Economy
Not much in the way of breaking economic news this week, but a scheduled revision to the gross domestic product (GDP) for the third quarter of 2025 showed the economy grew slightly faster than previously reported. In more real-time news, the number of people who filed for unemployment insurance last week was below economists' expectations, nearly matching the previous week's numbers. That's not to say the job market is robust right now, but the wheels haven't fallen off either.
The economic news cycle will pick up next week when the Fed meets and announces what will likely be no change in interest rates from the last meeting. Current odds of a rate cut are less than 5%. Perhaps the most interesting story right now with the Fed is the recently announced criminal investigation from the Department of Justice into Jerome Powell's Senate testimony about the cost of rehabbing the Fed buildings. This will be Powell's first public press conference since the investigation was announced, and he will undoubtedly be asked about it. President Trump could announce his pick for the incoming Fed chair in the next several weeks, but there are now members of the Republican party threatening to block his nominees until the DOJ's probe is finished. (I have commented to my wife on several occasions that the current goings on between the Fed and the Trump administration is far more entertaining that the stuff she watches on Bravo but I've yet to convert her.)
Markets
The S&P 500 closed Friday relatively unchanged from where it closed a week ago, but it was anything but a quiet week. Markets opened sharply lower Monday and fell throughout the day as they reacted to President Trump's tariff threats made late in the day last Friday. The tariffs were related to his desired acquisition of Greenland and in response to pushback from Denmark and other European nations. He was scheduled to speak at the World Economic Forum in Davos Tuesday morning, and when he explicitly ruled out military action, markets started to rebound their losses. By Tuesday afternoon, a new deal was struck between the US and NATO, and the tariffs announced just a few days earlier were walked back. With the geopolitical drama off the table, we were able to focus on corporate earnings, which have been good so far at these early stages of earnings season. Next week is jam packed with earnings calls, including several of the Magnificent Seven companies, which interestingly have underperformed the S&P 500 ex-Mag 7 as a group for the last few months.
What We're Reading
- Out of Control- The Art of Wandering
- Gen X and Millennials Will Inherit Trillions in Real Estate Over the Next Decade - WSJ
Have a great weekend.
Dogwood Wealth Management