Week in the Charts (9/30/25)

Look video of this post here.

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The most important charts and themes in markets and investing…

1) The Fed Has an Inflation Problem

The Fed’s preferred inflation measure (Core PCE) rose to 2.9% in August, the highest level since February and 0.9% above the inflation target of 2%.

This leaves one more major inflation report before the next FOMC meeting (October 29): the September CPI report due on October 15.

What do you expect to show?

According to the Cleveland Fed: overall inflation increased to 3.0%, which is the highest level this year.

The Fed has an inflation problem, but market players are betting that won’t stop them from cutting interest rates.

Probability of a rate cut in October: 91%.

2) Trust Collapses, But Consumers Remain

We’ve never seen a gap this big between what US consumers say and what they do.

The University of Michigan’s Consumer Sentiment Index has fallen to 55, below 99% of historical data points since 1952.

But at the same time, Retail Sales grew 4.8% compared to last year, outstripping inflation of 1.8%.

And second-quarter real GDP was revised higher to 3.8%, largely due to continued strength in consumer spending (contributing 1.7%).

The Atlanta Fed projects this will continue in the 3rd quarter, with real GDP forecast at 3.9%. Expected consumer spending contribution: 2.3%.

Which begs the question: why are consumers so grumpy?

It’s all about their expectations.

They believe next year will bring higher unemployment (>60% increase) and higher inflation (>4% price increase).

But does this interfere with their actual spending?

Not yet. That is, they may be afraid of the future, but they have not acted on those fears.

3) “Quite Very Valuable”

Those were the words of Jerome Powell when describing equity prices at talks in Rhode Island last week.

What did he mean by that?

We can only guess as he didn’t explain further. But he emphasized that the Fed would not change its monetary policy in response to rising asset prices.

This means that the Fed’s monetary easing will continue even though:

• Stock prices are at all-time highs, with the S&P 500 hitting another 28 record closes this year.

• The highest price-to-sales ratio ever recorded was 3.3 for the S&P 500.

• The peak price to earnings level was 27.7 for the S&P 500, which is the highest level we’ve seen since 2000 and more than 60% above the historical median.

• The CAPE ratio is above 40, trailing only the peak of the dot-com bubble in terms of historical valuation.

• The US Stock Market Value to GDP ratio (aka the “Buffet Indicator”) has reached a new record high of 217%. It is now more than 2 standard deviations above the long-term trend line.

4) New Home Discount

The average sales price of new homes sold in the US is now over $9000 less rather than the average sales price of existing homes, the unusual discount is due to: a) the “lock-in effect,” b) a shortage of existing homes for sale, c) home builders cutting prices, and d) a shift to new, smaller homes being built.

Homebuilder sentiment has fallen to its lowest level since December 2022, with 39% of builders reporting price declines in September. That’s the highest percentage in the post-Covid period.

Price cuts appeared to help boost demand, with New Home Sales rising to the highest level since January 2022 (800K).

Meanwhile, a lack of affordability continues to plague the home market, with sales near their lowest level in more than a decade.

5) Gold Sparkles, Silver Shines

Gold is heading for its best year since 1979, rising more than 46% in 2025.

Not to be outdone, Silver is now up more than 60%. This was the highest monthly close ever ($47/ounce), surpassing the previous record in April 2011.

6) Some Interesting Statistics…

a) Foreign holdings of US equities have exceeded $20 trillion, a record high. 30% of the total US stock market is now held by foreign investors, the highest percentage ever recorded based on data going back to 1945.

b) The top 10 holdings in the S&P 500 now control nearly 39% of the index, the highest concentration ever recorded.

c) The world’s seven largest companies are all US tech giants – whose combined wealth is over $20 trillion. And 22 of the top 25 are Americans.

d) Going back to 1928, what do you think a chance to beat the S&P 500 while still earning cash?

• 30% within 1 year
• 21% over a 5 year period
• 15% over a 10 year period
• 0% over a 25 year period

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And that’s all for this week. Thanks for reading!

Every week I create a video detailing the most important charts and themes in markets and investing. Subscribe to our YouTube channel HERE for the latest content.

Disclaimer: All information provided is for educational purposes only and does not constitute investment, legal or tax advice, or an offer to buy or sell any security. Read our full disclosure here.