For week ended 2/16/2025
It’s back! Yes, I’m talking about the scourge of inflation. This one economic data point has inflicted more pain on households over the past four years than just about anything else. It was also a key factor in Trump’s ability to reclaim the White House.
Now, to the numbers: The Consumer Price Index (CPI) rose 3% year-over-year in January, while Core CPI increased by 3.3%. On a seasonally adjusted basis, prices jumped 0.5% for the month—the largest monthly increase since August 2023. Even more concerning, this marks the fourth consecutive month that the year-over-year average has risen, up from September’s 2.4% reading.
Another noteworthy data point: January retail sales took a significant dive from December. Whether this is just a post-holiday slump or an early warning sign of something bigger remains to be seen. My bet? It’s just the usual seasonal hangover—after all, U.S. consumers love to spend.
Checking in on the markets, foreign stocks led the performance race last week with a 2.2% gain, followed by commodities. Six weeks into 2025, these two asset classes are significantly outpacing everything else. But don’t look for a deep fundamental reason behind foreign stocks’ lead over U.S. markets. Yes, they’re cheaper—but they’ve been cheaper for over a decade. More likely, this is just a rebound after they lagged far behind domestic stocks last quarter and throughout 2024. As for commodities, don’t waste time trying to decipher their movements. Pure chaos. There’s always some opaque mix of supply shocks, speculation, and geopolitical nonsense driving prices there—best to stay diversified and not get too cute trying to predict that rollercoaster. Keep your exposure—and expectations—low for now.
This week should be relatively quiet on the economic front. U.S. markets will be closed Monday for Presidents’ Day, with existing home sales and a couple of PMI reports due on Friday.
And with that—if you're in Colorado and love skiing or snowboarding, get to the mountains ASAP; the snow keeps piling up. For the rest of us suckers? Buckle up, buttercup. We've got work to do.
Interesting data point of the week.
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