3 Things I Think I Think - Inflation, Stock Market Returns, AI Cycle

2025-01-26 12:30:00 ET

Summary

• The New Tenant Rent Index (NTRI) leads the actual CPI rental data and came in at the lowest rate of change this cycle at -2.4%. This has been, and continues to be, the main reason why I am not really worried about inflation flaring up again.
• Since 1900, US stock market has generated real returns of 6.65% per year. That might not sound so great compared to the typical 10-12% figure you hear about, but your stock returns only give you more purchasing power when they are higher than the rate of inflation.
• This week saw the release of DeepSeek, a Chinese AI that is open source and reportedly costs about 3% of what ChatGPT does.

Here are some things I think I am thinking about this weekend.

1) There’s Still a Strong Disinflationary Bias at Work

One of the most important pieces of news this week was the New Tenant Rent Index. The NTRI leads the actual CPI rental data and came in at the lowest rate of change this cycle at -2.4%. This has been, and continues to be, the main reason why I am not really worried about inflation flaring up again....

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