Morning News: February 28, 2025
Posted by Eddy Elfenbein on February 28th, 2025 at 7:02 am

India’s Economy Picks Up Speed

What Is Japanification and Is it Happening to China?

China Vows ‘All Necessary Measures’ Against New US Tariffs

All the Ways China Could Respond to Trump’s Ramped Up Trade War

Global Shares Fall After Renewed U.S. Tariff Threats Spook Investors

Trump’s Tariff Onslaught Is Coming Faster Than His Team Can Carry It Out

America’s Trade War With China Should Be a Team Sport

When It Comes to Tariffs, Trump Can’t Have It All

The Oil Market Has a Growing Gas Supply Problem

Team Trump Can’t Have It Both Ways on Oil and Gold

Feeling ‘Slapped Across the Face by Trump,’ Canadians Say They’ll Skip U.S. Trips

Inflation Is Stalking Trump

Egg Crisis Forces Trump to Seek Bigger Imports

Trump Dials Back Fed-Bashing, Seeks a Different Kind of Rate Cut

The Fed’s Hand Might Be Forced to Lower Rates

Traders Are Racing to Bet on the End to Russian Sanctions

‘Trump Put’ Looms as S&P 500 Reverses Election Rally, BofA Says

Bitcoin Down 25% From All-Time High as Crypto Rout Worsens

S.E.C. Declares Memecoins Are Not Subject to Oversight

Rich People Are Firing a Cash Cannon at the US Economy—But at What Cost?

“Low Buy 2025”: What Does It Take to Quit Shopping? Mute, Delete and Unsubscribe.

Indonesia’s $1 Billion Win in Apple Negotiations Sets New Precedent

Tumbling Tesla Shares Leave Investors Bracing for More Losses

Nissan Needs a Savior to Swoop to Its Rescue Again

BASF Expects Earnings Growth on Cost Cuts

Videogaming’s All-In Bet: Can Two Titans Lift a $58 Billion Industry?

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Morning News: February 27, 2025
Posted by Eddy Elfenbein on February 27th, 2025 at 7:04 am

Eurozone Business Sentiment Improves as Rates Fall, Despite Looming Tariffs

Polish Zloty Surges to 10-Year High Fanned by Hawkish Central Bank

LSEG Shares Rise on $633.8 Million Share Buyback

HKEX Profit, Revenue Hit Quarterly Highs

Trump Aims at Chinese Shipping, Risking Another Shock for Businesses

Reagan’s ‘Peace Through Strength’ Never Looked So Weak

‘Buy Canada, Bye America’: Trump’s Taunts Spur Fury in the North

Republicans Gamble on a Regressive Economic Agenda

From Egg Prices to Housing, US Inflation Is Heating Up Again

U.S. Economy Shows Signs of Strain From Trump’s Tariffs and Spending Cuts

Bessent Gets His Lower Bond Yields But for the Wrong Reasons

US Treasuries Slip as Traders Await GDP Data for Growth Hints

Big Money Flocks Back to a Levered Trade That Went Bust in 2008

Squeezed by Strong Dollar, Companies Try to Neutralize Currency Swings

Musk’s Empire Tells Its Own DOGE Story

A Disastrous Buyout Exposes Fuzzy Math in Private Equity Deals

When Central Banks Hit Instagram, Cue the Cringe

Nvidia Sees Mixed Outlook After Two Years of Blowout Results

Tencent Releases Turbo AI Model It Says Is Faster Than DeepSeek

PayPal Needs Help From Its Oldest Friends—Consumers

NFL Teams Gathered Detailed Consumer Data Without Standard Notice or Opt-Outs

Breaking Up BP Would Risk Its Profitable Trading Edge

Founding Family Fails in Bid to Buy Out 7-Eleven

The Most Important Person (in Japanese Food) You’ve Never Heard Of

Becoming a Beer Sommelier is Almost Impossible. Explaining It Is Harder.

They Broke Up. Then Came the Brand Deals.

‘Jeopardy!’ and ‘Wheel of Fortune’ to Leap to Streaming

YouTube Star MrBeast Is Raising Money at a $5 Billion Valuation

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Morning News: February 26, 2025
Posted by Eddy Elfenbein on February 26th, 2025 at 7:05 am

BP to Slash Green Spending, Pivot Back to Oil

Trump Announces Inquiry That Could Lead to Tariffs on Copper

Trump Ends US Initiative to Boost Electricity Access in Africa

Trump’s Rare Earth Diplomacy

Trump’s New Crackdown on China Is Just Beginning

Trump Aims at Chinese Shipping, Risking Another Shock for Businesses

Hong Kong Looks to Shore Up Economy as Trade Risks Loom

China to Inject at Least $55 Billion of Fresh Capital Into Several Big Banks

Trump to Offer ‘Gold Card’ Visas for $5 Million to the Rich

Federal Funding Crackdown Imperils Global Newsrooms

What Will Become of U.S.A.I.D.’s Funding? A Billionaire’s Son Has Some Ideas.

