Change of power in Germany, inflation in the US, company news and geopolitics, waiting for Nvidia's report
Stock market news
• The euro is up 0.65% at 1.053 on expectations that the AfD will not join the government coalition. The news also helped U.S. stock index futures rise 0.5%. And the DAX is up 1%. Investors are hoping for a massive fiscal stimulus from the new German government.
• Markets reacted with relief after the election of the relatively conservative CDU/CSU in the German election, with DAX futures now up 1.4% after a slow start. The euro added 0.5% to a one-month high of $1.0528, breaking the previous high of $1.0514. The next target is $1.0534. Conservative leader Friedrich Merz still needs to form a coalition government and it is not clear whether he will need one or more partners, with the latter certain to take longer. Analysts suggest a straight coalition with the SPD would be the preferred outcome, but there is a lot of horse-trading to do first. A German Ifo poll due out later could show a rally in anticipation of a Merz victory.
German leadership is badly needed, given the question marks over President Donald Trump’s support for NATO and Ukraine. European Union leaders are set to hold an emergency summit on March 6 to discuss additional support for Ukraine and how to pay for Europe’s growing new defense needs. That will almost certainly require more debt issuance and some relaxation of EU budget rules. Perhaps they could bring back war bonds, sorry, defense bonds, to attract patriotic retail investors.
• In the U.S., the mere threat of tariffs was enough to send the services PMI sharply lower, and things are likely to get worse amid reports that the White House is effectively pressuring Mexico to raise its own tariffs on Chinese imports. A jump in U.S. consumer inflation expectations to their highest since 1995 will not be welcomed by Fed policymakers, who have consistently consoled themselves by saying that expectations were “well anchored.” With at least nine Fed speakers scheduled to speak this week, there is plenty of opportunity for verbal warnings ahead of Friday’s PCE inflation report.
• Wall Street futures at least rose in Asian trading, perhaps on hopes that Nvidia's results on Wednesday will justify its sky-high valuation.
Investors expect fourth-quarter sales to be around $38.5 billion, with first-quarter sales forecast at around $42.5 billion, while any concerns about future AI capital investment could dampen demand.
• Fast-fashion retailer Shein's profits fell almost 40% last year, putting pressure on a potential UK initial public offering - FT
• Robinhood (HOOD) CEO Vlad Tenev calls prediction markets "the future" and says the company will play a "leading role." The company is going all-in on prediction markets after its success in them during the presidential election.
• Morgan Stanley's chief U.S. economist Michael Gapen wrote in a note to clients that the 2.6% rise in core inflation for January "implies a significant decline in the 12-month rate of core inflation" and is consistent with their call for the Fed to cut interest rates by a quarter percentage point in June.
• All eyes on Nvidia (NVDA): The AI darling will report quarterly results after the bell Wednesday. Analysts expect Nvidia to report adjusted earnings per share of $0.84, up 63% from a year earlier. Meanwhile, revenue is forecast to come in at $38.26 billion, up 73% from the same quarter last year.
• Most of the flows into the Sonic (S) ecosystem come from Solana. It looks like Solana's degen traders are finding a new home.
• Bybit has offered a 10% reward to anyone who helps recover funds stolen during the hack. Crypto market participants say the hype around meme coins has become debilitating. “The sentiment right now is probably as low or lower than it was during the FTX crash.” Bybit has processed a record number of withdrawals since the hack.
Bybit’s CEO said the exchange saw its highest number of withdrawals in history in the 10 hours following the hack, with more than 350,000 requests. The Bybit hack is not FTX 2.0.
Many were expecting a “new FTX,” but instead Bybit showed a cool head and control over the situation.
Unlike Mt. Gox, where there was no communication and users waited years for compensation, Bybit acted transparently and promptly.
This incident is not only the largest since Mt. Gox, but also a master class in crisis management.
• Novo Nordisk (NVO) announced that the shortage of its popular diabetes and weight loss drugs, Ozempic and Vegova, has ended. The news has had a negative impact on Hims & Hers Health (HIMS), which produced combination versions of the drugs during the shortage. Once the supply issue is resolved, Hims & Hers will no longer be able to produce the combination drugs, which will impact its market position.
• HIMS shares fell 26% on Friday on heavy volume, suggesting the slide is not over.
• Celsius Holdings (CELH) made headlines with its $1.8 billion acquisition of Alani Lu, which is seen as a strategic move that will help grow and scale the energy drink market.
The acquisition is expected to strengthen Celsius' position among female consumers, a demographic that is increasingly consuming energy drinks.
• Trucking stocks including Old Dominion (ODFL) and Saia (SAIA) came under pressure as JP Morgan warned of a potential loss of market share if Amazon (AMZN) enters the trucking sector as a competitor.
• TFI International CEO highlights ongoing challenges in the freight industry, predicting challenging conditions in the first half of 2025.
• Viking Therapeutics (VKTX) shares rose on renewed takeover speculation, with Pfizer (PFE) rumored to be interested. That follows earlier reports of Eli Lilly (LLY) potentially interested in acquiring the obesity drug maker, whose market cap has risen to $3.5 billion.
