Market Friction: Misleading Inflation Data, Antitrust Attrition, and Amazon's AI Ghost

Headline figures often mask a more turbulent reality. The January

reported a 2.4% year-over-year increase, a figure the current administration and many market observers initially celebrated. However, these metrics suffer from severe data distortions. A critical blind spot exists because of the October government shutdown, which prevented the

Bureau of Labor Statistics

from collecting accurate price data during that period. Instead of acknowledging the gap, the agency assumed inflation was flat, a move that

Mark Zandi

suggests understates current figures by one or two-tenths of a percent.

When we look past the headline CPI, the

(PCE) deflator—the Fed's preferred metric—paints a far grimmer picture. Core services, excluding energy, surged 4% in January, the fastest monthly pace since July. This "sticky" inflation suggests the real rate sits closer to 3% than the 2% target. Furthermore, the 96% pass-through rate of tariffs from businesses to consumers creates a persistent upward pressure on prices that has yet to fully manifest in the data. We are likely entering a phase where inflation gets worse before it finds a definitive path toward moderation.

The Collapse of Antitrust Populism

The sudden ousting of

as the

Department of Justice

antitrust chief signals a major shift in the political landscape of corporate regulation. Slater, a serious and well-respected attorney, was confirmed with the promise of resisting political interference. Her departure, following the resignation of her top deputy, exposes the internal collapse of the MAGA-populist wing that once seemed aligned with the aggressive enforcement seen under the Biden administration.

Reports indicate Slater was forced out after resisting settlements with companies represented by lobbyists connected to the

administration. This friction suggests that the "horseshoe theory" of politics—where far-right populists and progressive regulators find common ground on corporate overreach—was more theater than policy. The ideological battle between those wanting tough enforcement and the pro-business wing has ended in a decisive victory for corporate interests. The initial hostility toward

Big Tech

appears to have been rooted in cultural grievances rather than a fundamental commitment to antitrust principles.

Amazon's Hidden Equity Advantage

is currently being punished by a market that views it as a legacy e-commerce relic vulnerable to AI disruption. The stock recently suffered its longest losing streak since 2006, trading at a multiple of 28 times earnings—far below peers like

Walmart

or

Costco

. This valuation gap stems from a fundamental narrative failure: the market is ignoring Amazon’s massive stake in

Anthropic

.

Amazon has invested roughly $8 billion in

, owning nearly a fifth of the company. Despite this, the investment is rarely mentioned in analyst calls or research notes. Internally, Amazon values this stake at over $60 billion, yet they have been remarkably opaque about the specific terms. By failing to communicate the depth of this partnership,

Andy Jassy

is allowing

Wall Street

to categorize Amazon as an AI loser when it is actually one of the largest beneficiaries of the current technological shift.

The Rerating of the Tech Industry

We are witnessing a fundamental rerating of the tech sector.

is aggressively picking winners and losers based on perceived AI integration. Software stocks have fallen 16% on average over the past month as investors fear AI will enable companies to "vibe code" their own solutions, rendering traditional software subscriptions obsolete. While these fears may be overstated due to enterprise security needs and switching costs, the narrative shift is real and destructive. Companies like

Amazon

and

Microsoft

—the latter owning a third of

OpenAI

—must proactively integrate their private AI equity into their public market stories to prevent further multiple compression. If the narrative isn't controlled by the executive team, the market will write its own, often at the expense of shareholder value.