Trump 2.1 Arrives With a Whimper Rather Than a Bang

US Mortgage Rates Decline to 6.88%, Lowest Level This Year

The Economy Is Still Fine. Americans Are Still Gloomy.

Tax Cut Chances Rise as House Passes Budget Targeting Safety Net

Why ‘Probationary’ Employees Are a Target in Federal Job Cuts

Mass Federal Firings May Imperil Crops, Cattle and Pets

Egg Prices Are Soaring. Bird Flu May Not Be the Only Culprit.

Is Warren Buffett’s True Successor Bill Ackman?

Apple’s UK Privacy Fight Is Noble But Shortsighted

Elon Musk’s DOGE Adventure Leads to Knotty Accounting Question for Tesla

Tesla Feels the Wrath of Anti-Elon Musk Backlash

GM Boosts Investor Payout With New Buybacks, Dividend Hike

Aston Martin to Shrink Workforce, Delay EV Launch in Cost-Cutting Drive

Bud Brewer AB InBev Stock Jumps After Higher Prices Boost Revenue, Profit

How a Plastic Panic Gave New Life to Steel and Wood Utensils

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CWS Market Review – February 25, 2025
Posted by Eddy Elfenbein on February 25th, 2025 at 6:35 pm

(This is the free version of CWS Market Review. If you like what you see, then please sign up for the premium newsletter for $20 per month or $200 for the whole year. If you sign up today, you can see our two reports, “Your Handy Guide to Stock Orders” and “How Not to Get Screwed on Your Mortgage.”)

Wall Street has had a case of the jitters recently, and I can’t blame it. On Tuesday, the S&P 500 fell for the fourth day in a row. The index has dipped below 6,000, and it’s fallen beneath its 50-day moving average.

Of course, we should put this in context. Yes, the market is down, but that’s measuring from its all-time high from last Wednesday. Also, markets are naturally very volatile. The stock market pulls back all the time, even in roaring bull markets. There’s nothing unusual about this latest move. The combined loss is a little over 3%.

Still, there are some areas of concern. The economy could be getting weaker. The last retail-sales report was a dud. The jobs report was less than expected. Also, the inflation report came in hot. I noticed that the wage gains for January were the exact same as the inflation figure for January. In other words, every penny in raises was eaten up by higher prices.

Consumer Confidence Plunges

We got more bad news today in the Consumer Confidence report. The Conference Board said that the consumer confidence index fell to 98.3 for February. That’s down seven points from January, and it came in below Wall Street’s estimate for 102.3. If shoppers aren’t happy, then the economy will not do well.

This was the biggest drop in consumer confidence in more than three years, and it was the lowest reading since last June. Inflation expectations increased to 6%. That’s three times the Fed’s target. This comes at the same time that tariffs appear ready to go into effect. We really have no idea yet what the impact could be. The CEO of Alcoa said that it could cost 100,000 jobs in the aluminum industry.

“Views of current labor market conditions weakened. Consumers became pessimistic about future business conditions and less optimistic about future income,” said Stephanie Guichard, the board’s senior economist for global indicators. “Pessimism about future employment prospects worsened and reached a ten-month high.”

There’s another consumer confidence report put out by the University of Michigan. Last week, it reported a larger-than-expected drop of nearly 10%.

We’re currently in a fairly quiet period for economic reports. The new-home sales report is out tomorrow. Later this week, the government will revise the Q4 GDP numbers. While that’s an important report, Q4 is already a bit dated for our purposes. Markets move quickly but econ reports move slowly. A lot of guessing is done in the middle.

One interesting aspect of the market’s recent downturn is that it’s been heavily tilted toward riskier stocks. I like to track the S&P 500 High Beta Index which is a group of high-volatility stocks within the S&P 500. Over the past week, the S&P 500 has lost 2.8%, but the S&P 500 High Beta Index has lost 7.6% while the S&P 500 Low Volatility Index has gained 2.2%.