• Kenvue (KVUE) shares rose slightly amid speculation of takeover interest from the likes of Procter & Gamble (PG) and Unilever (UL). The company is currently locked in a proxy fight with activist investor Starboard Value, which is pushing for changes that would improve the stock's performance.
• AMD (AMD) is in talks to sell its server chip factories in Asia, potentially valued at $4 billion. The sale would include factories acquired through its purchase of ZT Systems to expand its artificial intelligence capabilities for data centers.
• Despite the market downturn, Ferrari's (RACE) market cap reached $90 billion for the first time in 2025. And the most expensive production car in the history of the Italian automaker, the F80, priced at about $4 million, is impossible to buy. All 799 units of the hypercar are reserved for the company's top clients.
• Warren Buffett’s Berkshire Hathaway (BRK-B) posted its third straight record annual operating profit on Saturday,
helped by higher underwriting revenue and investment income in its insurance business.
Berkshire ended 2024 with $334.2 billion in cash.
Much of the cash is held as collateral for the 189-unit holding company’s insurance business.
Berkshire will never choose to own cash-equivalent assets over owning “good businesses.”
Berkshire’s portfolio of public company holdings totaled $272 billion in the fourth quarter.
Greg Abel will become the company’s next CEO when Buffett steps down.
• Mercedes-Benz won't follow Tesla and Elon Musk into robotaxi. Mercedes-Benz CEO has downplayed expectations for its potential robotaxi fleet.
• Goldman Sachs estimates Trump's 10% oil tariff could cost foreign producers $10 billion annually
Light crude prices would need to rise 50 cents a barrel to make Middle East medium crude more attractive to Asian refiners, as U.S. Gulf Coast refiners prefer domestic light crude to imported medium grade.
• This week, investors will be closely watching the Fed's favorite inflation gauge, the "core" personal consumption expenditures (PCE) index, on Friday. A second estimate of fourth-quarter U.S. GDP is expected, as well as updates on consumer confidence and home prices.
Key events likely to impact markets on Monday:
- German GDP.
- German Ifo business survey for February, final EU CPI data.
- Bank of England research conference, with Deputy Governors Dave Ramsden and Claire Lombardelli and Bank of Canada Deputy Governor Tony Gravelle speaking. BoE committee member Swati Dhingra speaking.
- US CB consumer confidence index.
Fundamental news
• The US may strengthen its military contingent in Poland - Duda. The US will not withdraw American troops from Poland and may even strengthen its military contingent in the country, Polish President Andrzej Duda said after a meeting with Donald Trump in Washington.
• EU seeks ways to confiscate part of Russia’s frozen $280 billion - Bloomberg.
• Hungarian Prime Minister Viktor Orban made a tough statement about Ukraine's accession to the European Union. He noted that the decision on Ukraine's accession to the EU depends on Hungary, and if Budapest is against it, Kyiv will not be able to become a member of the European Union.
• Scholz's party fails in early Bundestag elections, finishing third, according to exit polls.
The conservative CDU/CSU bloc wins early Bundestag elections, according to exit polls. The Alternative for Germany (AfD) is in second place for the first time in history with 20.8% (up 10.4% from the 2021 elections!).
Scholz will step down and Merz will likely take his place. Merz said he hopes to form a coalition government by Easter. But that will likely be difficult. But a ruling coalition could well be formed without the AfD, which is why the euro is rising.
• Fed's Austin Goolsbee downplayed expectations for rising U.S. inflation in a report last week - Bloomberg
• Washington's embrace of Putin aims to drive a wedge between Moscow and Beijing - The Wall Street Journal
Foreign policy experts have dubbed Trump's maneuver a "reverse Nixon" after the president's early 1970s shift in American policy toward communist China in an effort to deepen the rift between Mao Zedong and the Soviet Union. The choice reshaped the geopolitics of the Cold War and set the stage for China's economic rise.
• US allies fear intelligence leaks - Politico They are looking for ways to protect their intelligence from Trump, given his history of disclosing classified information.
Some countries already restricted data sharing during his first term, and their concerns have only increased now, especially with the appointment of Tulsi Gabbard.
• The EU's losses from President Trump's first wave of tariffs on steel and aluminum will reach 28 billion euros, says European Trade Commissioner Maroš Šefčovič. This time, duties will be imposed on four times more European goods than during the first trade wars between the US and Europe in 2018. This will include, in particular, finished goods.
• Trump: "Elon is doing a great job, but I wish he would be more aggressive. Remember, we have a country to save and ultimately make great like never before."
• California Governor Asks US Government for $40 Billion to Rebuild State After Wildfires - The Washington Post.
/ What Will He Offer Trump in Return?
• German Chancellor candidate Friedrich Merz called for talks with France and Great Britain on nuclear defense.
This is due to the US administration's threats to abandon support for Europe. And German Foreign Minister Annalena Baerbock, against the backdrop of US President Donald Trump's statements about Zelensky and Ukraine, threatened the US with a severance of ties.
• US presses Iraq to resume oil exports from Kurdistan - Reuters. The US threatens Iraq with sanctions if the country does not agree.
• Thousands of people rallied in Bratislava and other Slovak cities on Friday calling on Prime Minister Robert Fico to resign as they continued protests against the country's pro-Russian foreign policy - Reuters.