Company news and geopolitics, European leaders summit, talks in Saudi Arabia, US holiday
Stock market news
• US markets will be closed for Presidents' Day on Monday. EUR/USD rose above 1.05 this morning. Bitcoin treads $96K - the crypto is stuck in a swamp and the nervous may start selling. Stocks and bonds show slight appetite for risk.
• Asian stocks had a mostly upbeat start to the week, although a holiday in US markets reduced liquidity. Hong Kong led the way again, adding another 1.4% to last week's 7% jump on optimism about potential low-cost AI adoption following the DeepSeek disclosure.
• Goldman Sachs raised its forecast for China’s growth and stocks, arguing that widespread AI adoption could boost earnings per share by 2.5% a year over the next decade. It would also boost the fair value of Chinese equity by 15% to 20% and attract $200 billion in inflows. The excitement was fueled by a 24% jump in Alibaba shares on news that the company would partner with Apple to support iPhone AI services in China. Alibaba reports earnings on Thursday, and options imply the stock could move 7.5% in either direction depending on the results.
• The pan-European STOXX 600 index also attracted global funds, rising for eight straight weeks and up 8% year-to-date. EUROSTOXX 50 futures and DAX futures were up slightly on Monday. Japan’s Nikkei was muted by a rising yen, which offset news of a strong 2.8% rise in annual economic growth in the fourth quarter. Oddly, markets still only see a slim chance that the Bank of Japan will raise rates again in March, presumably because it will come before the conclusion of a major round of wage talks. Even a decision in May is priced at just one in four, which seems too low given the range of data and the hawkish comments from the Bank of Japan.
• The GDP surprise helped the yen rise to 151.55 per dollar. The U.S. currency has been in a bind since an unexpectedly weak retail sales report in January called into question the entire economic “exceptionalism” meme. Markets are again betting on two Fed rate cuts this year instead of one, with the outlook better than 50/50 in June. The central banks of Australia and New Zealand hold policy meetings this week, with both banks expected to cut interest rates, the former by 25 basis points and the latter by double that amount.
• AAPL will announce a new product launch at a launch event on Wednesday. There will be a press release and promotional materials, rather than a live event. The event is expected to feature the fourth-generation iPhone SE, although there are also rumors of a new MacBook Air, a new iPad Air, or a surprise announcement.
• Musk said xAI would launch free "Grok 3," "the smartest AI on Earth," on Monday.
• Perplexity launches its own free “deep exploration” product. Perplexity is the latest AI company to release a deep exploration tool, announcing the new feature on Friday. Google unveiled a similar feature for its Gemini AI platform in December. OpenAI launched its own exploration agent earlier this month.
• Miley has launched an investigation into the cryptocurrency LIBRA, which he previously promoted. The investigation was launched after allegations of a “rug pull” - a fraudulent scheme in which developers leave the project and take investors' funds. This move by President Miley is aimed at addressing the issues that have arisen and ensuring accountability in the cryptocurrency sector.
Meanwhile, the Argentine opposition is pushing for Miley's impeachment.
• Acer to raise prices 10 percent in response to Trump tariffs The chief executive of one of the world's largest computer makers said he is raising prices by 10 percent as a direct result of Donald Trump's tariffs.
• Elon Musk says the biggest payoff from AI will come from humanoid robots. In an interview at the World Government Summit, he said humanoid robots will enable the creation of “quasi-infinite” products and services.
• Broadcom weighs possible deal to acquire Intel's chip business - WSJ
• Reddit CEO Steve Huffman said the platform will introduce paid forums this year, and the company is also exploring expanding e-commerce features in the future - BI.
• The earnings season will continue, led by quarterly reports from Alibaba (BABA) and Walmart (WMT). A total of 46 S&P 500 companies are expected to report results during the holiday-shortened trading week.
• Next week will bring a calmer flow of economic news, with investors focusing on the minutes of the January Fed meeting, data on manufacturing and services activity, and consumer sentiment.
• Jack Dorsey says Bluesky's rapid growth is due to "people running away from X" - BI.
• Uber sues DoorDash, accusing rival of inflated costs and anticompetitive business practices. In a lawsuit filed Friday, Uber Technologies accused food delivery rival DoorDash of anticompetitive business practices that cost Uber millions of dollars.
• Trump Media & Technology Group Corp. awarded employees more than $107 million in stock last year. But the company's revenue fell and it lost $401 million.
• Fund managers increase holdings of bitcoin ETFs, US quarterly earnings show. Asset managers from wealth management firms to hedge funds and pension funds increased their holdings of US exchange-traded funds linked to the price of bitcoin in the first quarter of this year.
