Major Stocks Fall, New French Government, Company Stock News and Geopolitics

Stock market news

• Yesterday's stock trading began with a sharp drop in popular stocks, which have recently been frequently bought with borrowed funds. But defensive and cyclical sectors held up well. Stock indices were bought out at the close. Value beat Growth. Testing important support did not provoke a mass closure of positions by stop losses. This means that the bulls got a chance to counterattack the bears. It is not surprising that Bitcoin returned to $95 thousand after testing $90 thousand. Tomorrow will be interesting, when banks start reporting, and data on consumer inflation in the US will be published.

• France's new government faces a tough test today. Prime Minister Francois Bayrou is expected to outline a deal in a speech to ease pension reforms in exchange for left-wing support for the budget. Bayrou's government, formed last month after the collapse of his predecessor's administration, has sought assurances from some opposition parties, particularly the Socialists, that they will not vote against the 2025 budget. Analysts expect him to win the election. Bayrou's entourage declined to give details of the speech but told Reuters its contents would take into account his talks with party and union leaders.

• Still, markets are nervous over concerns that Bayrou will reverse part of the pension reform that would raise the minimum age for full pensions, which could save billions of euros for the already cash-strapped government. The risk premium on French bonds, measured by the difference in yields between 10-year French and German bonds, is trading near its highest in 12 years as investors worry about political instability and a widening government deficit.

• Markets will also trade on U.S. producer prices and commodities, which feed into the Fed's PCE deflator due later. That comes ahead of Wednesday's more important CPI, as expectations for higher inflation rise as President-elect Donald Trump unveils policies on tariffs, immigration and taxes once he is inaugurated next week.

 • Investors have been jittery since Friday's unambiguously strong U.S. jobs report lifted yields and dampened market odds for a Federal Reserve rate cut. Markets are pricing in just 29 basis points of Fed rate cuts this year.

• Ten-year Treasury yields hit 14-month highs, pushing the dollar higher and a wave of selling in tech stocks that spread to Asia in early trading. Japan's Nikkei index fell after the holiday and with U.S. inflation data in the spotlight.

• The U.S. dollar index hit its highest in two years, then eased slightly on a Bloomberg News report that the new Trump administration is discussing a gradual rather than sudden tariff plan.

• iPhone sales fell 5% in holiday quarter after AI disappointment. Apple (AAPL) sold 5% fewer iPhones worldwide and was outsold by Chinese rivals in the final quarter of last year.

• US announces new AI chip controls that set export quotas to about 120 countries
The US has targeted China with new AI restrictions. The new rules will take effect 120 days after publication.

• Authorized U.S. cloud service providers must store at least half of their i-chips inside the U.S. Eight U.S. allies and partners, including Japan, Britain and the Netherlands, will be exempt from the new AI rules.

• NVIDIA (NVDA) shares fall on news NVIDIA customers face delays due to shi-chip faults
Customers have cut back on Blackwell GB200 orders, with some customers waiting for later versions. Customers include Microsoft, AMZN, Google and Meta.

• Europe's largest pension fund, Stichting Pensioenfonds ABP, sold Tesla (TSLA) shares for $585 million. The reason was dissatisfaction with Elon Musk's compensation package.

• Goldman sees USD rise by 5% Goldman Sachs (GS) has raised its forecast for the dollar, expecting the currency to rise by 5% over the year due to the introduction of new tariffs and stable economic growth.

• BlackRock Launches Spot Bitcoin ETF on CBOE Canada According to lenders, FTX announced it will begin disbursing $1.2 billion for orders under $50,000, which will begin on February 25 and run through March 4, 2025.

• Trump's nominee for Treasury Secretary Scott Bessent has revealed that he owns $500,000 in Bitcoin ETFs and plans to sell these holdings to avoid a conflict of interest.

• MicroStrategy (MSTR) bought $243 million in bitcoin after selling shares - Bloomberg. It was the company's 10th consecutive weekly purchase.

• Oil prices jumped amid new US sanctions against Russia. Brent futures rose to their highest since August at $81.11, while WTI futures rose to $77.97, approaching the October record of $78.32.

• “US interest rate cuts will continue, but at a slower pace,” - UBS.

• Fidelity analysts say the stock market could react negatively if yields rise above 5% in 2025.
Rate hikes could be a headwind, especially when valuations are in the top 10% of historical values. Earnings look stable, but the risk of a break in the bullish trend due to rate fluctuations remains.

• China's Temu collects personal data, spies on you and can even carry out cyberattacks, - CSIS The program requests extensive access to users' devices, including sensitive information such as location data, contact lists and even access to the microphone and camera.

• At the meeting, the Central Bank of China discussed maintaining the stability of the yuan exchange rate at a reasonable and balanced level.
Gold falls amid rising bond yields and uncertainty about the Fed rate - Bloomberg.

• Moderna (MRNA) shares fell 17% after the company revised down its 2025 revenue forecast due to lower demand for its Covid and RSV vaccines. Moderna now expects $1.5 billion to $2.5 billion in revenue, significantly less than its previous estimates. The company is also expanding cost-cutting measures to soften the impact.

• JP Morgan (JPM) CEO Jamie Dimon expressed a "cautiously pessimistic" outlook on the U.S. economy, adding to negative market sentiment.

