Sep 13, 2025

💬 Weekly Observation

“The more you want something to be true, the more likely you are to believe a story that overestimates the odds of it being true.” — Morgan Housel

A reader *told me they’d finally “found the thing” that would make the numbers work— daycare costs, a future move, the whole puzzle. Once that hope took root, every feed seemed to agree: headlines, charts, podcasts, even group chats. It felt like consensus, but really it was an echo, our brains (and algorithms) turning desire into a chorus.

Two volatile sessions later, nothing fundamental had changed except the soundtrack: from triumphant to anxious. The swing wasn’t about markets; it was about expectations meeting randomness.

In investing, wanting something badly can masquerade as evidence. Noticing that tug—how our hopes curate what we see, keeps our expectations grounded and our stress lower when markets do what they always do: surprise.

☕️ So grab your coffee and let's dive into today's fresh edition of Diversification Weekly.

🗞️ Week's stories that matter (and why)

1. 🔥 US inflation stays hot while job market softens

August consumer prices rose 0.4% month‑over‑month and 2.9% year‑over‑year; weekly jobless claims unexpectedly climbed to a three‑year high of 263,000.

The International Monetary Fund noted that US domestic demand is moderating and job growth has been overestimated after revisions.

Markets still expect the Federal Reserve to cut rates at its Sept. 17 meeting, with futures pointing to a 25‑basis‑point reduction.

Why it matters: Inflation is easing but remains above the Fed’s 2% target, while a cooling labour market signals slower growth. Investors should brace for lower rates but also consider how weaker employment could hit earnings.

Assets in Focus: Fixed Income

2. 🇪🇺 European Central Bank holds rates, says eurozone is in a “good place”

The ECB kept its deposit rate at 2% after cutting earlier this year and signalled no rush to ease further. Officials said growth and inflation risks are now balanced and forecast eurozone inflation at 1.9% in 2027.

Money markets are pricing only a ~40% chance of one more cut by spring.

Why it matters: A stable rate path in Europe contrasts with imminent US cuts. A “good place” for the eurozone suggests policymakers think the economy can handle higher borrowing costs, supporting the euro and European equities.

Assets in Focus: Currencies

3. 🛢️ Oil slides on oversupply fears despite Middle‑East tensions

Brent crude fell about 2% to $66.37 a barrel and US WTI dropped to $62.37 as the International Energy Agency predicted supply would rise faster than demand with OPEC+ and Russia planning output increases.

Traders said bearish headlines from the IEA and concerns about Chinese demand outweighed geopolitical risks.

Why it matters: Tariffs act like a cost shock to supply chains—raising production costs, triggering inflation pressure, and reshaping sectors from agri-gear to automakers.

Assets in Focus: Commodities

4. 🗽 Wall Street indices hit record highs as AI fever intensifies

The S&P 500 and Nasdaq closed at new highs on Sept. 10 thanks to a 36% surge in Oracle’s share price after it announced robust demand for artificial‑intelligence cloud services.

Chipmakers such as Nvidia (+3.8%), Broadcom (+10%) and AMD (+2.4%) rallied, while cooler‑than‑expected producer‑price data reinforced expectations of a Fed rate cut.

Despite the frenzy, some analysts warned that valuations are stretched and consumer‑electronics giant Apple fell 3.2% on concerns it is lagging the AI race.

Why it matters: AI‑linked winners are driving US indices, but concentration risk is growing. Elevated valuations and pockets of weakness (e.g., Apple) suggest investors should diversify beyond a handful of tech names.

Assets in Focus: Equities

5. 💊 Drugmaker Eli Lilly unveils AI platform to speed up drug discovery

Eli Lilly launched TuneLab, an artificial‑intelligence platform that gives biotech partners access to models trained on years of its research data.

The company invested over $1 billion to build the system, which it says will democratise access to AI‑powered drug discovery and reduce animal testing. Smaller biotech firms Circle Pharma and insitro are among the first partners.

Why it matters: Breakthroughs in AI‑driven healthcare could shorten development timelines and lower costs for new medicines. For investors, it highlights opportunities in health‑tech and raises questions about ethical data use and regulatory oversight.

Assets in Focus: Equities

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🧭 Three macro themes to remember

1. Cooling labor, sticky inflation
   This week’s prints kept the “slower growth, not-quite-2% inflation” mix in view: unemployment indicators ticked up from earlier-year lows while consumer-price measures remained above central-bank targets. The combination points to a late-cycle economy, wage pressures easing at the margin, but services and shelter components keeping core inflation from falling quickly.
2. Narrow leadership & concentration risk
   Index highs masked dispersion under the surface. Gains were led by a small cluster of mega-cap, AI-adjacent names and a few large chip and cloud beneficiaries, while several non-tech sectors lagged. Market breadth—how many stocks participate in a rally, remained thin, a pattern typical when policy direction is in flux and earnings leadership is concentrated.
3. Surprises > headlines
   Price action hinged on how data landed versus forecasts, not the headlines alone. Slight misses or beats on inflation and producer-price gauges moved yields and FX more than the absolute levels, and central-bank “no surprises” decisions steadied rates curves. In commodities, updated supply-demand assumptions outweighed geopolitics at times, reinforcing that revisions and expectations are the key catalysts.

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🤯 Alternative investment highlight:  A $3.65M Lightsaber (No, really.)

Darth Vader’s screen-used “hero” lightsaber from The Empire Strikes Back and Return of the Jedi sold for $3,654,000 at Propstore’s Los Angeles auction on Sept. 4, smashing the $1–3M estimate and setting a record for any Star Wars item. Day 1 alone moved 433 lots for $14.3M, underscoring how blue-chip pop culture now trades like fine art: story, provenance, and scarcity carry the price.

What makes this saber special? It’s one of the rare verifiably screen-used dueling hilts ever offered publicly—documented to specific scenes and on-set wear—exactly the kind of proof collectors prize. The prop itself traces to a vintage camera flash body that builders modified with grips, wires, and greebles—movie alchemy turning hardware-store parts into myth.

For scale: the same sale featured Indiana Jones’ whip, Tobey Maguire’s Spider-Man suit, a Men in Black neuralyzer, and even Picard’s Ressikan flute—big prices, but all dwarfed by Vader’s hilt. The takeaway isn’t “buy props”; it’s that narrative + scarcity drive value in alternatives—especially when the object is tied to a shared cultural memory.

🧠 From the Education Center: R.I.P 60/40 portfolio?

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