Would the Fed’s dot plot have looked different with November’s PCE?

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U.S. government shutdown suspended
The U.S. government narrowly avoided a shutdown after President Joe Biden signed a stopgap government funding bill on Saturday. President-elect Donald Trump and Elon Musk thwarted an initial, negotiated funding plan Wednesday by harshly criticizing its provisions, and specifically insisted on suspending the U.S. debt limit for two years.

Slight chill in price increases
U.S. headline inflation in November rose just 0.1% from October, according to the personal consumption expenditures price index. On an annual basis, prices increased 2.4%. Both readings were 10 basis points lower than expected. Core inflation also came in 10 basis points below forecast. The PCE is the U.S. Federal Reserve’s preferred gauge of inflation.

Markets in the U.S. bounced
On Friday, the S&P 500 rose 1.09%, the Dow Jones Industrial Average added 1.18% and the Nasdaq Composite climbed 1.03%. But all indexes fell on the week. The pan-European Stoxx 600 fell 0.88% to end the week 1.9% lower. Novo Nordisk shares plunged 17.8% after the Danish pharmaceutical company reported disappointing trial results for a new weight loss drug.

CEOs see the door
Blue-chip companies, such as Boeing, Intel and Starbucks, announced changes in their chief executive officers this year. They’re not alone. There were 327 CEO departures in U.S. public companies this year through November, according to outplacement firm Challenger, Gray & Christmas. That’s the highest level since the firm started tracking data in 2010.

[PRO] Will Rudolph’s red nose outshine Santa?
After a few rocky weeks of trading, stocks are poised to end December in the red. But the Santa Claus rally, traditionally occurring on the last five trading days of the year and the first two of the next, could reignite seasonal cheer. In data going back to 1969, the S&P has added 1.3% on average, according to the Stock Trader’s Almanac.

Stocks sold off on Wednesday after the Fed indicated it sees two quarter-point rate cuts in the year ahead, fewer than the four previously projected. “We have been moving sideways on 12-month inflation,” said Fed Chair Jerome Powell at his news conference.

But November’s PCE came in cooler than expected. “Sticky inflation appeared to be a little less stuck this morning,” said Chris Larkin, managing director of trading and investing at E-Trade Morgan Stanley.

The Fed has emphasized again and again that it’s “data-dependent.” Would the Fed, then, have presented the world with a slightly different dot plot, if they’d had the chance to review the PCE data first?

Giving slight credence to that train of thought, Chicago Fed President Austan Goolsbee told CNBC’s Steve Liesman he’s hopeful November’s inflation reading “suggests that the couple of months of firming were more of a bump than a change in path.” In other words, the economy is “still on path to get to 2%,” said Goolsbee.

Then again, Powell said in July that the central bank would be “data dependent, but not data-point dependent” in determining when to cut rates. Even if November’s PCE index did signal inflation returning to its downward trajectory, one month’s data wouldn’t have shifted the dots around. Perhaps two consecutive months of cooler reading might have?

Those questions are rhetorical. Conditional questions are unanswerable, especially in markets. But in their indeterminacy and circuitous nature, they highlight the fact that trying to time or game the market, especially in volatile times like these, might not be the best idea.

Instead, dig deep into the fundamentals — earnings, cash flow, future income — which sway stocks even as inflation and interest rates rise and fall. Remember the days when inflation reports and Fed meetings were just another day in markets? (Not a rhetorical question.)

— CNBC’s Jesse Pound, Brian Evans and Sean Conlon contributed to this report.