Markets Weekly January 18, 2025

Hello my friends, today is January 18th and this is Markets Weekly. So this past week was a good weekend market. We had a nice search in the S&P 500. Now that search seems to be largely due to better than expected data and probably something to do with options positioning as it was January op-x. So today let's talk about three things. First, let's talk about some of the positive inflation data that drove the bump inequities and decline in interest rates. Secondly, last week we also had the big bank earnings and they are always a good window into what's happening into the economy. So let's listen to what they're saying. And lastly, it looks like the California wildfires are about to end. So let's think about what the financial and economic impact of those wildfires are.

你好，朋友们，今天是1月18日，欢迎收看《市场周刊》。过去的一周对市场来说是一个不错的周末。标准普尔500指数有了一个很好的上涨。这种上涨主要得益于好于预期的数据，可能也与期权头寸有关，因为这是1月的期权到期日。今天我们来讨论三件事。首先，聊一聊推动股市上涨和利率下降的一些积极的通胀数据。其次，上周还公布了大型银行的财报，它们总是能很好地反映经济状况。所以我们来听听它们怎么说。最后，看起来加州的野火即将结束。让我们思考一下这些野火在金融和经济方面的影响。

Starting with inflation data. So the past week we got PPI, which is prices paid by businesses and also CPI, which of course is the all-important consumer price index, though not the one the Fed follows the most closely. Now PPI was lower than expected, but the bond market didn't react super strongly. Initially it rallied, but then it sold off because the thing is some components in PPI that actually feed into PCE, which is the price index of the Fed cares about. Some of the components that feed into that weren't really that cool. And so PPI, the market didn't really seem to care about. And to be clear, unless we were in this current somewhat inflationary context, the market wouldn't have cared about PPI in the years before.

从通胀数据开始。过去一周我们获得了生产者价格指数（PPI），这是企业支付的价格，还有消费者价格指数（CPI），当然这个指数对于消费者非常重要，但并不是美联储最关注的一个。PPI低于预期，但债券市场没有强烈反应。最开始的时候市场有点上涨，但随后又下跌，因为PPI中有一些实际上会影响到美联储关注的个人消费支出物价指数（PCE）的一些成分。这些成分并不太理想。因此，市场对PPI并不是特别在意。需要澄清的是，除非在我们目前这种有些通胀的情况下，市场在之前的几年里对PPI并不感兴趣。

Now CPI, though, was a big market driver. Now CPI came out cooler than expected, core unexpectedly declined. Now again, like we've been discussing, Fed doesn't target CPI, it targets PCE, but when you know PPI, when you know CPI, you can make a pretty good estimate as to what the all-important PCE is. And with that in mind, the Cleveland Fed's inflation now casting is suggesting that a core PCE is going to print at a pretty cool rate. Actually on a month-over-month basis, if we printing at a rate that is in line with the Fed's 2% target. And so looking at all this positive inflation data, you can see the bond market rallying a lot. And that of course, lower interest rates makes the stock market happy and contributed to the big rally we saw in the major equity indexes.

最近，消费者价格指数（CPI）成为了市场的重要驱动因素。最新数据显示，CPI的增幅低于预期，核心CPI意外下降。虽然我们已经讨论过，美联储并不直接以CPI为目标，而是以个人消费支出价格指数（PCE）为目标。但是，当你知道生产者价格指数（PPI）和CPI的数据时，就能较为准确地估算出关键的PCE数据。考虑到这一点，克利夫兰联储的通胀预测表明，核心PCE的增幅将会维持在一个相当稳健的水平。事实上，从月度环比来看，我们的数据甚至达到了美联储2%目标水平。因此，结合所有这些积极的通胀数据，你可以看到债券市场出现了大幅上涨。当然，较低的利率使得股市更为活跃，并推动了主要股指的大幅上涨。

Now the reason I think that the market is pricing in lower rates with lower inflation is because they know that the Fed has been paying attention to this and now the Fed is will be more at ease to cut rates more. And we had a confirmation of that from Governor Waller. Let's hear what he said. If we continue getting numbers like this, it's reasonable to think that possibly rate cuts could happen in the first half of the year. So basically Governor Waller is saying that we could have a rate cut in the first half of this year, not going to be January of course. But March is possible. He really liked the inflation data we got and maybe if that continues, we can get more rate cuts. Now last week, the market was just pricing in one cut this year and now it's becoming open to more cuts. But again, it's still early. We have to see what happens with inflation data. And of course, I expect there to be a lot of policy announcements coming out of the White House next week.

