Stagflation - Market Update March 24-28, 2025
The boogeyman of Economists
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Welcome back to the Rambling Mind Newsletter. This is your Market Update.
Summary of Topics:
Economic News
🥵 Inflation Heats Up
Stats of the Week
🚘 25% Tariffs on Cars
🥚 $3 Eggs
♨️ 100 Million Grills
🗳️ $100+ Million Campaign Donations
🪪 300 Student Visas
Looking Ahead
Labor Markets Back in Focus
Tariffs Go Into Effect
Extras - Trump Did WHAT?
White House Commercialization
Executive Order to Restrict Voting Rights
More Criminals Pardoned
Markets
Year To Date Returns
Tale of the Tape
Economy
The Fed's preferred inflation guage, Personal Consumption Expenditure, was released on Friday. It showed two ominous signs for the economy: increased inflation and reduced spending.
🔢By the Numbers: Prices from last year increased in February by 2.8% more than the expected 2.6% and more than 2.7% in January.
Since last month, prices have increased by 0.4%
Core inflation, which removes volatile food and energy prices, increased year over year by 3.6%. The highest we have seen since March of last year.
On the other hand, inflation-adjusted spending only increased by 0.1%. As consumers faced the uncertainty of the current administration's tariff discussions, and decided not to spend at all.
👍🏾Good News: Although folks aren't spending, they are saving more money. The US household savings rate rose to 4.6% from 4.3%.
Takeaway: Demand slowing and prices increasing are never a good combination. If this continues, we will be in a stagflationary environment, which is much worse than inflation. You must remember that one man's spending is another man's income. When everyone (consumers, businesses, and government) decides to stop spending for whatever reason, typically because of fears that a recession might be coming, it brings about the recession we were afraid of.
This is the job of Jerome Powell and the Fed. It is to instill security and calm, mainly to businesses, which in turn continue hiring workers and paying higher wages. This allows people to keep spending.
Unlike an inflationary environment, our wages still increase to somewhat keep up with prices rises. In stagflation, wages are either stagnant or recede.
🪙My Take: Papa Powell gotta be pissed after seeing this report. His hard work over the last two years engineering the soft landing of the economy might be undone in 2 months by Trump's confusing economic plans.
Stats of the Week
The Trump Administration finally imposed a real tariff that did not get rolled back but is actually in effect. President Trump on Wednesday unveiled a 25% tariff on all imported vehicles. Meaning cars that are not fully assembled in the US.
You can expect prices to go up rather quickly on cars (which have already been stubbornly high since Covid) because 45% of cars sold in the US are imported. Mainly coming from Mexico and Canada, making their way through the US at various points.
🪙My Take: Don't expect to get relief by buying a used car. Those will rise as dealers know you have no other option. I believe companies will find a way to gamify the system to save as much money as possible. But that does not mean they will charge a cheaper price. With the pretense and cover of these tariffs, I expect to see nice profits from the auto manufacturers over the next 3 years or until the tariffs are removed.
Egg prices are coming back to earth as supply chains get back to normal after the surge of bird flu. Hopefully, I can finally stop hearing how egg prices are the reason we can't get a handle on their finances.
George Foreman passed away two weeks ago, at the age of 76. He left a legacy that only Ali surpassed. I never knew George Foreman as a boxer, but rather for the grill I used through college and today in my house for certain meals. The grill was one of the few times a celebrity product was worth it.
🔢By The Numbers: Over 100 million Foreman grills have been sold since 1994 (when I was born) when George Foreman became the face and spokesperson for the grill. In 1997, Foreman sold his naming rights on the product for a nice $137 million (about $273 million in today's dollars).
Foreman said he has made over $200 million from the grill sales.
The top 6 donors (bribes) to US elections gave more than $100 million each. Every single one of these donors gave to the Republican Party.
🪙My Take: Something has gone wrong that people can donate (bribe) such large sums of money. There is no reason we have elections with this much money coming from so few people. The conflicts and risks are far too large. We have seen some of the effects already, not just with Trump but even with Obama, Bush, Clinton, and every other political official as well. Sometimes things that would be better for the general public are shelved because it does not benefit a certain group of people.
This is why I no longer call these donations but bribes. When you can have influence over someone in exchange for cash, it is not a donation, it is a BRIBE! Until we all accept this truth, things will only get worse.
The number of student visas revoked by the Trump administration's crackdown on any student who protested the Hamas war.
🪙My Take: This is illegal and a civil rights violation. Free speech is a key tenet of everything in the US. Trump is going to the one place with the most space for free speech and actively demolishing those rights, college campuses. He has already gotten administrators to ensure they will not fight back or protect students by threatening the funding of the school, or in many cases, pulling those federal funds.
For all my immigrant folks out there, keep your heads up and stay out of the firing lane. But I will be honest, this scares me as someone who knows that at any point on any day, the same thing could happen to me or my family.
Looking Ahead
Jobs Jobs Jobs
This week will bring the labor market back into focus.
On Tuesday, we get the JOLTS (Job Opening and Labor Turnover Survey).
This provides us an insight into how tight or loose the labor market is.
