Temporary return of optimism to stock markets, company reports, geopolitics and new Trump statements
Stock market news
• Yesterday, optimism returned to the Magnificent Seven, semiconductors and oil. The dollar dipped a bit. Bitcoin fell below $98,000 on the lack of news from Sachs about the US government reserve in BTC. After a weak reaction to the reports, US stock index futures are slightly lower.
But overall, everything is calm.
• No one is quite sure what to make of President Donald Trump’s sudden proposal that the United States take over Gaza and turn it into the Riviera of the Middle East – after the Palestinians have been resettled elsewhere, of course. It’s unclear whether the proposal was serious, as it sounds eerily reminiscent of Trump’s son-in-law Jared Kushner’s suggestion last year that Gaza’s coastal territory could be valuable and that Israel should evacuate civilians while the strip is cleared. Markets appeared to be skeptical, with no obvious reaction in oil prices. Otherwise,
the Asian session has been rocky so far, with stock markets moving in a variety of ways and the US dollar retreating as Treasury yields fell.
• While Wall Street rose slightly on Tuesday, Nasdaq futures are now down about 0.5% after Alphabet's disappointing earnings as it spends heavily on capital expenditures. Shares of the Google owner fell 7.6% in after-hours trading, wiping $192 billion off its market value.
• Asian stock markets were mixed, with some pleased that China was restrained in its response to President Donald Trump's tariffs. JPMorgan noted that China's additional duties would apply to products that totaled just $14 billion in imports last year.
• Beijing also held the yuan steady at 7.1693 per dollar as markets returned from the Lunar New Year holiday, defying concerns it might allow a sharp depreciation to offset the impact of tariffs. The dollar did rise 0.5% against the domestic yuan, but that was only catching up to where the offshore market was already and still a long way from Monday's record high of 7.3765. Chinese blue chips fell only slightly, but that was a resilient performance considering they were returning from a holiday during a real trade war.
• The dollar was mostly lower, falling 0.6% against the Japanese yen to around 153.33, partly reflecting a continued rise in Japanese government bond yields to highs not seen since 2008. The yen's rise erased early gains in the Nikkei. European stock futures were modestly lower, unsurprising given Trump's continued warning that the EU is in his crosshairs for tariffs but has not specified what he wants in return.
• Trump-appointed Commerce Secretary Howard Lutnick: “Every time Bitcoin goes down, I’ll be a buyer.” Do we believe it?
• And Trump Jr. is pumping ETH.
It looks like they've learned how to make money in the "Wild West" of crypto.
• Crypto Czar David Sachs: 'Financial Innovation' Needs to Happen in the US
- Stablecoins Have Potential to Ensure US Dollar Dominance Internationally
- Bitcoin's Use as a Reserve Still Under Study
• The large Korean alliance Kakao announced a partnership with OpenAI to use ChatGPT in its AI-based services.
• Trump closes trade loophole for Shein and Temu - FT New rules will require every package from China to be checked, slowing delivery and making Chinese companies less competitive.
• Payments to FTX creditors will begin on February 18, 2025. Creditors with claims under $50K will be paid first.
• Crude oil prices fell on news of Chinese sanctions, with WTI crude futures down 2.2% at $71.57 a barrel.
• PayPal Holdings (PYPL) announced a new $15 billion share repurchase program, which complements the buyback program that was scheduled to begin in June 2022. Despite the company reporting better-than-expected earnings and revenue, shares fell 13% due to higher-than-expected expenses.
• Palantir Technologies (PLTR) shares jumped 24% after beating fourth-quarter estimates. Analysts praised Palantir's AI value proposition, noting its focus on operationalizing data and accelerating decision making.
• Pfizer (PFE) posted strong fourth-quarter results, beating both high and low estimates, but its 2025 outlook missed consensus. The pharma giant reported strong revenue growth in primary care and oncology, with Eliquis remaining its top seller. While Pfizer reiterated its 2025 outlook, its midpoint revenue and EPS numbers fell short of market expectations.
• PFE shares fell 1%. NXP Semiconductors (NXPI) reported strong fourth-quarter results but provided cautious first-quarter guidance, drawing a mixed reaction from analysts.
The company expects first-quarter revenue to decline 9% from the previous quarter, reflecting macroeconomic challenges in Europe. Despite solid demand in the automotive sector, other sectors such as IoT and mobile showed weakness.
NXPI shares fell 1%.
• Estée Lauder (EL) faces a challenging outlook for the current fiscal quarter as job-cutting plans overshadowed its better-than-expected second-quarter results. The company cites challenges in its travel retail business in Asia and global geopolitical uncertainty as factors behind its cautious stance. Estée Lauder is making strategic changes to regain market share and improve margins.
• Spotify (SPOT) rose 13% after forecasting growth in users and premium subscribers in the first quarter.
The streaming music service expects to beat market estimates with 678 million monthly active users and 265 million premium subscribers. Spotify also plans to increase revenue and gross profit in the current quarter.
• PepsiCo (PEP) announced a 5% increase in its annual dividend, its 53rd hike in a row.
Despite mixed fourth-quarter results, the company plans to return $8.6 billion to shareholders in 2025 through dividends and share repurchases. PepsiCo's organic revenue rose 2.1%, slightly below expectations, with a notable increase in operating profit from its Quaker Foods unit.
PEP shares fell 5%.
• Merck (MRK) shares fell nearly 9% after issuing a disappointing 2025 outlook, despite beating fourth-quarter estimates. The company forecast weaker-than-expected sales and profits, as well as a temporary pause in Gardasil shipments to China. Merck's Keytruda continued to drive sales growth, but the outlook weighed heavily on investor sentiment.
