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Morning Brew January 29 2025
Summary: Can the week get any hotter?
Good morning,
We saw a strong rebound in tech stocks that sold off on Monday during the Deepseek scare. Nvidia rose 7.8%, Apple 3.6%, Meta 2.5%, and Microsoft 2.76%. This pulled the Nasdaq higher by 2%. The US 500 gained 0.9%, and the Dow Jones 0.3%. ASML reported very strong bookings this morning at 7 billion versus 4 billion expected.
US 10-Year Yields are slightly lower at 2.52%; the peak on January 5 was 2.8%. The USD Index has receded to 107.75 amidst massive volatility; on Monday, it traded below 107. EURUSD is at 1.0440, GBPUSD at 1.2455, and USDJPY at 155.26.
Gold and Silver are at 2760 and 30.40, respectively, with Bitcoin at 102500, all somewhat midrange and looking for the next big directional push.
We are heading into the hot phase of the week:
- Central Banks: Today, the Swedish, Canadian, and US Central Banks will announce rates. Sweden and Canada are expected to cut by 25 basis points, while the US is expected to take no action with near certainty (97%). The FOMC Statement and the press conference will be key. We are currently trading 2 rate cuts by year-end; that will be the benchmark to watch in my view.
- Earnings: Today, we expect Tesla, Meta, and Microsoft as the most important, along with Nasdaq, ASML, Teva, ServiceNow, and IBM. Tomorrow, Apple, Intel, UPS, Mastercard, Visa, Blackstone, Caterpillar, and Visa will report.
- Data: Tomorrow, the US GDP and, most importantly for the week, the US PCE.
- US Politics: A court blocked a spending freeze issued by Donald Trump that would have affected a large number of government programs, from Medicaid to foreign aid programs. The administration is also looking to downsize federal employees by offering 2 million employees a bonus to quit. The tone between Denmark and the US is becoming somewhat harsh over the attempt to take Greenland from Denmark. Over the next few weeks, the impact of the initial policies will be assessed. It is too early to see any changes to growth, inflation, and employment yet.
- AI and Deepseek: News around Deepseek will continue to be watched carefully. After the initial shock has been digested, the overall consensus seems to be that the development will be positive for AI.
- Germany: Political nerves are on edge heading into the election as sentiment remains depressed. VW is looking to start production of Audi and Porsche in the US.
Wednesday,
- AU CPI, Sweden GDP& Rate Decision, Bank of Canada, FOMC Rate decision and press conference
- Earnings: Tesla, Meta, Microsoft, ASML, IBM,
Thursday
- France GDP, De GDP, EU GDP, ECB Rate Decision, US GDP, Initial Jobless claim
- Earnings: Apple, Intel, Nokia, UPS, Dow, Blackstone,
Friday;
- China PMI, France CPI, US PCE,
- Earnings: Abbvie, Colgate Palmolive, Chevron.