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Key Stories from the past week: The unpredictable Trump-ride begins
It’s been a week heavily dominated by the Trump inauguration and the many headlines on the new administration’s key priorities. Tough stance on inflation, trade policy and tariffs - abolishment of Biden’s ‘New Green Deal’ and focus on resuming American fossil fuel exports have been among the most important issues for the markets. US stocks have been well behaved despite the headline risks with S&P500 about 3% higher over the week. The earnings season is also getting up to speed with the highly anticipated Q4 results from Netflix that took the market by storm. More below on this week’s key stories.
Netflix shares surge after record subscriber growth
Netflix surged to an all-time high on Wednesday after revealing they added 18.9 million subscribers in Q4. This is the largest quarterly subscriber gain in the Company’s history, vastly exceeding market expectations & taking the total count of globally paid memberships to 301 million, representing a 15.9% increase Y/Y. Several factors could have contributed to this record growth, including big bets on sport events, the actions against password sharing, and the popularity of the ad-supported subscription plan even in more price sensitive markets. Netflix also reported a 16% Y/Y revenue increase to $10.25bn, while announcing price hikes & a share buyback programme. Clients at Saxo were slightly more active this week on Netflix, primarily adding to long positions. Jacob Falkencrone dives into Netflix’ Q4 results & overall position in the market, read more below:
Netflix Delivers Blockbuster Q4 Results, What’s Next for Investors?
Crude oil weakening
Crude oil prices have been drifting lower over the past week due to renewed demand uncertainty caused by Trump's tariff threat. He also spoke at Davos where he said he will ask OPEC to “bring down the cost of oil”. His "drill, baby, drill" initiative is likely to focus more on gas to meet the growing demand for power. US crude inventories are expected to rise as Canada pushes volumes south ahead of tariffs. WTI has stabilized above USD 74, but there is potential for additional weakness targeting USD 72.90. Saxo client positioning shows an overall net short positioning in Crude oil related instruments.
Crude oil weakens amid tariff uncertainty
The lonely hiker
The Bank of Japan raised its key interest rate to 0.5% on Friday, the highest level since 2008. The hike came with an upward revision of inflation expectations which saw the yen strengthen initially with USDJPY dropping below 155. The softer dollar also playing a part in the move after Trump’s comments demanding an immediate drop in US interest rates. BoJ Governor Ueda said hikes will continue if the outlook permits, but he failed to give the markets confidence on when that might be. Across the Saxo client base, USDJPY was the most traded product by value this week and the second most by number of trades.
FX Update: Three critical questions for the days and weeks ahead
Next week promises to be even more eventful with scheduled policy meetings for both the Fed (Wednesday) and ECB (Thursday). A 25-bps cut is fully priced in for ECB while the Fed is widely expected to hold rates unchanged. However, it will be interesting to see if Trump’s harsh demand for lower rates has any sway on Powell’s press conference. The earnings season kicks into max speed with 4 magnificent seven companies reporting - Microsoft, Meta and Tesla on Wednesday and Apple on Thursday. Furthermore, two of Europe biggest companies LMVH and ASML also issue their report card.