Barron's : The Recession That Never Was Could Be Coming This Year

The Recession That Never Was Could Be Coming This Year

Don your shimmering suit and kick up your heels, it’s time to celebrate America’s New Golden Age—or so says President Donald Trump. What could possibly go wrong? Well, not to take away your punch bowl prematurely, but a recession, for one thing.

What? The “R” word? Pshaw! No one’s made mention of that dreary economic relic in eons—or at least since November. Recessions, so the starry-eyed say, belong to a bygone era, not this epoch of cheap energy, unbridled growth, and AI-hegemonical American exceptionalism. (Ah, maybe let’s hold off on that last one.)

Snarkiness aside, my point is that just when rose-colored glasses are tinting the world most vividly is when all can come undone. In fact, at this moment of great economic expectations—and yes, much of it, as per usual in the U.S. of A., is warranted—there are still all manner of nagging worries, any one of which could explode into fury.

Consider sentiment itself. You may be aware that few, nay, basically no economists are predicting a recession right now. That’s in sharp contrast to just 24 months ago, when any dismal scientist worth her or his slide rule was calling for a contraction.

In fact, the average probability that a recession will occur within the next 12 months, according to 70 or so economists polled by The Wall Street Journal’s Economic Forecasting Survey, has been declining for the past 10 quarters, from a 63% chance in the third quarter of 2022 to just 22% today. This move is even more significant when you consider that rarely do economists rate the possibility of a recession at more than 90% or less than 10%.

Other analyses mirror the Journal’s. Bankrate, in its latest quarterly Economic Indicator Survey, reports that “economists put the odds of a recession by the end of 2025 at just 26%, a new series low [going back to the first quarter of 2022].” And some 91% of respondents to the latest National Association of Business Economics survey from a week ago assigned a probability of 50% or less to the U.S. entering a recession over the next 12 months.

So yes, the same cohort that is issuing the all-clear sign today was braying oh so recently, quarter after quarter, that a contraction was nigh—which struck some of us been-around-the-blockers as suspect. In June 2022, I wrote, “I’ve covered the markets and the economy for four decades, and I can’t recall a time when more people—or at least prognosticators, economists, and bankers—were more certain that an economic downturn was imminent….Does it mean that a recession won’t occur?”

In fact, it didn’t.

In June 2023, I revisited the topic and said flat out that there would be no recession that year. I was “ridiculing the most widely predicted economic event in modern history—which seems pretty certain not to happen.”

In fact, it didn’t.

Now the script has been flipped.

The fact that so many economists were wrong before doesn’t necessarily mean they are wrong again and that a recession is imminent. So, let’s examine some real-life proximate risks and check in with the few wild-duck economists who aren’t irrationally exuberantly inclined.

Amy Crews Cutts, for one, an independent consulting economist with Primerica. Invoking former Defense Secretary Donald Rumsfeld’s ”unknown and known knowns,” she sees a greater than 50% chance of a recession in the next 12 months.

“There’s always unknown risks,” she says, “say, if North Korea were to bomb Russia. But we have known risks, and chief among them is Trump’s trade policy. If he enacts tariffs rapidly, across large swaths of our import economy, we will see people involved in [international] trade being laid off and companies going belly up instantaneously.”

“I think that the Trump administration is using tariffs as a negotiating tool, and they’re not going to be as bad as many think, but there is a risk of overdoing it,” says Eugenio Alemán, an economist at Raymond James who, while positive on the U.S. economy, sees a 40% risk of recession this year, one of the highest in the WSJ survey. Alemán notes that we could slip into an escalating and retaliatory trade war, similar to what he says exacerbated the Great Depression of the 1930s. That, and overdoing mass deportation, which could diminish economic activity, worry Alemán.

“We need landscapers, people in kitchens, and people to clean [hotels], and that source of labor comes largely from the undocumented pool,” says Cutts. “We also need engineers and well-trained people. If we curtail all legal and undocumented immigration, we put pressure on wages, which is inflationary. We make it hard for companies to grow because they can’t get the labor they need.”

Cutts also points to Primerica’s Household Budget Index, which tracks the purchasing power of middle-income families. “You ask about the probability of recession. Well, taking into account [higher costs] of necessities, [families] are just barely above where they were in January 2019,” she says. “Some 70% of families surveyed say their income is not keeping up with inflation.” These numbers, Cutts suggests, make Americans susceptible to an economic shock and could cause a recession.

Food inflation is still persistent, specifically the price of eggs, which underlines another potential ticking economic bugaboo. “Avian flu is not going away,” Cutts says. “The solution seems to be to kill all the birds. So, farmers are wiping out their flocks, but it seems like that’s not working—and it’s spreading to livestock.”