• Intuitive Machines (LUNR) announced that it has repurchased all outstanding warrants to purchase shares of its Class A common stock
after the stock price consistently traded above $18 per share.
The Company exercised its right under the Warrant Repurchase Agreement to purchase warrants at a price of $0.01 per warrant, reflecting strong market activity.
• Companies continue to cut jobs in 2025 after wave of layoffs last year - BI.
Among those cutting staff are Meta, Microsoft, BlackRock and Ally.
• BP ready to invest up to $25 billion in Kirkuk oil and gas fields in Iraq. Oil giant BP is expected to spend up to $25 billion over the life of a project to redevelop four Kirkuk oil and gas fields, a senior Iraqi oil official told Reuters.
• Dubai plans to raise up to $500 million from an initial public offering of ALEC Engineering & Contracting LLC, according to people familiar with the matter - Bloomberg.
Stocks in the morning after the reports
GOOGL -8%
SNAP +5%
AMD -10%
AMGN -1%
CMG -5%
MDLZ -5%
Key events that could impact markets on Wednesday:
- EU, German, UK and French services PMIs; EU producer prices; speech by ECB Chief Economist Philip Lane.
- US ISM services survey, ADP employment report, Treasury refinancing announcement.
- Speeches by Federal Reserve Chair Michelle Bowman and Vice Chair Philip Jefferson, as well as Fed Presidents Barkin and Goolsbee.
Fundamental news
• The US labor market unexpectedly showed a noticeable cooling.
The number of open vacancies in the JOLTS labor market (December) 7,600m (forecast 8,010m; previous 8,156m, revised from 8,098m).
US industrial orders (December) -0.9% m/m (forecast -0.7%; previous -0.4%)
Durable goods orders ex-defense (December) -2.4% m/m (forecast -2.4%; previous -2.4%).
• Elon Musk's offer to federal employees to quit their jobs in exchange for paychecks through September was accepted by 20,000 federal employees, or ~1% of the federal workforce - BBG.
• China imposes tariffs in response to US supplies. The Chinese government announced that US coal and LNG supplies will be subject to a 15% tariff, while oil, agricultural machinery and some cars will be subject to a 10% tariff. The new tariffs will come into effect on February 10.
China also begins an investigation into Google - Bloomberg, citing the Chinese Ministry of Commerce.
China introduces export controls on goods related to tungsten, tellurium, bismuth, molybdenum and indium
/ In this way, Xi Jinping shows that he is ready for a trade war and does not intend to give in. This means that the escalation will most likely increase.
Chinese manufacturers intend to bypass US tariffs by moving production to other countries - FT
/ China has been doing this for a long time and quite openly.
• Donald Trump is considering plans to impose a 10% tariff on the EU - The Telegraph, citing its own sources.
Von der Leyen warned Trump against imposing tariffs and called for dialogue. According to the head of the EC, the EU has "prepared" for such a development, but an escalation in relations must be prevented by starting a dialogue as soon as possible. The NYT revealed the true goal of Trump's trade wars.
• Donald Trump has deliberately started an economic war in which the rules of the game are changed at his own discretion, and the final goals remain uncertain. Using tariffs as a tool of political blackmail, he creates controlled chaos, allowing him to declare himself the winner at any moment - when it is beneficial for his rating. The New York Times writes about this. / I think this is a very simplified understanding of the situation without taking into account the strategic interests of the United States.
• There is a political coup in Afghanistan. Sirajuddin Haqqani will be the new head of state and leader of the Taliban. The Taliban emir, Maulavi Haibatullah Akhundzada, has already been declared insane. Experts write that the "Kabul" Taliban defeated the "Kandahar" in favor of the United States at the expense of China.
• The new leader of Syria offers Erdogan to place Turkish military bases in the country instead of Russian ones, - Reuters.
• The EU "bursts into the AI race" - the union will allocate as much as $56 million to create its own open model - Forbes. This is not a joke: the EU has heard stories from DeepSeek about a top model for $6 million and now thinks that it has allocated a lot - as much as 9 times more than the DeepSeek development cost.
For training, they will use ready-made supercomputers Mare Nostrum and Leonardo, so the hardware is not included in the price. However, experts estimate the real cost of pumping DeepSeek at $1 billion. Therefore, the $56 million allocated to the EU will only be enough to pay the consultants' salaries. Or is this the goal?
• Trump plans to withdraw US from UN Human Rights Council over aid to Gaza - Politico.
• El Salvador to accept dangerous criminals and illegal immigrants from the United States in a giant 40,000-person prison. The United States will send convicted violent criminals and migrants who are deported to El Salvador, where they will be held in a local prison.
• Trump believes that the entire Gaza Strip should be demolished, it is uninhabitable and dangerous to live in - it is better to resettle refugees from the Gaza Strip to Jordan and Egypt.
• Washington believes that Iran is exploring ways to quickly create nuclear weapons, The New York Times reported, citing unnamed American officials. According to the sources, the data was collected during the final months of Joe Biden's presidency and then passed on to US President Donald Trump's national security team. Typically, such "leaks" are aimed at encouraging the opponent to come to an agreement.
• AfD for lifting anti-Russian sanctions. The Alternative for Germany party demands in its election program to lift sanctions against Russia and restore Nord Stream. The party believes that trade with Russia is necessary, because sanctions threaten Germany's energy supply and economy.
It turns out that for the right, money is more important than principles.