Week of Jan 24, 2025 Weekly Recap & The Week Ahead
Wednesday, January 29th, 20251. Tech Leaders Pledge Up to $500 Billion in AI Investment in U.S. — the joint venture, known as Stargate, is led by the ChatGPT maker OpenAI and the global tech investor SoftBank Group. It will build data centers for OpenAI. The database company Oracle ORCL 6.75%increase; green up pointing triangle and MGX, an investor backed by the United Arab Emirates, are also equity partners in the venture. The companies are committing $100 billion to the venture and plan to invest up to $500 billion over the next four years. The plans, key elements of which remain vague, were announced Tuesday at a White House ceremony with President Trump. The $100 billion sum includes projects that the companies already announced and initiated under the Biden administration, people familiar with the matter said.
2. Trump’s War on DEI Freezes Diversity Work Across Federal Government — President Trump’s plan to unravel diversity, equity and inclusion efforts began taking shape on Wednesday with an order closing such programs within federal agencies and placing all staff working on those programs on paid leave. The Agriculture Department, the Treasury Department and the Labor Department had removed some webpages on diversity by Wednesday morning. The Federal Communications Commission rescinded an action plan promoting DEI and shut down the agency’s advisory group, among other steps. Elsewhere, meetings on those issues were canceled quietly, and federal employees were uncertain about whether internal affinity groups would continue. Paid leave for employees who work on DEI programs was to take effect by 5 p.m. Wednesday.
3. Trump Says Reducing Energy Prices Will Allow for Lower Interest Rates — Trump told reporters he would like to see rates “come down a lot” and implied that steps to keep a lid on price pressures were an important precursor to lower interest rates. In his first term, inflation wasn’t a major problem, and Trump frequently called for the Fed to lower interest rates. The Federal Reserve cut its benchmark short-term interest rate three times between September and December by a full percentage point. But longer-term interest rates rose during that period, partly reflecting expectations of stronger growth.
The episode underscored how the Fed controls short-term interest rates but market forces influence long-term interest rates, which are closely tied to rates on mortgages, auto loans and business debt. Long-term rates can rise even if the Fed is cutting rates if investors anticipate fewer Fed rate cuts, if they are more concerned about inflation, or if they are more optimistic about future economic activity.
4. U.S. Homes Sales in 2024 Fell to Lowest Level in Nearly 30 Years — High costs related to homeownership sapped sales again. The average rate for a 30-year fixed mortgage has hovered between 6% and 8% since late 2022, making it prohibitively expensive for many Americans to buy homes at current prices, which hit record highs last year. Rising home insurance and property tax costs are also adding to homeowners’ expenses. The Federal Reserve cut short-term rates three times last year, but mortgage rates have risen in recent months. Last week, mortgage rates topped 7%, an important psychological threshold for buyers and sellers, though rates declined slightly this week, according to Freddie Mac. The unaffordable housing market has frustrated buyers and sellers, forcing many to delay or cancel plans to move, and prompted both presidential candidates in 2024 to pledge to help lower housing costs. The slow pace of sales has also hurt mortgage lenders, real-estate brokerages and home-goods stores.
The week ahead — Economic data from Econoday.com:
Posted in Week of Jan 17, 2025 Weekly Recap & The Week Ahead
Wednesday, January 22nd, 2025The hard work in trading comes in the preparation. The actual process of trading, however, should be effortless. Jack Schwager
1. Wholesale prices rose 0.2% in December, less than expected — The producer price index rose just 0.2% on the month, less than the 0.4% increase in November and below the Dow Jones consensus estimate for 0.4%, according to a Bureau of Labor Statistics reported. Excluding food and energy, the so-called core PPI was flat compared with the forecast for a 0.3% rise. Excluding food, energy and trade services, the measure rose just 0.1%. On an annual basis, headline PPI rose 3.3% for the full year, well ahead of the 1.1% increase in 2023. Goods prices increased 0.6%, pushed by a 9.7% surge in gasoline prices. Upward moves in several food- and energy-related measures were offset by a 14.7% slide in prices for fresh and dry vegetables.
On the services side, prices were flat, despite a 7.2% increase in passenger transportation that was offset by a fall in prices for traveler accommodation.
2. Inflation Ticks Up to 2.9%, but Underlying Price Gains Are Muted — The consumer price index rose 0.4% in December from November and finished the year up 2.9%, the Labor Department said Wednesday. Economists surveyed by The Wall Street Journal had expected the CPI to advance 0.3% last month from November and 2.9% from December 2023. Gas prices rose 4.4% last month from November, their largest monthly gain since August 2023. Federal Reserve officials and market participants tend to look past such swings in volatile food and energy prices. So-called core prices, which exclude those categories, rose 0.2% from November and finished the year up 3.2%. Economists had expected increases of 0.3% and 3.3%, respectively.
