Traders Await Nonfarm Payrolls Report, California Wildfires, Corporate and Geopolitical News
Stock market news
• Most Asian stocks were lower on Friday, tracking Wall Street futures ahead of a key jobs report that could send Treasury yields and the U.S. dollar higher. Nasdaq <NQc1> and S&P 500 futures fell 0.3% after U.S. trading was closed overnight for the funeral of former President Jimmy Carter. European stock markets looked set for a flat open.
• That reflects concerns in global bond markets. Benchmark 10-year Treasury yields are close to an eight-month peak of 4.73% and threatening a key chart level of 4.739%. Yields on 30-year notes have risen 11 basis points this week to their highest in a year. UK government bond yields soared to their highest since 2008 as investors weighed the country's fiscal outlook, though they have calmed somewhat for now. Even China's bond yields rose on Friday after the country's central bank said it would temporarily suspend Treasury purchases. A shortage of paper was cited as the reason, but analysts suspect it was aimed at supporting the yuan.
• Much now hinges on the payrolls report, which shows the median forecast for jobs to rise by 160,000 in December and for the unemployment rate to remain at 4.2%. Forecasts are in a relatively narrow range of 120,000 to 200,000, suggesting more room for an outside surprise. There's another wrinkle in the annual re-analysis of the household survey, which could see the unemployment rate fall in recent months.
• A surprisingly strong report is likely to send 10-year yields above 4.739% as bears covet the psychologically important 5% level, a high not seen since 2007. That would bolster an already strong US dollar, which is near two-year highs and wreaking havoc in emerging markets. The stock market reaction could also be negative as lofty valuations are now challenged by rising term premiums and higher discount rates.
• Investors may be better off praying for a soft report, but not one so soft that it jeopardizes the favorable scenario for the U.S. economy. On the other hand, it would likely have to be extremely soft to change the Fed’s course on rate cuts, given that investors and the Fed are now more focused on how U.S. President-elect Donald Trump’s policies might play out over the next few months. Markets have already returned to easing by just 43 basis points this year, equivalent to less than two rate cuts, with the first of those not fully priced in until June, when the potential impact of Trump’s proposals becomes clearer.
• In the currency market, the dollar rose for a sixth week in a row. The British pound was the worst performer, falling 1% to $1.2303, its lowest in a year.
• Overnight, a number of Fed officials issued statements and agreed that there was no rush to cut interest rates.
• Goldman Sachs predicts inflation will rise under Trump, but believes the Fed will cut rates anyway.
• Google (GOOGL) donates $1 million to Trump's inauguration fund - Politico.
• Insurance companies are preparing to pay out $20 billion in losses from California wildfires. Allstate (ALL), Chubb (CB) and Travelers (TRV) could be hit.
• Shares of utility Edison International (EIX), which has operations in some of the affected areas, fell 10%.
Edison's after-tax liability limit is $3.2 billion, the amount EIX's market cap fell by Wednesday.
Edison International said in a news release Wednesday that it does not service the Palisades area, where one of the largest fires occurred. But it does have some infrastructure around the Hurst and Eaton fires and is reviewing the incidents.
• Last year, insured losses from natural catastrophes soared to $140 billion, the highest since 2017 and more than double the 30-year average - Bloomberg.
• Telegram gave the US data on 2,145 users after Durov's arrest. At the same time, requests from the Russian Federation are already unanswered, - 404 Media with reference to a Telegram bot report. In the first nine months of 2024, the messenger did not satisfy a single request from the Russian Federation. Telegram has probably undertaken to disclose IP addresses and phone numbers of people suspected of terrorism, cybercrime, and the sale of prohibited goods.
• Mortgage rates jumped again, nearing 7%. The fourth week of rising rates came after the 10-year Treasury yield, which measures mortgage rates, rose following new economic data.
• Wall Street just got another sign that deal-making is picking up. Investment banking revenue rose at Jefferies Financial in the fourth quarter, a positive sign for Wall Street as the big banks prepare to report their results next week.
