Finance

When, in october 2017, Wolfgang Schäuble left the Detlev Rohwedder Building for the final time after his stint as German finance minister, hundreds of civil servants, dressed all in black, waited under his window in the shape of a giant zero. Their schwarze Null symbolised the balanced budget, or surpluses, he had achieved since 2014. It was the apogee of German fiscal self-congratulation. More

After peaking in 2022 at 11% year on year, inflation across the rich world has steadily fallen. Until now. As central banks bring down interest rates, headline inflation across the rich world is edging up (see chart 1 ). It rose from 2.1% in September to 2.5% in December. More

Federal Reserve officials in January agreed they would need to see inflation come down more before lowering interest rates further, and expressed concern about the impact President Donald Trump’s tariffs would have in making that happen, according to meeting minutes released Wednesday.Policymakers on the Federal Open Market Committee unanimously decided at the meeting to hold their key policy rate steady after three consecutive cuts totaling a full percentage point in 2024.In reaching the decision, members commented on the potential impacts from the new administration, including chatter about the tariffs as well as the impact from reduced regulations and taxes. The committee noted that current policy is “significantly less restrictive” than it had been before the rate cuts, giving members time to evaluate conditions before making any additional moves.Members said that the current policy provides “time to assess the evolving outlook for economic activity, the labor market, and inflation, with the vast majority pointing to a still-restrictive policy stance. Participants indicated that, provided the economy remained near maximum employment, they would want to see further progress on inflation before making additional adjustments to the target range for the federal funds rate.”Officials noted concerns they had about the potential for policy changes to keep inflation above the Fed’s target.The president already has instituted some tariffs but in recent days has threatened to expand them.In remarks to reporters Tuesday, Trump said he is looking at 25% duties on autos, pharmaceuticals and semiconductors that would accelerate through the year. While he did not delve too far into specifics, the tariffs would take trade policy to another level and pose further threats to prices at a time when inflation has eased but is still above the Fed’s 2% goal.FOMC members cited, according to the meeting summary, “the effects of potential changes in trade and immigration policy as well as strong consumer demand. Business contacts in a number of Districts had indicated that firms would attempt to pass on to consumers higher input costs arising from potential tariffs.”They further noted “upside risks to the inflation outlook. In particular, participants cited the possible effects of potential changes in trade and immigration policy.”Since the meeting, most central bank officials have spoken in cautious tones about where policy is headed from here. Most view the current level of rates in a position where they can take their time when evaluating how to proceed.In addition to the general focus Fed officials put on employment and inflation, Trump’s plans for fiscal and trade policies have added a wrinkle into the considerations.On the flip side of worries over tariffs and inflation, the minutes noted “substantial optimism about the economic outlook, stemming in part from an expectation of an easing in government regulations or changes in tax policies.”Many economists expect tariffs that Trump plans on launching to aggravate inflation, though Fed policymakers have said their response would be dependent on whether they are one-time increases or if they generate more underlying inflation that would necessitate a policy response.Inflation indicators lately have been mixed, with consumer prices rising more than expected in January but wholesale prices indicating softer pipeline pressures.Fed Chair Jerome Powell has generally avoided speculation on the impact the tariffs would have. However, other officials have expressed concern and conceded that Trump’s moves could impact policy, possibly delaying rate cuts further. Market pricing currently is anticipating the next reduction to come in July or September. 
The Fed’s benchmark overnight borrowing rate is currently targeted between 4.25%-4.5%.