• Peloton Wins Shareholder Lawsuit Over Seat Recall Peloton Interactive on Friday won a lawsuit from shareholders who accused the fitness equipment maker of covering up safety issues.
• Court documents show Meta has paused efforts to license books for AI training. New court documents confirm previous reports that the company has “paused” talks with book publishers over licensing deals to feed some of its generative AI models with training data.
• AI investment grew by more than 50% to $131.5 billion in 2024 - PitchBook analysis. Amazon and Apple are trying to implement generative AI technology in their digital assistants - Alexa and Siri, respectively - TechCrunch.
• Ackman's firm boosted Nike stake, cut Chipotle in Q4 TSMC considers taking over Intel's U.S. factories after Trump team asks - Bloomberg
• Taiwan Semiconductor Manufacturing Co. is considering acquiring a controlling stake in Intel Corp.'s factories at the request of Trump administration officials.
• Robotics startup Figure AI is in talks to raise $1.5 billion in funding that would value the company at $39.5 billion, with Parkway Venture Capital expected to lead the Series C round, a person familiar with the matter said.
• Geopolitics remains in the spotlight, with reports that talks on the Russia-Ukraine conflict will begin in Saudi Arabia this week, although the participants are not yet entirely clear.
French President Emmanuel Macron will hold an emergency European summit on Monday after U.S. officials said Europe would have no role in ending the conflict, which is likely to be negotiated between the United States and Russia.
Key events that could impact markets on Monday:
- Eurozone finance ministers meet in Brussels
- Speeches by Philadelphia Federal Reserve Bank President Patrick Harker and Federal Reserve Board Chair Michelle Bowman
Fundamental news
• EU ministers urgently gathered in Munich due to statements by US representatives. The reason could have been the resonant speech by US Vice President J.D. Vance, who outlined a change in Washington's approach to relations with Europe.
• The G7 countries said that Moscow's diplomatic efforts to achieve peace in Ukraine will influence their decision on new sanctions against Russia - German Foreign Ministry.
• Canada's Conservative leader proposes massive natural resources overhaul to counter Trump.
Pierre Poilievre has promised to build an "east-west economy" with oil and gas pipelines stretching from Alberta to the Maritimes, as he did last year.
• The EU plans to impose tariffs on a range of US products that contain pesticides banned in the EU. The European Commission will agree next week to study the possibility of introducing import restrictions. Initial targets could include US crops such as soybeans, which are grown using pesticides banned for European farmers.
• Japan's GDP grew 2.8% y/y in the fourth quarter.
Japan's economy is expected to expand 0.1% in seasonally adjusted real GDP in 2024.
Private consumption grew 0.5% y/y in the three months through December, holding steady but losing momentum. Exports jumped 4.3%, while capital investment rose 0.5%.
• U.S. egg prices up 62% y/y, driving inflation higher
The average price of a dozen large Grade A eggs is $6.23, up from $3.84 a year earlier.
The price hike is due to supply shortages caused by bird flu, which has caused millions of laying hens to be culled.
It takes about five months for a fertilized egg to hatch and develop into a laying hen. Until then, egg prices will remain high.
• Trump has imposed $600 billion in import tariffs on China, more than any other US president.
The US vice president met with the leader of the right-wing populist Alternative for Germany party and called for change in Europe - The Washington Post.
• The US is openly interfering in the election process in Germany - the leader of the Christian Democratic Union (CDU) and candidate for German chancellor Friedrich Merz, in a commentary for Deutsche Welle, rejected the statements of US Vice President J.D. Vance, who accused Europe of restricting democracy and freedom of speech.
• Europe must finally understand that it is alone - Der Spigel. European leaders still hope that the US can force Putin to make a fair peace in Ukraine. But Donald Trump and his Vice President JD Vance have made it clear that they consider Europe a minor factor in this process.
• The US is set to tighten sanctions on Iran so that it can export less than 10% of its current oil supplies, or 100,000 barrels per day - Bloomberg.
• The US Treasury Department stated that, if necessary, tough measures could be applied to the Russian Federation. At the same time, Trump is trying to reduce oil prices to $40-50 per barrel.
• Donald Trump has signed an executive order banning COVID-19 vaccinations in schools and colleges that receive federal funding - NBC News. The White House website justifies the decision by saying that mandatory COVID-19 vaccinations "threaten educational opportunity."
• More Americans with government loans are falling behind on their mortgage payments, a worrying sign for consumer health. Delinquency rates for Federal Housing Administration and Veterans Affairs loans have reached 11.03% and 4.7%.