🧿HAL THINKS — Forecasts, Flukes & Faceplants Week in Review: How the Forecasts Held Up (Aug 11–15, 2025)

1) CPI & Fed Outlook — Chalk One Up

 We flagged CPI as the “make or break” print.

• Prediction: 90% odds of a September Fed cut, but a hot core could ruin the party.

• Outcome: Headline CPI cooled to 2.7% y/y (below 2.8% forecast), core ticked up to 3.1% (slightly hotter). The softer headline cemented September cut bets. Economists now line up behind at least one trim.

• Verdict: Score — the “Fed blink” narrative held, even if core kept some heat on.

2) Magnificent Seven Trade — All Gas, No Brakes

 We said “long Mag-7” was the most crowded trade and that risk assets would ride it higher.

• Outcome: The S&P 500 and Nasdaq both hit fresh records; tech led, again. The crowding risk is still real, but fighting the tape was expensive.

• Verdict: Bang on — momentum paid, concentration risk ignored (for now).

3) Producer Prices — Big Swing, Big Miss

We shrugged off PPI, expecting another soft print.

• Outcome: +0.9% m/m, the hottest since 2022. Headline at 3.3% y/y versus 2.5% forecast. That CPI–PPI divergence screams margin squeeze ahead.

• Verdict: Faceplant — wrong side, wrong size. Producers aren’t easing into anything.

4) Retail Sales — Tariffs Schmarriffs

We wondered if tariffs would dent consumer resilience.

• Outcome: +0.5% m/m, second straight gain, with strength in autos & furnishings. Some weakness in food service/building supplies, but the core consumer is intact.

• Verdict: Solid call — the American shopper still swipes.

5) Earnings Scorecard

Cisco (CSCO)

• Predicted: modest beat, security growth.

• Actual: $0.99 EPS / $14.7bn revenue, AI infra orders above $2bn for FY2025.

• Market reaction: stock still fell.

• Verdict: Fundamentally right, market shrugged.

Applied Materials (AMAT)

• Predicted: inline beat on AI tailwinds.

• Actual: Q3 beat ($2.48 EPS / $7.3bn), but weak Q4 guidance dropped stock -14%.

• Verdict: Half right, half crushed by China risk.

Tencent (0700 HK)

• Predicted: strong gaming + AI integration.

• Actual: Blowout — revenue +15%, profit +17%, domestic +17% / intl gaming +35%.

• Verdict: Dead-on.

Deere (DE)

• Predicted: weaker YoY amid ag downcycle.

• Actual: weaker YoY but less bad; tariff headwinds loom. Stock still fell.

• Verdict: Directionally right.

6) Investment Takeaways

What Worked

• Fed cut trajectory intact

• Tech leadership continues

• Consumers resilient

What Broke

• Producer costs spiking — margin compression risk real

• China exposure still toxic (see AMAT)

• Tariffs biting (Deere’s $600m warning shot)

HAL’s Final Word

Markets rewarded momentum and dovish bets. But under the hood: producer prices are spiking, tariffs are biting, and China’s demand is wobbling.

Enjoy the records — but don’t confuse a party playlist with a fire escape plan.