Daily Commentary

MarketMinder’s View: Huh. This casts US Consumer Price Index (CPI) inflation’s slowdown from 2.7% y/y to 2.4% in January as “providing hope that the nagging US inflation problem could be starting to ease.” But inflation already eased. The war is over. We won! The chart inside shows as much, tracking inflation’s slide from 9.0% y/y in June 2022 to today. You will see the inflation rate has been rangebound for two years, wobbling between around 2% and 3%. Fun fact: CPI’s long-term inflation rate is about 3.0%, rendering today’s reading below-average. Yes, it is above the Fed’s 2% target, but that target is squishy and arbitrary and something the Fed itself was loath to establish, as transcripts of the deliberations over it show. On the bright side, the article makes the salient observation that tariffs haven’t turbocharged inflation, which makes perfect sense. Most of the CPI is services, where tariffs are largely irrelevant. Among goods, where businesses have passed tariffs to customers, it is no different from the normal phenomenon of prices of some goods rising as others fall. Inflation isn’t about trends in select goods. It is about prices across the broad economy. Those are in check. That society doesn’t seem to realize this just yet shows there is still a brick in stocks’ wall of worry labeled “inflation.”

MarketMinder’s View: Look, we agree the “Magnificent Seven” Tech and Tech-like stocks’ large weighting in the S&P 500 doesn’t make the index inherently riskier or undiversified, but the reasoning presented here is off-base and strikes us as dangerous. We do appreciate the observation that five of the Mag Seven lagged the S&P 500 last year and clearly didn’t make or break its return. That is a good point and also a reminder that MarketMinder doesn’t make individual security recommendations (we are here for the broad theme only). But this heads down the wrong path: “Giant companies, even in the same industry, have much more-diversified economic exposures than smaller companies do. That’s why, [two researchers] find, investing in only a handful of the biggest companies has ‘essentially the same’ riskiness as owning all the rest of the stocks in the S&P 500 combined. ‘The largest stocks are just safer,’ [one analyst] says—making them intrinsically well-diversified.” No. There is no such thing as a “safe” stock. All carry the risk of loss, and sometimes large stocks get hammered during bear markets. Saying you don’t need to diversify because the large companies diversified themselves for you is like saying you don’t need global exposure if you have enough US-based multinationals. We think the correct move here is to note the concentrations within the S&P 500 and then ensure you are invested globally to mitigate US-specific risks and widen your opportunity set. The Mag Seven’s collective 20.9% weighting in the MSCI World Index (per FactSet), far less than its 33% weighting in the S&P 500, is an easy way to see this.

MarketMinder’s View: UK GDP rose 0.1% q/q in Q4, short of expectations for 0.2% growth, as business investment dropped -2.7% and consumer spending grew just 0.2%. While the article acknowledges the UK’s annual expansion picked up from 2024 (from 1.1% to 1.3% in 2025), it also frets over GDP’s apparent sputtering in the second half. “However, economic output was then hit by the cyber-attack on Britain’s biggest carmaker, Jaguar Land Rover, which depressed vehicle production and led to the minimal growth in the third quarter. Speculation around the autumn budget appears to have further hindered growth in the final three months.” As one interviewed expert here puts it, “Businesses had a particularly bleak quarter as the dark cloud of uncertainty caused by the budget and higher costs severely curtailed trade and investment plans.” But hold on. Sure, services output didn’t grow in Q4, but on a monthly basis, the only decline occurred in October, as Budget speculation mounted. Services grew 0.1% m/m in November and accelerated to 0.3% in December—revealing that as clarity came, falling uncertainty helped headwinds on growth fade in the UK’s largest economic sector. This is yet another case of the UK’s economic resilience and reality not being as poor as many believe—a bullish factor.