我认为市场预期更低利率和较低通胀的原因是因为他们知道美联储已经注意到了这一点，现在美联储可能会更容易去降息。我们从美联储理事沃勒那里得到了确认。让我们看看他说了什么。如果我们继续得到这样的数据，可以合理地认为可能在上半年就会降息。所以基本上，沃勒理事表示，今年上半年我们可能会降息，当然不会是1月，但3月是有可能的。他非常喜欢最近的通胀数据，如果这种趋势继续下去，我们可能会看到更多降息。上周，市场仅预测今年会有一次降息，但现在对更多降息持开放态度。不过，这仍然为时过早，我们需要关注通胀数据变化。当然，我预计下周白宫会有很多政策声明发布。

Now the second thing we want to talk about is bank bank earnings. Now the big banks reported earnings the past week and they are a very good window into what's happening in the real economy. Now of course, anyone who does any business in the US has a bank account and banks see that data. They see the money that comes in and out of your checking account. They see how much is drawn on the credit cards. They see the amount of new accounts open and so forth. So big bank earnings are a really good window into what the US consumer is doing. And across the board, the banks are pretty upbeat. Now bank earnings have been pretty good. The past week and part of that is because the market has priced out a lot of rate cuts. So with higher rates, banks are going to be earning a lot of interest and they also have a lot of deposits that are 0% yielding checking account deposits. So high rates for them naturally is good for their interest income. But with respect to the consumer, they're pretty upbeat. Now looking at this data from Bank of America, what you notice is that Bank of America is showing steady loan growth across consumers and across businesses. So again, if you have a loan growth, that's money that's being created that can be spent in the economy.

现在我们要谈的第二个话题是银行的盈利情况。上周，大型银行公布了它们的盈利数据，这为我们了解实际经济情况提供了一个很好的窗口。因为在美国做生意的人基本上都有银行账户，银行可以看到这些账户的数据。他们可以看到你支票账户的资金流动情况，以及信用卡的使用情况、新账户的开设数量等等。所以，大型银行的盈利数据是了解美国消费者行为的重要窗口。从整体来看，银行的表现相当乐观。最近一周，银行盈利表现良好，部分原因是市场已经预期不会大幅降息。在高利率的情况下，银行通过收取利息会赚得更多，而且他们还有大量的0收益率的支票账户存款。因此，高利率对银行的利息收入来说自然是件好事。至于消费者方面，银行依然保持乐观。根据美国银行的数据可以看到，个人和企业的贷款都有稳定增长。如果贷款增长，这意味着有新的资金被创造出来，可以在经济中使用和消费。

It also suggests some degree of optimism as well. And that was also commented during the earnings call. As we've seen in a lot of small business sentiment surveys, small businesses are very optimistic about potential policy changes, especially when it comes to regulation. So all in all, it seems like the banks, at least from Bank of America's perspective, things are going well.

这也表明了一定程度的乐观态度。这一点在业绩电话会议上也被提到了。正如我们在很多小型企业信心调查中看到的那样，小型企业对潜在的政策变化特别是监管方面充满乐观。总的来说，至少从美国银行的角度来看，情况进展得不错。

Now one other thing that people have been paying attention to, of course, is credit quality. Now there's been some concern that high rates, maybe slowing economy might be impacting the credit quality of say credit cards or businesses. Now looking at this charge off data from Bank of America, you can see that actually credit quality is fine. It actually improved a little bit over quarter. So I think that's consistent with the really low credit spreads we see in the capital markets as well.

现在，还有一件人们一直关注的事情，就是信用质量。有人担心，高利率和可能放缓的经济可能会影响信用卡或企业的信用质量。不过，查看美国银行的坏账数据，你会发现信用质量实际上挺好的。实际上，季度间还有一些小幅改善。所以我认为，这与我们在资本市场上看到的非常低的信用利差是一致的。

Now Will's Fargo also showed very similar upbeat consumer data looking at their credit card and debit card business transactions continue to grow at a pretty healthy clip about 2.6%. Again that suggests ongoing consumer spending, consistent basically with an economy that's growing about 2 to 3%, which is also what we see in the aggregate data. Now JP Morgan didn't give as much of a granular detail on consumers, but again, they are generally upbeat on the economy as well.

