Originally published at: This week in charts: Elon Musk breaks new records – InvestEngine Insights
This week we turn our attention to the United States, in a week where CPI inflation ticked up to 2.7% and president Xi received his invitation to the inauguration, we take a look at the expectation for rate cuts by the Federal Reserve as inflation remains stickier than expected and some of the Trump effects already priced in by markets. Over in Europe the ECB has also cut rates a further 25bps to 3.00% as expected.
Source: Bloomberg
US stocks reach double GDP
All time highs in the US appear to be a weekly occurrence at present and as US CPI sends big tech to fresh highs, we reach a point yet again where the US market is worth over 2x its nominal GDP.
The rise of equal-weight ETFs have offered an alternative for investors looking for another avenue away from magnificent 7 concentration. That however at this point in time has come at the expense of investment performance as market-weighted US stock indices continue to rally.
As the presidential inauguration nears and as concerns with Trump’s stimulus, tax cuts and tariffs could lead to inflation, the current gains market gains make a good case for strong nominal growth.
Resolving the US inflation uncertainty may bring uncertainty over the next few months which could be crucial for the global economy. It might yet force a change in the Trump 2.0 plans for tax cuts and tariffs.
Elon Musk breaks new ground
As one of Donald Trump’s new best pals, Elon Musk has seen his ownership in Tesla increase by 72% since November 2024. A further re-evaluation of his SpaceX venture via an insider deal has propelled the valuation to $350m making his the richest individual in the World.
His network currently sits at $470 billion dollars, a single day gain of $63Bn, eclipsing Jeff Bezos’ net worth by almost $200m.
Polymarket has since launched a series of bets when Musk will reach the trillion dollar mark.
The Fed due to cut rates throughout 2025
It can be argued that the Federal Reserve does not need to cut rates further given how resilient the US economy has been to interest rate changes. However both the government and the Federal Reserve run separate mandates where one should not influence the other. The threat of Trump fueled inflation remains and markets continue to price further cuts. At present, we are expected to have a 25bps cut come December’s meetings.
A keen eye on Donald Trump’s tariff plans
As the Trump tariff threat continues to play its part with some of the US’ trading partners, the responsiveness in their domestic markets has been somewhat muted at present. China is almost off by 5% but, given the volatility investors have come to expect from the regions, this is not out of character.
Donald Trump plans tariffs on China, Mexico, and Canada upon taking office in January 2025 to address drug smuggling and illegal immigration. A 25% tariff targets Mexico and Canada, with a 10% additional tariff on China until fentanyl smuggling stops. Critics warn of higher consumer costs, trade tensions, and supply chain disruptions.
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