• Johnson & Johnson (JNJ) announced it will acquire Intra-Cellular Therapies (ITCI) for $132 per share in cash, valued at approximately $14.6 billion. The acquisition is intended to expand J&J's neuroscience portfolio by adding promising therapeutics for central nervous system disorders to its offerings.

• Broadcom (AVGO) is under scrutiny as new U.S. export controls on AI processors could impact its business with ByteDance.

• Natural gas exporter Venture Global is seeking to raise $2.3 billion in an IPO. T-Mobile (TMUS) to acquire Vistar Media for $600 million to bolster ad business. The deal will strengthen the telco's ad business, giving it a strong foothold in the digital out-of-home (DOOH) market as brands shift from static to digital advertising.

• Lululemon (LULU) Raises Q4 Sales and Earnings Outlook Lululemon Athletica raised its fourth-quarter sales and earnings forecast after the company's CFO said "guests responded well" to its product offerings during the holiday season.

• Moody's has agreed to acquire Cape Analytics, a startup that develops geospatial AI for insurance companies.
The deal is expected to close in the first quarter.

• Howard Hughes (HHH) shares jumped 10% after billionaire Bill Ackman's $85-a-share offer
Ackman's investment firm Pershing Square offered to buy the real estate developer's remaining shares, sending the company's shares higher.

• Macy's (M) and Abercrombie (ANF) sales disappoint in tough holiday season Macy's Inc. issued a downbeat sales forecast for the current quarter, suggesting executives may have been too optimistic in their expectations for a robust holiday shopping season.

• Sage Therapeutics (SAGE) shares soar after Biogen (BIIB) made a takeover bid
The U.S. Supreme Court on Monday refused to hear Meta Platforms' (META) bid to avoid a multibillion-dollar class action lawsuit from advertisers
who accused the Facebook and Instagram parent of inflating prices by overstating the number of people using their services.

• Swedish property group SBB says lender has withdrawn claim.

• LNG exporter Venture Global aims for valuation of up to $110 billion in high-profile US IPO

• The US is tightening controls over the flow of AI chips around the world.

• Abercrombie & Fitch raises fourth-quarter sales target amid strong holiday demand.

• Macy's expects holiday quarter sales to be below expectations.

• Apple fights $1.8bn App Store lawsuit in UK's first class action against tech giants

• Berlin is considering a complete exit from Uniper, with a deal planned for the summer, sources say.

• Billionaire Ackman's Pershing Square is offering $85 a share for the rest of Howard Hughes.

• BMO Capital Markets settles SEC case over oversight of bond desk.

• Goldman Sachs announces plans to create new capital solutions unit.

• Goldman Sachs creates new team to strengthen focus on finance.

• Swedish property group SBB says lender has withdrawn claim.

• Gulf Bank QNB slightly beat estimates with net profit up 10% in the fourth quarter.

• Bank deposit growth in Italy continued to accelerate in November.

• Commerzbank chairman sees little chance of friendly merger with UniCredit, report says

• JPMorgan asks employees to return to the office five days a week, sparking complaints.

Key events that could impact markets on Tuesday:
- Data: U.S. producer price index
- Speakers: ECB's Robert Holzmann, Bank of England Deputy Governor Sarah Breeden, Riksbank Deputy Governor Aino Bunge, Kansas City Federal Reserve President Jeffrey Schmid
- Income: Games Workshop Group PLC
- Debt auctions: Germany resumes issuance of 5-year bonds, U.K. 30-year bonds

Fundamental news

• New York Fed Survey Finds Mixed Inflation Expectations in December. U.S. consumers' outlook for the expected path of inflation was mixed in December amid growing concerns about households' ability to make debt payments. NY Fed 1-Year Consumer Inflation Expectations (Dec) 3.0%.

• Venezuelan President proposes to invade Puerto Rico and liberate it from the US with the help of "Brazilian troops."

• US House of Representatives member Dusty Johnson has introduced a bill to acquire the Panama Canal.
The proposal would give Trump the authority to negotiate "the return of the Panama Canal" to the US.

• Greenlanders don't want to be either Danes or Americans - the island's prime minister.

• FBI Director Resigns Under Pressure from Trump Christopher Wray said Trump began blaming him after the Federal Bureau of Investigation began investigating interference in the 2020 election. Trump also criticized Wray for investigating possible ties to Russia, calling it a "witch hunt."

• China has implanted malware into US critical infrastructure - FBI. Such as wastewater treatment plants, energy grids, natural gas pipelines and telecommunications systems, with the intent to cause real harm at any time at its discretion.

• The current President of Croatia, Zoran Milanovic, won the election. He received 74.66% of the votes after the second round and the processing of almost 100% of the data.

• In Germany, the far-right Alternative for Germany party refused to condemn the Russian invasion of Ukraine at its congress. The AfD party did not include in its election program an item condemning Russia's full-scale invasion of Ukraine. At the party congress, the proposal by MP Albrecht Glaser to include such an item in the program was rejected by the majority of MPs.

• Switzerland could "guarantee the Kremlin it will not arrest Putin on an ICC warrant if he comes to the country to meet Trump" - The Times.