The Week in Charts (9/30/25)

View the video of this post here.

This Week’s post is sponsored by YCharts.

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The most important charts and themes in markets and investing…

1) The Fed Has an Inflation Problem

The Fed’s preferred measure of inflation (Core PCE) moved up to 2.9% in August, the highest level since February and 0.9% above their inflation target of 2%.

That leaves one more major inflation report before the next FOMC meeting (October 29): the September CPI report set to be released on October 15.

What is it expected to show?

According to the Cleveland Fed: an increase in overall inflation to 3.0%, which would be the highest level of the year.

The Fed has an inflation problem, but market participants are betting that won’t stop them from cutting interest rates.

The probability of a rate cut in October: 91%.

2) Confidence Crumbles, but the Consumer Carries On

We’ve never seen a disconnect this wide between what the US consumer is saying and what they are doing.

The University of Michigan Consumer Sentiment index has moved down to 55, a reading below 99% of historical data points going back to 1952.

But at the same time, Retail Sales grew 4.8% over the last year, outpacing inflation by 1.8%.

And second quarter real GDP was revised higher to 3.8%, due in large part to continued strength in consumer spending (contributing 1.7%).

The Atlanta Fed is projecting this to continue in the 3rd quarter, with a real GDP estimate of 3.9%. Consumer spending’s expected contribution: 2.3%.

Which begs the question: why is the consumer so grumpy?

It’s all about their expectations.

They believe the next year will bring higher unemployment (>60% see an increase) and higher inflation (>4% increase in prices).

But has that derailed their actual spending?

Not yet. Which is to say that they may be fearful about the future, but they are not yet acting on those fears.

3) “Fairly Highly Valued”

Those were Jerome Powell’s words in describing equity prices last week at a talk in Rhode Island.

What did he mean by that?

We’re left to guess since he didn’t elaborate. But he did make it clear that the Fed is not going to alter its monetary policy in response to elevated asset prices.

Which means that the Fed’s monetary easing will continue despite:

• Stock prices at all-time highs, with the S&P 500 hitting 28 more record closes this year.

• The highest price to sales ratio on record at 3.3 for the S&P 500.

• A price to peak earnings rate of 27.7 for the S&P 500, which is the highest we’ve seen since 2000 and more than 60% above the historical median.

• A CAPE ratio above 40, trailing only the peak of the dot-com bubble in terms of historical valuations.

• The ratio of the US Stock Market’s Value to GDP (aka the “Buffett Indicator) has moved up to a new record high at 217%. That’s now more than 2 standard deviations above the long-term trendline.

4) The New Home Discount

The median sales price of a new home sold in the US is now over $9000 less than the median sales price of an existing home, an unusual discount due to: a) the “lock-in effect,” b) a shortage of existing homes for sale, c) homebuilders cutting prices, and d) a shift to smaller new homes being built.

Homebuilder sentiment has moved down to its lowest level since December 2022, with 39% of builders reporting price cuts in September. That’s the highest percentage in the post-Covid period.

The price cuts appear to be helping to boost demand, with New Home Sales rising to their highest level since January 2022 (800k).

Meanwhile, a lack of affordability continues to plague the existing home market, with sales hovering near their lowest levels in over a decade.

5) Gold Glitters, Silver Shines

Gold is on pace for its best year since 1979, up over 46% in 2025.

Not to be outdone, Silver is now up over 60%. Its on pace for its highest monthly close ever ($47/ounce), surpassing the previous record from April 2011.

6) A Few Interesting Stats…

a) Foreign holdings of US equities have crossed above $20 trillion, a record high. 30% of the total US stock market is now held by foreign investors, the highest percentage on record with data going back to 1945.

b) The top 10 holdings in the S&P 500 now make up nearly 39% of the index, the highest concentration on record.

c) The world’s 7 largest companies are all US tech giants — together worth over $20 trillion. And 22 of the top 25 are American.

d) Going back to 1928, what were your odds of beating the S&P 500 while sitting in cash?

• 30% over a 1-year period
• 21% over a 5-year period
• 15% over 10-year period
• 0% over a 25-year period

And that’s it for this week. Thanks for reading!

Every week I do a video breaking down the most important charts and themes in markets and investing. Subscribe to our YouTube channel HERE for the latest content.

Disclaimer: All information provided is for educational purposes only and does not constitute investment, legal or tax advice, or an offer to buy or sell any security. Read our full disclosures here.

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