February 19, 2025
January inflation kept the Fed's path from looking clean. CPI rose 3% year over year, with shelter up 0.4% and responsible for roughly 30% of the monthly increase. Energy rose 1.1%, gasoline rose 1.8%, and food rose 0.4%. Core CPI also rose 0.4%. PPI told a similar story, with final demand up 0.4%, food up 1.1%, energy up 1.7%, and egg prices up 44% because of the poultry outbreak.
Tariffs added another margin pressure point. The U.S. announced a 25% tariff on all steel and aluminum imports, effective March 12, with no exemptions for Canada, Mexico, Japan, or South Korea. U.S. Steel, Cleveland-Cliffs, and Nucor rose on the news, but downstream manufacturers face the harder question of whether they can pass through higher input costs.
Hyatt's planned acquisition of Playa Hotels & Resorts was the main M&A example. The deal values Playa at about $2.6 billion including $900 million of debt. Hyatt already owns 9.4% of Playa and agreed to buy the remaining 90.6% for $13.50 per share. Playa's properties are concentrated in Mexico, the Dominican Republic, and Jamaica, which supports Hyatt's push into all-inclusive resorts. Hyatt also plans to use new debt and third-party property buyers, while targeting $2 billion of asset sales by 2027.
Chevron showed the cost side of the same theme. The company plans to cut 20% of its global workforce by the end of 2026 and has targeted $2 billion to $3 billion of savings through asset sales. Chevron's portfolio is worth about $280 billion, but fourth-quarter EPS of $2.06 missed the $2.11 estimate. Brent is expected to average $74 in 2025 and $66 in 2026, down from $81 last year, so efficiency matters more.
Energy data was mixed. U.S. crude inventories rose 4.1 million barrels to 427.9 million, still 4% below the five-year average, while production is forecast at 13.5 million barrels per day. Gasoline inventories fell 3 million barrels and refinery utilization rose to 85%.
AI and consumer data rounded out the week. The Hang Seng Tech Index rose more than 20% over a month and Alibaba gained 35%, while Tesla fell 6.3% after Elon Musk's $97.4 billion OpenAI bid raised focus concerns. Auto insurance rose 11.8% year over year, forcing some households to cut coverage or other spending. For recruiting, this is a practical recap of how inflation, tariffs, portfolio moves, and cost cuts all end up in margins.