We’ve got some good news and some bad news for those with recurring inflation nightmares.

Consumer prices increased at the slowest rate in four months in February, according to the latest consumer price index (CPI) report, published on Wednesday. So the good news: Inflation may be calming down. The bad news: Likely-inflationary tariffs are just starting to hit now, meaning this may well be just the calm before the storm.

Transitory Cooling Inflation

Here’s the headline: CPI increased 2.8% year-over-year in February, below most economists’ 3% expectations but still a healthy tick above the Fed’s preferred 2% threshold. Month-over-month, the gauge increased 0.2%, a healthy tick down from January’s 0.5% hike. Prices excluding volatile food and energy costs, meanwhile, rose just 3.1% year-over-year — the lowest such reading since 2021. Leading the disinflationary charge: gasoline prices, down 3.1% year-over-year; new cars, down 0.3% year-over-year; and seasonally adjusted airfares, down 4% month-over-month. Shelter costs also saw their slowest year-over-year increase in prices since December 2021.

In a vacuum: all great news. In the context of tariffs and trade wars, the impact of which mostly missed February, well … things are “not as encouraging as they look,” Thomas Ryan, an economist at Capital Economics, told The Wall Street Journal. In fact, the new CPI report may well already be considered “old news,” Nationwide chief economist Kathy Bostjancic told Bloomberg. So what’s the new news?

• “There’s no disinflation momentum right now,” Bostjancic added. “We are predicting a little bit of a bump up in the coming months because of these tariffs.”
• In a recent note, Goldman Sachs analysts said they now expect the personal consumption expenditures price index — a.k.a., the Fed’s preferred inflation gauge — to end the year at 3%, up from previous projections of around 2.5%. Morgan Stanley chief US economist Michael Gapen on Friday also upped his year-end inflation projection from 2.5% to 2.7%.

Fed Up: Increased inflation wasn’t the only update to yearly projections by Goldman and Morgan Stanley economists. Goldman’s analysts also lowered their 2025 GDP growth forecast from 2.4% to 1.7%, while Gapen lowered his growth projections from 1.9% to 1.5%. All of which adds more fuel to the dreaded R-word rumors. Which in turn means Jerome Powell and the Fed could soon find themselves in a tricky spot: On one hand, a recession would typically call for the easing of monetary policy to stoke growth. On the other hand, the chances of tariff-fueled inflation would typically call for maintaining — or even raising — interest rates. The odds of a rate cut in June fell slightly on Wednesday, according to CME’s FedWatch tool.

Europe’s dream of building an electric-vehicle supply chain to rival China is running out of juice faster than a bargain-bin AAA battery.

Swedish EV-battery maker Northvolt filed for bankruptcy yesterday after failing to survive against dominant Chinese competitors. It’s one of the biggest bankruptcies in Sweden’s history and signals that it’s not easy to break China’s chokehold on the EV supply chain.

More than $14 billion worth of investments wasn’t enough to keep Northvolt out of the red. The battery maker was reportedly burning through $100 million per month as of last year.

Northvolt blamed supply chain kinks caused by geopolitical instability, along with shifting EV demand, for its demise. The company also said that it’s struggled to ramp up production in an industry it called highly complex. Last summer, BMW canceled a $2 billion contract with the battery-maker after Northvolt missed delivery deadlines.

It seems the gap between Northvolt and its Chinese rivals was too big to close.

Green Energy, Red Flag

China produces over three-quarters of the world’s EV batteries. And just two Chinese companies account for over half of the global industry: CATL, which dominated battery-making with about 37% market share last year, and BYD, which claimed about 17%.

Behind China, Korean and Japanese suppliers are racing to grab more of the market, while Europe (and the US) are tiny specks in the distance.

• While EV manufacturing is heating up in the EU and the US, some of the growth is being led by the same Chinese companies as they try to future-proof for tariffs.
• CATL is doubling its EU footprint with two new battery factories, and is licensing its tech to Ford for a US plant — which could be awkward after Trump added it to a list of companies with ties to China’s military last month.

But it’s hard, if not impossible, to pick up and move the entire EV supply chain. Before factories can even start building batteries, they need key components like cathodes and anodes — of which China controls more than 90%.

Still Charging: It’s nearly impossible to fully cut China out of the EV picture in the near-term. Like Northvolt pointed out in its bankruptcy statement, it’s a highly complex industry — and China has a huge head start on the rest of the world. In the meantime, EV costs could rise while adoption slows.

Hey look, Elon Musk is at the center of a controversy that has nothing to do with DOGE, the Hatch Act, or exploding rockets.

We’re talking about his ongoing push to reclaim a $56 billion pay package that was nullified by the Delaware Court of Chancery last year. The case has since prompted the introduction of legislation in the state — Senate Bill 21, or SB 21 — that could alter the balance of power between shareholders in Delaware, the legal home to many of America’s largest corporations. On Wednesday, lawmakers met for hearings over the bill.

Crossing the Delaware

At the heart of the matter is one question: What is a controlling shareholder? Flashback to over a year ago, when a Delaware judge ruled that Musk, despite owning roughly just 13% of Tesla shares, held enough sway over the company to be considered the de facto controlling shareholder — and thus had undue influence over negotiations for his massive pay package. It was the most high profile in a string of similar rulings that critics say were overly deferential to noncontrolling shareholders.

That, in turn, led to a series of Dexits (or corporate exits from Delaware) or threats of Dexits. Which in turn prompted some state lawmakers, concerned over the potential loss of a major source of state revenue, to introduce SB 21, which codifies the definition of a controlling shareholder and would likely soothe the concerns of powerful shareholders such as Musk.

It has, predictably, drawn ardent supporters and ardent critics:

• On Tuesday, a group of 21 influential corporate law firms co-signed a letter urging passage of the bill, saying it marks “an important step in maintaining Delaware’s status as the jurisdiction of choice for sophisticated clients,” and noting that over its “long history… Delaware has repeatedly adjusted its approach in order to modernize and respond to market developments.
• On the other side: more lawyers. One group of lawyers who bring shareholders’ cases against companies claims the bill would “take rights away from stockholders to eliminate accountability for billionaire executives.”

Course Correction: So would the bill help Musk if it is even passed? Probably, experts say. In fact, Boston College law professor Brian Quinn in a recent blog post wrote the entire point of SB 21 “appears to be about dictating an outcome” in Musk’s ongoing appeal, given that it leaves room for judges to adjust in accordance to the new law in any pending case. Either way, it’ll be the last time Tesla fights in the state; the company has since moved its legal home to Texas.