Weekly Market Bites

end of week markets update

1) It’s been an interesting start to the year so far:

• The S&P 500 is near a new all time high

• International stocks, both developed and emerging, are outperforming the US

• Bitcoin and crypto in general have so far failed to make new highs

Here’s a year-to-date summary of markets:

2) Is higher inflation coming back?

Should you be worried? Probably not (yet).

One or two higher inflation readings alone don’t establish a new upwards trend.

The question is whether the disinflation trend of the past two years has stopped?

If this is the case, then the Federal reserve will likely hold-off on further rates cuts. Especially with the risk tariffs could take the price of some goods higher.

Which means daddy J. Pow Pow is gonna have an uncomfortable next few months dealing with Trump 🍿 

Lastly on inflation, its absolutely incredible how politics is driving consumer inflation expectations:

• When Biden was president, Republicans had higher inflation expectations. Due to big government spending, higher taxes, and more regulation.

• Now that Trump is president, Democrats believe higher inflation is coming. Due to tax cuts, deregulation, tariffs, and looser fiscal discipline.

Who is right? None probably 🤣 

3) The stock market feels like it’s a little shakier starting out the year (admittedly this could change before you even get this post 😅 ).

Sure, there is business optimism following Trump’s election. But then the threat of tariffs are spooking some people, while there is also a sense of wearing off in excitement over the AI revolution.

All covered with the fact that US stocks (especially MAG-7) are anything but a bargain at current valuations.

Talking about the MAG-7 stocks.

If the future shifts away from free trade and more toward an all-out economic brawl between the U.S. and China, or the U.S. and the rest of the world, it’s important to keep one thing in mind: many U.S. companies are heavily exposed to international markets.

Which means that while the U.S. economy as a whole might not rely as much on global trade, many U.S. companies do. So I wonder if in a zero-sum economic fight, a "win" for the U.S. economy could actually mean losses for some of its biggest corporations?

4) Gold continues pushing higher in 2025.

The metal has been moving in a near-straight line higher since 2023. And now, for the first time in history, it's trading above $2,900 per ounce.

Just look at the chart below.

Why is it still rising?

Central Banks keep Buying (a Lot): Since the Russia-Ukraine war, central bank gold purchases have doubled from 500 to nearly 1,000 tons per year. The goal? Rely less on the U.S. dollar while still having a US dollar denominated asset.

China Is Leaning in to Gold: China allowed insurance companies to buy gold for the first time last year. And Chinese retail investors are buying gold as hedge, given the terrible real estate and equities market there.

Gold Is Still Under-Owned Most investors: retail and institutional are all underweight gold. They haven’t been driving this rally. But data seems to show they have started leaning in.

Can It Keep Going? History would suggest that when gold moves it’s a structural shift, not just a short-term spike:

5) Bitcoin is stuck around $100 thousand, what’s next?

Is this the top of the bull market? Or is there still some gas in the tank for another big rally?

We are just gonna have to wait and see.

Personally, I plan to be mostly out of the crypto market by the end of spring, rain or shine.

charts

The bar for a positive economic surprise is higher than ever.

• In 2022 and 2023 everybody was expecting a recession or 0% growth. When the economy grew 3% the market ripped higher.

• In 2024, expectations were higher, and the economy still managed to surprise.

• Now, in 2025, solid growth is the base case expectation.

Are we set up for disappointment?

Finally, some interesting data from the dating world:

Proving out what I have heard anecdotally from my single friends: If you are the alpha male in the dating scene, the world is your oyster. If not, it’s a jungle out there.

And finally, some parting wisdom