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BlackRock has been on a buying spree that will change the makeup of the world’s biggest asset manager. BlackRock announced last year a slew of high-profile acquisitions — including a $12 billion deal to buy private credit manager HPS Investment Partners (HPS), which is expected to close in mid-2025; a $12.5 billion purchase of infrastructure investment firm Global Infrastructure Partners (GIP), which closed in October; and a $3.2 billion agreement to buy alternative assets data provider Preqin, which is expected to come on board this quarter. “That’s a real change in the complexion of BlackRock and kind of the leverage that we have to markets,” BlackRock CFO Martin Small said at last week’s Bank of America financial services conference. “It’s a big change.” The deals come at a time when BlackRock’s portfolio of exchange-traded funds (ETFs) and other funds faces tough competition — highlighted by Vanguard announcing on Feb. 3 fee cuts for nearly 100 of its funds. That led to a slide in BlackRock’s stock. We bought the dip — at the time, calling it overblown. Our view was amplified by Small who said the fee reductions won’t have a material impact on BlackRock financials. “These three acquisitions will help BlackRock accumulate more assets,” said Jeff Marks, the Investing Club’s director of portfolio analysis. “The deals should strengthen BlackRock’s earnings power and could help the stock re-rate to a higher price to earnings multiple.” We have been slowly building a position in BlackRock since mid-October. BLK 1Y mountain BlackRock 1 year Looking at the merits of each deal, the HPS purchase will add $148 billion in assets to BlackRock’s existing $89 billion private debt platform. It will also expand BlackRock’s presence in the lucrative market of private credit in which companies or investors lend money directly to businesses — allowing them to bypass traditional banks or other parts of the public market. There’s been a tremendous amount of growth in the sector over the past several years. In the aftermath of the 2008 financial crisis, regulators cracked down on banks by placing stricter requirements on lending. Private credit funds, in turn, stepped in to fill the gap. That’s because it can cater to more diverse financial needs, helping borrowers access capital they might not get through public debt markets or bank loans. HPS is not BlackRock’s first move into private credit, though. The firm has had a footprint in the market for years. BlackRock bought private credit manager Tennenbaum Capital Partners in 2018, which had some $9 billion in committed capital in late 2017 before the acquisition was completed. To be sure, that’s a fraction of the asset size of the HPS deal, which reflects BlackRock’s increasing interest in the space. Evercore analyst Glenn Schorr told CNBC recently that BlackRock decided that “there’s too much growth [in private credit.]” He added, “It makes too much sense for their client base. They thought, ‘We should be bigger in this,’ so they decided to buy the biggest and best among the very biggest and best private credit managers that are out there. They just decided: ‘Enough, let’s go big.'” The CNBC Investing Club’s other financial names Goldman Sachs and Wells Fargo have made strides to grow their private credit businesses as well. In January, Goldman Sachs announced a new division to focus on providing loans to corporate clients and financing larger deals in an effort to deepen its private credit presence. The division, dubbed Capital Solutions Group, combined three businesses under the company’s global banking and markets unit. Before that, Goldman was also listed as the sole adviser to Intel ‘s $11 billion investment from private credit firm Apollo Global as well. CEO David Solomon has described the growth of private credit as “one of the most important structural trends taking place in finance.” Reflecting on last week’s conference and meetings with bank CEOs, Bank of America analysts on Tuesday reiterated their Goldman Sachs buy rating, in part, citing its private credit business. “Private credit has existed at GS since the 1980s, and GS continues to grow the alternatives business, which should drive economies of scale,” the analysts wrote. Wells Fargo, meanwhile, has a partnership with money manager Centerbridge Partners since 2023 to provide direct lending to middle-market companies through Overland Advisors. Centerbridge and other investors provide the capital for this direct-lending fund, while Wells Fargo makes the loans to existing customers as an alternative to other financing options. “What that does is give us an opportunity to still be relevant for clients where it’s not something we’re going to put on our balance sheet, but we can offer them a solution,” Wells Fargo CFO Mike Santomassimo previously said of the partnership. The Wall Street giant also lends directly to private credit funds. As of the third-quarter 2024, loans to asset managers and funds represented $57 billion, or 6% of Wells Fargo’s total loans. Bank of America on Tuesday praised Wells Fargo for viewing “private credit as an opportunity as opposed to an existential threat.” BlackRock’s purchase of GIP, the world’s largest independent infrastructure fund manager with over $100 billion in assets under management, adds to BlackRock’s current $50 billion in client infrastructure money. We’re assured by GIP’s immense growth in assets in recent years — increasing its $22 billion in 2019 five-fold. Infrastructure, in particular, is forecasted to be one of the fastest-growing segments of private markets in the years ahead, according to BlackRock CEO Larry Fink. “A number of long-term structural trends support an acceleration in infrastructure investment such as increasing demand for upgraded digital infrastructure, like fiber broadband, cell towers, and data centers; renewed investment in logistical hubs such as airports, railroads, and shipping ports as supply chains are rewired; and a movement toward decarbonization and energy security in many parts of the world,” BlackRock wrote in its GIP acquisition announcement. Bringing Preqin under the BlackRock umbrella will bolster the asset manager’s existing Aladdin portfolio management platform — giving clients more insights into the opaque world of alternative assets. “Private markets are the fastest growing segment of asset management, with alternative assets expected to reach nearly $40 trillion by the end of the decade,” Blackrock wrote in the Preqin deal release. Evercore’s Schorr said each of these deals is a classic example of how BlackRock continues to cater to its clients’ ever-growing needs while managing to rake in more and more assets. The firm had $11.6 trillion in assets last quarter, its highest level in history. “BlackRock’s amazingly adaptive to the world. Think about it,” Schorr said. “They were just mostly just a fixed income manager, and then they bought [Merrill Lynch Investment Managers] and got the equity side of the business. And then, they were mostly an active manager and then they bought iShares from Barclays.” He added: “They are always seeing around corners, seeing where the world’s headed, and then adapting.” For now, however, there are no other big-name acquisitions on the table. BlackRock’s Small said at the Bank of America conference that these deals “round out our near- to intermediate-term agenda for private markets, data, and tech.” “What I’d emphasize is the BlackRock of today is not the BlackRock of the last three to five years,” Small continued. “The BlackRock of today is going to have pro forma 20% of our revenue base in alternatives, private markets, and technology — secular areas that have less market sensitivity, more structural growth that I think should deliver more stability in earnings, more earnings diversification through the cycle.” (Jim Cramer’s Charitable Trust is long BLK, GS, WFC. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