That’s a big spread for just a few days. It’s further evidence that investors are shying away from risk and that they’re looking for safe havens. I’ll also note that our ETF has been performing well versus the rest of the market in recent days.

In no sense are riskier stocks better or worse than conservative stocks. Instead, there’s a cycle to both and it reflects investor outlook. Sometimes investors become more willing to shoulder risk, and in other times, they seek shelter from the storm. Riskier assets had been doing well, but they got some pushback this week.

It’s not just stocks; we can see the same effect playing out in other markets. For example, bitcoin got dinged hard yesterday and today.

At the end of next week, March 7 to be exact, we’ll get the jobs report for February and that will tell us more about the economy’s recent behavior. The expectation that there will be fewer jobs six months from now rose to its highest level in over a decade.

The simple story is that Wall Street is bracing for bad news, but we don’t know if the upcoming news will be bad just yet. The market prefers to move before the news is certain. For now, Wall Street is adjusting itself to the possibility of bad news.

Buffett Has $330 Billion in Cash

Over the weekend, Warren Buffett released his annual shareholder letter. These are always fun to read. The 94-year-old CEO has a great ability to make complicated topics easy to understand.

What’s caught people’s attention is that Buffett’s cash holding has soared to more than $330 billion. A lot of commenters think that the large cash position reflects a bearish outlook from Buffett.

He was quick to allay those fears. Buffett wrote, “Berkshire shareholders can rest assured that we will forever deploy a substantial majority of their money in equities – mostly American equities although many of these will have international operations of significance.”

For the ninth quarter in a row, Buffett has been a net seller of stocks. Last year, Buffett sold $134 billion worth of stock. Still, Buffett has not been buying back his own stock. Perhaps he simply doesn’t see any compelling buys right now.

By the way, if you like Wall Street history, then today is your day. Several important moments have come on February 25:

The first Bank of the United States was chartered on February 25, 1791. Twenty years later, Congress decided by one vote not to renew the charter.

The first cabinet meeting was held on February 25, 1793.

On February 25, 1817, the New York Stock and Exchange Board was organized. (Sorry, but the Buttonwood stuff wasn’t that important.)

On February 25, 1862, The U.S. formed the Bureau of Engraving & Printing.

On February 25, 1863, Congress created the National Currency Bureau.

On February 25, 1893, the Philadelphia & Reading Railroad bankruptcy launched a Panic.

On February 25, 1901: JP Morgan created the first billion-dollar company, US Steel.

On February 25, 1913: The 16th Amendment authorized the first federal income tax.

That’s all for now. I’ll have more for you in the next issue of CWS Market Review.

– Eddy

Morning News: February 25, 2025
Posted by Eddy Elfenbein on February 25th, 2025 at 7:06 am

Eurozone Wages Slow, Opening Way For Rate Cut

ECB Can Keep Cutting Rates as Inflation Approaches Target, Bundesbank’s Nagel Says

Germany Confirms Economic Contraction, Emphasizing Challenge for Next Government

Bank of Korea Cuts Rate, Lowers Growth Forecast

America’s Turning Its Alliances Into a Protection Racket

Trump Refocuses on Trade

Trump Team Seeks to Toughen Biden’s Chip Controls Over China

Chinese Manufacturers Speed Up Efforts to Dodge Trump Tariffs

US-China Decoupling Fears Drive Slide in Chinese Tech Shares

Trump’s SALT Tax Promise Hinges on an Obscure Loophole

To Do Its Job Right, the Fed Must See What’s Wrong

Bitcoin Slides Below $90,000 as Crypto Selloff Gathers Steam

The Bond Market Isn’t Fully Buying What Musk’s DOGE Is Selling

Some of DOGE’s Damage Can’t Be Undone

Hedge Funds Face Fresh Watchdog Scrutiny Over Huge Macro Wagers

Egg Prices Are a Problem. So Where Are the Solutions?

Nippon Steel to Discuss U.S. Steel Deal With U.S. Officials

ANA to Order $14 Billion of Jets From Boeing, Airbus, Embraer

Tesla Moves One Step Closer to Self-Driving Cars in China

Trump’s Threat to EV Trucking Rules Undermines Big-Rig Bets

Thermo Fisher Nears Deal for Solventum’s Filtration Unit

Fresenius Medical Care Narrows Key Earnings Metric View on Profit Slump

Lilly Cuts Price of Zepbound Vials to Battle Cheaper Copycats

Unilever Replaces CEO to Speed Up Turnaround Efforts

Home Depot Expects Tepid Recovery in Housing Demand

Middleby Plans to Spin Off Food Processing Business

Krispy Kreme Sees Higher Sales After Cyberattack Dents Quarterly Results

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Morning News: February 24, 2025
Posted by Eddy Elfenbein on February 24th, 2025 at 7:06 am

Austria, a Longtime Buyer of Russian Gas, Tries to Break the Habit

Russia Is Wooing Western Energy Companies, but Will They Return?

