The S&P 500 and the NASDAQ climbed around 1%, recording their second positive week in a row but failing to match the previous week’s stronger gains. It was the sixth positive week out of the past eight for both indexes. The Dow climbed 1.7% for the week but finished 0.2% shy of joining the S&P 500 and the NASDAQ in record territory. Taylor Swift announced the release of her new album this week. I broke down this week’s update using Taylor Swift songs.
You Need to Calm Down
Bitcoin has been surging to record highs. The price of Bitcoin topped the $124,000 level on Thursday. It calmed down a bit after hitting that high. The price has fallen back down and is trading around $118,000. On a year-to-date basis, Bitcoin is up nearly 27%. If you have bitcoin, the temptation is to let it keep running. The right thing to do howeve,r is to sell 5 to 10 percent of your position to lock in some of these gains.
I Knew You Were Trouble
In April, it was widely assumed that the tariffs would cause inflationary troubles. That trouble has not yet materialized, at least at the consumer level. The two inflation reports this week presented a mixed picture of inflationary pressures at the consumer and wholesale levels. The Consumer Price Index (CPI) showed that inflation held steady at a 2.7% annual rate in July. The brunt of the tariff cost is being carried at the wholesale level. The Producer Price Index (PPI) reflected that business costs grew at a larger-than-expected 3.3% increase. That is the sharpest rise in five months. Inflation remains manageable but not where the Fed would like it to be. Even with the rise, PPI inflation has yet to be as bad as originally feared. This has the market rising as controlled inflation keeps the possibility of a Fed pivot to easing on the table.
Look What You Made Me Do
The trade tension with India has increased. As a result, a scheduled visit by U.S. trade representatives to New Delhi later this month was called off. The visit that was expected to take place between Aug. 25 and Aug. 29, right before an additional 25% penalty tariff is to take effect on August 27th. President Trump imposed a 25% blanket tariff on Indian exports. He plans on adding to those with an additional 25% as a “penalty” for India purchasing Russian crude oil.
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