Morning Brew February 19 2024

Good Morning,

Key News:

• Ukraine: US and Russian negotiators seem to be making progress in their discussions. It will be interesting to see how the US will try to involve Ukraine in an agreement they were not part of negotiating. In comments, Donald Trump blamed Ukraine for the war, stating they could have made a deal. Trump also mentioned he is considering tariffs on autos, pharmaceuticals, and chips as early as April.
• German Election & DAX: The DAX climbed 0.3% to 22,863. With three days to go before the German election, the DAX is trading at record levels. Political stalemates are often positive for equities. Today, it seems likely that the CDU under Merz will win the election with 30% of the votes, followed by the AfD with 20%. It appears a coalition of the CDU, SPD, and Greens is likely, which would require massive compromises and make significant reforms unlikely. As the AfD faced allegations of troubling donations, there is still a chance for the FDP to surpass the 5% hurdle and change the political landscape. Defense, energy, growth, migration, and the relationship with the US require determination and decisiveness. Endless coalition talks would be the worst outcome for Germany and Europe.
• New Zealand cut rates by 0.5% as expected, with NZD/USD gaining 0.8%.
• Oil rose to nearly $72 a barrel as OPEC+ considered delaying April supply increases.
• Intel and SMCI are on fire due to takeover hopes for Intel and SMCI potentially avoiding delisting.
• X is looking to raise capital at a valuation of $44 billion according to Reuters.

US Equities moved little in high volumes yesterday as the S&P500 managed a new closing high. It was the biggest mover of the Three big indexes at +0.24%. Volumes were above 16 billion shares.

US 10-year yields are at 4.54%, and the USD Index is trading near the 50-day average at 106.90. EUR/USD is little changed at 1.0460, GBP/USD is higher at 1.2622, and USD/JPY is at 151.60. Gold and silver are at 2634 and 32.80, respectively. Silver closed above 32.50 and needs to now tackle the 33.

Traders are expected to remain on edge without key data and clarity. Real insight into the economic policies of the current paradigm shift is months away, at least. The real question is how Team Trump will affect growth, inflation, and jobs in the US, as well as international trade and security.

Key Data:

• Wednesday: Japan Trade, UK CPI, German ZEW Fed Minutes ,
  Earnings Etsy Wix Garmin, Vale,
• Thursday: China Loan Prime Rates, Denmark GDP, US Initial Jobless Claims, Philly Fed, EU Consumer Confidence, AU PMI,
  Earnings Alibaba, Wallmart, Rivian, Dropbox,
• Friday: Japan CPI, UK Retail Sales, international PMI, University of Michigan Sentiment
  Earnings Arbor