Fireworks Before Christmas?

Santa is on his back foot. Fed Chair Powell's presser was hawkish last Wednesday. Thursday's batch of economic indicators seemed to support the hard-landing scenario. Could the Santa Claus rally make a comeback before Christmas despite the Grinch at the Fed? It could, depending on November's personal income report to be released on Friday.

We think that it will confirm that inflation is moderating as measured by the PCED measure of consumer prices. It should also confirm that consumers are still spending, though more on services than goods. It should show that in addition to excess saving, wages are rising faster than prices, boosting consumers' purchasing power. That would all be consistent with a soft landing.