Corporate America Is Not Raring to Return to Russia if Trump Lifts Sanctions

ECB Might Have to Lower Key Rate to Level That Stimulates Economy, Wunsch Says

German Business Confidence Remains Weak at Start of New Political Era

In Britain, a Fight Over a Film Studio Becomes a Test for the Economy

Italy’s Saipem to Merge With Norwegian Rival Subsea7 in $4.9 Billion Deal

SoftBank, Temasek Among eFishery Investors Facing Near Wipeout

U.S. to Hit Chinese Ships With Hefty Port Fees

U.S. Dockworkers Vote on Labor Deal This Week

Musk’s Federal Worker Order Divides Trump Administration

Is Trump Strong or Weak? Americans Will Decide

Wishful Thinking Won’t Solve the US Debt Crisis

The U.S. Economy Depends More Than Ever on Rich People

Why Private Equity Is Eying Your Nest Egg

Everyone Hates Pennies, Except This Guy

That Online Investment Scam Is a Geopolitical Problem

Microsoft Cancels Leases for AI Data Centers, Analyst Says

Apple to Build A.I. Servers in Houston and Spend $500 Billion in U.S.

Apple Will Add 20,000 US Jobs Amid Threat from Trump Tariffs

Human Therapists Prepare for Battle Against A.I. Pretenders

Trump’s Early Policy Moves Create New Headaches for This Biotech Heavyweight

Apollo to Buy Real-Estate Firm for $1.5 Billion as it Seeks to Fill Gaps

Walmart Wants to Be Something for Everyone in a Divided America

Prosus to Buy Just Eat Takeaway.com for $4.3 Billion

Domino’s US Sales Fall Short, Highlighting Worsening Conditions

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Morning News: February 21, 2025
Posted by Eddy Elfenbein on February 21st, 2025 at 7:02 am

Why Are Pro-Palestinian Activists Suddenly So Quiet?

Ukraine’s Women Keep the Economy in Gear Despite the War

Ukraine Can Survive With the ‘Least Worst’ Peace Deal

‘Mar-a-Lago Accord’ Chatter Is Getting Wall Street’s Attention

When Germany Votes, It Will Be About the Economy

Euro Vulnerable Ahead of German Election

Trump’s Growing Focus on Tariff Revenue Raises Trade War Odds

Airbus Says U.S. Tariffs Would Be ‘Lose-Lose’ for Airline Industry

The Latest Dilemma Facing Finance Chiefs: What to Tell Investors About Tariffs

Trump’s Tariff Wars Leave US Small Business With Nowhere to Hide

Why Trump’s Clean Energy Rollbacks Could Derail a Factory Boom

RBI to Inject $10 Billion Via Forex Swap to Curb Cash Crunch

BOJ’s Ueda Vows to Respond to Abnormal Bond Yield Rise

Wall Street’s New Money Is Shaking Up the Ranks of the Superwealthy

Wall Street’s ‘Original Rogue Trader’ Nick Leeson Is Starting to Get Worried

Meet Seven of America’s Top Personal Finance Influencers

The Case for Getting Your Child a Retirement Account

BlackRock Resumes Talks With Companies Following SEC Guidance

Trump’s Cuts at US Agencies Starve Internet Watchdogs That Fight Disinformation

D.E.I. Comes and Goes. Profits Are Forever.

DeepSeek Promises to Share Even More AI Code in a Rare Step

Super Micro Computer’s Next Leg Hinges on Keeping Nasdaq Listing

Big Miners Show Era of Bumper Payouts Is Over

In the Trump Era, Flying Green Doesn’t Matter Anymore

Soaring Egg Prices Reignite Debate Over Bird Flu Vaccinations

Moody’s Cuts Nissan Motor’s Rating to Junk Status

Universal’s Theme Parks, Long in Disney’s Shadow, Expand at Dizzying Pace

Seeking Golf Deal, Trump Meets With Tiger Woods and Saudi Wealth Fund Chief

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Morning News: February 20, 2025
Posted by Eddy Elfenbein on February 20th, 2025 at 7:04 am

Russia Wins When the US Stops Fighting Corruption

Is Russia Open for Business — and at What Cost?

