Today's Scoop:

Hey friend - it was a big day of wins for the economy and the planet.

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Here’s what you need to know today…

1. Borrowing may start getting cheaper soon as policymakers ease up economic restrictions.

2. Global leaders finally acknowledged the need to transition away from fossil fuels.

3. Inflation isn’t much of a problem for businesses anymore.

S&P 500: 4,707.09
1Mo: +5% | 1Yr: +18% | 5Yr: +81%

The market surged today, approaching its all-time high, after policymakers finally acknowledged that inflation is under control.

The cost of borrowing for mortgages, credit cards, and auto loans may have peaked. The Federal Reserve decided not to raise baseline interest rates and forecasted rate cuts for next year, signaling an end to a series of extreme interest rate increases aimed at slowing borrowing to bring down inflation from 40-year highs. Policymakers acknowledged in their December meeting that inflation is under control, forecasting steeper declines next year, and expressed confidence in the economy. The Fed projected even more robust economic growth for 2023 and only a mild slowdown for next year. Interest rates on treasury bonds that determine the cost of most debt, from mortgages to auto loans, have already started to fall.

Global leaders have finally agreed to transition away from fossil fuels. Led by the United Arab Emirates’ Sultan Al Jaber, the COP28 United Nations climate summit in Dubai ended with a historic agreement to transition away from fossil fuels. It was the first time in nearly three decades of meetings that fossil fuel terms were included in the pact. Leaders called for a rapid, equitable shift from fossil fuels in energy systems but are allowing natural gas to be used as a transitional energy source in the short term. The summit came together after a year of escalating climate disasters, from wildfires to floods, devastated millions worldwide. While this meeting doesn't directly force any nation to abandon its current fuel sources, it's a massive step for global leaders, including the biggest oil-producing countries, to acknowledge the need to not only lower emissions but specifically exit fossil fuels. We’ll dig into this more on Sunday. Upgrade to access our Weekly Explained series.

Inflation is becoming less of a problem for businesses. The Labor Department reported no month-to-month change in the producer price index (PPI) in November after a decrease in October. [🤓] This was primarily driven by the continuing decline in energy prices. The year-over-year measure was up 0.9%. When stripping out volatile food and energy prices, the core PPI rose only 0.1%. That’s up 2.5% from a year earlier, the smallest reading in almost three years. Easing costs for businesses could translate into lower prices for consumers.

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Why do economists care about the Producer Price Index (PPI)?

The Producer Price Index (PPI) is another important indicator for economists tracking inflation. Inflation is the rate at which things get more expensive.

Unlike the Consumer Price Index (CPI), which looks at a set basket of stuff your average consumer spends money on and tracks how much it costs each month, the PPI tracks the prices of wholesale goods - like how much Ford pays for the tires it installs in its cars before selling them to you. The rate of change in those prices is inflation.

Prices rarely decline. Inflation, aka rising prices, is only a problem when it's really fast (3%+ per year).