Good morning.

Well, investors received a bit of good news this morning with an inflation number that raised new hopes that the Fed might not be finished with cutting rates.  I will point out, however, that the result was only a slight improvement (3.2% annualized vs. 3.3% expected) but investors are using any and all excuses to party.

We will see if this report changes attitudes, as Goldman Sachs recently reduced its call for 3 rate cuts this year down to 2 (in June and December) while Bank of America stated the Fed is done with chopping rates.

There could be one problem with numbers over the next few months, as the wildfires in California might drive inflation numbers upward.  Morgan Stanley Research came out with a study showing past increases attributed to wildfires … and with the present situation being worse than in fires past, the level of damage (to both property and inflation) is unknown.  Homes, autos and other things will need to be replaced … and with cars pointed out as a big part of post-wildfire inflation … especially in an area where public transportation is a stranger … there could be a nationwide effect on supply.

One of the positive things that came out of Covid was the use of Zoom … which many of us were forced to become quite familiar with.  Suddenly, online viewing of educational items and personal videos (TikTok, Instagram, Facebook) have become second-hand … and organizations quickly realized the benefit of holding “virtual meetings” … as content was the same (or better) and audiences were able to drop in without transportation (or even dress) worries.

Along these lines, Emerald Asset Management is holding its 32nd annual Groundhog Day Investment Forum event on Thursday, February 6th … and those in the industry are invited to join in on the “Springtime for Small Caps” theme.  Registration can be done via the “Team Emerald” website (teamemerald.com/newsinsights/groundhog2025/) or by sending me a note.

That about wraps it up for today on a morning where markets remain positive.

Meanwhile, I made sure to include the last article below … which tells us that while BMI is used to tell us how unhealthy we are … it really doesn’t tell the complete story … as some high numbers show up in those that are actually in pretty good shape.

That being said … after this article gave me a degree of overconfidence … I got on my smart scale telling myself that my muscular build is the reason behind the higher-than-wanted BMI number.

I did, however, need to hold my stomach in …

… not because it helped my muscle mass …

… but it was the only way I could see the numbers.

Have a great day,

Joseph G. Witthohn, CFA

Have any questions? Please contact info@teamemerald.com