Welcome to “The Week Ahead” where we take a moment to provide our thoughts on what we can expect in markets and the economy during the upcoming week.

A couple of years ago, like many hundreds of thousands of other people, I put a deposit down on a yet-to-be-released Tesla Model 3. With no end to the waiting in sight, and my fifteen year-old car starting to act up, I decided to cancel the reservation. Every time I see one in red, I wonder if I should have been a bit more patient.

During Tesla’s latest earnings call, we saw that demand for Tesla cars is coming off the boil, and starting to ebb somewhat. Mr. Musk, known for his off-color commentary, had an interesting line during the call, “Demand for the Model 3 is insanely high, but cost is too high.” This comment genuinely made me smile. I don’t think most companies who are seeing waning sales growth could get away with such an excuse.

Despite being in “insanely high” demand, Tesla cut the price of a Model 3 for the second time this year by $1,100 to $42,900. When Apple tried to raise the price of the iPhone in China, sales fell by nearly 15%. To bring the situation under control, iPhone prices were subsequently reduced for third party vendors. The e-commerce giant Alibaba reported an increase of 76% in iPhone sales after the price reduction. If demand is high, as it clearly is for iPhones and the Model 3s, why are these aspirational brands having to reduce prices, and what effect is it having on the global economy?

Conventional economic theory states that once the unemployment rate gets below a certain point, we should expect to see higher wages from employers competing for a dwindling pool of qualified workers. These higher wages bid up the price of goods, resulting in inflation. Well, we’ve seen employment growth for 100 straight months (an incredible statistic), and we are finally seeing some increase in wages, but inflation is still practically non-existent. It’s clear that something is different this time. I believe the combination of technology, globalization, and competition that has developed over the past two decades is keeping inflation down while driving growth. Indeed, ten years into this expansion, core inflation is still less than 2.0%.

This week the Bureau of Labor Statics (BLS) will show us the latest data point on inflation with the consumer price index (CPI). While the Tesla Model 3 and the iPhone are not counted in the basket goods monitored by the BLS, expectations are for CPI to continue to remain in check for January, and it is likely to stay that way for some time.

Data deck for February 11-February 15: