Morning Brew February 11 2025

Good Morning,

As what somewhat expected, Donald Trump signed orders yesterday to raise the tariff rate on steel and aluminum to 25% with no country exceptions.  The Tariffs are said to take effect on March 4.

The S&P 500 ended the day up 0.7%, the Nasdaq 1%, Dow 0.4%, a recover in Tech and Magnificent 7 after Fridays losses was the main driver. McDonalds could rise by beating weak expectations and the stock rose nearly 5%. Tesla remained under pressure, shedding another 3%. US Steel and Aluminum producers rose across the board.

Japanese and German Equities are little changed despite the escalation in the trade war, the GER40 is at 21910, the Japan 2258 at 38780.

US Yields remain near 4.5% and until we have clearer picture of the impact of Trumps policies I expect no significant shift. A surprise in Jerome Powells testimony or the Inflation could shift the picture.

The USD Index is at 108.33 with EURUSD 1.0307, GBPUSD 1.2360 and USDJPY 151.90. Bitcoin is holding at 98411.

Elon Musk is heading a consortium that is looking to buy the nonprofit that controls OpenAI , offering USD 97 Billion to prevent OpenAI from becoming a for profit organization

Gold is continuing its ascend and is up 63% since October 2023, driven by diversification, demand in Asia and by Central banks. We are currently trading at 2922 while Silver is lagging and struggling to breach the 32 level and causing the XAUXAG ratio to trade at 91.50.

Hamas announced it would stop releasing Israeli hostages until further notice alleged violations of a ceasefire agreement

John wrote a new FX Update: The USD Bear Case awaits confirmation

 The drop in US yields has helped engineer a USDJPY breakdown, now we watch the broader USD picture for whether we get further signs that the USD bear case is playing out.

Key event risk remains any statement out of the Whitehouse as usual, the testimony of Jerome Powell and earnings.

Key events this week:

• Tuesday: Earnings; Shopify, Coca-Cola, BP, Supermicro, Lyft, Gilead. Powell, Hammack & Williams speak.
• Wednesday: US CPI. Earnings; Barrick, Biogen, Reddit, Robinhood, The Trade Desk, Cisco. J. Powell speaks.
• Thursday: Germany Inflation, UK GDP, US Initial Jobless Claims & PPI. Earnings; John Deere, Sony, Coinbase, Airbnb, Roku.
• Friday: EU GDP, US Import Prices & Retail Sales.