Bond prices rise, Justin Trudeau resigns, company stock news and international reviews
Stock market news
• Markets in Asia were mostly choppy, driven by reports that Canadian Prime Minister Justin Trudeau could announce his resignation as early as today. A muted market reaction suggested the news had been priced in and investors may welcome the possibility of a snap election to clear the outlook, sending the U.S. dollar down 0.3% to C$1.4404.
• The dollar also lagged some of the other majors but was supported by Treasury yields, with 10-year notes approaching their recent eight-month high of 4.641%. A break of that level would take the 2024 peak to 4.739% and further erode the stock market valuation. While the S&P 500 returned 25% last year, it was built on a very narrow base, with almost half of that coming from just five stocks.
• Japanese bond yields also rose, hitting 1.121% not seen since 2011, as markets speculate the Bank of Japan will raise rates soon, even if not this month. Unfortunately for the yen, Treasury yields rose faster, keeping the spread 351 basis points in favor of the dollar. Meanwhile, Chinese bond yields continue to hit historic lows, with the yuan hitting a 16-month low of 7.3286 per dollar on Monday.
• Dollar bulls are now betting on a series of Federal Reserve speakers this week to show caution about further rate cuts, with a particular focus on influential Fed Governor Waller on Wednesday.
• The services PMI later on Monday should reflect strong U.S. economic data, although there is a chance that Germany’s CPI could surprise and provide some support for the euro. Wall Street wants the jobs report to be strong enough to bode well for growth and income prospects, but not so strong that it makes it even harder for the Fed to cut rates further. The median forecast is for payrolls to rise by 150,000 and the unemployment rate to 4.2%, although analysts warn that seasonal fluctuations could result in a loss of about 50,000 jobs. There is also a chance that the jobless rate could rise to 4.3%, from 4.246% in November. Another caveat is that the household survey is revised down each year for seasonal factors, which could result in the unemployment rate in recent months being revised downward.
• Elon Musk announced Grok 3. He also noted that 10 times more computing power was used to train the updated model.
• Apple CEO to donate $1 million to Trump's inauguration - Axios Tim Cook will donate personally, rather than on behalf of the company, because he "believes the inauguration is a great American tradition and is giving in the spirit of unity."
• Wall Street expects another blockbuster year for ETFs after inflows jump to record $1 trillion in 2024 - Business Incider. After a year of record growth, the ETF market has grown to $10.4 trillion. Experts say they expect that trend to continue in 2025.
• Oppenheimer cut its S&P Global (SPGI) price target to $580 from $590 and maintains an Overweight rating on the stock. Weak expectations for a fourth-quarter equity offering fell short.
• Trading hours will be shortened this week because of a national day of mourning for former U.S. President Jimmy Carter on Thursday. That will result in early closings for stock markets and federal agencies, as well as some bond markets. Several events on the calendar for the day have been rescheduled, and more changes are possible.
• Michael Saylor $MSTR has stated that all of his BTC will be burned after his death.
• The Institute for Supply Management (ISM) will release its December services purchasing managers' index (PMI) on Tuesday, and the Federal Reserve will release consumer credit data on Wednesday.
• This week also sees data on the U.S. trade deficit and preliminary results from the December consumer sentiment survey. Delta Air Lines (DAL) reports its quarterly earnings report this week, as do Jefferies Financial (JEF), Albertsons (ACI) and Walgreens Boots Alliance (WBA).
• Zoomers have become the main threat to global alcohol production. They spend on average 2-3 times less money on alcohol than other generations.
• Minecraft 2 has been announced. The creator of the original, Notch, has announced a sequel. The game has a working title - Adventureland. Notch is already choosing the setting of the project - it could be space or steampunk.
• Europe's best stock market is Germany - The Economist. Germany is struggling with a recession, high energy prices and political uncertainty. Despite this, the German DAX index has risen by 12% in 2024.
The rise in the DAX index was driven primarily by two companies: SAP and Siemens. For example, SAP shares have risen by 70% in 2024. So the strong performance of these two companies more than offset the poor performance of car companies such as Mercedes.
• President Biden could ban new oil drilling in the U.S. Atlantic and Pacific oceans, Bloomberg reports. Such a ban could have a lasting effect, complicating Trump's efforts to boost domestic oil and gas production. Trump is expected to order the ban lifted, but it's unclear whether he will succeed. That's because the law on which Biden's ban is based does not give presidents the power to override such decisions.
• In 2025, China will start paying extra for the purchase of smartphones, tablets and smartwatches from local brands such as Xiaomi and Huawei - Bloomberg. The government has decided to expand the subsidy program, which previously only covered cars and home appliances made in China.
Such measures are expected to “revive” the Chinese market for smartphones and other electronics in the wake of COVID-19. Chinese consumers have begun to save money and buy new smartphones less often. Another reason for the low demand is the lack of innovation.
• Getty Images discusses merger with photo bank Shutterstock - Bloomberg.
