On Tuesday afternoon, Federal Reserve Chair Jerome Powell told members of Congress that, “We do not need to be in a hurry to adjust our policy stance.”

Turns out that the salt-and-pepper son of a gun was right.

The Bureau of Labor Statistics revealed the latest CPI reading today:

• Consumer prices jumped 3% year over year in January, higher than the 2.9% expected and up from December’s annual CPI reading of 2.9%.
• CPI rose 0.5% month over month, above forecasts of 0.3% and up from December’s 0.4% increase.
• Core CPI, which measures prices excluding food and energy, rose 0.4% from December, and 3.3% year over year—both higher figures than expected.
• The bird flu drove grocery prices up 0.5% over the month and 1.9% year over year. Egg prices, in particular, are out of control, up 15% over just the past month.
• There was a sliver of good news: Rent price inflation began to cool. Shelter inflation only rose 4.4% over the past 12 months, the smallest gain in three years.

Markets sank in reaction to the report. “No matter how you slice the data, the January print marks an unwelcome re-acceleration in prices to start off 2025,” wrote Jason Pride, chief of investment strategy at Glenmede, in a note this morning.

Back to square one

Inflation’s persistent grip on the economy complicates the Federal Reserve’s plan for a soft landing.

When the central bank cut rates for the first time in four years in September, investors celebrated what they thought was the beginning of a new, lower-rate era. But it turns out they were getting ahead of themselves.

“The Fed will see January’s hot inflation print as confirmation that price pressures continue to bubble beneath the economy’s surface,” explained Chief Economist for Comerica Bank Bill Adams. “That will reinforce the Fed’s inclination to at least slow and possibly even end rate cuts in 2025.”

The Fed kept interest rates at its target of between 4.25% and 4.5% following its most recent FOMC meeting at the end of last month, and now the market is giving a roughly 98% chance that rates will remain the same following the next meeting in March.

But while Powell spent today testifying to Congress that he is no rush to slash rates, just across the Capital, President Trump was firing off a series of Truth Social posts. “Interest Rates should be lowered, something which would go hand in hand with upcoming Tariffs!!!” he wrote, after declaring “BIDEN INFLATION UP!”

This isn’t the first time Trump has suggested he should have some say over the Fed’s policymaking, worrying economists.

How to invest: “With potential for more volatility in rates across the curve, it’s worth considering a fixed income approach that is actively managed and has the flexibility to ‘go anywhere’ in the opportunity set,” wrote Head of Investment Strategy at JPMorgan Wealth Management Elyse Ausenbaugh. “We have also been focused on complementing fixed income exposures with other diversifiers, like gold, or alternative sources of income generation, like real estate.”—LB

🟢 What’s up

• BYD rose 8.01% as investors continued to celebrate the Chinese EV maker’s decision to make driver-assistance technology free in vehicles under $10,000.
• Baidu rose 4.36% on reports that the Chinese tech company will release the latest version of its large language model sometime this year.
• Chinese e-commerce giant Alibaba climbed 4.93% on news that AI features it designed for the iPhone have been submitted to Chinese regulators for approval.
• CVS Health soared 14.95% following a successful first full quarter at the helm for new CEO David Joyner.
• Super Micro Computer gained 2.77% after announcing solid second-quarter results and promising to release its long-delayed quarterly and annual reports later this month.
• When you decide to order in during the chilly winter months, DoorDash profits. The delivery app popped 4.04% after beating top and bottom line estimates last quarter.

What’s down

• More people paid more money for rides from Lyft last quarter, but the ride-hailing app still sank 7.92% on management’s forecast of a slowdown this quarter.
• Kraft-Heinz beat earnings expectations but missed revenue targets last quarter as the consumer goods company suffered from rising ingredient costs and lower consumer spending. Shares fell 3.25%.
• Zillow expects that a slow housing market will keep earnings lower than it would like next quarter, sending shares tumbling 9.40%.
• Avis Budget Group dropped 6.82% after the car rental company not only missed top and bottom line forecasts, but also announced that its CEO is leaving.

Markets were blindsided by a higher-than-expected inflation reading today. But you know who saw this one coming? Everyone else.

Earlier this month, the latest University of Michigan survey of consumer sentiment fell to its lowest point since July 2024, largely due to expectations that inflation isn’t just going to stick around, but rise.

“Year-ahead inflation expectations jumped up from 3.3% last month to 4.3% this month, the highest reading since November 2023 and marking two consecutive months of unusually large increases,” according to the survey results. “This is only the fifth time in 14 years we have seen such a large one-month rise (one percentage point or more) in year-ahead inflation expectations.”

