Good morning. Happy Friday.
The Asian/Pacific markets were split. India, Australia and Indonesia did well; South Korea, Thailand and the Philippines were weak. China, Hong Kong, Taiwan and New Zealand were closed. Europe, Africa and the Middle East are quiet and little changed. Only the Netherlands (up) and Turkey (down) have moved much. Index futures in the States point to a moderate gap up open for the cash market.
————— VIDEO: Tracking S&P 500 All-Time Highs Per Year —————
The dollar is up. Oil is up; copper is down. Gold and silver are up. Bonds are down. Bitcoin is flat.
Stories/News from Seeking Alpha…
Crude swap
Steep tariffs on Mexico and Canada are set to go into effect on Saturday as President Trump threatens trade with America’s neighbors unless they address illegal migration, drug trafficking, and “massive subsidies in the form of deficits.” One closely watched area likely to be excluded is oil, due to the complicated nature of the U.S. energy industry. There’s a notable paradox for a country that has become a dominant energy superpower, where despite producing more oil than it consumes, it remains the second-largest importer in the world after China.
How did things get this way? Lower barriers to trade since the 1970s meant it became more profitable for the U.S. to import oil from abroad rather than produce it at home. Importing ramped up from countries like Canada, Mexico, Venezuela and Saudi Arabia, where oil was more abundant and production costs were lower, while historic regulations like the Jones Act pushed up (and continue to impact) local transport costs. The refinery system in the U.S. also centered around heavy, sour oil grades, which were available from these countries, though geopolitical risks increased as the U.S. became more dependent on foreign oil.
In the early 2000s, the fracking revolution changed the entire landscape as the U.S. returned to the world stage as a producer capable of supplying cheap energy (and recently became the largest oil producer in the world). However, this light, sweet crude wasn’t a match for most of the U.S. refinery system that was based on heavier grades, and building out new infrastructure would take decades and hundreds of billions of dollars. While there are heavier oil sands in the U.S., located in areas like Alaska, California and Utah, processing them requires more capital than lighter oil and they only make up a fraction of the total available crude in America.
Energy security (not independence?): Everything works fine as long as the U.S. has buyers of its oil, and is able to import its needs, but arrangements can be agitated if things are shaken up on the trade front. Expanding and converting current refineries, or developing new ones to process sweeter crude (less sulfur and contaminants), would be too expensive and require an extended time horizon for an industry that must please new U.S. administrations every four to eight years (renewables and green energy?). Other problems include the lack of infrastructure to get U.S.-produced oil to U.S. refineries, as well as environmental permits and regulations, and don’t forget the premium to be made on the sale of light sweet WTI (CL1:COM) and the strengthening of margins by processing cheaper sour crude.
What else is happening…
Gold hits record high as tariff fears continue to drive safe-haven demand.
SA Asks: Which stocks could be helped/hurt by China’s DeepSeek?
More DeepSeek… Did it evade export controls for Nvidia (NVDA) chips?
Apple (AAPL) outlines sales targets after strong results, AI expansion.
DOJ sues to block Juniper Networks’ (JNPR) $14B sale to HPE (HPE).
UPS (UPS) slides after cutting business with largest customer by 50%.
Most Costco (COST) store employees will now make $30 an hour.
IBM (IBM) shares surge after impressive earnings, impacting top ETFs.
Walgreens Boots (WBA) falls after quarterly dividend suspension.
Green light for a combined bitcoin (BTC-USD)-ether (ETH-USD) ETF?
Today’s Economic Calendar
08:30 AM Personal Income and Outlays
08:30 AM Employment Cost Index
09:45 AM Chicago PMI
01:00 PM Fed’s Bowman Speech
01:00 PM Baker Hughes Rig Count
03:00 PM Farm Prices
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Good morning. Happy Thursday.
The Asian/Pacific markets leaned down. Japan and Australia did well. New Zealand, Indonesia, Thailand and the Philippines were weak. Europe, Africa and the Middle East are mostly up. The UK, Poland, France, Turkey, Finland, Spain and the Netherlands are leading. Israel is weak. Index futures in the States point to a positive open for the cash market.
————— VIDEO: Tracking S&P 500 All-Time Highs Per Year —————
The dollar is down. Oil is down slightly; copper is up. Gold and silver are up. Bonds are up. Bitcoin is up.