A Unified Economic Theory of Being a Bully

Ukraine Is Just a Pawn in a Russian Reset

Europe Races to Craft a Defense Plan After Trump’s Ukraine Broadside

Xi Risks Becoming Top US Threat If Trump Cuts Deal With Putin

Trump Says New China Trade Deal ‘Possible’ Despite Tensions

Argentine Mortgages Triple as Milei Reignites a Snuffed-Out Housing Market

Something Is Rotten in Canada

How Tariffs Could Shock America’s Power System

Bessent Says US ‘Long Way’ From Boosting Longer-Term Debt Sales

Interest Rate Cuts on Hold Until Inflation Improves, Fed Minutes Show

So, You Want to Get Rid of the Penny. Do You Have a Plan for the Nickel?

With Truth Social, Trump Has Official Mouthpiece and a Channel for Revenue

‘Sticker Shock’ Awaits US Consumers If Tariffs Threats Become Reality

Trump’s First Month Has Traders Ditching America-First Wagers

Howard Lutnick Starts Wall Street Dynasty With DJ and Trader Sons

Fund Giant BlackRock Is Out to Unite Public and Private Markets

Millennium Lures Team With $100 Million Bid as Hedge Fund Talent War Rages

Microsoft Says It Has Created a New State of Matter to Power Quantum Computers

TikTok Returns to US App Stores Buffeted by Weeks of Uncertainty

Mercedes-Benz Plans to Cut Jobs as Earnings Expected to Slump

Alibaba Posts Fastest Revenue Growth Since 2023

Walmart Warns of Slower Sales Gains After a Bumper Year

Hasbro Expects Mild Sales Growth in 2025 as Tariffs Loom

Birkenstock’s Revenue Rises on Strong Holiday Period

You Can Take the Fried Chicken Out of Kentucky …

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Morning News: February 19, 2025
Posted by Eddy Elfenbein on February 19th, 2025 at 7:05 am

China Inc. Reduces Bets on North American Projects

Even Brazil’s Billionaires Scrap Investment Plans as Rates Hit Double Digits

Rare Earths in Ukraine? No, Only Scorched Earth.

Europe Is Becoming an Afterthought for the World

U.K. Inflation Reaches 10-Month High, Complicating Bank of England’s Rate Path

Rubio Says Sanctions Stay for Now as Trump Eyes Putin Summit

Trump Floats 25% Tariffs on US Auto, Drug, Chip Imports

HHS Job Cuts Jeopardize Our Health and Safety

Elon Musk Zeroes In on the I.R.S.

DOGE Says It’s Saved $55 Billion; Itemized Data Show Far Less

Struggle Over Americans’ Personal Data Plays Out Across the Government

The Cryptocurrency Scam That Turned a Small Town Against Itself

Private Credit Is the Hot New Thing on Wall Street. But What Is It?

Citrone Joins Top-Paid Hedge Fund Ranks With $730 Million Payday

Mastercard Faces Scrutiny Over £200 Million Deal in £10 Billion Case

HP to Buy Parts of Humane, Maker of the Ai Pin, for $116 Million

Musk’s X in Talks to Raise Money at a $44 Billion Valuation

Trump Is Scrambling Global Automakers’ Reliance on America

Mitsui to Acquire $5.3 Billion Stake in Rio Tinto’s Australia Iron Ore Project

How Med Spas Conquered America

How Temu’s Online Dollar Store Became a Trade War Target

Shein $30 Billion IPO Would Still Be a Stretch

Canadian Tire Selling Helly Hansen to Kontoor Brands for C$1.28 Billion

Hermes in ‘League of Their Own’ as Family Gets $5 Billion Payout

The French Billionaire Working His Trump Ties to Spare His Luxury Empire

Bao Buns and Coat Checks Come to Lucky Strike Bowling Alleys (and Cost Cuts Too)

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CWS Market Review – February 18, 2025
Posted by Eddy Elfenbein on February 18th, 2025 at 6:17 pm

(This is the free version of CWS Market Review. If you like what you see, then please sign up for the premium newsletter for $20 per month or $200 for the whole year. If you sign up today, you can see our two reports, “Your Handy Guide to Stock Orders” and “How Not to Get Screwed on Your Mortgage.”)

The stock market was closed yesterday in honor of President’s Day. The long weekend wasn’t enough to stop the bulls. The S&P 500 closed Tuesday at 6,129.58. That’s another new all-time closing high.

