Daily Commentary

MarketMinder’s View: No, the Fed’s inflation target is not the core personal consumption expenditures (PCE) price index, which excludes food and energy. It targets headline PCE. And that rate inched slightly higher in September, from 2.7% y/y to 2.8%, while inflation-adjusted consumer spending flatlined. This piece, as you might gather from the headline, spends most of its pixels discussing what this means for the Fed, which convenes next week. We reckon its significance on that front rounds to diddly-squat. Again, these are September readings, delayed by the government shutdown. We are now in December. And our data-dependent Fed purportedly looks forward (purportedly!). While more recent official inflation data might not be available, policymakers have plenty of market-based indicators at their disposal, and market-based indicators are generally more forward-looking. Not that you can predict the Fed—you can’t—but we have a strong hunch this reading is just too stale to matter.

MarketMinder’s View: As a reminder, MarketMinder doesn’t make individual security recommendations (so any firms mentioned here are coincident to a broader theme we wish to highlight). We also aren’t inherently for or against cryptocurrencies. However, bitcoin’s recent plunge illustrates how demand is tied to sentiment rather than any clear, repeatable fundamental driver (e.g., the economic cycle). Consider the scenario laid out here: “The Securities and Exchange Commission dropped lawsuits against many major crypto companies, lifting a legal cloud that had halted the industry’s progress for years. And Mr. Trump announced that the United States would establish its own Bitcoin reserve, a government-run stockpile of digital coins. On Oct. 6, Bitcoin reached a high of $126,000. Then came the crash. On Oct. 10, Mr. Trump announced that he would impose a new tariff on China, sending shock waves through the global economy. Bitcoin dropped about 10 percent, while other coins plunged even more.” So apparently, a fresh US tariff on China—which isn’t anything new, especially this year—had the power to send bitcoin reeling while global equity markets held up fine? (The MSCI World did slip on 10/10, but it ended October up from September, per FactSet). We thought bitcoin was supposed to be a “fear asset,” i.e., something that holds up during uncertain times? Seems to us like it isn’t doing its job. Beyond this, we would humbly suggest those thinking the liberalization of regulation is bullish for coins missed the point: Many crypto enthusiasts saw it as outside the government’s reach, so this encroaches on a thesis to own. And while some of the moves increase investor access, theoretically boosting demand for coins, they could also encourage vast supply creation. So again, it all boils down to whether investors were enthusiastic enough to bid coin prices up. In 2025, they haven’t been. For more, see our November commentary, “Bitcoin’s Wild Ride to Nowhere.”

MarketMinder’s View: Central bank independence made headlines this year after President Donald Trump reportedly explored firing Fed chair Jerome Powell over monetary policy disagreements. While this story was more noise than concern for markets, Fed independence in general is overrated—elected officials appoint central bankers, so the Fed is an inherently political animal. This isn’t just an American phenomenon. Bank of Japan (BOJ) Governor Kazuo Ueada has been making the case for a December rate hike to new Prime Minister Sanae Takaichi. “The pitch worked - both markets and Japan's new government got the message that a quarter point rate hike to 0.75% later this month was a near certainty, allaying worries the BOJ might succumb to political pressure to not tighten policy. … Clearing political opposition has ‍been the biggest challenge to Ueda's rate-hike plan since Takaichi took office on October 21, with the premier voicing displeasure over an early increase.” This (long) article details how the BoJ has sought to avoid antagonizing the Takaichi administration, e.g., extra meetings and effusive speeches celebrating the “successes” of policies enacted under Takaichi’s political mentor, the late Shinzo Abe. As the article correctly points out, “The central bank is also sensitive to political winds because the government has authority to pick the governor and members of the board, which then need parliamentary approval.” It concludes that, while jawboning over a December hike didn’t cause major political ructions, BOJ guidance about policy in 2026 is another matter. Uhhh … here is the thing. Central bank guidance is never worth setting in stone. N-E-V-E-R. See 2022’s global central bank U-turn with any questions about that, and that had zero to do with politics. Beyond this, you can’t divorce politics from monetary policy—the two are intertwined, and arguments advocating otherwise are removed from reality. The very process this article depicts of how the BOJ allegedly paved the way for a peaceful hike is political. For more, see our July commentary, “The Market Filters News and Noise on Fed ‘Independence.’”