现在，威尔斯·法戈银行（Wells Fargo）也展示了非常相似的积极乐观的消费者数据，表明他们的信用卡和借记卡业务交易继续以大约2.6%的健康速度增长。这再次表明消费者支出持续增长，基本上与经济增长2%到3%的情况一致，这也是我们在总体数据中看到的表现。而摩根大通（JP Morgan）虽然没有提供那么详细的消费者数据，但他们对经济总体上也持乐观态度。

So all in all, taking into account what the banks are saying, that's consistent with basically what we see across the other data metrics as well. Economy continues to grow, jobs are created, consumer spending, things are okay. And again, the big changes will come next week. We have the first 100 days from the Trump administration. The restoration takes place this Monday and afterwards, I think we'll see what will happen. But so far though, all the data indicates that the US economy is doing okay, totally fine.

总的来说，综合考虑银行的观点，其实与我们在其他数据指标上看到的情况一致。经济持续增长，就业岗位增加，消费者支出正常，一切都还不错。而接下来下周会有重大变化。我们迎来了特朗普政府的第一个100天。这个星期一将进行恢复工作，之后我想我们会看到将发生什么。不过到目前为止，所有数据显示美国经济一切正常，非常好。

Now the last talk I want to talk about is the California wildfires. So as we've been seeing on the news, there have been tremendous wildfires in California that have been burning uncontrollably, but seem to be coming more and more under control. Now as a result of this, we have tens of thousands of structures being burned down, mostly homes. And so a lot of people are being impacted by this tragic event.

现在，我想谈的最后一个话题是加州的野火。正如我们在新闻中看到的，加州发生了巨大的野火，火势一度难以控制，但似乎逐渐得到了控制。由于这场灾难，成千上万的建筑物被烧毁，其中大多数是住宅。因此，很多人都受到这个悲惨事件的影响。

But is this tragic event going to have an impact on the economy and the financial markets? Well, it looks so far, probably not a whole lot. Now let's talk about the financial markets first. So when someone's home burns down, who bears the loss? Well, it depends. Let's say that you will homeowner and you own your home outright. Well, that's your loss. So basically it's a loss in equity, households have less wealth, maybe that impacts your spending part. But usually though, if you buy a home and you buy it with a mortgage and that mortgage could be held by a commercial bank or it could be securitized in sold to an investor.

但这个悲剧事件会对经济和金融市场产生影响吗？到目前为止，看起来可能影响不大。现在先来谈谈金融市场。当某人的房子被烧毁时，谁来承担损失呢？这要看情况。假设你是房主，而且房子是你完全拥有的，那么损失就是你的。因此，基本上这是一种股本损失，家庭的财富减少了，这可能会影响你的消费部分。但通常情况下，如果你是通过抵押贷款买的房子，而这个贷款可能由商业银行持有，或者被证券化后卖给投资者。

If you are a homeowner with a mortgage, you have to buy insurance on it, right? The lenders want to protect themselves. So for the most part, the losses in this episode are going to be borne by the insurers. Now if you have a $2 million home, a $2 million according to your Zillow score and it burns down, what doesn't happen is the insurer cuts you a $2 million check. So I mean, the land has value and oftentimes particularly looking at that area that home would be pretty old.

如果你是一个有房贷的房主，你必须要为房屋购买保险，对吧？因为贷款人想要保护自己的利益。所以，在大多数情况下，这种情况下的损失会由保险公司承担。假设你有一栋价值200万美元的房子，根据Zillow的估值，如果房子被烧毁，保险公司不会直接给你开一张200万美元的支票。因为地皮是有价值的，而且在那个地区，房子一般都比较老旧。

And so the replacement cost is not going to be as if you were building new. So you're going to get a fraction of that $2 million value, a Zillow value. And so estimates by analysts looking at Bloomberg is going to be about $40 billion of losses to be borne by the insurance companies. Other Wall Street analysts give about $30 billion, but basically it's in that ballpark. And so the homeowners, they're going to lose a lot. They're going to lose their equity they had in the home. You see that's an area that had tremendous amounts of appreciation over the past few decades.

因此，更换成本不会像你在建造新房时那样高。所以你得到的价值只会是200万美元中估值的一部分。据分析师通过彭博社的观察，保险公司将承担大约400亿美元的损失。其他华尔街分析师估计大约是300亿美元，但基本上就在这个范围内。所以房主们会损失很多，他们会失去房屋中原有的资产净值。要知道，这是一个在过去几十年里房价大幅升值的地区。

Insurance companies, they're going to have a loss as well. It looks like it's $3,340 billion. And so if you're an insurance company and suddenly you have a big bill you have to pay, you have to pay out to your clients, where are you going to get that money? Well, if you're an insurance company, you've been taking in premiums and then investing that premiums in the financial markets. And so when you need to pay out, you liquidate some of those financial market assets and you use the proceeds to pay down your claims.

