Corporate earnings season starts in 2025, inflation indices, company news and geopolitics
Stock market news
• Today marks the official start of the Q4 2024 earnings season for banks. Investors have good expectations - bank stocks have been holding up significantly better than the market in recent days. Plus, data on US consumer inflation in December will be released.
Yesterday, Magic Seven stocks fell in price again. And Value stocks were better than the market. There is also demand for small caps. The increase in market breadth is good news for the bulls
• Bond investors may have taken some comfort from upbeat US producer price data, but two CPI reports from the UK and US will decide whether the relentless selling in global bond markets will resume. And the risks to inflation appear to be clearly growing, with Donald Trump set to return to the White House and issue a flurry of executive orders next Monday. Some analysts have warned that even a consensus US CPI result will not ease the bearish pressure on bonds.
In Asia, stocks struggled for direction. MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.1%, while Japan's Nikkei vacillated between gains and losses but was last flat.
• U.S. stock futures were flat, while pan-European STOXX 50 index futures rose 0.1 percent and U.K. FTSE index futures rose 0.2 percent ahead of U.K. consumer price data at 0700 GMT.
• Headline inflation is expected to remain steady at 2.6% in December, while the core measure is expected to ease slightly to 3.4% from 3.5% the previous month, according to a Reuters poll. Any higher reading would be an ideal excuse for speculators to short government bonds, where yields have soared to 16-year highs amid worries about Britain's fiscal health under Chancellor Rachel Reeves. It would also add pressure on the pound, which is stuck near a 14-month low and testing a key chart level of $1.2056.
• The next hurdle, and likely a bigger one, for investors will be U.S. consumer price index data. The headline figure is forecast to rise 0.2% monthly, with a narrow range of 0.2% to 0.3%. A reading of 0.3% or more would trigger another wave of heavy selling in Treasuries, with the 10-year yield approaching 5%, lifting the dollar and hurting stocks. Traders will further trim expectations for Federal Reserve easing this year from the current 29 basis points. A reading of 0.2% or lower would likely restore risk appetite somewhat and trigger a relief rally in the bond market.
• Wednesday also marks the start of a major round of fourth-quarter 2024 U.S. earnings releases from major U.S. banks including Citi and JPMorgan. Lenders were expected to report stronger earnings, fueled by robust deals and trading. Given high expectations, the risk of missing out is high.
• The Bank of Japan's consideration of raising interest rates and the government's goal of exiting deflation are not in conflict with each other - Japan's economy minister. Japan's monetary policy is an important element of global financial markets.
• SEC Chairman Gary Gensler: "Bitcoin is a highly speculative asset, but 7 billion people want to trade it. Just like we had gold for 10,000 years, we now have $BTC bitcoin."
• China is considering selling TikTok to Elon Musk - BBG. One of the scenarios being discussed is that Twitter/X could gain control of TikTok US. China denies the rumors. At the same time, Americans are creating accounts on Xiaohongshu - a clone of TikTok.
• US sees oil prices slump Oil prices could fall more than 17% from today's levels in 2026, the government said in its first 2026 supply and demand forecast. But natural gas prices are rising and could average $4 per million British thermal units in 2026, nearly double 2024 levels.
Supertanker freight rates jump after US expanded sanctions on Russian oil trade
Traders are rushing to book ships to pick up supplies from other countries for shipment to China and India, ship brokers and traders say.
• China's state-owned oil companies and private refineries have begun urgently buying up oil. They fear that tightening US sanctions against Russia and Iran threaten to restrict supplies in the short term. This is contributing to a short-term rise in oil prices.
• D-Wave Quantum (QBTS) fell 37% on Monday after announcing a $150 million stock offering. The company also reported a significant share sale by its shareholder, the Public Sector Pension Investment Board, as part of a previous SPAC merger. The developments have raised investor concerns about the company's financial strategy.
• Microsoft is urging companies to be “quantum ready.” “We are on the cusp of an era of trusted quantum computing. And we are right on the cusp of quantum computers solving significant problems and delivering new business value.”
