U.S. Indices predominantly closed lower on Wednesday with heavy-cap tech stocks plummeting, leading indices lower, with the NASDAQ underperforming, while the Russell and Equal Weight S&P closed green. Sectors were mixed with outperformance in Energy, Consumer Staples and Real Estate, while Consumer Discretionary, tech and Communications lagged. Energy stocks had outperformed, tracking crude prices higher throughout the majority of the day, seeing benchmarks settle well in the green. However, futures wiped out any gains post-settlement as President Trump said he was informed by an Iranian source that they will stop killings and there are no plans for execution, which largely reduces the probability of a US attack on Iran. The news also hit gold prices (remains well in the green) and helped lift Equity Indices into the closing bell, given several reports throughout the day suggested Trump could attack Iran within 24 hours, albeit these fears have now been quelled. In FX, the Dollar lagged while the Japanese Yen outperformed. The Yen was buoyed by jawboning from officials, but also on reports that the opposition parties – CDP and Komeito- have started talks on forming a new party. A new coalition will likely make it harder for Takaichi to secure a majority in the snap election, thus less chance of her passing through more expansive fiscal policy measures. Elsewhere, US data saw hot-leaning PPI reports for October and November, albeit the monthly figures were more encouraging, while Retail Sales were generally stronger than expected. The data had little market reaction, with focus today on geopolitical developments. The US and Denmark also spoke, but Denmark was not able to sway the US’s view on Greenland. Regarding the tech weakness, losses were broad-based throughout the sector, particularly within the heavyweights. China reportedly told customs agents that NVIDIA’s (H200) AI chips are not allowed to enter the country, although it was not clear whether it was a formal ban or a temporary measure. Meanwhile, the Information reported that TSMC (TSM) has not been able to supply customers like NVDA and Broadcom (AVGO) with the chips they need fast enough. The BLS released the October and November PPI yesterday. The October PPI rose 0.1% M/M before rising 0.2% M/M in November, while the Y/Y October print rose 2.8%, with November rising 3.0%. The core metrics for November saw no change M/M after a 0.3% gain in October but rose 3.0% Y/Y in November. Generally, both reports leaned hotter-than-expected, though some monthly figures were encouraging. Within the report, the PCE components generally leant softer than October’s, with Portfolio Management cooling to 1.44% from 3.75% with Passenger Airline Services declining 0.25%, versus the prior -0.06%. Home Health and Hospital outpatient care accelerated slightly, but inpatient care and nursing home care eased. Following the data, analysts at Pantheon Macroeconomics expect the core PCE deflator rose 0.25% in October and 0.19% in November, followed by a 0.37% increase in December – albeit the December forecast is based just on CPI data for now and is subject to revisions. US retail sales for November were stronger than expected, with the headline rising 0.6% (exp. 0.4%, prev. 0%), with Y/Y lifting 3.3% (exp. 3.0%, prev. 3.5%). Ex autos and ex gas/autos also surpassed expectations, coming in at 0.5% (exp. 0.4%, prev. 0.4%) and 0.4% (exp. 0.1%, prev. 0.5%), respectively. Retail control was as anticipated 0.4%, dipping from 0.8%. The strong gain in retail sales supported Oxford Economics forecast that this holiday season was a solid one for retailers, with the volume of holiday retail sales rising by the strongest since 2021. However, the consultancy adds that it rests on narrow foundations as spending is driven by high-income households spending part of their recent wealth gains. Looking ahead, OxEco suggests the data is consistent with its forecast for overall consumer spending to expand by close to 2% annualised in Q4, a slowdown driven mostly by the expiry of the EV tax credit that hit auto sales hard earlier in the quarter. One of the areas of weakness in the retail sales report is the housing-related categories, and while Oxford expect some recovery in housing demand this year, it is a sector of the economy that will continue to lag. Fed Member Paulson said that modest rate cuts are likely appropriate later this year if forecasts are met. She expects inflation to be around 2% by year-end, alongside growth of around 2%. She noted the job market is bending, but not breaking, while the baseline economic outlook is pretty benign. She is cautiously optimistic about inflation moving back to target and is seeking greater clarity this year on what is driving the jobs market. Meanwhile, Kashkari Speaking to the New York Times, noted the Trump administration actions against the Fed are “really about monetary policy”, and Powell explained that accurately. On Monetary Policy, Kashkari does not see any impetus for a rate cut in January, and with rates between 3.5-3.75%, that puts the Fed in a “pretty good spot right now”. The 2026 voter added that there could still be some scope to cut later in the year, but right now, it is “just way too soon”. The Minneapolis Fed President spoke again later, and noted the economy is confusing and the job market is showing signs of weakness, and inflation is still too high but moving in the right way. Back on monetary policy, he wonders how tight it actually is and added that the job and inflation goals are in tension. Lastly, on the employment side of things, Kashkari is not sure what the current breakeven rate is for the job market. Finally, Governor Miran reiterated his calls for rate cuts. Noting, deregulation should reduce pressure on prices, reiterating the need for 150 basis points of cuts this year. He noted inflation is coming down, and that “other stuff is just noise”. Elsewhere, Oil closed lower by 0.66% while Gold closed above $4600 with a 0.35% gain.
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For anyone following my Platinum Service it lost 75 points yesterday and is now ahead by 2057 points for January having closed December with a gain of 2599 points, after ending the month of November with a gain of 4542 points, after ending October with a nice gain of 5110 points after closing September with a gain of 3774 points while ending August with a gain of 3362 points after closing July with a gain of 3753 points after closing June with a gain of 3530 points, having closed May with a gain of 3606 points, after closing April with a gain of 7685 points after closing March with a gain of 2254 points while closing February with a gain of 4180 points. January ended with a gain of 2768 points while 1997 points were gained in December. October ended with a gain of 2179 points, after closing September with a gain of 4402 points, following a loss of 301 points in August. July gained 1908 points while June saw a gain of 2074 points. The Platinum Service made a record 9619 points in October 2022. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 2300 points. I have a YouTube Channel which contains recent interviews I have given This can be viewed by clicking HERE Please subscribe to this for new interview notification
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