This week, we discuss the war in Iran and a run of discouraging economic data, including falling payrolls, rising inflation and a downward revision to fourth quarter GDP. The most dramatic market development was in oil. Prices surged to $120 per barrel early Monday before plunging to $90 by Monday afternoon, the largest decline on record. The fall followed comments from President Trump suggesting the conflict would soon end. Yet the administration later walked back those remarks, leaving oil trading near $100 by the end of the week. The turbulence in energy markets arrives at an awkward moment for the economy. Signs of stagflation appear to be intensifying. Nonfarm payrolls fell by 92,000 in February, marking the third decline in the past five months. At the same time inflation remains stubborn. Core PCE, the Federal Reserve’s preferred measure, rose 0.4 percent month over month in January after a similar increase in December. With energy prices rising sharply in recent weeks, the March reading is likely to come in even higher. The growth picture is weakening as well. Fourth quarter GDP was revised down to 0.7 percent from an initial estimate of 1.4 percent, a revision that underscores the increasingly fragile state of the economy. Taken together, the combination of softer growth, falling employment, and persistent inflation may complicate the Federal Reserve’s plans to begin cutting interest rates and tip the economy into recession.

This week we examine the implications of the war in Iran and the rising uncertainty now weighing on financial markets. Since our previous episode, titled “Inflation Intensifies Amid Credit Cracks,” the inflation outlook has deteriorated sharply as the conflict has pushed energy prices higher. In the near term, stronger inflation now appears almost unavoidable, arriving at a moment when the economic backdrop was already fragile. We also look to history for guidance on the risks building in private credit. In particular, we revisit the collapse of Executive Life Insurance in the late nineteen eighties and early nineteen nineties, when heavy exposure to high yield debt ultimately proved fatal. The episode offers a useful lens through which to consider how stress in private credit might unfold and how losses could spread into other parts of the financial system. Finally, we reflect on the unusually uncertain environment facing investors. Will the conflict prove brief or prolonged? No one yet knows. What is clear is that periods of geopolitical uncertainty tend to unsettle markets. For now, that anxiety is showing up in prices, with all three major equity indices in the United States negative for the year.

On this week’s episode, we examine signs that inflationary pressures are proving more stubborn than many had hoped. January’s Producer Price Index surprised to the upside, with headline prices rising 0.5 per cent over the month and the measure excluding food and energy increasing 0.8 per cent. We discuss why these pressures are likely to filter into the forthcoming Personal Consumption Expenditures data, particularly in goods, and what that means for the broader inflation narrative. We also turn to markets, where Nvidia delivered earnings and revenues ahead of expectations, yet saw its shares fall sharply. The reaction, we argue, reflects mounting unease about the scale and sustainability of capital expenditure plans among the largest cloud providers. Data centers require enormous amounts of electricity, and questions about power availability raise doubts about whether projected demand for advanced chips can be fully realized. Finally, we explore the collapse of Market Financial Solutions in London. Following recent failures in other credit focused firms, the episode highlights the risks embedded in years of generous liquidity and looser underwriting standards. As financial conditions tighten, the vulnerabilities created during the boom are becoming harder to ignore.

This week the stagflation theme refused to fade. On Friday the Bureau of Economic Analysis released the PCE price index, the Federal Reserve’s preferred gauge of inflation. Headline and core PCE rose 2.9 per cent and 3.0 per cent respectively. More troubling than the levels was the recent momentum. Inflation has firmed over the past three months, an unwelcome development that further complicates the Fed’s path forward. The same release cycle brought a softer than expected Q4 2025 GDP report. Headline growth registered just 1.4 per cent, unsettling markets. Consumption cooled from recent quarters, but the reaction to the top line number appears excessive. The government shutdown alone shaved nearly a full percentage point from growth, distorting the underlying signal. Taken together, the data reinforce a familiar and uncomfortable mix: slower activity alongside renewed price pressures. For central bankers, it is the most awkward of combinations.

