Morning Brew January 30 2025

Good morning,

If the Fed Meeting yesterday provided anything it was a degree of uncertainty. Without a real understanding of which policies will be enacted, any impact on inflation are impossible to tell. The Fed will wait for more clarity before adjusting rates further. Powell was very keen to stress his independence pointing out he had not spoken to Donald Trump since the inauguration.

3 of the Mag 7 reported earnings yesterday, with a mixed bag of results:

• Microsoft beat quarterly revenue estimates but forecast disappointing growth in its cloud computing business and lost 1.4% after hours
• Tesla's fourth-quarter profit margin missed expectations but the outlook of cheaper cars and driverless vehicles let the shares rise 3% after hours.
• Meta forecast first-quarter revenue below market estimates gained 0.2% in late trading, it is too early to tell if DeepSeek impacts spending plans

Deutsche Bank reported disappointing earnings this morning on legal provisions and restructuring, profit for 2024 was 2.7 billion  Euro vs 4.2 billion

Indexes gave up ground yesterday, the Dow ended down 0.3%, the S&P 500 0.5%; the Nasdaq down 0.5%, volumes were small at 13 billion shares traded with Nvidia losing 4%.

EURUSD fell to 1.0411, GBPUSD is at 1.2435 and USDJPY Lower at 154.60, ten-year yields are unchanged from yesterday at 2.52 and the USD Index is higher on the weaker Euro. Gold and Silver could rise to 2760 and 30.83. Silver broke an important trendline to the Upside yesterday, if it holds the week above that level, that could be interesting.

Today the ECB will set rates and is certain to cut based on the futures market, until the end of the year, 85 Bais points are expected. The press conference by Mme Lagard is likely to be more market moving than the rate decision. The Press conference will be held at 14:45

Ole wrote on commodities:

• The agriculture sector is off to a strong start this January, with tight supply driving arabica coffee and cattle futures to fresh record highs, while corn trades near a 15-month high
• Ongoing momentum attracting a great deal of speculative buying, not least in corn which has seen the hedge fund long rise to a May 2022 high
• Cotton potentially ripe for a short-covering bounce after spending the past six months consolidating following a major slump during the first half of 2024

The US GDP and initial Jobless claims and the Apple results will be in focus today in terms of data, but I expect politics to take center stage:

It is still unclear if tariffs against Mexico and Canada will take effect on February first, just two days away. Regardless of what one thinks of the tariffs, the degree of uncertainty is absurd. Yesterday the Whitehouse rescinded a spending cut after it was blocked by a judge.

In Germany the CDU joined votes with the AFD to toughen immigration, a first in German politics, sharpening the tone heading into the election.

Trade safely.

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.