for the week ending February 28, 2025
Note: This post is typically for paid subscribers, but today, it's open to all subscribers. If you're in financial advisory services, this one's especially for you. That said, there may be a nugget or two of interest for others as well.
About Signal & Noise
Cutting Through Market Chatter to What Really Matters.
No fluff, no wasted wordsâjust the market trends, hot investment topics, and key financial chatter your clients actually care about. Quick insights, smart talking points, and a little edge to keep you ahead of the conversation. Read it, use it, and maybe even surprise your clients by beating them to their own questions.
Iâm not an advisor, and I donât work for advisorsâbut I think like a client. That means I cut through the jargon and get to what actually matters in the real world.
On this day in 1980 - Buddy Hollyâs glasses are found in Mason City, Iowa.
On this day in 1980, the infamous glasses were returned to Hollyâs widow. Never has a government-issued pair of glasses been so famous. When Holly, Ritchie Valens, and the Big Bopper crashed in a snowy field in the wee hours of 1959, their personal effects were scattered over 300 yards of an Iowa cornfield. The coronerâs report listed various items, but not Hollyâs signature glasses.
Filed away in the Cerro Gordo County Sheriffâs office was a manila envelope marked ârecâd April 7, 1959.â It remained unopened until 1980. And voilĂ âthe glasses. They were finally returned to Hollyâs wife.
I love those glasses. Retro, stylish, and effortlessly cool. Can we credit Morrissey (the original hipster) of The Smiths for bringing the Holly style back into vogue?
"Inflation is when you pay fifteen dollars for the ten-dollar haircut you used to get for five dollars when you had hair.â -Sam Ewing
Inflation: The Silent Pickpocket
Inflation will be all over the news today. The Core Personal Consumption Expenditures (PCE) reportâotherwise known as the Federal Reserveâs favorite mood ring, will tell us if inflation is behaving itself or if Jerome Powell needs to start stress-eating potato chips again. Letâs be real, there is nothing better than stress eating a bag of chips. Wall Street, that ever-optimistic gambler with a crippling addiction to rate cuts, is eagerly waiting for any hint of monetary relief. Current projections suggest anywhere from two to four quarter-point cuts in 2025, because, apparently, weâve decided to treat interest rates like a seasonal wardrobeâjust keep adjusting based on the vibes. Depending on how todayâs numbers shake out, expect the usual market chaos: bonds doing the jitterbug, equities either popping champagne or panic-sobbing, and cash investors sitting in the corner smirking, wondering why everyone doesnât just keep their money under a mattress or in a Prince Albert can, just like grandma. Stay tunedâPowellâs emotional rollercoaster continues.
It is a good time to remember that Inflation is inevitable. You know, inflation is sorta like gravity: you canât escape it, but you can adjust for it. Over time, prices rise, and your dollars buy less. Pretending otherwise is a financial death wish. Honestly, I am not happy about it either. The normal 14 pack of Airhead Blue Rasberry Gum I buy from Amazon went from $12 to $21. In fact, I am kinda irritated by this as I type. Luckily, stocks notoriously outpace inflation. Remind your clients of this. You can run any return string over the decades and see that equities tend to offer the best inflation-beating returns. I believe the S&P 500 has historically averaged around 7% after inflation, meaning long-term investors who stay in the game usually win. Lastly, cash can be a silent killer. Keeping too much in cash means your purchasing power erodes every year. That "safe" money in your savings account is actually getting mugged in broad daylight.
NVIDIA Earnings: Will AI Print More Money or Just More Existential Dread?
There is no escaping NVIDIA newsâit's the financial worldâs Snoop Dogg, and weâre all just along for the ride. Q4 and FY 2025 earnings are out, and shocker: AI is still the most lucrative gold rush since Silicon Valley discovered how to make people pay for free apps. Revenue hit a jaw-dropping $39.3 billion in Q4 (up 78%), with the full year raking in $130.5 billion (up 114%)âmostly thanks to data centers ($35.6 billionâsorry, competition, maybe next cycle). Blackwell chips are the new must-have status symbol, like Ferraris for tech bros.
But not all is perfect in GPU paradise. Gross margins slipped to 73% because, surprise, making cutting-edge AI hardware isnât free. CFO Colette Kress assures us theyâll recover, though, because they always say that. Meanwhile, Trumpâs tariff talk and China export restrictions could throw a wrench in the hype machine. And the stock? It dropped. Because, of course, in a world where NVIDIA basically prints money, investors still find something to freak out about.
Now, a word to the wise: NVIDIA may be AIâs reigning monarch, but chasing individual stock returns is like trying to surf a tsunamiâyou might ride the wave for a while, but eventually, itâs gonna slam you into the sand. The AI boom is real, but so is volatility. If youâre in it for the long haul, diversify. If youâre just here for the thrill, well, enjoy the stomach-churning drops.
Tariff Tantrums: Time to Buckle Up?