• Mobileye (MBLY) shares fell 13% as investors reacted to the company's presentation at the Consumer Electronics Show. Concerns arose because the autonomous driving technology firm did not provide commercial updates, unlike in previous years. Analysts noted that while Mobileye is confident about its future roadmap, its next major product, Chauffeur, is not expected until 2027. The lack of immediate commercial news weighed heavily on investor sentiment.
• Nvidia (NVDA) and Microsoft (MSFT) continue to lead the way in artificial intelligence, according to a UBS survey of IT executives. The survey found that 100% of organizations are exploring AI, and 61% are already running AI programs. Despite this, only 11% have expanded AI initiatives, and many plan to do so before 2026. That’s slower than expected, and the adoption could disappoint investors who are looking for faster returns on AI innovation.
• Eli Lilly (LLY) got a boost as Medicare began covering the weight-loss drug Zepbound to treat obstructive sleep apnea in obese patients. The coverage could pave the way for broader Medicare coverage. Zepbound, also known as tirzepatide, was recently approved by the FDA and is marketed for diabetes under the name Mounjaro. The development strengthens Eli Lilly's position in the obesity treatment market.
• Sana Biotechnology (SANA) experienced a surge, rising over 200% after positive results from a phase 1 trial of its UP421 cell therapy. The trial showed encouraging results for the treatment of type 1 diabetes without immunosuppression, boosting investor confidence in Sana's hypoimmune platform.
• AMD (AMD) shares fell more than 4% after HSBC downgraded the stock, citing concerns about its AI GPU roadmap compared to Nvidia's offerings. The downgrade reflects skepticism about AMD's ability to compete effectively in the AI GPU market, particularly regarding its upcoming MI325 GPU.
• Will Buffett sell his entire stake in Apple and buy Boeing? Another of hedge fund manager Doug Cass's maximalist predictions for 2025.
• Bitcoin falls to lowest since November. Is Trump rally losing steam? Ahead of the inauguration, Bitcoin fell more than 3% on Thursday to just over $92,000, its lowest since November.
• UK market woes spill over into pound, currency hits one-year low - Bloomberg The pound has fallen to its lowest in a year on concerns the Labour government will struggle to keep the deficit under control as borrowing costs rise sharply.
• Boston Fed President Susan Collins says it's time for a patient, gradual approach to rate cuts.
She said Thursday that significant uncertainty about the outlook requires the central bank to take a cautious approach to cutting rates in the future.
• Billionaire Frank McCourt's Project Liberty is bidding for TikTok's US assets, ahead of a January 19 deadline for ByteDance to sell the platform or face a ban. The amount has not been disclosed.
• 200,000 Wall Street bank employees could be laid off due to AI - Bloomberg.
• The number of job postings in the US in 2024 will be the lowest in nine years.
• Chinese company Country Garden proposes deal to restructure offshore debt.
• Thai CP Group appoints former Telenor chief to lead telecoms business.
• Trump's tariff threat prompts auto parts suppliers to revise production plans.
• Volkswagen brand deliveries will decrease by 1.4% in 2024.
• Polestar offers hope as orders rise
• UK consumer confidence falls after Christmas sales.
• Italy's Meloni said she did not discuss the Starlink deal with Musk.
• Saudi Aramco and Sonatrach cut LNG prices in January.
• A strong dollar keeps the pound, euro and yen under pressure.
• Iconiq Growth hires Amit Agarwal from analytics firm Datadog in latest expansion.
• UBS close to settling Credit Suisse tax evasion case, WSJ reports.
• StanChart creates new entity for digital asset custody services in the EU.
• UK financial firms face biggest drop in sentiment in two years - survey
• Munich Re says climate change is showing its 'claws' and disaster costs are rising.
• Switzerland's central bank forecasts record $88 billion in profits in 2024, driven by rising gold and stock prices.
• The Central Bank of India begins to lift restrictions on the activities of non-banking financial institutions.
