This was another week of incremental gains for the Fab Five (+$66 billion) while the Telco Top Five lost about a quarter of their year-to-date 2025 gains (-$17 billion). Handwringing still continues over the elevated level of Artificial Intelligence-related data center spending. This seems to have become as important to market shifts as tariffs and inflation.
Producer Price Index or PPI (release here) and Consumer Price Index or CPI (release here) figures for August were also released this week. The PPI reflected the negative impact on wholesaler margins from increased tariffs. Other than that, unless you are concerned about the price of tobacco, it was in line with exepctations – tariff increases are being layered into the economy – as older inventory depletes, replacements are being ordered (and in more than a few cases, from American as opposed to foreign sources).
The CPI tells a different story in our view, with broad-based price increases offset by lower gasoline prices. This chart on the CPI home page clearly shows the offset:
Behind these numbers there are outsized increases in the price of electricity (+6.2% over the last 12 months) and piped gas (mainly natural gas and propane, +13.8% over the last 12 months). Most of these increases came during the winter months. Everyone is impacted by electricity and gas increases – metro riders and truck drivers alike.
Travel related costs are also on the rise with airline fares (+5.9% in August, +3.3% last 12 months) and logding away form home (+2.3% in August, -2.6% last 12 months) showing outsized month-over-month gains. The largest index component, housing, and the largest component with that figure, owners equivalent rent continues to be steadily high (+0.4% for the month, +4.0% last 12 months). This is driven by increased insurance costs, higher local property taxes, and higher interest rates. More details in this table. Mortgage rates are finally showing signs of falling (see chart here), but it’s very unlikely that we will see any meaningful reduction (e.g., below 6% for a 30-year rate) until the housing imbalance is reduced.
Finally, we had the Federal budget deficit figures for August released (here). The news here was slightly more encouraging (to the extent that our budget deficit only rose by 1% over the last 12 months is reason for celebration). Any fiscal restraint is welcome news. More details in the release.
Full file is below. In next week’s Brief we will highlight four comments made by communications companies at analyst conferences in the last month. We will also dive into the Apple announcement and initial results of the iPhone 17 pre-sales.