For any person who’s watched financial markets long enough, you’re struck by how easily the market can rally amid unpleasant news. The old saying is that “the market climbs a wall of worry.”

Think of all the scary news that could have led you to dump all your stocks. Yet, through it all, sitting and waiting was a great strategy.

Despite it being another up day for Wall Street, Meta Platforms (META), the parent of Facebook, snapped a 20-day winning streak today. The last time that Meta’s stock closed lower was on January 16. Over that time period, Mark Zuckerberg’s net worth increased by $40 billion.

On January 29, Meta reported Q4 earnings of $8.02 per share. That was 18% higher than Wall Street’s forecast. Check out all those black crosses in a row!

December Retail Sales Drop 0.9%

Wall Street got a big shock on Friday with the latest retail sales report. According to the report, retail sales fell 0.9% last month. Bear in mind, that’s not adjusted for the 0.5% inflation we saw last month.

That retail sales report was much worse than expected. Wall Street had been expecting a modest decline of 0.2%. The number for November was revised to 0.7%.

This suggests that consumers are holding back on their shopping. I can’t blame them. Consumers are getting squeezed by higher prices – eggs are up over 50% over the last year – and also by small wage gains. Consumers make up two-thirds of the U.S. economy. If shoppers aren’t happy, the economy won’t prosper.

Excluding autos, prices fell 0.4%, also well off the consensus forecast for a 0.3% increase. A “control” measure that strips out several nonessential categories and figures directly into calculations for gross domestic product fell 0.8% after an upwardly revised increase of 0.8%.

With consumer spending making up about two-thirds of all economic activity in the U.S., the sales numbers indicate a potential weakening in growth for the first quarter.

Receipts at sporting goods, music and book stores tumbled 4.6% on the month, while online outlets reported a 1.9% decline and motor vehicles and parts spending dropped 2.8%. Gas stations along with food and drinking establishments both reported 0.9% increases.

Some folks are saying the report really isn’t that bad. Some of the drop is due to bad weather. Also, auto sales fell after delivering a big gain in December. Maybe so, but those factors were known prior to the report and it still fell far below expectations.

The retail sales report is especially worrisome because it comes after another bad inflation report. It’s becoming very clear that inflation isn’t going away. Core inflation is holding steady around 3.3% or so, which is much higher than the Fed’s target.

The Budget Deficit Soars

Yesterday, the government said it ran a budget deficit last month of $129 billion. Holy moly, that’s big! The deficit is up significantly from the $22 billion deficit it ran for last January.

It’s not hard to pinpoint the problem. For January, receipts grew 8% to $513 billion, but outlays were up 29% to $642 billion.

The Treasury said there were some technical reasons for the big increase such as benefit payment calendar shifts. Also, payments of $87 billion worth of February benefits were paid out in January. Treasury said the adjusted deficit increase for the month would have been $21 billion instead of the reported $107 billion.

Still, that doesn’t exactly put me at ease. For the first four months of this fiscal year, the U.S. Treasury reported a deficit of $840 billion. That’s up 58% from last year. For the year so far, receipts are up 1% to $1.6 trillion, but outlays are up 15% to $2.4 trillion. For the new fiscal year, individual income taxes are up 6%.

Customs receipts were up 12% but that’s a very small portion of receipts. This doesn’t yet reflect any of the new tariffs on Chinese goods that went into effect recently.

The most concerning number is the interest payments on the debt. You can’t escape those. So far this year, interest expenses are up 10% to $318 billion. Social Security outlays, which is the single-largest item on the budget, are up 8% to $529 billion. Military spending rose 13% to $318 billion.

I try not to be an alarmist on these matters, but if we’re in better fiscal shape, that gives the Fed a lot more room to lower interest rates. The rolling 12-month deficit is now running at 7.3% of GDP. Ideally, that should be cut in half. These deficits are having an effect. Consider that over the last 16 months, the price for gold has gained close to 50%.

Even with the holiday-shortened week, there are still a few things to look out for this week. Tomorrow we’ll get reports on housing starts and building permits. The Fed will also release the minutes of its last meeting. The Fed decided to leave interest rates alone, but it will be interesting to see if the central bank has any broader concerns about the economy.

On Thursday, we’ll get the regular jobless claims report. This data series has held up well in recent months despite the concerns news about retail sales. Then on Friday, we’ll get the report on existing home sales.

That’s all for now. I’ll have more for you in the next issue of CWS Market Review.

– Eddy