What about the stock market, Big Tech stocks like Nvidia, in particular, getting deep-sixed this past week by DeepSeek, the Chinese upstart that apparently produces a cheaper form of artificial intelligence? “The expectations on the AI sector and the rate of growth are concerning and might be a bubble,” says Alemán. “This could trigger animal spirits in the wrong direction. I don’t think this has the ability to bring down the U.S. economy, but it starts to scratch the surface.”

It’s also worth noting that DeepSeek calls into question the mind-boggling capital expenditures that Big Tech has been pouring into AI. My colleague Adam Levine notes that Amazon.com, Microsoft, Alphabet’s Google, and Meta Platforms “have combined for $343 billion in capital expenditures largely for building out AI data centers,” with the promise of tens of billions more going forward. If this megaspend turns out to be mostly for naught, well, it certainly won’t boost economic growth.

Speaking of spending, the CEO of a boldface-name private-equity group whom I lunched with this past week expressed concern over the federal deficit, which is expected to climb from $1.9 trillion this year to $2.7 trillion by 2035, according to the Congressional Budget Office’s economic outlook. It’s easy to imagine the Treasury needing to fund that debt with higher bond yields, which would be inflationary—and potentially recessionary.

Monetarist economist Steve Hanke of Johns Hopkins University notes a significant contraction in money supply, which he says has historically been recessionary, though he acknowledges that his theories have fallen out of fashion. “[Federal Reserve Chair Jerome] Powell has been adamant that the changes in the quantity of money don’t have any material effect on economic activity or inflation, which is complete nonsense,” Hanke says. Less money makes for less economic activity, he argues, which he says will engender an economic slowdown this year.

For now, at least, recessionary talk comes from outliers, and any number of Americans are content to celebrate the moment. A recent New York Times article on what the president’s supporters want for the future of America included a photograph and quote from one Robert Shinkle, from the Ohio Department of Development administrative staff in Sugarcreek Township, Ohio. Shinkle, resplendent in a shimmering suit, said, “We expect that Trump will usher in a new golden era for America. That’s why we’re dressed the way we are. This is the beginning of the Roaring ’20s 2.0.”

Let me pose the question again: What could possibly go wrong?

Stocks of companies in the power-generation business got short-circuited this past week in the wake of the DeepSeek imbroglio. The thinking is that if the Chinese AI start-up’s low-cost model proliferates, tech companies won’t need massive amounts of power for their data centers. But at least one CEO close to the action is unperturbed.

“It shouldn’t really have affected us because of the significant orders we already have,” says Ian Edwards, CEO of AtkinsRéalis Group, a Montreal-based company that maintains, restarts, and builds nuclear power plants. Yes, his stock has dropped 7.6% this past week, but Edwards says the DeepSeek news won’t affect the need for nuclear power. “We’re going to move to electric vehicles, and manufacturing wants to go electric,” he says. “Eighty percent of the world’s electrical energy is now fossil fuel. Most countries are looking to get to net zero by 2050.”

Only 20% of AtkinsRéalis’ revenue comes from the nuke business. The majority is derived from managing and advising on large construction projects. But it’s the nuclear piece of the company that has Wall Street lit up.

“Our nuclear business grew 35% last year,” he says, some three times its engineering services business, benefiting from the so-called nuclear renaissance, which has the company refurbishing or in discussions to restart or build new nuke plants in Canada, Argentina, Romania, and South Korea. Even with the dip this past week, AtkinsRéalis stock is up 171%, versus 36% for the S&P 500 index over the past three years.

Before that rebirth, AtkinsRéalis’ nuke business, now called Candu Energy, which it bought from the Canadian government in 2011 for a pittance of $15 million in that country’s currency, was a moribund enterprise engaged in maintenance and decommissioning. Today, Edwards says, it has a C$4 billion backlog of orders.

Like the nuclear power business, AtkinsRéalis, formerly named SNC-Lavalin, went through its own dark period. From the 1990s into the 2000s, the company was scarred by a series of scandals and litigation. And so, Edwards, who became CEO in 2019, had a major maintenance and refurbishment of the internal kind to sort through. Now, investors are counting on the company and the nuclear business to continue to rebound.

Barron's : Merger Funds Are Ready to Rally. Why They Look Better Than Bond Funds

Merger Funds Are Ready to Rally. Why They Look Better Than Bond Funds.

The urge to merge is back—and Biden administration appointee Lina Khan, the former chair of the Federal Trade Commission, is gone.

“Everybody is sick and tired of the government interfering in private commerce,” says Roy Behren, the manager of the Merger Fund. “We saw an extremely activist Federal Trade Commission led by an inexperienced academic, and she has forestalled many transactions that were announced.”

While the Khan FTC insisted it was protecting the public from monopolistic practices, merger arbitrage managers like Behren are celebrating Khan’s departure and the Trump administration’s replacement of her with the more merger-friendly Andrew Ferguson.