Stories/News from Seeking Alpha…
What it means
Earnings, earnings, earnings. There’s a flood of them being released daily as the peak of the season gets underway, with Big Tech in the investor spotlight this week. It’s a big deal as the bumper stock market rally over the past year has been driven by the promise of AI, so any hiccups there could shake things up, DeepSeek style. Putting things into perspective, the Magnificent 7 added $5.8T in market capitalization in 2024, which is about half of the $11T tacked on by the rest of the U.S. stock market.
Mixed bag, so far: Meta Platforms (META) climbed 2.2% AH to $692 on Wednesday after its Q4 net income jumped by nearly 50%, bolstered by successful AI bets and a forecast of a “really big year.” Over at Microsoft (MSFT), cloud computing sales missed estimates, prompting the stock to drop 4.6% to $422, with the division one of its biggest revenue drivers. Meanwhile, Tesla’s (TSLA) stock revved up 4.1% to $405 despite a slide in profits, as more promises were made on the timeline of robotaxis.
What about DeepSeek? There have been questions about the hundreds of billions of dollars being spent on AI, especially in the wake of the cheap Chinese competitor that made headlines earlier this week. “DeepSeek has had some real innovations,” Microsoft CEO Satya Nadella said on an earnings call, adding that R1 has been added to its Azure AI Foundry. Meta’s Mark Zuckerberg made similar remarks, commenting that DeepSeek has done “a number of novel things” and “they have advances that we will hope to implement in our systems.” He also discussed what that might mean for the trajectory around infrastructure and capex.
SA commentary: “After putting up profit growth north of 35% from Q1 – Q3 2024, Q4 is expected to show a marked slowdown for these seven names,” SA analyst Christine Short wrote in Can The Magnificent 7 Maintain An Upbeat Earnings Season? “Even so, the blended EPS growth expectation of 21.7% for Q4 is nothing to sneeze at. In fact, if you remove these seven companies, S&P 500 growth for the quarter drops to 9.7%.” Note that results from Apple (AAPL) will be published after the bell today, while Amazon (AMZN) will report its quarterly numbers next week.
What else is happening…
No surprise by the Fed’s pause; future data could hint to something more.
Army Black Hawk chopper collides with American Airlines (AAL) plane.
Softbank may invest up to $25B in OpenAI, eyeing top backer spot.
HHS Secretary nominee RFK Jr. faces contentious Senate hearing.
TikTok: Group including Roblox (RBLX) CEO ready to offer over $20B.
Penn Entertainment (PENN) shareholder HG Vora starts proxy fight.
Spirit Airlines (OTC:SAVEQ) rejects Frontier’s (ULCC) merger offer.
Toyota (TM) remains top-selling automaker despite lower 2024 sales.
NASA, Elon Musk affirm SpaceX will bring back Starliner (BA) crew.
META set to agree to $25M settlement with Trump for 2021 lawsuit.
Today’s Economic Calendar
08:30 AM GDP Q4
08:30 AM Jobless Claims
10:00 AM Pending Home Sales
10:30 AM EIA Natural Gas Inventory
04:30 PM Fed Balance Sheet
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Good morning. Happy Wednesday. Happy Fed Day.
The Asian/Pacific markets were mostly closed. Japan, India and Australia did well. Europe, Africa and the Middle East are mostly up. Denmark, Germany, South Africa, Norway, Spain, the Netherlands, Portugal, Swede and the Czech Republic are up; France is down. Index futures in the States point to a negative open for the cash market.
————— VIDEO: Tracking S&P 500 All-Time Highs Per Year —————
The dollar is up. Oil is up; copper is down. Gold is unchanged; silver is up. Bonds are up. Bitcoin is up.
Stories/News from Seeking Alpha…
Time to pause?
The Federal Open Market Committee is widely expected to take a breather this afternoon, the first pause since it started cutting rates in September. As a result, investors’ focus will be more attuned to the Federal Reserve signaling its path ahead.
Quick recap: The Fed trimmed the federal funds rate by 100 basis points to 4.25%-4.50% in the last three meetings, with a super-sized 50-bp cut in September followed by two 25-bp cuts in each of the two meetings that followed. The easing followed a trend of decelerating inflation, while the labor market cooled from its overheated state in 2021 and 2022.