Perhaps that’s why interest in “quantum stocks” returned yesterday – QUBT (+14%), QBTS (+24%), RGTI (+48%), IONQ (+6%).
Leading quantum scientists agree that this will be a longer process than Microsoft suggests.
• Starbucks (SBUX) is introducing new store policies that require customers to make a purchase to use services. The change is intended to improve store operations and customer engagement by reducing lines and providing a welcoming environment. The company is also introducing measures to prevent harassment and other disruptive behavior.
• Arm Holdings (ARM) shares rose 2% on reports that the company's chip prices could rise as much as 300%
The strategy, proposed by CEO Masayoshi Son, is aimed at significantly increasing Arm's revenue over the next decade. The company licenses its technology to major players such as Apple (AAPL) and Qualcomm (QCOM).
• Edison International (EIX) shares fell 13% on Monday as an investigation continues into whether its infrastructure contributed to the Los Angeles wildfire. The company reported a broken conductor near the fire, but the cause of the damage remains unclear. The event has heightened scrutiny of the utility.
• Lululemon (LULU) is getting positive attention after strong holiday sales, thanks to successful product categories and collaborations. Analysts expect continued growth, particularly in China, where new store openings and strategic initiatives are boosting sales. The company is also benefiting from favorable discounts compared to last year.
• Tempus AI (TEM) reported a 35% jump in fourth-quarter revenue, though shares fell 14% on Monday as the numbers slightly missed Wall Street estimates. The company remains upbeat about its growth prospects, citing strong demand for its AI solutions and strategic initiatives to strengthen its market position.
• Aehr Test Systems (AEHR) shares fell sharply 27% after missing second-quarter earnings and revenue estimates. Despite the setback, the company reiterated its fiscal-year revenue guidance, underscoring its commitment to meeting long-term growth goals and maintaining a healthy backlog of orders.
• Telegram's TON blockchain is preparing for expansion in the US - BBG. Attracted by the prospect of a favorable regulatory framework under the incoming Trump administration, Italy's largest bank bought $1 million in bitcoin on the spot.
• Intesa Sanpaolo, Italy's largest banking group, has made its first spot purchase of Bitcoin. The bank purchased the cryptocurrency for about $1 million.
• Nvidia (NVDA) is set to set up its Asian headquarters in Taipei, Taiwan, the country's National News Agency reported. The chip giant plans to hire at least 2,500 people and open a research and development center in Kaohsiung.
• Meanwhile, rival AMD (AMD) is seeking to set up its own R&D center in Tainan, demonstrating Taiwan's growing importance in the semiconductor industry.
• Applied Digital (APLD) announced a significant $5 billion investment from Macquarie to support the development of its high-performance data center business. The deal also gives Macquarie a 15% stake in Applied Digital's high-performance computing business.
• Apple (AAPL) is getting closer to validating chips made at Taiwan Semiconductor's (TSM) Arizona plant, with the first batch expected to ship soon. Apple CEO Tim Cook previously said Apple would be one of the first to receive chips from the plant, with other customers like AMD and Nvidia also benefiting.
• B. Riley Financial (RILY) jumped 14% after unveiling financial measures to shore up its balance sheet following the bankruptcy of Freedom VCM Holdings. The company significantly reduced its balance sheet with Nomura and received subpoenas from the Securities and Exchange Commission over its dealings with Freedom VCM Holdings. Not to be confused with Freedom Holding Corp (FRHC).
• US sues KKR for allegedly avoiding antitrust scrutiny. The US Justice Department said on Tuesday it had filed a civil lawsuit against KKR & Co Inc "for repeated disregard for antitrust laws".
• H&E Equipment (HEES) shares double after $4.8 billion acquisition of United Rentals (URI).
• Angi shares jump 9% as IAC plans to spin off home services provider. IAC said it will spin off its stake in home services company Angi to its shareholders, with CEO Joey Levin stepping down to become Angi's executive chairman. The media giant said the move will help it focus on expanding its portfolio and provide new growth opportunities.