• Boaz Weinstein's Saba courts UK trust shareholders in order to cash out.
• Broker McGill offers war property reinsurance for Ukraine.
• Cyber company Wiz appoints Merchant as president and CFO to prepare for IPO.
• Iconiq Growth hires Amit Agarwal from analytics firm Datadog in latest expansion.
• Dubai-based developer DAMAC signs $1 billion deal with blockchain platform MANTRA.
• Billionaire Frank McCourt's Liberty project is offering to buy TikTok's American assets.
• India's Tata Elxsi missed third-quarter revenue expectations on weak demand in the media and communications sector.
• Apple clarifies Siri privacy stance after $95 million class action settlement
• The Prime Minister said Malaysia aims to become a hub for energy and chip manufacturing.
• The Netherlands is in talks with Nvidia and AMD to supply AI hardware.
• Source says SoftBank and Arm are considering acquiring Ampere Computing.
• Vanguard Group increases stake in Talen Energy to 10.4% amid growing demand for AI.
• Today, an important report on the US labor market will be released. And next week, the reporting season of US companies will begin. The main question is what will be the forecasts for 2025. Especially given the very optimistic current expectations for EPS growth by 19% for the year.
DAL will report today and this will affect airline stocks.
Another big question is the dynamics of US government bonds. The growth of their yields caused the dollar to strengthen, Bitcoin to decline and is holding back stock growth.
Key events that could impact markets on Friday:
- French industrial production for November.
- US nonfarm payrolls report for December.
Fundamental news
• Trump is absolutely serious about buying Greenland, advisers to the US president-elect told Danish officials. The goal is to expand US influence in the Western Hemisphere.
• Armenia has approved a bill to begin the process of the country's accession to the EU. Prime Minister Nikol Pashinyan said that the decision to join the EU can only be made through a national referendum, and before that it is necessary to "develop a roadmap."
• Trump Jr. blamed Ukraine for the fires in California. Allegedly, the fires are connected with assistance to Ukraine. He reposted a message that the United States transferred some firefighting equipment to Ukraine. Elon Musk reposted it to himself. A
new fire broke out in Los Angeles and threatens such iconic landmarks as the Hollywood Walk of Fame, the Hollywood Bowl, and a number of others - Hollywood Reporter. Hunter Biden's luxurious mansion overlooking the sea in Malibu burned to the ground.
• Scholz spoke out against Trump's demand to increase NATO countries' defense budgets to 5% of GDP. The German Chancellor pointed out that 5% of GDP would mean about €200 billion euros per year in defense spending for Germany. At the same time, the federal budget currently amounts to about €490 billion.
• Hungary again misses 2024 budget target Hungary exceeded its budget deficit target last year after the country slipped back into recession, according to estimates from the Economy Ministry. Hungary is one of eight EU members subject to the bloc's excessive deficit procedure, which threatens violators with fines if they fail to bring their budgets back into line.
• Duda asks not to arrest Netanyahu at Auschwitz memorial event. The Polish president has asked the government to provide guarantees for the Israeli prime minister so that he will not be arrested at a Holocaust memorial event in late January. The Polish government has allowed Netanyahu to attend the 80th anniversary of the liberation of Auschwitz, guaranteeing his safety despite the ICC warrant - PM.
• Taiwan Continues to Reduce Trade with China - Bloomberg. Taiwan's net exports to China fell to $17.7 billion in 2024, the lowest since 2003. By contrast, Taiwan's net exports to the U.S. jumped 83.5% last year to $64.9 billion, the sixth straight year the net figure has increased.
• Los Angeles wildfires have caused more than $135-$150 billion in economic damage - and counting The
ongoing fires have already caused one of the worst disasters in California history. The total damage and economic losses from this wildfire disaster could reach nearly 4% of California's annual GDP.
At least 10,000 buildings have been destroyed, at least five people have died and at least 180,000 people have been forced to evacuate. Rents in Los Angeles could rise 8-12%.