Marquee at the main entrance to BlackRock headquarters building in Manhattan.
Erik Mcgregor | Lightrocket | Getty Images

BlackRock has been on a buying spree that will change the makeup of the world’s biggest asset manager.  More

Pershing Square’s Bill Ackman hiked his takeover offer for Howard Hughes Holdings.
The billionaire investor said Tuesday that his firm has submitted a proposal to acquire 10 million newly issued Howard Hughes shares at $90 per share.

Bill Ackman, CEO of Pershing Square Capital Management, speaks during an interview for an episode of “The David Rubenstein Show: Peer-to-Peer Conversations,” in New York on Nov. 28, 2023.
Jeenah Moon | Bloomberg | Getty Images

Pershing Square’s Bill Ackman hiked his takeover offer for Howard Hughes Holdings to create a “modern-day” Berkshire Hathaway.
The billionaire investor said Tuesday that his firm has submitted a proposal to acquire 10 million newly issued Howard Hughes shares at $90 per share. Back in January, Ackman proposed forming a new subsidiary of Pershing to merge with Howard Hughes, offering current holders $85 a share.

If the newly proposed transaction goes through, Pershing Square will own 48% of the real estate developer based in The Woodlands, Texas. The revised transaction does not require regulatory approvals, a shareholder vote or financing, so can be completed in a few weeks.
Shares of Howard Hughes fell nearly 5% in extended trading following the news. The stock had closed up 6.8% at $80.60 in anticipation of the announcement.
Ackman will become chairman and CEO of Howard Hughes if the deal comes to fruition. Pershing Square would receive an annual fee, paid quarterly, of 1.5% of Howard Hughes’ equity market capitalization.
“We will make available the full resources of Pershing Square to HHH to build a diversified holding company, or one could say, a modern-day Berkshire Hathaway,” Ackman said in a post on social media site X. “The new HHH will acquire controlling interests in private and public companies that meet Pershing Square’s criteria for business quality.”
Ackman said he took inspiration from the unusual career path of the legendary “Oracle of Omaha.” The 94-year-old Warren Buffett started out, essentially, as an activist investor and hedge fund manager running a series of private partnerships, until the 1960s when he closed his partnerships and took control of Berkshire Hathaway, a struggling textile business.

Today, Berkshire is worth $1 trillion with businesses in industries including insurance, energy, railroad and retail as well as a massive equity portfolio and more than $300 billion in cash.
Ackman said Howard Hughes will continue to develop and own “master planned communities” such as The Woodlands in Houston and Summerlin in Las Vegas.
“Owning small and growing MPCs that will eventually become large cities in the best pro-business markets in the country is a great long-term business,” he said in the post. “It’s a lot better than a dying textile company.” More

The S&P 500 has returned three consecutive years of 20% gains just once since the 1920s.
The U.S. stock index delivered a 23% return in 2024 and 24% in 2023.
A backdrop of solid economic growth and consumer spending, coupled with relatively low unemployment, may push the S&P 500 up about 12% in 2025, market strategist says.

Traders on the floor of the New York Stock Exchange at the opening bell in New York City on Feb. 12, 2025. 
Angela Weiss | Afp | Getty Images

Stock market investors enjoyed lofty annual returns over the past two years. However, 2025 may not offer a “three-peat,” investment analysts say.
The S&P 500 stock market index yielded a 23% return for investors in 2024 and 24% in 2023. Those returns were 25% and 26%, respectively, with dividends.

