Hi there! 

Welcome to FinSoar. Today, I have a long rant about the suspicious job report, the S&P 500, and Wall Street celebrating the eggs before they’re in the basket. Plus, a “warrior dividend.” Plenty of creative liberties in framing today’s market: 

Trump announced Wednesday that 1.45 million service members would receive $1,776 checks before Christmas, dubbing it a "Warrior Dividend" to honor the nation's 1776 independence.

"The checks are already on the way," he said. "We made a lot more money than anybody thought because of tariffs."

Not quite…

The $2.6 billion in payments is being pulled from $2.9 billion Congress already approved for military housing stipends as part of Trump's One Big Beautiful Bill Act, signed in July. Defense Secretary Pete Hegseth directed the Pentagon to pay it out as a "one-time basic allowance for housing supplement" to troops.

Congress gave the Pentagon broad discretion on how to use the supplemental BAH money to help with cost of living, but Trump's team decided to rebrand it as a lump sum "dividend."

Active duty members at O-6 rank (colonel or Navy captain) and below qualify, plus reserves on active duty orders of 31+ days as of November 30. Roughly 1.28 million active component and 174,000 reserve component members will get checks.

The payments are tax-free because they're classified as housing allowance, which the IRS excludes from taxable income. Regular BAH increases by 4.2% next year still proceed as planned.

This isn't the first time Trump has promised tariff-funded dividends that never materialized. 

He's repeatedly suggested every American could receive $2,000 from tariffs, an idea that would cost between $279.8 billion and $606.8 billion, depending on the structure. 

The Tax Foundation estimated Trump's tariffs would produce only $158.4 billion in 2025 and $207.5 billion in 2026. He also floated a DOGE "dividend" from government efficiency savings. Neither has happened.

The warrior dividend announcement came during a primetime address defending his economic record, as polls show half of voters feel the cost of living is the worst in their lives. Trump's approval on economic issues dropped 15 points since March to 36%.

A 2024 Government Accountability Office report found the Pentagon "does not routinely assess the negative financial and quality-of-life effects that limited supply or unaffordable housing has on affected service members." Some troops reported taking on debt or commuting long distances to afford housing.

Money is fungible, a White House spokesperson told CNN. But calling pre-approved housing funds a tariff-funded "dividend" is creative accounting at best; I don’t knw if this is a good idea, economically speaking, but you have to hand it to Trump’s marketing team. 

Sources: CNN, BBC, Fortune, The New York Times, CBS News

Talk about giving people trust issues. 

Thursday's November CPI report showed inflation cooling to 2.7% from 3% in September, well below the 3.1% economists expected. Core CPI hit 2.6%, also below forecasts of 3%. 

Stocks jumped, with the S&P 500 snapping a four-day losing streak to rise 0.79% and the Nasdaq surging 1.38%. Traders immediately boosted bets on Fed rate cuts, with odds of a March cut rising to 56.8% from 53.9%.

But almost nobody believes the numbers.

Wells Fargo economists told clients to "take it with the entire salt shaker." Fed Chair Powell warned last week that the data would be "not just more volatile, but distorted." Barclays estimates the headline number may be biased lower by 20 to 25 basis points.

The 43-day government shutdown prevented data collection in October, forcing the Bureau of Labor Statistics to make methodological assumptions that appear to have understated inflation significantly.

The biggest red flag is owners' equivalent rent, a key component of housing inflation. UBS economist Alan Detmeister said October price changes for OER "appear to have been set to zero." 

The 0.06% monthly rise in rent and 0.13% for OER are suspiciously low compared to the 0.51% three-month average through September.

Evercore ISI's Krishna Guha said the BLS "put in zero inflation in multiple categories" while calculating OER for approximately one-third of cities. Omair Sharif of Inflation Insights didn't mince words: "Honestly, I'd probably fire someone."

The November data collection also started late on November 14, after the shutdown ended on November 12, capturing more holiday discounting than typical. 

There’s also downward pressure on the goods categories since data collection took place during peak holiday discounting periods.

Excluding shelter from core services shows the category still above 4% year-over-year, suggesting underlying inflation remains sticky. 

Wells Fargo economists warned: "A bounce back in prices in the December CPI report to be released on January 13 is probably coming."

Despite the skepticism, the White House celebrated the report. Press Secretary Karoline Leavitt said, "Inflation continues to fall, wages continue to rise, and America is trending towards a historic economic boom." Trump claimed Wednesday night that inflation had "stopped."

The bigger concern is that structural inflation pressures could persist regardless of monthly noise. JPMorgan's Grace Peters warns inflation risk is "under-appreciated by investors." 

She points to three powerful forces poised to reignite growth: fiscal stimulus from the One Big Beautiful Bill Act delivering $20-30 billion directly to consumers, accelerating AI capex globally, and easier financial conditions from rate cuts.

Structural trends threaten to keep inflation elevated: persistent fiscal deficits tempting policymakers to tolerate higher inflation, global supply chain reconfiguration driving up costs, surging power demand from AI straining energy infrastructure, and climate-related volatility in input prices.

Morgan Stanley's Mark Haefele acknowledged: "We think policymakers may be cautious about interpreting this report as a definitive shift in inflation trends due to methodological uncertainties."

Markets don't seem to care about the details. For now, any inflation number with a "2" in front works.

Sources: CNBC, The Financial Times, BBC, CNN, The Wall Street Journal

That’s all for today!