保险公司也将面临损失，看起来损失金额是3340亿美元。那么，如果你是一家保险公司，突然需要支付一大笔费用给客户，你会从哪里获得这些资金呢？通常，保险公司会收取客户的保费，并将这些保费用于金融市场的投资。因此，当需要赔付给客户时，保险公司会变现部分金融市场的资产，并用这些收益来支付赔款。

Now, is a $30, $40 billion loss a big deal? Well, actually it's not a big deal at all. In fact, you can look at directly at the stock prices of some of these insurers to know. This is Chube, which is one of the big insurance companies. It's a big insurance company with some meaningful exposure to California. The insurance company with the largest exposure is actually State Farm, but they're not publicly traded.

现在，损失 300 亿或 400 亿美元是个大事吗？其实，这根本不算什么大事。事实上，你可以直接通过查看一些保险公司的股票价格来了解这一点。这是丘博公司，是一家大型保险公司，在加利福尼亚有一定的业务。对加州影响最大的保险公司实际上是 State Farm，但它不是上市公司。

So looking at Chube, you can see that their stock price took a big fall during the wildfires and now has largely rebounded. And for insurance companies, again, if the collective loss is just $30, $40 billion, that's Jackson not that much of a loss on their equity. Now you can also say that equity holders, of course, are the people who are the first to bear losses. But what about the assets they have to liquidate? Is that going to have an impact on their liquidity?

看一下Chube，你会发现他们的股价在野火期间大幅下跌，但现在已经基本回升。对于保险公司来说，如果总损失仅为300到400亿美元，对于他们的股本来说，损失不算大。当然，你可以说股东是最先承担损失的人。但是他们不得不清算的资产会对他们的流动性产生影响吗？

Now looking at aggregate Fed data, you can see that these property and casualty insurance companies collectively have over $3 trillion in assets. Again, they have plenty of money to cover this. And these insurance claims are going to be paid out not immediately, not at the same time, but say gradually over a period of time as the claims go through and probably some litigation.

根据美联储的综合数据来看，可以看到这些财产和意外险公司总共有超过3万亿美元的资产。也就是说，它们有足够的资金来应对这种情况。而这些保险索赔不会立即支付，也不会同时支付，而是会随着索赔的处理，可能再加上一些法律诉讼，逐渐在一段时间内完成支付。

So if you have say a $30, $40 billion in securities you need to sell, looking at the balance sheets of these insurance, they're largely in debt securities, specifically corporate bonds. Selling that $30, $40 billion over a period of years, it's super easy. It's not going to have an impact on market liquidity. It's not going to have an impact on spreads. It's everything is really going to be in a consequential. The most sensitive part, obviously, is their stock price because that's the equity. The equity holders are going to have less profits because the insurance companies have to pay out. But again, it doesn't look like it's going to be meaningful. So it doesn't look like there's going to be a financial market impact from these losses. But I think there could be an economic impact.

所以，如果你需要出售大约300亿到400亿美元的证券，根据这些保险公司的资产负债表来看，它们主要投资于债务证券，特别是公司债券。在几年的时间内出售这300亿到400亿美元是非常容易的。这样不会对市场流动性产生影响，也不会对利差产生影响。一切都会变得微不足道。当然，最敏感的部分显然是他们的股价，因为那是股东权益。股东的利润会减少，因为保险公司需要支付赔偿。但总体看来，这不会是一个重大的问题。所以看起来这些损失不会对金融市场造成影响。然而，我认为这可能会带来经济上的影响。

So looking at California, once upon a time, the Californians passed a proposition that limited the amount of increases in insurance that they had to pay. And as a result of this basically soft price control, many private insurance companies left the state or are in the process of leaving the state. And so if you are a homeowner in California and you can't get garbage from a private insurance company, what you do is you go to the public sector. So the California has a public state owned insurance company that's meant to ensure people who other people won't want to ensure. And obviously, these state owned insurance companies are going to give rates that are lower than the private market. And so based on data from the state insurance company, it's called FAIR, you can see that more and more people were subscribing to this type of insurance.

从前，加利福尼亚通过了一项法案，限制保险费的上涨幅度。由于这种价格控制，许多私人保险公司离开了加州或正在离开。因此，如果你是加州的房主而无法从私人保险公司获得保险，你就需要求助于公共部门。加州有一家公共的国有保险公司，专门为那些私人公司不愿承保的人提供保险。显然，这些国有保险公司提供的费率会比私人市场低。根据加州的国有保险公司（简称为FAIR）提供的数据，可以看到越来越多的人开始购买这种保险。

So the losses in the California Waterfer are going to be borne by the insurance companies largely. But a large portion of that insurance is actually public. So it's going to be borne by the state of California, which is another way of saying this is going to be borne by the California people. So people across the state are likely going to have to socialize these losses by buying higher insurance premiums. And that could over time have an impact on property values in California. We saw this happen in Florida, where after all the hurricane damage insurance premiums went up, that increased the cost of carry for many people, and that led to a decline in home prices. So that is a possibility.