• KB Home (KBH) shares rose 5% on Tuesday, a day after the company reported better-than-expected results as shipments surged.
• Southwest (LUV) pauses some hiring, internships as airline seeks to cut costs - AP
Shares of Signet Jewelers (SIG) fell 22% after the company cut its outlook due to weak holiday sales.
• The parent company of Zales, Jared and Kay Jewelers reported weak holiday sales and cut its fourth-quarter outlook.
• Eli Lilly (LLY) shares fell 7% after the company forecast fourth-quarter sales of its weight-loss drug Zepbound below Wall Street estimates.
• AWS Pledges $5 Billion in Mexico (AMZN) – Amazon Web Services (AWS), the cloud computing unit of Amazon, said Tuesday that it plans to invest $5 billion in Mexico over the next 15 years as part of a “long-term commitment” to the region. Part of that investment will go toward developing cloud services in Mexico.
• Chinese shares rise: Chinese shares listed on U.S. exchanges rose on reports that Trump is considering a gradual approach to raising tariffs.
• ChatGPT has added a Tasks feature. All paid subscribers will be able to create up to 10 tasks until the end of the week. For example, receive a daily market news summary at 8 a.m. without a reminder. AI is getting closer to a full-fledged assistant.
Key events that could impact markets on Wednesday:
- UK consumer price index for December.
- French consumer price index for December.
- Eurozone industrial production data for November.
- US consumer price index for December.
- New York Fed President John Williams speaks, as do Chicago President Austan Goolsbee and Richmond President Thomas Barkin.
Fundamental news
• Fresh US Industrial Inflation Data
Core PPI: 3.5% y/y (3.8% expected)
US wholesale inflation unexpectedly eased in December, helped by falling food and fixed services prices, which could help ease concerns about a protracted rise in prices.
PPI: 3.3% y/y (3.5% expected)
The latest US Producer Price Index (PPI) data showed a softer-than-expected 0.2% month-on-month increase in December 2024, according to the Bureau of Labor Statistics. That was below the 0.4% consensus and the 0.4% increase in November.
It is too early to draw conclusions about a slowdown in the US economy.
• Switzerland is ready to make an exception for Putin and not arrest him under an ICC warrant if he comes to negotiate with Donald Trump, says the head of the Foreign Ministry’s information service, Nicolas Bidault, quoted by The Times.
• Trump team exploring gradual tariff hikes under emergency powers - Bloomberg The plan would raise import duties by 2% to 5% per month to build leverage but avoid a spike in inflation.
• Canada is preparing for a trade war with the United States. Authorities plan to impose significant tariffs on American products if Trump follows through on his threat to impose a 25% tariff on Canadian goods, - Bloomberg. Canada's response will depend on what Trump actually does after he takes office.
• Musk to get White House offices - NYT Elon Musk, the world's richest man, is preparing to take an official position in the administration of new US President Donald Trump. This will give the billionaire close contact with the president to implement a new project - the Department of Government Efficiency (DOGE).
• North Korea has launched a series of ballistic missiles into the Sea of Japan, with South Korean military officials stepping up surveillance and bracing for further provocations from Pyongyang.
• If we do not allocate more money to defense, in 4-5 years we will have to take Russian language courses or move to New Zealand, - NATO Secretary General Mark Rutte, during a speech in the European Parliament, called on EU countries that are members of NATO to spend more on defense, stating that the spending rate of 2% of GDP is insufficient.
• Another underwater cable between Sweden, Lithuania, Germany and Finland has been damaged. The culprit is preliminarily a Chinese ship that was anchored 160 km from the shore, - the Swedish Ministry of Defense.
• South Korean President Yoon Seok-yeol arrested on 'suspicion of sedition against democracy' - Yonhap. Police have arrested South Korean President Yoon Seok-yeol at his residence in Seoul over his declaration of martial law last month.