• Microsoft plans to invest $80 billion in AI data centers this fiscal year.
• The software giant's president, Brad Smith, said in a blog post on Friday that more than half of that amount would be spent in the United States.
• A resurgence in America's manufacturing sector would be a major boost to the stock market, says BofA strategist.
Bank of America strategists said in a research note that manufacturing activity could begin to expand as early as April of this year.
• Rezolve Ai shares jump on partnerships with Microsoft and Google.
• MicroStrategy plans to raise $2 billion in capital, again to buy more bitcoin.
The capital raise will be done through one or more publicly traded, underwritten perpetual preferred shares, which may contain features such as conversion to Class A common stock and a cash dividend.
Key events that could impact markets on Monday:
- German CPI for December, PMI for the European and U.S. services sectors, and U.S. factory orders for November.
- Fed Chair Lisa Cook talks economic outlook.
Fundamental news
• Good data on the Chinese economy. China Services PMI rose from 51.5 to 52.2 (expected 51.7).
• Biden signed a law Sunday that would repeal two laws that previously barred many government workers from receiving Social Security benefits.
The change benefits public sector workers, particularly teachers, police officers, and firefighters. As of November 2024, more than 2 million Americans had lost their Social Security benefits because of WEP. And more than 650,000 people were affected by the GPO.
The law had bipartisan support, but it would widen Social Security’s already large hole. Repealing WEP and GPO would cost Social Security $196 billion over a decade.
• Trump met with the Prime Minister of Italy, which is predicted to play the role of mediator in Europe. The American politician received the head of the Italian government at his Mar-a-Lago residence in Florida.
The informal meeting with Trump took place just a few days before Meloni is scheduled to receive US President Joe Biden in Rome during an official visit to Italy and the Vatican from January 9 to 12.
• One of Trump's main challenges as president will be controlling and managing Elon Musk, who will eventually become a headache for him - The Times.
Most Americans (58%) are unhappy with the government's use of public funds, and Musk hopes to conquer this entrenched system that Trump has given him to manage. But analysts note: this is not so easy when your position has no authority, and the budgets you plan to radically revise are set by Congress, not the White House.
• China is experiencing a surge in cases of a new respiratory virus, leading to overwhelmed hospitals, emergency measures and public anxiety about the outbreak - The Independent.
Cases of the virus, identified as human metapneumovirus (HMPV), have risen sharply in northern Chinese provinces this winter, particularly among children.
• George Soros has been awarded the Medal of Freedom, the highest non-military award in the United States. At a ceremony held at the White House, the awards were given to Hillary Clinton, U2 frontman Bono, film actors Michael J. Fox and Denzel Washington, and others. A total of 19 people. The White House said in a statement: “These 19 Americans are extraordinary leaders who have made America a better place.”
• An underwater communications cable between Taiwan and the West Coast of the United States has been cut. Taiwanese authorities have blamed the incident on the Shunxing39 vessel (flagged by Cameroon), which is owned by Jie Yang Trading Limited, a Hong Kong-registered company with a Chinese director.
• In Bratislava, the capital of Slovakia, people came out to protest against the policies of Prime Minister Robert Fico and his trips to Moscow. About four thousand people came to the rally.
• Afghanistan and Pakistan are on the brink of war. The Taliban have captured a town in Pakistan 24 km from the border with Afghanistan. The Pakistani Prime Minister has already said that it is time to eradicate the Taliban once and for all. Pakistan has nuclear weapons.
• China Secretly Arming Yemen's Houthis - i24NEWS Investigators have uncovered a vast network of sophisticated weapons shipments that threatens stability in the Red Sea. The Iranian-backed Yemeni group is using Chinese-made weapons in its attacks in exchange for immunity for Chinese-flagged ships, according to US intelligence sources who spoke to i24NEWS.
• Trump-linked foundations have raised a record $200+ million in donations since his election victory.
The donations will go toward funding his political activities, his inauguration, and even a presidential library.
• President-elect Donald Trump to be sentenced on January 10 in porn star bribery case
Judge Juan Merchan rejected Trump's efforts to dismiss the case altogether, saying only "final closure" in the case would serve the interests of justice.
Trump could theoretically face up to four years in prison. However, the judge made it clear that Trump will not face jail time, a fine or probation.
• Spain will abolish “golden visas”. This is a residence permit in exchange for investments. The most common option for obtaining a “golden visa” was the purchase of real estate for a minimum of €500,000.
Other options include investing €1 million in shares of Spanish companies or €2 million in Spanish government securities.
• Israelis grapple with rising cost of living as war costs mount - Bloomberg More taxes. Less disposable income. Higher bills for food, water and electricity.
• Argentina has struck a $1 billion deal with five international lenders that will help bolster its central bank's foreign-exchange reserves - Bloomberg. It was a key victory for President Milley. The agreement will last for nearly 2.5 years.
• Austrian Chancellor Karl Nehammer announced his intention to leave his post “in the coming days” after the failure of coalition talks.