
The Week in Charts (1/27/25)
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The most important charts and themes in markets and investing…
1) More All-Time Highs
The S&P 500 hit its first all-time of the year last week, crossing above 6,100 for the first time.



At the same time, Bitcoin also surged to a new record high, rising above $109,000 for the first time.

The financialization of crypto in recent years seems to have contributed to a rising correlation between Bitcoin and equity markets like the S&P 500.

Over the past 9 years, Bitcoin has moved up or down in tandem with stocks in every single calendar year, but with a significantly higher beta. When the S&P 500 advanced in 2016, 2017, 2019, 2020, 2021, 2023, and 2024, Bitcoin rose far in excess of the S&P 500’s return. And when the S&P 500 declined in 2018 and 2022, Bitcoin experienced much bigger declines (-73% and -65%).

2) The Biggest Headwind for Stocks: High Expectations
With a CAPE Ratio of 37.8, US equity valuations at the start of Trump’s second term are higher than the start of any other presidential term in history.

Which is another way of saying that expectations today are extremely high. Historically, that has meant below average future returns for stocks when looking out 10 years.

Expectations in the credit markets are also at an extreme, with High Yield spreads at their tightest levels since June 2007 (2.59%).

When spreads have been very tight in the past, future equity returns have been well below average.

3) All the Signs Were There
A few days before taking office for his second term, President Trump decided launched a meme coin.

Naturally, the price immediately skyrocketed and within 48 hours the market value of the coin went from nothing to nearly $15 billion. And this only includes the circulating supply – if you add in the supply held by the coin’s creator (Trump), the total diluted market value was an astounding $75 billion.
In the week since its launch, the coin has already lost two-thirds of its value.

But that’s actually better than the 82% decline in the first lady’s meme coin (yes, there was a crypto coin created for her as well).

No one rings a bell at the top. But years from now we’ll look back and say that it was so obvious. All the signs of a speculative mania were there – clear as day.
4) The Housing Market’s Quadruple-Whammy
US Home Prices have increased 53% over the past five years, more than double the increase in average wages.

While prices have risen, so have mortgage rates (from under 3% to over 7%), creating a so-called double-whammy for new homebuyers.

But if we add in other major housing expenses like property taxes and insurance which have also seen tremendous increases, it’s more like a quadruple-whammy.
32% of the average US mortgage payment in 2024 went to property taxes and insurance, a record high and up from 29% a decade ago.

The least affordable housing market in history has caused both demand and supply to plummet, and here’s the result: fewer US existing homes were sold in 2024 than any year since 1995.

5) Big Banks, Big Profits
All of the major US banks traded higher after reporting better-than-expected profits in the 4th quarter.
The largest bank in the world (JPMorgan Chase) generated a record $58 billion in Net Income during 2024. That was 60% higher than 5 years ago and 169% higher than 10 years ago.

Here are the total returns for the six major US banks over the past year. All have handily outpaced the S&P 500’s 25% return with gains ranging from 48% to 68%.

6) Another Record Year for Netflix
Netflix revenues hit a record $10.25 billion in Q4, up 16% YoY. Net income of $1.87 billion was up 99% YoY.

Netflix generated Revenues of $39 billion in 2024, 609% higher than a decade ago ($5.5 billion). Net Income of $8.7 billion in 2024 was 3,165% higher than in 2014.

What’s driving this growth?
More subscribers paying increasingly higher prices.
Netflix ended the year with 302 million paid subscribers, 41 million more than a year earlier. That was the biggest annual increase ever for the company.


Netflix also announced a new round of price increases during its quarterly call:
- Standard Plan: $17.99 a month, up from $15.49 (16% increase).
- Ad-supported Plan: $7.99 a month, up from $6.99 (14% increase).
- Premium Plan: $24.99 a month, up from $22.99 (9% increase).
Investors embraced the earnings report and price hike announcement, sending the stock to a new all-time high. $10,000 invested in Netflix at its IPO in May 2002 is now worth over $8 million.

7) A Few Interesting Stats…
a) Self-driving taxi company Waymo picked up close to 500,000 passengers in California last August, up from fewer than 20,000 a year earlier.

b) Economists now see a 22% likelihood of a US recession occurring in the next 12 months, the lowest probability since January 2022.

c) Individuals own an estimated 70% of Bitcoin’s total supply…

d) 21 US States increased their minimum wage this year by an average of 4.6%. Biggest percentage increases: Delaware (13.2%), Nebraska (+12.5%), and Missouri (+11.8%).

e) Walmart, Amazon and Costco now make up 17% of total retail sales in the US, up from 11% a decade ago. Their share price gains have widely outpaced the Retail ETF ($XRT) over the last 10 years.


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