Today’s decision: Policymakers are expected to wait and see how the economic data unfolds. The economy faces elevated risks as President Donald Trump rolls out his policies – particularly upcoming tariffs that stoked fears of inflation resurging. The debate now appears to be whether the Fed will cut at all this year. In its December dot plot, the median dot expected two more cuts this year. The dot plot won’t be released this meeting, but Fed Chair Jerome Powell will provide some insights into the Fed’s thinking. Market pricing indicates a 90% probability that the Fed will cut at least once this year and a 62% chance that it will cut by at least 50 bps.
SA commentary: Michael Kramer, of Mott Capital Management, believes the Fed should avoid signaling rate cuts before July “to prevent exacerbating inflation fears.” SA analyst Logan Kane thinks markets may have to brace for an extended pause, and even a rate hike or two, due to lingering inflation. “There’s a good chance that the Fed is more hawkish than the market expects,” he said. Investing Group Leader Chris Lau pointed to treasury yields rising, which suggests markets are pricing in potential future rate hikes, despite the Fed’s last stance on rate cuts.
What else is happening…
Earnings watch: Meta (META), Microsoft (MSFT), and Tesla (TSLA).
Microsoft (MSFT) probing if DeepSeek improperly used OpenAI data.
DeepSeek impact: Uranium price falls, but nuclear stocks rebound.
GM (GM) shares slump as guidance excludes impact from tariffs.
Starbucks (SBUX) highlights upside from return to coffeehouse vibe.
Kohl’s to shut underperforming stores, eliminate 10% corporate roles.
Novo Nordisk’s (NVO) Ozempic gets FDA nod for kidney disease.
23andMe (ME) is exploring strategic alternatives, including a sale.
RFK Jr. softens his anti-vaccine stance ahead of confirmation hearing.
Trump reforms: Federal funding freeze blocked; workers offered buyout.
Today’s Economic Calendar
07:00 AM MBA Mortgage Applications
08:30 AM International Trade in Goods (Advance)
08:30 AM Retail Inventories (Advance)
08:30 AM Wholesale Inventories (Advance)
10:30 AM EIA Petroleum Inventories
11:00 AM Survey of Business Uncertainty
02:00 PM FOMC Announcement
02:30 PM Chairman Press Conference
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Good morning. Happy Tuesday.
The Asian/Pacific markets were mostly closed. India did well; Malaysia and the Philippines were weak. Europe, Africa and the Middle East are mostly up. The UK, Poland, France, Turkey, Germany, Switzerland, Norway, Spain, the Netherlands, Italy and Portugal are posting moderate gains; Denmark is down. Index futures in the States point to a positive open for the cash market.
————— VIDEO: Don’t Panic When the Market Weakens —————
The dollar is up. Oil and copper are up. Gold and silver are up. Bonds are down. Bitcoin is up.
Stories/News from Seeking Alpha…
Tariff talk
President Donald Trump has once again ramped up his tariff rhetoric, with traders now expecting potentially harsher tariffs to be announced in the coming days. A universal tariff rate is now being seen as inevitable, following a media report on Treasury Secretary Scott Bessent’s plans.
Across-the-board levy: Bessent, the hedge fund manager who was confirmed as the next Treasury secretary on Monday, is favoring a 2.5% universal tariff rate on U.S. imports, the Financial Times reported. This rate will then rise gradually, four people familiar with the proposal told the media outlet. But Trump later said he wants the universal tariff rate to be “much bigger” than 2.5%. “I have it in my mind what it’s going to be… I won’t be setting it yet, but it’ll be enough to protect our country,” he added.
Trump also said he’d impose tariffs on steel, aluminum, copper, computer chips, semiconductors, and pharmaceuticals in the “very near future” to bring production back to the U.S. The president previously said he’d announce tariffs of up to 25% on imports from Canada and Mexico by February 1, and over the weekend, used the tariff threat as a bargaining chip to force Colombia to accept illegal migrants deported from the U.S.
Dollar rises: Trump’s comments on the universal tax rate pushed the U.S. dollar higher, with the index tracking the greenback (DXY) hovering near $108. ING FX strategist Francesco Pesole said the comments “may have put a new solid floor below the greenback,” as they “contradict the markets’ tentatively sanguine assumption that tariffs would be more of a case-by-case measure (like for Colombia) and not universal.”
What else is happening…
WSB survey results for January are in, here’s the poll if you missed it.
DeepSelloff: Nvidia (NVDA) value craters, OpenAI’s Sam Altman reacts.
Trump says Microsoft (MSFT) is among contenders for TikTok (BDNCE).
