Weekly markets update - 4 August 2025
"If you torture the data long enough, it will confess to anything." Ronald H. Coase, 1994, Essays on Economics and Economists
When someone wins the Nobel Prize for explaining why companies form naturally, when individuals stripped of hope come together to solve problems without waiting for the government, I pay attention. Ronald Coase made sense of what most people experience instinctively - that coordination, when left alone, often works better than central planning. But Coase also understood something deeper. Markets run on information, and when that information is distorted, the entire process breaks down. Some of his sharpest observations were about data and how easily it can be used to mislead. In finance, we see this every day. Selection bias, data smoothing, time frame manipulation, and crazy charts are all common tools used to support whatever narrative needs selling. So naturally, let’s talk about one of the most persistent concerns in financial data – CPI, the Consumer Price Index.
Many, including myself, believe it significantly understates true inflation. And that matters. In many countries, inflation directly affects tax brackets, private pension contribution limits, social security adjustments, and the payout on inflation-linked government bonds. If inflation is understated, people simply receive less.
The entire system relies on the assumption that the reported numbers are accurate. But the incentive to understate inflation is obvious, especially when the agency producing the data reports directly to the government or, even worse, operates as part of it. This connection became even more apparent when President Trump fired BLS Commissioner just hours after a disappointing July jobs report. But the issue is not that one report. The deeper problem lies in the structure itself. A statistics agency should be truly independent and serve the public, something that is only present in few other countries. As an investor and trader, I continue to watch the data. But I stopped trusting it a long time ago. Markets move for all kinds of reasons.
A strong number may push stocks higher, or a weak number may still rally the market if the Fed is expected to act. Then the revisions come, and we are back where we started. The takeaway is not to ignore the data, but to understand the context and its limitations. This sets the tone for this week. Hopefully not too boring, and ideally useful.
As always, I will highlight what stands out before Monday. This is update number forty-six. Almost a year now, I have shared trades, setups, and insights with a focus on what matters. The summary table remains clear, covering indices, forex, rates, metals, energy, and agricultural commodities.