A separate survey of consumer expectations from the Federal Reserve Bank of New York shows that Americans think inflation is here to stay for the long run. Consumers not only believe inflation will remain at 3% for the next year and the next three years, but the survey says they now think inflation will remain at 3% for the next five years.

Fear that the negative impact of tariffs could turn inflation up a notch drove results in both surveys, but tariffs weren’t in place when the CPI data for January was being tallied. That means next month’s reading may be hotter, giving US consumers even more to worry about.

The Lone Star State is about to get an influx of finance bros.

The New York Stock Exchange announced today that one of its fully electronic outposts, NYSE Chicago, is reincorporating in Texas, and will now go by—you guessed it—NYSE Texas.

Texas has the largest number of NYSE listings, and represents over “$3.7 trillion in market value for our community,” wrote Lynn Martin, president of the NYSE Group.

But it’s not just opportunities that are bringing the NYSE to Texas—it’s competition.

An exchange standoff

A group of financiers from BlackRock and Citadel have been attempting to start their own exchange based in Dallas, dubbed the Texas Stock Exchange (TXSE), founded on anti-“woke” principles. The group has raised $161 million from its backers, and just last month announced it filed with the SEC to launch sometime in early 2026.

For the great state of Texas, the economic opportunities extend beyond ticker symbols. Gov. Greg Abbott is marketing Texas as an alternative to Delaware as the top legal home base for corporations. So far, the strategy seems to be working: Elon Musk’s Tesla and SpaceX reincorporated in Texas last year, and Meta is reportedly considering moving to Texas.

Over 60% of S&P 500 companies are incorporated in Delaware for a reason: The state has a reputation of being business-friendly, both in its courts and tax structure. But tech behemoths wager that Texas may embrace their businesses even more warmly. Musk made the decision to move SpaceX to Texas after a Delaware judge rejected his monster pay package at Tesla.

That’s partly why Texas is starting its own court to try corporate cases, rivaling Delaware’s Court of Chancery. Meta is reportedly facing a slew of litigation in Delaware, and CEO Mark Zuckerberg may believe that Texas courts would be more likely to rule in his favor.

Only time will tell how a cowboy hat fits into Zuck’s new look.—LB

• James Howells, the guy who lost his bitcoin hard drive worth $770 million, is now offering to buy the dump where his trashed drive is buried.
• Spirit Airlines says thanks but no thanks to Frontier Group’s latest acquisition attempt.
• Metal tariffs threaten to annihilate one group near and dear to our hearts: craft brewers.
• Financial regulators may be consolidated under the Treasury Department, or just abolished entirely.
• A running list of all the companies pulling back on DEI initiatives.
• If Russia and Ukraine agree on a ceasefire, JPMorgan says these stocks will benefit.

Forget CPI, tomorrow we’ve got PPI.

CPI measures inflation at the consumer level, while PPI, or the producer price index, measures it at the wholesale level. In other words, it takes a look at changes to the prices producers are paid for their products.

PPI rose just 0.2% in December, half of what economists were expecting, which is great news for US manufacturers still struggling under the weight of higher interest rates. An ongoing slowdown would be great to see, but after today’s CPI reading, it seems unlikely.

As for earnings, Thursday brings the heat with a boatload of big names like Sony Group, Datadog, Crocs, Palo Alto Networks, AirBnB, Honda Motor Co., Hertz, Hyatt Hotels, Wendy’s, US Foods, Molson Coors, Barclays, Wynn Resorts, and Roku.

Whether you’re a gambler or an investor (or maybe you're a bit of both), here are two familiar faces to watch for tomorrow.

After the close

• DraftKings has been a winning bet in 2025, rising over 20% year-to-date. The problem is, its customers have been winning big as well—management has warned that a shockingly high number of victories from betting favorites put an unusually large amount of money into its user’s pockets last quarter. Tomorrow we’ll learn whether that hurt the company’s bottom line, or whether more wins brought on more betting from users (and likely more profits for DraftKings). Consensus: $0.04 EPS, $1.4 billion in revenue.
• Coinbase has directly benefited from the popularity of crypto investing, and with bitcoin surging to over $100,000 following the presidential election, it seems likely that Coinbase will reap the rewards of higher transaction volume last quarter. Combine that with growing institutional acceptance for crypto, and Coinbase is sitting pretty for future growth. The only issue now is valuation: Shares have risen 84% in the past 12 months, and may look expensive to some. Consensus: $1.90 EPS, $1.75 billion in revenue.