Tesla (TSLA), BMW (OTCPK:BMWKY) sue EU over Chinese EV tariffs.
EV success: Norway is on track to be the first country to go fully electric.
Walgreens (WBA) sinks as potential takeover by Sycamore is likely dead.
Vail Resorts (MTN) gains as investor pushes for CEO ouster, board reset.
Arabica coffee futures hit record high, driven by supply and tariff concerns.
Top container shippers not returning to Red Sea despite Houthi pledge.
WHO exit: CDC staff told not to work with UN agency till further notice.
Today’s Economic Calendar
FOMC meeting begins
08:30 AM Durable Goods
09:00 AM Case-Shiller Home Price Index
09:00 AM FHFA House Price Index
10:00 AM Consumer Confidence
10:00 AM Richmond Fed Mfg. Index
11:30 AM Results of $30B, 2-Year FRN Auction
01:00 PM Results of $44B, 7-Year Note Auction
01:00 PM Money Supply
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Good morning. Happy Monday.
The Asian/Pacific markets leaned down. Japan and Hong Kong did fine, but China, India, Malaysia, Thailand and the Philippines were weak. Serveral markets were closed. Europe, Africa and the Middle East are mostly down. Denmark, Poland, Turkey, Germany, Greece, Hungary, Israel, Sweden and the Czech Republic are posting the biggest losses. Index futures in the States point to an enormous down open for the cash market.
————— VIDEO: Don’t Panic When the Market Weakens —————
The dollar is down. Oil and copper are down. Gold and silver are down. Bonds are up. Bitcoin is down.
Stories/News from Seeking Alpha…
DeepSeek fears
The artificial intelligence boom has pushed companies to spend billions of dollars to maintain their edge. But the global race has taken a surprising turn, with Chinese AI startup DeepSeek’s large language model outperforming American rivals and stirring up fears of China overtaking the U.S. in the burgeoning new technology.
Backdrop: DeepSeek’s latest LLM – called R1 – has outperformed models from established rivals like Microsoft (MSFT)-backed OpenAI, Meta (META) and Anthropic, which have spent billions of dollars to scale up their LLMs. DeepSeek’s first open-source LLM – DeepSeek V3, released last December – took less than $6M to build, using Nvidia’s (NVDA) H800 chips for training. The R1, built off the V3, is developed to perform complex reasoning and rivals OpenAI’s o1.
Bigger picture: “The new model is cost-effective and runs on reduced-capability chips,” Saxo analysts noted. “The development raises questions about the high valuations of leading AI companies like Nvidia and the investment case for the entire AI supply chain.” Also, DeepSeek’s LLMs have been developed despite U.S. export controls to limit China’s access to the advanced chips needed for AI work. “DeepSeek’s recent progress shows that the perceived lead the U.S. once had has narrowed significantly,” said Alvin Wang Graylin, a tech expert serving as global VP at Taiwanese firm HTC.
On the move: Doubts over U.S. dominance in the AI space, coupled with high stock valuations, dragged the tech-heavy Nasdaq 100 futures (US100:IND) down 4.3% on Monday. Many tech stocks are sliding before the bell, led by AI darling Nvidia’s (NVDA) near 12% drop. Other notable decliners: AMD (AMD) -6.5%, Meta (META) -6%, Amazon (AMZN) -5%, Alphabet (GOOGL) (GOOG) -4%, Tesla (TSLA) -4%. Take the WSB survey here.
What else is happening…
Trump’s tariff threat to Colombia pays off; Greenland pursuit gets heated.
White House working on plan to save TikTok (BDNCE) involving Oracle.
Meta (META) seeks to reassure advertisers worried about free speech shift.
Alphabet’s (GOOG) Nvidia (NVDA)-like business may be worth billions.
Trump’s big oil production plans likely to face pushback from Wall Street.
Activist Ancora pushes U.S. Steel (X) to drop Nippon deal, oust its CEO.
Disinflation in shelter, the biggest CPI component, is gathering speed.
Market support: China unveils measures to boost index investments.
TRUMP-USD ‘hysteria’ is more ‘evidence of froth in asset markets.’.
Early Super Bowl preview: These companies are going for the win.
Today’s Economic Calendar
08:30 AM Chicago Fed National Activity Index
10:00 AM New Home Sales
10:30 AM Dallas Fed Manufacturing Survey
11:30 AM Results of $69B, 2-Year Note Auction
01:00 PM Results of $70B, 5-Year Note Auction
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