The Trump administrationâs latest round of tariffsâbecause whatâs a good trade war without a sequel?âhas markets in full-blown whiplash mode. A fresh 10% tax on Chinese goods has investors sweating over inflation, corporate earnings, and the next global supply chain headache. Meanwhile, businesses are scrambling, consumers are bracing for higher prices, and the rest of the world is watching like itâs a reality show with billion-dollar consequences.
Is this a masterclass in economic strategy? A flex to protect American industries? Or just another episode of Tariffs Gone Wild, where politics takes the wheel and economic logic is tied up in the trunk? The administration swears itâs about leveling the playing field, but critics are screaming âstagflationâ like itâs a 1970s disco revival. Who knows?
For long-term investors, the best move isnât panic-selling every time a new tariff drops. The market will flail, but smart money plays the long gameâdiversify, focus on fundamentals, and donât try to time this mess. Because one thingâs for sure: this rollercoaster isnât slowing down, thereâs no emergency brake, and anyone betting on a smooth ride hasnât been paying attention.
And this is an o so gentle reminder that trying to time the market is like trying to predict the next plot twist in Days of Our Livesâjust when you think youâve figured it out, someone comes back from the dead, has an evil twin, or turns out to be possessed by a demon. Even the so-called experts (yes, even the loud ones on CNBC) get it wrong more often than not. The real winners? Those who stick to a disciplined strategy, stay invested, and let the magic of compounding do the hard work. Market swings are inevitable, but history favors patience over panic.
Utilities and AI Infrastructure: The New Crystal Ball Obsession
Brace yourself, because the marketâs loudest fortune-tellers are about to shift gears. As AI guzzles electricity like a data-hungry monster, expect every self-proclaimed market guru to start pounding the table for utilities and AI infrastructure stocks. Names like Constellation Energy and Vistra, already outpacing the S&P 500 in 2024-2025, will suddenly become the obvious next big thingâat least according to the talking heads who didnât see NVIDIA coming until it was already up 500%.
And speaking of bold predictions, get ready for the second coming of Harry Dent. If you donât know him, Dent is the Nostradamus of doom-and-boom market callsâthe guy who once swore the Dow would hit 40,000, then later predicted it would crash to 3,000 (spoiler: neither happened). Now, his spiritual successors will be out in full force, confidently declaring that AIâs insatiable power needs will either send utility stocks to the moon or lead to catastrophic overinvestment.
So, is AI infrastructure truly the next gold rush, or just another overhyped narrative? The market will be debating it all weekâjust donât be surprised when the loudest voices change their minds by next quarter.
On another note, I did find this headline interesting regarding AI and the growth of data centers. Microsoft just ghosted a couple of hundred megawatts of U.S. data center leasesâroughly two entire facilitiesâdialing back its 2023-2024 expansion spree. Some see it as a sign of AI infrastructure cooling, possibly due to oversupply or shifting demand (hello, OpenAIâs new side hustles). Microsoft, of course, insists its $80 billion AI and cloud investment plan for 2025 is still full steam ahead, brushing this off as a âminor adjustmentâ tied to power and facility delays. Sound familiar? Big Tech loves a good recalibration. So far, Wall Street isnât panicking, but the real question is whether AIâs breakneck infrastructure growth is finally slowingâor just catching its breath. By the way, every time I read about Microsoft, I react like Pavlovâs dogâexcept instead of salivating for food, I froth with uncontrollable hatred for PowerPoint.
Sycamore Partnersâ Latest Fixer-Upper (AKA, Future Trainwreck)
Walgreens Boots Alliance (WBA) jumped 18% on news that Sycamore Partners is piecing together $12â15 billion in debt for a potential buyout. Wall Street, ever the optimist, is thrilledâbecause if thereâs one thing private equity does so well, itâs turning struggling companies into thriving success stories (see: the corpse of Toys âRâ Us).
The plan? Most likely, sell off Boots UK like itâs a forgotten aisle of clearance toys and double down on higher-margin healthcare services like VillageMDâbecause nothing says âcost-efficient healthcareâ like a PE firm wringing every last dime out of it. In theory, itâs a masterstroke. In reality, private equity has a talent for running businesses into the ground while calling it âunlocking value.â Wall Street may be cheering, but if history is any guide, Walgreens should probably start writing its eulogy now.
Unpaid Toll Spam Hitting Emails
Reminder. If you are seeing spam emails hitting your inbox about unpaid tollsâIGNORE. Please, warn your older clients as well. Spammers and phishers deserve a special place in Hell. These phishing and spamming operations have been showing up in the last few weeks. I received two this week alone. The threat is urgent. Wait⌠did I actually miss a toll? Spoiler: You didnât. Do not click that shady link. In fact, donât ever click a link that shows up in text.
Thatâs a Wrap
Thatâs it for the week. Thank the good Lord we are starting to see warmer weather. Do something nice for someone today, even if its a simple compliment. Better yet, send someone a book. Who doesnât like receiving an unexpected book in the mail? I am super thankful for all the new readers over the last few weeks. I pray that my snark and bite is received in fun and grace.
Please share with your friends and family. With everyone nickel and diming you for every little thing, hopefully this is a little free respite and oasis on the internet that you can laugh and share with others.
Have a great weekendâLawain.
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