Tuesday’s trading session was largely a reversal of the Monday DeepSeek reaction. US equity futures were bid throughout the majority of the session led by upside in tech with Nvidia (NVDA) regaining some of the Monday losses, albeit still having some ground to cover to completely retract the move. T-notes settled red but were very choppy in response to risk sentiment, tariff commentary and auctions. On tariffs, US President Trump said he wants a larger universal tariff than 2.5% and he has a number in mind but has not quite set it yet. Meanwhile, the White House said the Feb 1st data still holds regarding Tariffs on Canada and Mexico. The Dollar was buoyed by the tariff commentary while the Japanese Yen lagged giving up some of the prior day gains and the Australian Dollar also underperformed ahead of inflation data overnight. Oil prices were choppy to Libya supply updates and the White House announcement on tariffs. Elsewhere, data was mixed with US Durable Goods disappointing on the headline but primarily due to volatile aircraft orders with core metrics more reassuring while the Atlanta Fed GDP Now data was upgraded in wake of the data to 3.2% from 3.0%. Consumer Confidence slipped but inflation expectations rose, while the Richmond Fed survey improved. There was also focus on earnings, Boeing (BA) was supported by commentary as opposed to the actual numbers while Lockheed (LMT) guidance saw the stock tumble. LVMH (MC FP) earnings disappointed, weighing on CAC futures, while BMW (BMW GY) cut its FY margin outlook. China stocks saw further gains with Alibaba (BABA) buoyed by its update that its new Qwen model outcompetes DeepSeek V3. The Federal Reserve is widely expected to hold rates between 4.25-4.50% at today’s meeting, highlighted by all 103 economists surveyed by Reuters expecting this outcome and money markets seeing just a 3% probability of a 25 basis points cut. Looking ahead, Money Markets are almost fully pricing in two 25bps rate cuts in 2025. Goldman Sachs’ baseline forecast also calls for two 25bp cuts this year in June and December and one more in 2026. GS expects inflation to keep falling and they do not expect tariffs to restrain the FOMC indefinitely. However, the desk adds it is hard to have great confidence in the exact timing of cuts, due to the fact it is hard to know how they will choose to navigate tariffs this time. Expectations of two rate cuts this year are fitting with the Fed median projections from December, which will be updated in March. Headline Durable Goods fell 2.2% in December, beneath the expected gain of 0.6% but within the wide range of forecasts between -3.5% and +4.0%, while the prior was revised down to -2.0% from -1.2%. The downside was primarily due to the volatile aircraft orders with ex-transport rising 0.3%, albeit still beneath the 0.4% forecast. Ex-defense durable goods fell 2.4% versus the prior -1.3%. The nondefense capital goods ex-aircraft rose by 0.5%, above the 0.3% forecast with the prior revised up to 0.9%. Meanwhile, the nondefense capital goods shipments ex-aircraft rose by 0.6%, versus the prior 0.4%. Analysts at Pantheon Macroeconomics highlight that this “suggests that Thursday’s advance GDP release will show a similar small gain in “core” business equipment investment, that is, excluding the volatile computer equipment and transportation components”. The desk also adds that the swings in aircraft will wash out the numbers eventually, but the larger question is “whether the nascent upturn in underlying capital goods orders and shipments will persist”. US Consumer Confidence unexpectedly fell to 104.1, beneath consensus of 105.6, and the upwardly revised prior of 109.5 (prev. 104.7). In January, the Present Situation Index fell sharply by 9.7 points to 134.3, with the Expectations Index also falling, by 2.6 points to 83.9, but remained above the threshold of 80 that usually signals a recession ahead; year-ahead inflation expectations rose to their highest level in six months. The headline weakened for a second straight month, but Chief Economist at The Conference Board Peterson notes it still remains in the narrow range since 2022, even if in the lower part. Additionally, Peterson noted, “views of current labour market conditions fell for the first time since September”; “consumers’ assessments of the present situation experienced the largest decline; and the return of pessimism about future employment prospects seen in December was “confirmed in January”. Ahead, OxFord Economics believes January’s inflation reports are unlikely to give consumers good news, as they will be lifted by residual seasonality and given added inflationary risks from tariffs this year, “inflation expectations will likely remain elevated in the near term. Elsewhere, both Oil and Gold closed higher Tuesday by 0.75%.
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For anyone following my Platinum Service it lost 20 points yesterday and is now ahead by 1949 points for January after closing December with a gain of 1997 points after closing November with a gain of 3049 points having finished October with a gain of 2179 points. September saw a gain of 4402 points following a 301-point loss for August after closing July with a gain of 1918 points while June closed with a gain of 2074 points, having made 1843 points in May. The Platinum Service made 4010 points in April after ending March with a gain of 2113 points. February closed with a gain of 1606 points, after closing January with a gain of 3675 points. December saw a gain of 1890 points after finishing November with a gain of 1734 points. October ended with a gain of 3184 after closing September with a small gain of 228 points, after finishing August with a gain of 1485 points, following a small gain of 285 points gain in July, after closing June with a gain of 2683 points. May closed with a gain of 3205 points. April saw a gain of 3354 points while March closed with a gain of 6168 points. The Platinum Service made a record 9619 points last October. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 1900 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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