This week we examine the reassuring headlines in the employment and inflation reports, set against weakening retail sales and housing activity. On the surface, payroll growth and a softer CPI print suggested resilience. A closer look told a more fragile story. Nearly all net payroll gains were concentrated in health care and social services, leaving the broader labor market treading water. Inflation, meanwhile, cooled largely because of sharp month over month declines in energy and used vehicle prices. Strip out those volatile components and price pressures appear far less benign. Taken together, the data resemble a one legged stool. And investors seem to be taking note, as equities notched another negative week.

This week, we examine signs of economic cooling and a more demanding market backdrop. Private labor market reports from ADP, Revelio Labs, and Challenger, Gray and Christmas point to slowing hiring and softer demand for workers. Motor vehicle sales also weakened, and we argue the slowdown reflects more than poor weather, with a slowing consumer playing a larger role. Finally, we review recent earnings in the technology sector. While positive surprises remain common, markets have often reacted negatively. At today’s elevated valuations, investors appear far less willing to reward results that merely meet or slightly beat expectations.

This week, we address a broad set of developments shaping the macro landscape: Japan’s government bond strains, the weakening dollar, the state of the housing market, rising inflation risks, a fall in the consumer savings rate, and the key takeaways from the January FOMC press conference. We also revisit the latest GDP report, highlighting a notable anomaly - an outsized contribution from gold exports in the third quarter - that we argued was unlikely to persist. That view was promptly borne out. This morning’s release of the Census Bureau’s International Trade in Goods and Services for November showed a sharp decline in gold exports and a widening trade deficit. As in prior episodes, our outlook for the economy and equity markets remains firmly negative.

In this episode, recorded on Friday, January 16, we examine the inflation outlook and the growing influence of geopolitics on financial markets. A superficially benign headline CPI reading obscures a firmer underlying inflationary trend that is likely to assert itself later in the year. Other inflation gauges are already running hotter, raising questions about whether the CPI is understating price pressures. We also consider the economic drag from the resumption of student loan payments, the withdrawal of health care subsidies, the inflationary impulse from tariffs, and recent developments in Venezuela. Taken together, these forces point to a more challenging backdrop for equity markets in the months ahead.

This week, we examine a run of key labor market releases alongside the latest GDP and productivity data. The Employment Situation report showed nonfarm payroll growth coming in below expectations, capping off the weakest year for job creation since 2020 and the weakest non-recessionary year since 2003. While much of the commentary celebrated the headline GDP figure, we were left with more questions than answers. Net exports is typically a modest swing factor but it accounted for more than a third of real GDP growth. Most of the remaining contribution came from personal consumption expenditures, yet that growth was narrowly concentrated in just four subsectors, several of which appear to have been estimated in ways that depart from historical practice. In our view, the jury is still out on the underlying strength of demand. Productivity also surprised to the upside, but here too caution is warranted. Given productivity’s reliance on GDP in its calculation, any uncertainty around output necessarily casts doubt on the apparent strength of the productivity gains.

In this episode, recorded on December 19, 2025, we examine the latest retail sales, employment, and CPI reports. Retail sales were flat on the month, underscoring a continued pullback in consumer spending as sentiment deteriorates and labor-market momentum slows.

The employment report was more troubling than the headline figures suggest. The unemployment rate rose to 4.6% in November, while payrolls fell in October before rebounding modestly in November. A closer inspection, however, reveals a far weaker underlying picture. Year to date, job gains in Health Care and Social Services have exceeded total payroll growth, implying that employment outside those sectors has declined outright. After adjusting for the outsized contribution from health care and the Federal Reserve’s estimated 60,000 monthly overstatement, we estimate that non–Health Care payrolls have fallen by more than 500,000 this year.

We also discuss the latest CPI report, whose construction raises serious questions. Evidence increasingly suggests that the Bureau of Labor Statistics imputed zero inflation for missing observations, including within the Shelter component, which accounts for roughly one-third of the index. If correct, this would render the headline inflation figures deeply misleading. That said, we also explore the counterfactual: what if the data are, in fact, accurate?

We hope you enjoy the episode and thank you for listening.