When in doubt, get out and get a good night’s sleep. I’ve done that lots of times and the next day everything was clear… While you are in [the position], you can’t think. When you get out, then you can think clearly again. — Michael Marcus

1. Trump says Mexico, Canada tariffs will start March 4, plus additional 10% on China — President Donald Trump on late last week said his proposed tariffs on Mexico and Canada will go into effect March 4 and that China will be charged an additional 10% tariff on the same date. The sweeping 25% tariffs on imports from Mexico and Canada had been paused on Feb. 3 for one month. But the Trump administration has recently sown confusion about whether they would go back into effect when the delays expired. “We cannot allow this scourge to continue to harm the USA, and therefore, until it stops, or is seriously limited, the proposed TARIFFS scheduled to go into effect on MARCH FOURTH will, indeed, go into effect, as scheduled,” Trump wrote.
He also announced that China, which already faces 10% U.S. tariffs on its products, “will likewise be charged an additional 10% Tariff on that date.”
2. Pending home sales drop to the lowest level on record in January — Pending sales, which are based on signed contracts for existing homes, dropped 4.6% from December to the lowest level since the National Association of Realtors began tracking this metric in 2001. Sales were down 5.2% from January 2024. These sales are an indicator of future closings. While weather may have been a factor, sales rose month-to-month in the Northeast and fell in the West, which would have seen the smallest impact of cold temperatures. Sales fell hardest in the South, which has been the most active region for home sales in recent years. Mortgage rates were also higher in January. The average rate on the popular 30-year fixed loan spent the first half of December below 7% but then began rising. It was solidly above 7% for all of January, according to Mortgage News Daily.
3. Margin Debt Hits Record High. Investors Are Amping Up Risk — Debit balances in investors’ margin accounts reached a record $937 billion as of January. That’s up 33% from $701 billion in January 2024, according to brokerage industry self-regulatory organization Finra, which publishes monthly data. Margin trading, in which investors borrow funds from their brokerage firms in order to buy stocks, can amplify returns, but it is also risky, because investors use their securities portfolios as collateral.
4. Fed’s favorite core inflation measure hits 2.6% in January — The personal consumption expenditures price index, the Federal Reserve’s preferred inflation measure, increased 0.3% for the month and showed a 2.5% annual rate. Excluding food and energy, the core PCE also rose 0.3% for the month and was at 2.6% annually. Fed officials more closely follow the core measure as a better indicator of longer-term trends. The 12-month core measure showed a step down from the upwardly revised 2.9% level in December. Headline inflation eased by 0.1 percentage point. The report comes as Fed policymakers weigh their next move for interest rates. In recent weeks, officials mostly have expressed hopes that inflation will continue to gravitate lower. However, they have indicated they want more evidence that inflation is headed sustainably back to their 2% goal before they will lower interest rates further.

The week ahead — Economic data from Econoday.com:

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