Over the last 6 months or so, the job openings have declined drastically and the labor turnover rate has also declined as less people are able to switch jobs.
That is not a great sign for the labor market because it means people are not able to switch to better-paying jobs.
On Wednesday, we get the ADP Private Payrolls.
This provides an insight into the hiring of private companies.
On Thursday, we get weekly initial jobless claims.
This shows the number of people applying for unemployment benefits for the first time during a given week.
On Friday, we get the grandaddy of them all, the nonfarm payrolls.
This gives us the number of jobs that have been added to the economy over the last month.
It also gives the current unemployment rate.
👀 What to Watch
The biggest event will be the unveiling and enactment of Trump's tariffs. It is expected that Trump will provide details on the tariffs. The markets will react either massively negatively or not that much.
Extras - Trump Did What?!
The White House is seeking corporate sponsors for the Easter egg roll. It was a 147-year-old annual tradition that brought kids to the White House to find eggs. But now it has been turned into another opportunity for Trump to commercialize our democracy and collect "donations".
🔢By The Numbers: The "sponsors" can select from three packages that range from $70,000 to $200,000. According to Axios, "The most expensive option Platinum 900-square-foot booth, tickets to a brunch hosted by First Lady Melania Trump, and 150 tickets to the event (100 general admission + 50 VIP)."
🪙My Take: Trump is making the silently said things, loudly shouted. Also, can we cut it out with the "sponsorships" or "donations"? These are BRIBES!! Any other nation that does the same thing, we would say it's corruption and bribery, but for some reason, in the US, we somehow make it legal and call it part of "campaign fundraising".
Bruh, PLEASE! It's BRIBERY & CORRUPTION!
On Tuesday, Trump signed an executive order that requires everyone to have proof of citizenship when voting and prevents any state from counting mail-in ballots that arrive after Election Day.
Like with most thing with this administration, you might start nodding your head that this makes sense. Do not let the simple explanation hide the reality of what is happening here. The goal is voter suppression and a power grab to dictate who votes and who does not.
Explain: In the US, there are only three real ways to validate your citizenship status:
If you are an immigrant, you must have your naturalization documentation.
For those of us who are immigrants, we can probably find this document much faster than any other document we own. Because we live in fear of the government trying to play with us.
If you are a natural-born citizen, there are two ways to validate your citizenship:
An original or certified copy of your birth certificate, where the name on the birth certificate matches the name you are registered to vote with.
Have a passport, also something more than 90% of the US public do not have.
Takeaway: Federal law already does not allow non-citizens to vote, so why is this needed? This executive order is simply a veiled attempt to limit the number of lawful citizens who can vote. It primarily makes it harder for three large groups of people: young people, poor individuals, and minorities.
To get your birth certificate certified, because I can guarantee that most of us do not have access to the original. It takes months, and most people,e especially young folks and those who are less affluent, do not keep up with the news to begin these processes early or even have the resources to handle these things.
Extra: Also, this executive order infringes on state rights.
My Take: Every time I hear the administration say something about fraud, I now just replace it with "gain power." And then it makes sense why they are doing certain things.
Should We Care?: Probably not. This is unlikely to survive all the legal scrutiny it will face. But again, it is another distraction from the administration from the main target. Which is increase tax cuts while gutting many of the social welfare programs.
While the Trump Administration continues using immigrants as the excuse for why crime is "so bad" in the US, President Trump is also pardoning individuals who were convicted without a reasonable doubt of major crimes against millions of Americans.
Details: On Friday, Trump pardoned Trevor Milton, the founder of the fake electric vehicle company Nikola. Trevor was found guilty of securities fraud because he showed a fake video of a "working" electric truck and used it to get his company to be valued at $30 Billion more than Ford at one point. After an investigation by a short seller called Hindenburg revealed the truth about the company, the government investigated and found everything to be true. Many people who worked in the company confessed to the lies. Trevor was sentenced to 4 years in prison.
Milton "donated" $1.8 million to the Trump campaign in 2024 and has now been pardoned.
AGAIN IT AINT A DONATION. IT’S A BRIBE!
Not Alone: Milton is not the only criminal who has been able to win favor from Trump through "donations".
Ross Ulbricht, the founder of the dark web marketplace Silk Road, was serving a life sentence for operating a website that functioned as a go-to for drug dealers and to hire killers.
He confessed to everything and is now a free man.
Ozy Media founder Carlos Watson and pardoned crypto entrepreneurs who pleaded guilty to violating bank secrecy laws.
Dude faked being a YouTube executive to defraud Goldman Sachs.
But hey, a small donation changed everything.
Takeaway: Trump is simply bringing the dark nature of the US into the light and doing what so many others have done on a massive scale. We all know in the US if you have money, the law is a suggestion, not something you have to follow.
It's how major companies have been formed, like Elon with Tesla and ignoring Department of Transportation requirements, or with Space X ignoring Federation of Aviation Administration requirements. Its the ethos of silicon valley companies. If you have a big enough backer, ask for forgiveness, not permission. It's why OpenAI and other AI companies didn't go seeking permission to use the content online, they just used it.
In a capitalist society, CAPITAL RULES! You get your way with your capital.
*I am a tiny shareholder in this company.