February 16, 2025
Volume 12, Issue 07
Weekly Recap
Domestic equities moved mostly higher last week with the Nasdaq Composite leading the way, gaining 2.58 percent. As measured by Russell indexes, growth stocks outperformed value shares for the second week this year. Small-cap stocks lagged, with the Russell 2000 trailing the S&P 500 by 146 basis points (1.46 percentage points) for the week. The S&P and Nasdaq Composite both closed the week within 1 percent of all-time highs. Stocks had their best day of the week on Thursday, largely in response to President Trump’s decision to not introduce new global tariffs, instead signing an order that could lead to the implementation of reciprocal tariffs on a country-by-country basis by April 1. While the news left some uncertainty, traders appeared to be encouraged as the move will further delay the implementation of additional tariffs and seemingly allow room for negotiation between the U.S. and its individual trade partners.
The week’s economic calendar was highlighted by Wednesday’s inflation data, which came in higher than expected. According to the Bureau of Labor Statistics, the headline consumer price index rose 0.5 percent month over month and 3.0 percent year over year in January, accelerating from December’s readings of 0.4 percent and 2.9 percent, respectively. Shelter costs rose 0.4 percent and accounted for nearly 30 percent of the total increase during the month. Core CPI, which excludes volatile food and energy prices, rose 0.4 percent in January, up from December’s reading of 0.2 percent.
Thursday brought more inflation data in the form of the BLS’s producer price index, which similarly rose more than expected, advancing 0.4 percent in January compared with consensus expectations for a 0.3 percent increase. However, certain closely watched components of the index, including health care items and airfares, showed signs of cooling, which seemed to help ease some concerns following Wednesday’s CPI report.
While testifying in front of the Senate Banking Committee, Federal Reserve Chair Jerome Powell noted that the hotter-than-expected inflation data show that while Fed policymakers have made significant progress on bringing down inflation, they are “not quite there yet” and they “want to keep policy restrictive for now.” Chicago Fed President Austan Goolsbee echoed Mr. Powell’s sentiment in an interview with The New York Times, calling the inflation figures “sobering” and adding “if we got multiple months like this, then the job is clearly not done.” Futures market expectations for the next rate cut moved from September to December following the CPI print. U.S. Treasuries were volatile last week as yields rose in response to the week’s inflation data, with the benchmark 10-year U.S. Treasury note’s yield touching an intraday high of 4.66 percent following Wednesday’s CPI report, before decreasing later in the week.
Market Monitor
A full listing of market performance data is available here.
DQYDJ.com (“Don’t Quit Your Day Job”) offers helpful investment calculators here, including one that shows total returns for individual stocks. Koyfin.com provides reams of data on individual stocks, including the ability to track total return — and just about anything else — over time.
In the News
The Consumer Price Index rose 0.5 percent month-over-month and 3 percent annually in January, the Bureau of Labor Statistics reported Wednesday, up from 0.4 and 2.9 percent, respectively, in December. Both were slightly above economists’ expectations. While testifying before Congress Wednesday, Federal Reserve Chair Jerome Powell said the CPI numbers show “we’re not quite there yet” in bringing down inflation and consequently, the central bank wants “to keep policy restrictive for now.”
U.S. producer prices also increased solidly in January, offering more evidence inflation was picking up again and strengthening financial market views that the Federal Reserve would not be cutting interest rates before the second half of the year. Some details of the report, however, suggested a more moderate increase in January in the key inflation measures tracked by the U.S. central bank for its 2 percent target than had been anticipated in the wake of the strong CPI data. In fact, we may have caught a break.
On Tuesday, Mr. Powell said the central bank doesn’t need to rush to adjust interest rates, again signaling that officials will be patient before lowering borrowing costs further. “With our policy stance now significantly less restrictive than it had been and the economy remaining strong, we do not need to be in a hurry to adjust our policy stance,” Mr. Powell told the Senate Banking. “We know that reducing policy restraint too fast or too much could hinder progress on inflation,” he said. “At the same time, reducing policy restraint too slowly or too little could unduly weaken economic activity and employment.”
The wholesale price of eggs is on the rise, and so is the cost of restaurant breakfast specials.
The Labor Department has paused its consolidated appeals of two district courts’ universal stays of Labor’s 2024 fiduciary rule.
Maybe the voters were right about the economy after all.
Our long national paper straw nightmare is over. Last week, President Trump signed an executive order switching the federal government back to plastic straws, with the hope that states and cities will follow suit. It is also proof that bipartisanship is not entirely dead. Jon Stewart and Jimmy Kimmel agreed that paper straws are “terrible.”
Data Dump: Industrial Production and Capacity Utilization; Retail Sales; Jobless Claims; PPI; CPI.
Charts of the Week
I found the following articles to be of note. Some may be of interest only to advisors while others are aimed more broadly. You may hit paywalls below; many can be overcome here.
- What You Should Do About the Stock Market’s Giant Problem (Jason Zweig)
- Apollo reports spike in alt sales (Bruce Kelly)
- The looming advisor shortage in U.S. wealth management (McKinsey & Company)
This is the best thing I’ve read recently. The smartest. The most sensible. The most insightful. The most remarkable. The least surprising. Flor-i-duh. Denzel’s purpose. Penniless. Super Bowl ad rankings. Marriage material. Youth sports. Eagles’ dominance. Laughter, even in North Korea. Love.
Last week’s Super Bowl commercials were stacked with celebrities. Since the pandemic, the number of spots with a celebrity in it averaged above 70 percent, far more than the one-third of commercials back in 2010. For those celebrities, it was a decent payday, with A-listers getting between $3 million and $5 million to appear in a spot. Given the $8 million it costs to get the ad time and the price of production, this year’s Super Bowl ads typically cost well above $10 million, minimum, with high-end productions exceeding $20 million. That’s a remarkable amount to pay for thirty seconds of American attention.
“If you only wished to be happy, this could be easily accomplished; but we wish to be happier than other people, and this is always difficult, for we believe others to be happier than they are.” ~ Montesquieu
Securities and advisory services are offered through Madison Avenue Securities, LLC, a member of FINRA and SIPC, a registered investment advisor. This report provides general information only and is based upon current public information we consider reliable. Neither the information nor any opinion expressed constitutes an offer or an invitation to make an offer, to buy or sell any securities or other investment or any options, futures, or derivatives related to such securities or investments. It is not intended to provide personal investment advice and it does not take into account the specific investment objectives, financial situation, and the particular needs of any specific person who may receive this report. Investors should seek financial advice regarding the appropriateness of investing in any securities, other investment, or investment strategies discussed or recommended in this report and should understand that statements regarding future prospects may not be realized. Investors should note that income from such securities or other investments, if any, may fluctuate and that price or value of such securities and investments may rise or fall. Accordingly, investors may receive back less than originally invested. Past performance is not necessarily a guide to future performance. Diversification does not guaranty against loss in declining markets. Madison Avenue Securities, LLC | 13500 Evening Creek Drive N, Suite 555 | San Diego, CA 92128 US
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