U.S. Indices closed Monday higher, with outperformance in Energy as US oil companies saw strength in the wake of the US’s attack on Venezuela, which saw Maduro captured. WTI and Brent also saw gains, and despite being choppy through the European session, it was one-way traffic higher in the US day. Amid the US attack on Venezuela, it has opened up the question if US decides to do an operation in another country, with punchy rhetoric from President Trump on Colombia. Following the attack, Chinese, Mexican, Turkish, and Russian officials all condemned the US’s actions on Venezuela. Overall, sectors do see upside with Utilities, Health, and Consumer Staples lagging. In FX, the Dollar Index erased gains seen overnight as an unexpected drop in the ISM Manufacturing PMI offset strength in response to the US capture of Maduro. The geopolitical developments kept haven demand in play, originally supporting the Greenback, with Antipodeans, Sterling and the Japanese Yen all eventually seeing out strong gains, while the Canadian Dollar was the clear underperformer. Back to ISM, although the headline disappointed and prices paid came in above expectations, both sub-indices of new orders and employment rose, albeit remaining notably beneath 50. Treasuries are firmer across the curve, with spot gold and silver seeing notable gains, with the latter up 7%. Fed’s Kashkari (2026 voter) spoke and remarked that his guess is that they are close to neutral at the moment. Geopolitics dominate the tape to start the week, and likely will for the foreseeable future; meanwhile, the US jobs report is due on Friday. The headline manufacturing PMI slipped to 47.9 from 48.2, below expectations of 48.4 and marking the lowest reading of 2025. Within the report, new orders edged up to 47.7 from 47.4, while the production index fell 0.4 points to 51. The backlog of orders index rose to 45.8 from 44.0 in November. Employment increased to 44.9 from 44.0, while prices paid were unchanged at 58.5, despite forecasts for a decline to 57.0. The report said US manufacturing activity contracted at a faster pace in December, with declines in the production and inventories indices driving the 0.3-point fall in the headline. “Those two subindexes increased in November, so their contraction this month continues the short-term ‘bubble’ of improvement seen in recent PMI data — and a hallmark of ongoing economic uncertainty in manufacturing.” On prices, Pantheon Macroeconomics said the index remains well below the April peak of 69.8. Pantheon also noted that price measures across other major manufacturing surveys point to underlying core inflation easing meaningfully by mid-2026, by which time the one-off boost to consumer prices from tariff pass-through should be largely complete, giving the Fed further scope to resume its easing cycle. Fed Member Kashkari said the job market is clearly cooling, inflation is still too high, and there is a risk that the unemployment rate can pop from here. On the neutral rate, the 2026 voter remarked his guess is that they are close [to neutral] at the moment, something we know has a wide range of views on the Fed. Minneapolis President expects the economy to remain resilient, and speaking on Fed independence, noted he is not concerned about the risk of Fed Bank Presidents being fired, and he does not agree with US Treasury Secretary Bessent that Bank Presidents do not represent their districts well. Meanwhile Fed Member Paulson said she sees inflation moderating, the labour market stabilising and growth coming around 2% this year, while she added that if all of that happens, then some further adjustments to the Fed Funds Rate would likely be appropriate later in the year. Paulson said she views the current level of rates as still restrictive and sees a decent chance that they will end the year with inflation that is close to 2% on a run-rate basis, as tariff-related price adjustments will likely be completed. Furthermore, she stated that while the labour market is bending, it is not breaking and that the baseline outlook for the economy is pretty benign. Elsewhere, Oil closed higher by 1.8% while Gold ended Monday’s volatile session with a 2.8% gain.
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For anyone following my Platinum Service it made 150 points yesterday and is now ahead by 730 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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