Three consecutive years of total returns of more than 20% for U.S. stocks is a historical rarity. It has only happened once — in the late 1990s — dating back to 1928, according to Scott Wren, senior global market strategist at the Wells Fargo Investment Institute.
“Do we expect an S&P 500 Index three-peat in 2025? In short, no,” Wren wrote in a market commentary Wednesday.

The U.S. stock market has delivered average annual returns of roughly 10% since 1926, according to Dimensional, an asset manager. After accounting for inflation, stocks have consistently returned an average 6.5% to 7% per year dating to about 1800, according to a McKinsey analysis.
“We have been spoiled as investors” the past two years, said Callie Cox, chief market strategist at Ritholtz Wealth Management.
“Twenty-percent gains haven’t been the norm,” Cox said. “Twenty percent gains are the exception.”

What might ruin the party?

While history “isn’t gospel,” there are reasons to think the stock market may not perform as well in 2025, Cox said.
For one, there are many uncertainties that could negatively affect the stock market, including tariffs and a potential rebound in inflation, Wren said. A surge in bond yields might also pose a headwind, Wren wrote in a market commentary. Higher yields could dampen demand for U.S. stocks.
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Additionally, technology companies have been a major driver of S&P 500 returns in recent years but may not be poised for the same outperformance this year, Cox said.
Tech stocks suffered a rout in late January, for example, amid fears of a Chinese artificial intelligence startup called DeepSeek undercutting major U.S. players. Those stocks have largely recovered since then, however.

In all, a rosy backdrop of solid economic growth and consumer spending, coupled with relatively low unemployment, may push the S&P 500 up about 12% in 2025, Wren wrote. That would be slightly better than the long-term historical average, he said.
“So do not be disappointed,” Wren wrote. “We think investors should be optimistic.”
However, investors should not let high expectations cloud judgment about market risks, Cox said.  
The current environment is one in which investors should “prioritize portfolio balance” and long-term investors should ensure their portfolio is in line with their targets, she said. More

Jerome Powell’s press conferences—sometimes market-moving events—have attracted less notice of late. With Donald Trump in the White House, the chair of the Federal Reserve faces competition for attention. Yet a recent inflation reading has returned prices to the public eye. In January America’s “core” consumer price index, which strips out volatile food and energy costs, jumped by 5.5% at an annualised rate. In response, Larry Summers, a former treasury secretary, called this the “riskiest period for inflation policy since the early Biden administration”, after which inflation rose to its highest in four decades. More

Federal Reserve Governor Michelle Bowman said on Monday she wants to see data reflect more progress on inflation before cutting interest rates further. 
While she expects inflation to continue to decelerate this year, she said disinflation “may take longer than we would hope.” 
The Fed maintained its target rate at a range of 4.25% to 4.5% at its January policy meeting.

Federal Reserve Bank Governor Michelle Bowman gives her first public remarks as a Federal policymaker at an American Bankers Association conference In San Diego, California, February 11 2019.
Ann Saphir | Reuters

Federal Reserve Governor Michelle Bowman said on Monday that while monetary policy “is now in a good place,” she wants to see data reflect more progress on inflation before cutting interest rates further. 
“I would like to gain greater confidence that progress in lowering inflation will continue as we consider making further adjustments to the target range,” Bowman said in a speech at the American Bankers Association. 

Rising core goods price inflation since last spring has slowed progress, Bowman said. While she expects inflation to continue to decelerate this year, she said disinflation “may take longer than we would hope.” 
“I continue to see greater risks to price stability, especially while the labor market remains strong,”  Bowman said.
The most recent consumer price index showed inflation trended higher than expected in January, rising 0.5% month-over-month versus the Dow Jones estimate calling for a 0.3% rise. This put the annual inflation rate at 3%, coming in above consensus forecasts for 2.9%
The Fed maintained its target rate at a range of 4.25% to 4.5% at its January policy meeting.
Bowman said Monday the current level is appropriate for “allowing the Committee to be patient and pay closer attention to the inflation data as it evolves.”

“The current policy stance also provides the opportunity to review further indicators of economic activity and get further clarity on the administration’s policies and their effects on the economy,” continued Bowman.
President Donald Trump’s tariffs against the U.S.’s largest trading partners have raised concerns among economists of higher prices. Expectations for further interest rate cuts in 2025 have weakened on Trump’s trade war. Traders are currently pricing in just a single quarter-percentage-point rate reduction this year, according to CME Group Data.  More