Happy Lunar New Year! It is now the Year of the Horse, and we should all celebrate the Spring Festival for the next 15 days, as the Chinese do. Catch you later!
Or now. Now also works.
We got a couple of important data points last week. First, the January jobs report arrived and showed that net non-farm payroll increased by 130,000 – much higher than expected. All growth came from healthcare and social-assistance jobs. Other job categories were negative. Past jobs reports were revised downward, so that the 2025 total jobs created were just 181,000 for the entire year, down from the 584,000 which were initially reported.
Then we saw the Consumer Price Index (CPI) release, which came in at 2.4% (year over year) for January, down from 2.7% in December. Core CPI, which excludes food and energy, rose 2.5% year over year. These numbers are closer to the Fed’s 2% target inflation rate, but we must remember that we are seeing diminishing inflation, NOT disinflation. Prices are rising more slowly, but are still rising. For instance, the cost of roasted coffee gained just 0.1% in January, but is higher by 17% over the past year.
Existing home sales plunged 8.4% in January, with sales declining across all regions of the U.S. (not just in the snowbound East). The median price of homes for sale increased by less than 1% in the trailing 12 months. So, nobody is buying, and prices are not being bid over asking. Current 30-year mortgage rates are around 6.11% to 6.22%, with some highly qualified buyers receiving rates below 6%. But that’s not quite low enough to entice Baby Boomers out of their enormous family homes and let younger families in.
All three releases weighed on stock markets, with the major indices posting their worst week since November. The Dow is back below 50,000. The Dow Industrial index is weighted by share price, which means that companies with higher per share prices contribute more to the movement of the Index. During the Dow’s move from 25,000 to 50,000, Goldman Sachs was responsible for more than 4,000 points, while Apple only counted for just over 3,000 points. Apple is clearly a more valuable company, but that’s why seasoned investors watch the Standard & Poor’s 500 more than the Dow.
Also weighing on markets was the fear that Artificial Intelligence (AI) would not only replace workers with robots, but would also replace companies completely. It has apparently just occurred to some investors that software companies will be unnecessary if users become good enough at using AI to obviate their need to buy software. Last week trucking companies were hit because AI could replace the software that those companies use to track their fleets and coordinate their logistics. And maybe AI is going to do that someday, but probably not this week.
Nonetheless, money flowed out of stocks and into Treasurys, pushing bond prices higher and yields lower. Bond prices and yields move in opposite directions, because when you pay more for a bond with a fixed coupon, you are receiving less yield per dollar invested, and vice versa.
Alphabet, parent company of Google, sold $32 billion of hundred-year bonds last week. In the history of hundred-year bonds some are still paying, but others of them (J.C. Penney, we’re looking at you) eventually sold for just pennies on the dollar. Alphabet looks invincible now, but it won’t always be so. And its hundred-year coupon of 6.05% may not always be attractive. As the Wall Street Journal reported, “This is a great time for companies to borrow. It isn’t obviously a great time to lend to them.”
Friday the 13th may be unlucky because that’s the day that King Philip IV of France hunted down the Knights Templar in 1307 (one theory) but it’s unlucky this year because the government went back into a partial shutdown after House members failed to reach a compromise on ICE and DHS funding. TSA funding is affected – maybe it’s not a great time to fly.
The Congressional Budget Office found that U.S. businesses and consumers paid nearly 90% of 2025’s import taxes (read: tariffs).
Some bitcoin buyers were momentarily enriched when $40 billion in bitcoin was given away by Korean bitcoin exchange Bithumb in a promotional campaign. The big winners were supposed to share 620,000 Korean won, worth about $425. Instead, the exchange paid out 620,000 BITCOIN, worth more than $40 billion. So many recipients tried to sell their winnings that the exchange had to half trading. Bithumb says it has recaptured 99% of the misdistributed bitcoins. Oh, but that 1%!
For the week ending on Friday, February 13th, the S&P 500 finished at 6,836, the Nasdaq Composite Index at 22,546, and the Dow at 49,500. The yield on the ten-year Treasury Note closed at 4.056%. U.S. crude oil cost $60.40 per barrel, N.Y. gold cost $4,993.00 per ounce, and one Euro was worth $1.18.
Elizabeth E. Cook
Partner, Diastole Wealth Management
News and information presented here was gathered from sources believed, but not guaranteed, to be reliable, including (but not limited to) Morning Brew, Barron’s, Bloomberg, CNBC, The Wall Street Journal, Yahoo Finance, 1440 Digest, The Washington Post, The Bureau of Labor Statistics, Axios, The New York Times, The Hustle, CNN, USA Today, The AP, Fortune, and Reuters. If you have questions, please call us at 203.458.5220, or write to me, Liz Cook, at ecook@dwinvest.com. Thanks for reading!
If you have small children or grandchildren, you may already know that the cost of babysitting rose nearly 5% last year, reaching $26.24 per hour for one child and almost $30 per hour for two children (according to Urban Sitter). Starting wages at McDonald’s are in a range from $11 to $17 per hour. It says a lot about children that parents have to pay about twice as much per hour as McDonald’s does.