed on the day. You had the tenure down about three basis points and we closed at 412. News out on the day was at least at the headline very substantial because this was a CPI print. We got headline CPI that came in lower than expected. We got 2.7 versus 3.1 quite a bit lower. Okay, if you strip out food and energy, the core number of CPI was actually 2.6, so even lower. That was, of course, good news, right? But the only thing that is wrong with it is that the government was shut down in all of October. And so the numbers there were completely missing, and then even November was partial.

And so I'm happy to see the inflation number coming down, but I just can't give this particular report a whole lot of credence, frankly. And I don't think the market should either. And that's why you saw stocks rally in the morning and then lose steam towards the end. Not much has really changed here. We still don't have a very clear read and a clear update on inflation. If these numbers were to hold, these numbers would be the lowest in about five years to put that in context. But we really do need another report before markets can really bite into any of this and feel good about it. The other stuff that we got in the economic calendar was on the employment side.

We had the initial jobless claims come out at 224. This was right in line with consensus. This is where we've been for a very long time. Anywhere from 200 to 250 has been in this range. We've been out for years, and that continues on there. Continuing claims were just below consensus. Lastly, you had a manufacturing number out of the Philly Fed. index that was surprisingly weaker than expected at negative 10 versus positive three. I know

that's a lot of numbers for me to throw out at you. Let me boil it down. Inflation rate lower than expected but can't be trusted. Jobless claims in line, manufacturing numbers lower than expected. Question in there today was about inflation. It was about people expecting these numbers and inflation rates to go down, but since the Fed targets a positive 2% inflation rate, doesn't that mean that's wishful thinking? And basically, that the cost of goods and services never goes down. Look, most of that is true. The Fed does target a positive inflation rate. And so over time, it would be unlikely the prices would on an absolute level go lower. That's not the design of the system and also population increases. The main thing that drives inflation is too many dollars

chasing too few goods and services. And so that's the money supply more than it is the cost of money, which is what the Fed changes with their Fed funds target rate. This is how much loans basically cost in the banking system. So those two things do matter, but I wouldn't expect that inflation would go negative if that's what people are hoping for. And also keep in mind, too, central banks can control prices to some degree with the cost of money, but it is market forces and money supply that are more powerful. And that's known because from 2009 to 2020, they really weren't able to get inflation up to their 2% target as much as they tried. And we also know from the Japanese experiment, they weren't able to get positive inflation.

basically. They dealt with deflation for 30 years, even though they did monetary policy across the board. As far as expansion goes, they still weren't able to. So it really is supply and demand and it really is money supply based. Those are our comments on inflation. That's our read on the CPI front for the day. And that's most of what was out today in the overall market recap, at least. So it's a shorter report this Thursday. And then tomorrow we should have a couple more pieces of data to go through with you and that'll send us into the weekend. But with that, I want to send you off and wish you a lovely evening and hope that you can reach out with your questions, hope that you've gotten at least some of your Christmas shopping done, whereas I have gotten 0.00% of mine done.

So I need to get out of the office and into the shopping malls, although that's never going to happen. So maybe I'll click on some stuff online. Who knows what I'll do? Maybe I won't do anything. Everyone gets a lump of coal. I don't know. I don't know what's going to go on. But in any case, No, I'm kidding. I wish you all a very Merry Christmas if I don't speak to you beforehand, but have a lovely evening. Thank you very much.

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