3 Things You Need to Know This Week | Inflation, Q4 Earnings, Supreme Court Tariffs

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Mackenzie Winner:

Hello, and welcome to 3 Things You Need to Know this Week— our regular series designed to help you sift through the noise across financial media and understand what really matters for markets. To stay up-to-date with our latest market insights, subscribe to our YouTube channel or visit fisherinvestments.com. And with that, here are three things you need to know this week.

First, US CPI inflation.

On Tuesday, we'll get the latest Consumer Price Index, or CPI, numbers for December. The CPI is an inflation measure that tracks how prices for a basket of goods and services changes over time—like groceries, furniture and airline tickets. In recent months, inflation has cooled slightly, though not without ups and downs along the way, which is normal. Data bounces around from month to month, and to us, inflation's broader trend is far more important. For example, in 2025, the CPI ticked up slightly, but still hovered near its long term 3% average. This is in line with the overall trajectory of the past few years. Meanwhile, consumer sentiment remains historically low, with consumer surveys—like those from the University of Michigan and the Conference Board—painting a bleak picture, though this seems mostly to reflect frustrations over high prices following high inflation a few years ago. Rising expenses can be stressful for many families— it's something everyone feels at the grocery store or gas pump. However, it's important to remember: high inflation is fundamentally driven by too much money chasing too few goods and services. Current global money supply trends suggest inflation will likely remain moderate. And sentiment surveys, while capturing how people feel in the moment, are not reliable predictors of what's to come. Despite lingering fears, there's little evidence to suggest that tariffs or other factors are reigniting inflation levels seen from 2021 to 2023. The good news for investors, even if inflation does rise, as stocks have historically been the most reliable hedge against inflation.

Next, Q4's earnings season kicks off.

This week marks the beginning of the Q4 earnings season, with several major US banks set to report starting on Tuesday. Analysts project Q4 year-over-year revenue growth of 7.6% and earnings growth of 8.3% for the S&P 500. If these numbers hold, it would mark the 10th consecutive quarter of earnings growth. In Q3, many big US banks beat earnings expectations, reporting higher quarterly profits compared to the same quarter the prior year. And looking beyond 2025, analysts anticipate strong double digit earnings growth in the first half of 2026. This doesn't surprise us, as global economic activity is chugging along nicely. One sign of economic resilience is the steepening global yield curve. The yield curve measures the difference between short term and long term interest rates. It plays an important role in the financial system, particularly for banks. Banks borrow money from their customers in the form of deposits at short term rates, then lend money through things like mortgages and auto loans at long term rates, profiting from the difference. A steeper yield curve means a bigger difference, and hence, bigger profits for banks. This process not only drives our profitability, but also fuels broader growth for economies and stocks, as banks provide capital for businesses to grow. In 2025, Financials emerged as the second-best performing sector in global equities, benefiting from the steepening yield curve. While this dynamic is broadly positive for banks, it's been particularly advantageous for institutions outside the US. The reason is that the yield curve is steeper over there. A steeper curve equals more room for bank profits. That said, earnings are inherently backward-looking and don't necessarily tell you what will happen next. Markets are forward-looking, and while earnings from the most recent quarter matter, factors like sentiment and politics remain critical in assessing the market's future direction. But to us, these reports suggest that the underlying business fundamentals remain strong. In our view, strong earnings growth and a steepening global yield curve indicate this bull market is supported by genuine profitability gains and, crucially, still has room to run.

Finally, a US Supreme Court tariff ruling.

the US Supreme Court is expected to rule soon on whether President Trump exceeded his legal authority by unilaterally imposing global tariffs under the International Emergency Economic Powers Act. In August 2025, a lower court determined the Trump administration may have overstepped its bounds by implementing these tariffs without explicit approval from Congress. If the Supreme Court rules against President Trump, the decision would invalidate most of the tariffs passed last year. While the mechanics remain unclear, such a ruling could force the government to refund nearly $90 billion in tariff revenue and potentially impact trade deals struck since April 2025. But, the size of any tariff refund would be minor compared to the size of US government spending. While the ruling is likely to make headlines, its broader fiscal and market implications are expected to be limited. Markets tend to reprice widely-known concerns, and they have increasingly anticipated this outcome, leaving little room for surprise. If the decision goes against the administration, any potential downside from associated unknowns would likely be fleeting— if it appears at all.

And that's it for this episode of 3 Things You Need to Know this Week. For more of our thoughts on markets, check out This Week in Review, released every Friday. You can also visit fisherinvestments.com. Thanks for tuning in and don't forget to hit like and subscribe!