To The Moon

Last week’s highly anticipated inflation reports - the Producer Price index (PPI) and Consumer Price index (CPI), were finally released on Wednesday and Thursday respectively.

Producer Price Index (PPI).

US producer price index (PPI) for August 2025 showed a clear slowdown in wholesale inflation, with:

• Headline PPI declining by -0.1% MoM and rising +2.6% YoY; with both readings coming in below consensus forecasts of +0.3% and +3.3% respectively. (see above)

• Core PPI, (excludes food & energy), also dipped by -0.1% MoM and rose +2.8% YoY against expected +0.3% and +3.5% respectively.

Moderation in PPI was driven in part by a decline in energy prices, that dropped -1.9% in August 2025.

This along with reduced margins for services indicating that businesses have absorbed more costs instead of passing them on to customers.

PPI softening also reflects weaker pricing power for corporations, as trade services and overall margins contracted.

Impact of ongoing tariffs appeared muted, with limited pass-through to final prices as firms absorbed some of the added costs.

Overall, no analysts know for sure if there are slow-growth reasons and weak economic demand that is keeping inflation in check.

Nationwide, Financial market economist, Oren Klachkin commented — “Going forward, tariff impacts will be somewhat easier to see in H2 2025 now that:

• Businesses have drawn down their inventories.

• Certain tariff reprieves have ended.

Consumer Price Index (CPI).

A tougher-than-expected consumer inflation report for August 2025, followed a surprisingly soft producer price report. (see below)

Divergence between the 2 reports, clearly reflects the price volatility facing US economy and the complexity of assessing the central bank's next steps.

Headline inflation.

• Monthly: came in at +0.4% vs economist’s consensus of +0.3% vs July 2025’s +0.2%. It’s the highest since January 2025 and has been driven by a jump in costs of shelter and food prices.

• Annual: rose to +2.9% vs economists in lined expectations of +2.9% vs July 2025’s +2.7%. It is the strongest reading since January 2025 also.

Core inflation.

• Monthly: came in at +0.3%, in lined with expectations & July 2025’s +0.3%.

• Annual: rose to +3.1%, in lined with expectations & July 2025’s +3.1%. It is the strongest reading since January 2025.

Economists pointed to Trump's broad tariffs as the key factor, with higher import costs being passed through to consumers, notably impacting goods like apparel and vehicles.

Business surveys have been warning for a while that companies are likely to raise their prices.

The only thing dividing economists were whether the pass-through from tariffs would be a one-off event (as prophesized by Treasury Secretary Bessent) or prolonged.

Jobless Claims.

Thursday also saw jobless claims reports being released.

(1) Weekly Jobless claims.

For week ended 06 Sep 2025, US weekly jobless claims increased sharply. (see above)

US Labour Department reported an increase of +27,000 to a seasonally adjusted 263,000 vs economists (polled by Reuters) forecast of 235,000 vs last week’s downwards revised 236,000 claims.

With the unexpected increase, jobless claims reached their highest level since hitting 268,000 in the week ended 23 Oct 2021.

This increase points to mounting layoffs and a softer labour market, with notable surges in states like Texas.

(2) Continuing Jobless claims.

For week ending 30 Aug 2025, US continuing claims was 1.939 million vs analysts’ expectations of 1.95 million. (see above)

Latest reading was slightly below the economists’ forecast of 1.95 million and remained unchanged from previous week's and is .

Comparatively speaking, latest reading suggests that while continuing jobless claims have surged to a near 4-year high, the total number of people remaining unemployed has stabilized instead of rising further.

The 4-week moving average, that helps smooth out volatility, also rose to 240,500, marking its highest reading since June 2025.

The report reinforces a slowdown in US hiring. As a result, when the Fed FOMC meeting convenes this week, they will likely move forward with interest rate cuts.

Q2 Earnings Season Summary.

As of 27 Aug 2025, 478 companies in the S&P 500, that is about 97% of the index, have reported their Q2 2025 earnings.

In this earnings season, it revealed that:

• Overall earnings per share (EPS) grew by approximately +11.8% YoY, surpassing earlier forecast of around 5%.

• This marks the 3rd consecutive quarter of double-digit earnings growth for the index.

• Sales growth was also solid, with blended sales increasing by about +4.9%YoY.

Actually, the strong earnings growth was driven mainly by 8 familiar tech cum AI stocks.

They are: $Apple(AAPL)$, $Amazon.com(AMZN)$, $Alphabet(GOOG)$, $Meta Platforms, Inc.(META)$, $Microsoft(MSFT)$, $Nvidia(NVDA)$, $Tesla(TSLA)$ and $Netflix (NFLX)$.

In short, its Magnificant 7 + Netflix (of FAANG) that posted EPS growth of +28.4% and sales growth of 15.7%.

Excluding the 8 tech giant stocks, earnings growth was a more modest +7.4%, with sales up +3.6%.

Best & Worst Earnings Sectors.

In Q2 2025, top 3 best & worst performing sectors are:

Best EPS Growth:

• Communication service: +48%.

• Technology: +23%.

• Financials: +12.5%.

Worst EPS Growth:

• Energy: -18.4%.

• Utilities: -1.9%.

• Materials: -0.8%.

Will the dynamics remain status quo as we head towards Q3 earnings reporting in about 2 weeks’ time?

Week of 15 Sep 2025.

For coming week, more US economic reports will continue to be released.

They are:

• Tue, 16 Sep - US retail sales. Will be closely watched as a gauge of consumer spending strength. Expectations are around a moderate decrease (consensus forecast around -0.2% MoM).

• Tues, 16 Sep - US import price index.

• Wed, 17 Sep - FOMC meeting. *most important event of the week.

• Thu, 18 Sep - Jobless claims reports.

• Thu, 18 Sep - US leading economic indicators.

US-China Trade Talks Continues.

If there is anything that could throw a curve ball at US stock market rally, it would be the on-going trade talk between US-China, taking place in Spain. (see below)

This is the fourth meeting between the two countries in 4 months.

It will be a ‘tough’ 4-days of trade wrangling and negotiation that started on Sun, 14 Sep 2025 and will conclude on Wed, 17 Sep 2025.

More importantly, rumours have it that current trade meeting (outcome dependent), serves as a prelude to a possible meeting between Trump and Xi Jinping, during the October 2025 APEC summit in South Korea.

The plot thickens and it deserves our attention, I say !

For now, this week’s US economic reports are expected to fuel US market’s rally, after a mostly positive Q2 earnings and a somewhat cooler inflation environment, it is believed.

Remember to check out my other posts. (See below). Help to Repost ok, Thanks.

Must Read: Click on below titles to access. Repost to share, Like as encouragement ok. Thanks.

• Will NVDA's bet on HON's quantum Pay Off ? Fri, 12 September. Pick post.

• AFRM vs KLAR, which is a better BNPL Buy ? Thu, 11 September. Pick post.

• CPI data rally PLTR recovery & US Market ? Tue, 09 September. Idea post.

• Do you think this week’s economic report will help to fuel US market rally?

• Do you think trade talk between US-China will be successful in staging a meetup between Trump & Xi ?

If you find this post interesting, give it wings! ️ Repost and share the insights ?

Do consider “Follow me” and get firsthand read of my daily new post. Thank you.

@Daily_Discussion

@TigerPM

@TigerStars

@Tiger_SG

@TigerEvents