Succinct Summation of the Week's Events

Succinct Summation of the Week’s Events:

Positives,

1)DeepSeek reminded us all of the great ability of technology to lower the costs of doing things and a lower price point for users, whether business and consumers, can help to widen and expand the markets that will use Gen AI.

2)The key factor in getting Powell & Co to start cutting interest rates last September was confidence in the trajectory of inflation and the unemployment rate. Now, I don’t believe he can have much confidence and was right to pause and say they are not in a hurry. If more cuts are needed, they can always change their minds.

3)Initial jobless claims totaled 207k vs 223k in the week before but best to average the two because of the MLK holiday. The estimate was 225k. The 4 week average was 213k vs 214k in the week before. Continuing claims continue to be the issue with it totaling 1.858mm, though down from 1.90mm last week which was around the highest since November 2021.

4)Apartment List said that NEW rents fell .2% in January m/o/m in the seasonally slow rental period. They are down .5% y/o/y. The vacancy rate rose one tenth to 6.9% which is the highest dating back to 2017 when they first started collecting this data point.

5)December personal income rose .4% m/o/m as anticipated while spending was better than expected with a .7% gain, two tenths above the estimate and November was revised up by two tenths to a .6% gain.

6)The consumer helped to drive the Q4 GDP growth bus with a 4.2% gain driven by a 12.1% jump in durable goods spending with help from motor vehicles and recreation. Spending on services continues to be led by healthcare and leisure/hospitality. Consumption alone added 282 bps to the GDP figure. The drop in inventories which was almost a 100 bps drag on GDP could have been a pre-tariff inventory drawdown as buyers rushed to procure product before year end.

7)The Q4 Employment Cost Index rose .9% q/o/q and 3.8% y/o/y vs 3.9% growth in Q3. Most importantly, private sector wages and salaries grew by 3.7% vs 3.8% in the quarter before. These figures continue to decelerate though in part due to tough comps and are still running well above pre Covid levels.