The Profit Margin: February 24, 2025
Statistic of the Week
President Trump has recently directed the U.S. Mint to stop the production of pennies. It costs approximately 3.7 cents to manufacture a penny. However, pennies are not the only U.S. currency produced at a financial loss. For instance, it takes about 13.8 cents to create a nickel. In comparison, dimes have a production cost of 4.2 cents, while quarters cost around 10.3 cents to produce. In 2024, the U.S. incurred a loss of about $85 million due to penny production.
Global Perspective
Australia’s inflation rate recently entered the target range set by the central bank. The latest data indicated that prices are rising at an annualized rate of 2.4%. Consequently, the central bank has reduced its benchmark interest rate to 4.1%. This marks the first rate reduction by the central bank since November 2020.
Market Moving Events
Tuesday: Consumer Confidence
Wednesday: New Home Sales
Thursday: Jobless Claims, Durable Goods Orders, GDP, Pending Home Sales
Friday: Personal Income and Spending, PCE
Commentary
Domestic equities began the week on a positive note; however, a significant earnings announcement and news of an important investigation dampened investor optimism. By the end of the week, all three major domestic indices ended lower, following Walmart’s earnings call, which raised concerns about tariffs and inflation, along with the Department of Justice’s announcement of an investigation into United Healthcare for Medicare fraud. The S&P 500 performed the best among the major averages, declining by 1.66%.1 Meanwhile, both the DJIA and Nasdaq dropped by 2.51%.2 In the fixed income markets, activity was relatively subdued, with the yield on the 10-year Treasury decreasing by 0.05% to close at 4.43% on Friday.3
At this stage in the quarter, earnings season is tapering off, prompting investors to shift their attention towards economic data and significant news events. This Friday, we will receive Personal Income and Spending figures along with the Federal Reserve’s preferred inflation measure, the PCE Index. There are concerns that personal consumption may show weakness following the disappointing Retail Sales figure from earlier this month.4 We believe the primary focus will be on the PCE reading. Headline PCE is anticipated to decrease from an annualized rate 2.6% in December to a rate of 2.4% in January, while the core reading (ex food and energy) is expected to fall from 2.8% to 2.6%.5 Inflation is a persistent concern when assessing the current state of the American economy. Although most indicators point to positive trends, inflation remains stubbornly above the Fed’s target zone.
Chart of the Week
In spite of the substantial layoffs declared by the Federal Government, the Initial Jobless Claims report has not demonstrated a notable increase. The latest figures indicate 219,000 initial claims, while the four-week average is recorded at 215,000.
Source Materials
Market Moving Events:
MarketWatch.com
Chart of the Week:
Clearnomics,
Bureau of Labor Statistics
Statistic of the Week:
The Wall Street Journal
Global Perspective:
The Economist
Commentary:
1. Bloomberg
2. Bloomberg
3. MarketWatch.com
4. Barron’s
5. MarketWatch.com