3. Mortgage Rates Top 7% for First Time Since Mid-2024 — The average rate on the standard 30-year fixed mortgage rose to 7.04% this week, according to a survey of lenders by mortgage-finance giant Freddie Mac. That marked the first time since May that it rose above 7%, an important psychological threshold for buyers and sellers. The housing market has slumped in recent years as high mortgage rates and expensive home prices made home-buying unaffordable for many Americans. It hasn’t helped that other costs of homeownership, such as insurance and taxes, have also surged. Sales of previously owned homes in 2024 likely fell to the lowest level since 1995, for the second year in a row. An uptick in rates to start the year could put a damper on the spring selling season—usually the most active time for sales—and undermine hopes that the market can break out of its sales slump.
The Federal Reserve last month lowered its benchmark interest rate for the third time in a year, which brought it down a full percentage point since September. But the central bank signaled doubt over its future path.
4. Medicare Will Pay Less for Ozempic and Wegovy in 2027. — the announcement confirms the long-anticipated inclusion of the blockbuster Novo medicines among 15 additional drugs whose prices Medicare will be allowed to negotiate with drugmakers this year. The prices won’t go into effect until 2027. While President Trump argued during his first term for policies that would have significantly lowered drug prices, those policies were not implemented, and the price-negotiation program has been a hallmark policy of the Biden administration . The negotiations are enabled by the Inflation Reduction Act, which President Joe Biden signed in 2022, and which for the first time allowed Medicare to haggle over prices with drugmakers. The Centers for Medicare and Medicaid Services negotiated lower prices for 10 drugs last year to go into effect in 2026.
The week ahead — Economic data from Econoday.com:
Posted in Week of Jan 10, 2025 Weekly Recap & The Week Ahead
Tuesday, January 14th, 20251. US Services Index Climbs, Price Gauge Hits Highest Since 2023 — The Institute for Supply Management’s index of services advanced 2 points to 54.1 last month, the group said Tuesday. Readings above 50 indicate expansion. The measure of prices paid for materials and services rose more than 6 points to 64.4. The acceleration in the cost gauge comes as Federal Reserve policymakers adopt a more cautious approach to lowering interest rates and amid uncertainty about what kind of tariffs the upcoming Trump administration may slap on imports. Resilient demand, illustrated by the pickup in business activity and stronger orders, adds to concerns that inflation will remain stubborn.
2. US Firms Add 122,000 Jobs in ADP Data, Fewest Since August — Employment rose by 122,000 last month — the least in four months — following a 146,000 increase in November, according to ADP Research Institute data published Wednesday. The median projection in a Bloomberg survey of economists called for a rise of 140,000. The report showed employment growth was mixed across industries. Education and health services, construction as well as leisure and hospitality registered the biggest increases. Manufacturing, natural resources and mining as well as professional and business services saw declines in headcount. The latest’s figures suggest the gradual softening in the US labor market in 2024 extended through the end of the year. Federal Reserve officials will have to balance that trend against renewed inflation fears in deciding how far to continue cutting interest rates in 2025 and beyond.
3. U.S. payrolls grew by 256,000 in December, much more than expected; unemployment rate falls to 4.1% — Nonfarm payrolls surged by 256,000 for the month, up from 212,000 in November and above the 155,000 forecast from the Dow Jones consensus, the Bureau of Labor Statistics reported Friday. The unemployment rate edged down to 4.1%, one-tenth of a point below expectations. An alternative measure that includes discouraged workers and those holding part-time positions for economic reasons moved down to 7.5%, a decrease of 0.2 percentage point and the lowest since June 2024.
4. US Consumer Inflation Expectations Jump to Highest Since 2008 — US consumers’ long-term inflation expectations jumped to the highest since 2008 on concerns about potential tariffs from the incoming Trump administration. Americans expect prices will climb at an annual rate of 3.3% over the next five to 10 years, up from the 3% expected last month, according to the University of Michigan’s preliminary January survey released Friday. They also see costs rising 3.3% over the next year, up 0.5 percentage point from December.
The week ahead — Economic data from Econoday.com:
Posted in Week of Jan 3rd, 2025 Weekly Recap & The Week Ahead
Tuesday, January 7th, 2025There will not be any posting for the holiday shorten week of January 3rd, 2025 — we are away for some needed R&R — Happy New Year