Weekly Newsletter 01/17/25

Good afternoon and best wishes to you and yours.

The markets and our office will be closed Monday in observance of Martin Luther King Jr Day.

Also on Monday is the Presidential Inauguration in D.C. and the college football national championship in Atlanta. The Norte Dame Fighting Irish take on the favored Ohio St Buckeyes in a culmination of the first football playoff for the highest division in college, formerly known as Division I (lower division playoffs have existed for many years). For me, it’s been too drawn out with too many teams, however, with T.V. networks paying nearly $8 billion on a 7-year contract which just started, I don’t think they are going to change anything based on this guy’s opinion…love your family, like your sports.

The U.S. stock markets are on track for healthy weekly gains (particularly equal-weight S&P). Wednesday was an exceptionally good day on, what seemed to me, unexceptional news. The excuse de jour for the big jump was a surprise in lower reported core Consumer Price Index (CPI). Not surprising to you I’m sure, but prices rose in December. The number given was 2.9% year over year. (On a side note, this marks the 46th straight month above the Fed target of 2%...way to go gang.) Though higher, it was slightly less than expected which signaled to some that maybe, just maybe inflation is starting to trend in a slower fashion. Annualized core CPI came in at 3.2% vs consensus 3.3%. A client during the day inquired as to why the market was doing so well and it’s hard to say 0.1% of anything can make that big of a difference. Despite this well-received data, market still seeing a lot of caution and uncertainty over path of disinflation. This week's prints followed other hotter recent inflation datapoints, including ISM Services prices paid index at 22-month high and ISM Manufacturing prices paid highest since August. Also noted, services inflation remains sticky, while full employment, positive economic growth, neutral Fed funds rate all suggest flat or hotter inflation moving forward.

The 24Q4 earnings season started this week with the big banks providing better guidance. The biggest takeaway was improved Net Interest Income (NII). This is banking 101. Pay depositors a rate lower than the rate borrowers pay you and the amount in the middle is profit…certainly not rocket science, yet somehow the smartest people in a room can mess it up. A seasoned senior loan officer in Laramie Wyoming taught me nearly 30 years ago a few lessons in banking. The 3-6-3 method of running a bank. Pay depositors 3%, charge borrowers 6% and hit the golf course at 3pm. The other insight I remember well, “The easiest way to rob a bank is to own one.” As the Fed lowered rates, banks took advantage and lower deposit rates…at a much higher ratio btw. (The Fed lowered the Fed Funds rate from 5.5% to 4.5%, an ~18% decrease. However, bank deposit rates went from ~5% to ~3% or less…a ~40-60% decrease). On the flip side, you may have noticed, credit card, auto loans, mortgages and general borrowing rates didn’t change at all. As a matter of fact, mortgage rates are higher now than when the Fed started its latest rounds of cuts.

In a “consider the source” moment, the International Monetary Fund (IMF) raised 2025 US growth forecast to 2.7%, up from October 2.2% estimate and just 0.1pp off 2024 pace. This was the highest estimated growth among G7 countries.

Raymond James will be sending the first-round of 2024 tax reports in mid-February with another batch at the end of February. As always please let us know if you wish to have any preliminary tax discussions or would like to have a review once your tax return is completed. My favorite finance cliché: “Its not what you make, its what you keep.” Please remember often what is reported on a tax document has little indication of total account performance.

The link below has additional financial resources for your review.

https://www.raymondjames.com/evangelista/resources

“The function of education is to teach one to think intensively and to think critically. Intelligence plus character - that is the goal of true education.”—Martin Luther King, Jr.

Thank you,

Kyle

KYLE CHRISTIANSON, CFP^®

Financial Advisor

Raymond James & Associates, Inc.

1421 Pine Ridge Rd, Ste 300

Naples, FL 34109

Toll Free (800) 843-2025 | Direct (239) 513-6525 | Main (239) 513-6500 | Fax (239) 596-5474

Kyle.Christianson@RaymondJames.com

Any opinions are those of Kyle Christianson and not necessarily those of RJA or Raymond James. The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. There is no assurance any of the trends mentioned will continue or forecasts will occur. The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Investing involves risk and you may incur a profit or loss regardless of strategy selected. This is not a recommendation to purchase or sell the stocks of the companies mentioned. Leading Economic Indicators are selected economic statistics that have proven valuable as a group in estimating the direction and magnitude of economic change. The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market. The Dow Jones Industrial Average (DJIA), commonly known as “The Dow” is an index representing 30 stocks of companies maintained and reviewed by the editors of the Wall Street Journal. The NASDAQ composite is an unmanaged index of securities traded on the NASDAQ system. Keep in mind that individuals cannot invest directly in any index, and index performance does not include transaction costs or other fees, which will affect actual investment performance. Individual investor's results will vary. Sector investments are companies engaged in business related to a specific sector. They are subject to fierce competition and their products and services may be subject to rapid obsolescence. There are additional risks associated with investing in an individual sector, including limited diversification. Investing in oil involves special risks, including the potential adverse effects of state and federal regulation and may not be suitable for all investors. Bond prices and yields are subject to change based upon market conditions and availability. Gold is subject to the special risks associated with investing in precious metals, including but not limited to: price may be subject to wide fluctuation; the market is relatively limited; the sources are concentrated in countries that have the potential for instability; and the market is unregulated.