因此，加州水灾的损失主要将由保险公司承担。但实际上，这其中很大一部分保险是公共保险，所以最终将由加州政府承担，这也就是说损失会由加州人民承担。因此，全州人民可能需要通过支付更高的保险费来分摊这些损失。而这可能会随着时间的推移，影响到加州的物业价值。我们在佛罗里达见过类似的情况，当时飓风造成的损害导致保险费上涨，这增加了许多人的持有成本，进而导致房价下跌。所以，这种情况是有可能发生的。

Of course, you have to balance that with simply the decline in the supply of housing in California from the destroyed homes. So it's a muddy picture. But you can expect insurance premiums in California to rise over the coming years. And this is currently going to be a broader trend through the US because, you know, as weather becomes more volatile, that means that the price of insurance, the potential losses to insurance companies are larger. And so they're going to have to raise premiums to cover that.

当然，你还得把这一点与加州因房屋被毁导致的住房供应减少的情况平衡起来。所以情况比较复杂。但可以预期，加州的保险费用在未来几年会增加。这也是目前整个美国的一个更大趋势。随着天气变得越来越不可预测，保险价格和保险公司可能面临的损失都会增加，因此他们将不得不提高保费来应对这种情况。

Now climate change is something that's been happening for hundreds of thousands of years. Like in the US, we were once under glaciers. We had an ice age, and now we don't. And also that that is something that is part of doing business. Another thing to think about is that if you have insurance premiums go up, how does that impact inflation? Is that going to push up inflation in the PCE and ultimately lead to a more hawkish fed? Well, I think it's going to be pretty incremental. And it's something that's going to happen in the future.

现在，气候变化已经发生了数十万年。例如，美国曾经被冰川覆盖。我们经历过冰河时代，而现在没有了。这也是商业运作的一部分。此外，还有一点需要考虑：如果保险费率上升，这将如何影响通货膨胀？这会不会推高个人消费支出（PCE）的通胀，最终导致美联储更加强硬？我认为这种影响将会是逐步发生的，这是未来可能出现的情况。

Now California is just one region. It's an important region, but I'm not sure if the increases in premiums in this region, and that will happen over time in the future is going to so quickly bleed into these nationwide price level impacts. So far it seems that you would have some economic impact. Again, there will be a rebuilding boom eventually, but this is something that plays out over at least a few years. You have to inspect the property. You have to clear the debris and you have to go and get permits and rebuild. Now listening to the earnings conference of KB Homes, who does about a third of their business in California, the earnings call was actually upbeat on the potential resource limitations in this. They didn't feel that the rebuilding movement would have a big drain on labor and materials noting that California is a very large economy. And so they should be able to supply the materials and labor that they need. So maybe that actually won't put too much up with pressure on inflation either. So we'll see.

现在加利福尼亚只是一个地区。它是一个重要的地区，但我不确定该地区保费的上涨是否会在未来很快影响到全国的价格水平。目前看来，这可能会有一些经济影响。将来重建潮最终会到来，但这个过程至少需要几年时间。你需要检查财产、清理废墟、申请许可并进行重建。在听取KB Homes的财报会议时，我了解到他们大约三分之一的业务在加利福尼亚，他们对潜在的资源限制持乐观态度。他们认为重建活动不会对劳动力和材料造成很大的消耗，因为加利福尼亚经济规模很大，应该能够提供所需的材料和劳动力。因此，这可能也不会对通货膨胀产生太大压力。我们拭目以待。

Now, this coming week is going to be a really big week. We're going to have meetings from the Bank of Japan. And of course, we want to figure out and find out finally what these over a hundred executive orders that President Trump wants to do right out of the gate. So I think it's going to be a very volatile and exciting period. And I can't wait. And I'll write a little bit about that in my weekly blog. All right, guys, that's why I prepared. Talk to you next week.

现在，这个即将到来的一周将会非常重要。我们将迎来来自日本央行的会议。当然，我们也期待最终了解特朗普总统在一开始就想要执行的一百多项行政命令。所以我认为这将是一个非常动荡且激动人心的时期。我非常期待。我会在我的每周博客中写一些相关内容。好吧，大家，这就是我准备的内容。下周再聊。