US Indices were choppy as participants digested as the repercussions from President Trump’s nomination of Kevin Warsh as Fed Chair last Friday would mean. That assessment is likely to continue for some time until Warsh issues a more up-to-date view on current conditions, given his lack of appearances in recent times. Warsh has been viewed as hawkish in the past on his approach to the balance sheet, showing concerns over QE, while in 2025, he advocated for lower rates. Eventually markets closed higher on Monday, with most sectors also in the green, as Consumer Staples and Industrials led the way. Energy, Utilities, and Real Estate were the only ones in the red, with the former weighed on by losses in excess of a 5% fall in Crude and Brent. Energy was heavily sold as the US/Iran rhetoric seemingly eased, after weeks of escalating tension. Trump told reporters on Saturday that Iran was “seriously talking”, after Tehran’s top security official Larijani said arrangements for negotiations were underway. In more recent updates, Axios reported that a senior US official said the US-Iran meeting on Friday will focus on trying to reach a “package deal” that would prevent war with Iran. In a continuation of Friday’s trade after Warsh’s Fed Chair nomination, the Dollar saw strength to the detriment of G10s peers, as the Swiss Franc led the losses. GBP, AUD, and NZD were the relative outperformers, albeit still saw weakness ahead of the RBA overnight. Gold and Silver continued on losses from Friday as the debasement trade took a backfoot; Gold fell 4.5% to ~USD 4,670 while silver dropped by 6% to ~USD 80/oz. Treasuries were weaker across the curve, with the short-end underperforming after a hot ISM Manufacturing reading. We also got the refunding estimates ahead of QRA on Wednesday, whereby the US Treasury expects to borrow USD 574 billion in Q1 (previous 578 billion, expected 550 billion), sees end cash balance of USD 850 billion; to borrow USD 109 billion in Q2, sees end cash balance of USD 900 billion. In terms of stock-specific stories, NVIDIA (-2.9%) saw weakness as the Wall Street Journal flags doubts over Cost. USD 100 billion OpenAI investment, while Oracle (ORCL) plans to raise between USD 45-50 billion (in debt and equity) to expand its Cloud infrastructure. Material names saw notable strength as Trump launches a USD 12 billion mineral stockpile to counter China. Looking at the week ahead, there are central bank decisions (RBA, BoE, ECB, Banxico) and earnings (GOOGL, QCOM, AMZN), while on the data footing the BLS will not release the January jobs report on Friday due to the partial US Government shutdown; December JOLTS (due 3rd Feb) has also been postponed. ISM Manufacturing for January rose to 52.6 from 47.9, above the expected 48.5 and outside the top end of the forecast range, as it rose back into expansionary territory. Employment and new orders jumped to 48.1 (prev. 44.9) and 57.1 (prev. 47.7), respectively, with prices paid at 59.0 (exp. 60.5, prev. 58.5), and also production, supplier deliveries, and inventories all improved. Highlighting the stellar report, the headline registered the fastest pace of expansion in over three years, new orders came in strong, backlog of orders rose, and low customer inventories suggested there will be momentum in the sector. However, Oxford Economics notes that comments remained downbeat, with policy uncertainty the largest drag on sentiment. This uncertainty is bleeding through to employment, which is lagging the demand indicators, with a continued use of layoffs in addition to attrition. Last Friday we got the latest PPI Report. Core and Headline PPI were notably hotter-than-expected in December. Core M/M rose 0.7% (exp. 0.2%, prev. 0.0%), Y/Y rose 3.3% (exp. 2.9%, prev. 3.0%). Headline M/M rose 0.5% (exp. 0.2%, prev. 0.2%), Y/Y rose 3.0% (prev. 3.0%). Supercore M/M rose 0.4%, accelerating from November’s 0.2% with the Y/Y reading unchanged at 3.5%. Looking at the PCE components, changes were mixed. Portfolio Management accelerated 2.0% from 1.4% due to stock market gains; Physician Care and Nursing Home care were unchanged at 0.1% and 0.2% respectively; Scheduled domestic passenger air transport rebounded, +2.5% (prev. -2.4%). Pantheon Macroeconomics noted that there were no major surprises among the PPI components that feed into the PCE. The firm forecasts core PCE inflation increasing to 3.0% in December from November’s 2.8%. As a reminder, Fed Chair Powell at the post-FOMC press conference said that December core PCE inflation was likely around 3.0% and headline around 2.9%. Elsewhere, both Oil and Gold ended Monday’s volatile trading session with a 5% while Natural Gas was slammed ending the session a 28% loss.
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For anyone following my Platinum Service it made 1145 points yesterday on the first trading session for February, after ending January with a gain of 4757 points, 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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