top of page

31 days of 2025

Writer's picture: Lavina NagarLavina Nagar


I read somewhere that January is like Monday but for an entire month! It definitely felt like that in January of 2025. It has been a volatile start to the year amid market shifts and policy concerns. President Trump returned to the White House and signed dozens of executive orders, the Chinese artificial intelligence company DeepSeek shook the tech industry, and the Fed hit pause on rate cuts. Looking forward, ground is still shifting with the latest round of tariffs and the impact on the global economy and inflation.


January was marked by technological disruption and policy transitions. A reported AI breakthrough by the Chinese company DeepSeek led to declines in some technology stocks, notably Nvidia. DeepSeek has purportedly built cutting-edge models that require 95-97% fewer resources to train than those created by OpenAI and other leading companies. While this is still being validated – OpenAI alleges that DeepSeek utilized its models – the possibility that the industry requires far fewer computing resources and energy has rippled across financial markets.


Another important development is in Washington, where the Trump administration implemented new tariffs, including a 10% tariff on China and 25% tariffs on Canada and Mexico. Tariffs on both Mexico and Canada have been paused for a month at the time of writing this post. While tariffs imposed during President Trump’s first administration were primarily focused on specific industries and China, the new measures cast a wider net. These measures could have economic implications for consumers and businesses, including the possibility of higher inflation. Various sectors face distinct challenges - the automotive industry must navigate complex cross-border supply chains, agricultural importers are grappling with potential price increases on fresh produce, and energy markets must adjust to new costs on Canadian oil imports. All this  has created uncertainty around global trade relationships, inflation, and economic growth. The exact economic impacts are not yet clear and will take time to unfold.


Finally, the Federal Reserve decided to keep rates steady at 4.25 to 4.50% at its January meeting. This represents a pause in rate cuts after the Fed lowered rates at the previous three meetings. The Fed made this decision because the economy is growing steadily, the job market is strong, and inflation remains stubborn. Recent data shows that inflation accelerated slightly on a year-over-year basis due to factors such as energy costs. Long-term interest rates have remained elevated as well, which suggests that investors also believe that monetary policy will need to remain restrictive for an extended period to ensure price stability.


With so much up in the air, staying focused and disciplined is important. Making changes to your financial and investment strategies based on issues whose outcomes are unclear, is not a good strategy. It is very tempting to change directions given the level of noise and confusion around us. But remember, right now, it is noise. However, it is a good opportunity to review how sound and convincing your long-term strategy is, and if your investments are a good reflection of your risk appetite. Maintaining a broader perspective will help you to be in a better position to achieve your financial goals.


Lavina Nagar, CFP(R) is the president and founder of Maya Advisors, Inc., a financial planning and investment firm in Palo Alto, California.


9 views0 comments

Recent Posts

See All

Comments


Thanks for submitting!

bottom of page