The Week in Charts (7/23/25)
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The most important charts and themes in markets and investing…
1) Hotter Than Expected
Overall US CPI moved up to 2.7% in June, above expectations and the highest inflation rate since February. US Core CPI (excluding Food/Energy) moved up to 2.9%, also the highest reading since February.
This effectively eliminates any chance of a Fed rate cut at next week’s FOMC meeting and the markets are reflecting that with a less than 3% probability of a cut.
2) Easing Ahead
While the Fed is unlikely to move next week, they are still expected to cut rates in September and December. That would bring the Fed Funds Rate down to 3.75-4.00% by year-end. In 2026, 3 more rate cuts are currently priced in with the Fed Funds Rate ending the year at 3.00-3.25%.
But what about the Fed’s 2% inflation “target” that has yet to be achieved?
And what about the fact that inflation has averaged more than double that target (4%) over the past five-and-a-half years?
The market seems to be betting that the Fed will dismiss these concerns in resuming their easing cycle in September.
3) More Milestones and More All-Time Highs
The S&P 500 hit its 11th all-time high of the year yesterday, continuing its remarkable turnaround from just a few months ago. Fears overs tariffs impacting the global economy have completely disappeared.
The S&P 500 Index has crossed above 6,300 for the first time, its 3rd 100-point milestone of 2025 and 7th in the past year.
Meanwhile, the Nasdaq Composite has crossed above 21,000 for the first time. The index has doubled over the last 5 years and quadrupled over the last 10 years.
4) Priced for Perfection?
The huge advance over the past few months has pushed US equity valuations up to levels we haven’t seen in some time.
The S&P 500’s price to peak earnings ratio has moved up to 26.5, its highest level since 2000 and 54% above the historical median.
The S&P 500’s CAPE Ratio is not far from crossing above 38 for the 3rd time in history and is now higher than 98% of historical valuations.
5) Pricing Power of Netflix
Netflix raised prices earlier this year on all of its plans, with increases ranging from 9% (premium plan) to 16% (standard plan).
Subscribers seem to have accepted these price hikes with the company reporting record sales and profits in Q2.
Revenues hit a record $11.1 billion, up 16% YoY. Net income hit a record $3.1 billion, up 46% YoY. Operating margins surged to a record 34%, up from 27% a year ago.
$10,000 invested in Netflix at its IPO in May 2002 is worth over $10 million today.
6) Too Big to Fail
10 Years ago, JPMorgan had a lower market cap than Wells Fargo. Today, its market cap of $800 billion is higher than its 3 largest competitors (BofA, Wells Fargo, Citigroup) combined. Too big to fail? We’re way past that.
7) A Few Interesting Stats…
a) YouTube now owns 12.5% of all U.S. TV viewing time – more than any other distributor.
b) After a record 25 consecutive months of negative real wage growth, wages have now outpaced inflation on a YoY basis for 26 straight months. This is a great sign for the American worker that hopefully continues.
c) Over the last 40 years, College Tuition and Fees in the US have increased by over 700% (8x) while overall Consumer Prices (US CPI) are up 199% (3x).
d) US Auto Insurance rates have increased by 94% over the last decade, far above the 35% increase in overall consumer prices.
e) The median household income necessary to purchase the median priced home for sale in the US ($123k) is now 56% higher than the current median household income ($79k). This is the most unaffordable housing market in history.
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