Less regulation and a dealmaker as president should improve returns, as the likelihood has increased of more merger deals being approved more quickly and ultimately closing.

Both the number and speed of regulatory approvals are relevant. “The big risk with merger arb is time,” says manager Scott Johnson of the NexPoint Merger Arbitrage fund. “If the definitive merger agreement tells me I’m going to get $20 at closing, how long it takes for that deal to close determines what my return is. If the stock is trading at [$19.50] and the deal closes in four months, I make an 8% IRR [annualized internal rate of return]. But if the deal closes in eight months, I make a 4% IRR.”

One way Khan delayed mergers was to issue what are called “second requests” for more information about proposed deals to see if they were anticompetitive, even when Johnson and other arbitragers believed they weren’t. These deals would eventually close but take longer to do so. Johnson points to waste-disposal company Waste Management’s $7.2 billion acquisition of Stericycle in November as an example. “Stericycle does only medical waste. Waste Management’s not in medical waste,” he says. “There was no overlap in their businesses.”

He calls this FTC strategy “regulatory tourism” in the private sector. Regulators “just go in and do a second request and prolong the deal for no other reason than to make boards and CEOs think twice about getting involved in a merger,” he says. Such requests, he believes, will largely disappear now.

The improved outlook for merger funds comes at a good time, as the bond market has become increasingly volatile in an uncertain interest-rate environment. Because of their low volatility and returns that aren’t correlated with the stock market, merger funds can be used as a bond fund substitute. Whether the stock or bond markets rise or fall, merger funds’ returns move independently, being based solely on whether proposed deals close.

Yet investors must understand the nuances of arbitrage strategies. Morningstar includes merger funds in its “event driven” fund category, but not every corporate event is a merger. The category’s best performer in the past five years, the Camelot Event-Driven fund, does a lot more than merger arb.

“We’ll invest in mergers, distressed situations, activist situations, and then special situations such as spinoffs or company breakups,” says the fund’s co-manager, Paul Hoffmeister. “We allocate to those different substrategies based on how we see the risk/reward profile in them.”

Camelot co-manager Thomas Kirchner sums up the common theme for each investment. “It’s a change in the corporate structure where you’re reorganizing the company—whether that’s a merger, breakup, or bankruptcy—and that unlocks some kind of hidden value,” he says.

While Kirchner and Hoffmeister argue that there will be better merger opportunities going forward, as of Dec. 31, Camelot had only 14% of its assets allocated to merger arb plays. Some 32% was allocated to activist situations, when a large shareholder of a company is trying to force its management to unlock value, often by selling assets.

The Camelot team will often piggyback on powerful activist hedge funds’ investments. One such power broker they follow is Starboard Value, which recently began to pressure Kenvue, a healthcare spinoff from Johnson & Johnson, to address its lagging share price. Such bets can produce higher returns than merger arb, but with more volatility and unpredictability, as activists don’t always win their fights.

Camelot’s standard deviation—a volatility measure—has been 8.1% in the past three years, compared with NexPoint Merger Arbitrage’s 1.9% and the Merger Fund’s 2.6%. That’s a lot less than the S&P 500 index’s 17.4%, yet Camelot might make a better equity substitute than a bond one.

While the merger outlook has improved, there are still a few risk factors to consider in the more lenient Trump administration, such as to technology sector mergers. Concern over the influence of the largest social-media, search, and e-commerce platforms crosses political parties. “Gail Slater, who’s going to head the antitrust division at the Department of Justice, is pro mergers,” says NexPoint’s Johnson. “What she is against, as is Andrew Ferguson, is Big Tech. They’re going to continue going after Big Tech.”

The other risk is to cross-border mergers, as the new administration is hostile to foreign influences on American business. “It depends on the industry and country,” says manager Daniel Lancz of First Trust Merger Arbitrage, another solid, low-risk merger fund. China and its influence on the U.S. tech sector is a particular concern. “When you start getting into certain industries that have sensitivity, whether it be to national security or just the general advancement or misuse of technology for the advancement of another country over the United States, I think those are going to be the type of transactions that probably warrant more caution,” he says.

Even so, the sailing for merger funds should be smoother going forward than for rockier bond funds.

Barron's : 2 Surprising Stock Rallies: Volkswagen and Germany

2 Surprising Stock Rallies: Volkswagen and Germany

Don’t look now, but Volkswagen stock is on a tear. German equities in general are outperforming their country’s dismal economic statistics.

Shares in VW, the global auto industry’s sick man, surged 20% in the past two months. Germany’s leading stock index, the DAX 40
DAX, is up 10% over the same period, while the S&P 500 is about even.

Volkswagen’s rally may run out of gas, or charge. Germany’s looks like it has legs.

VW, whose nine million vehicles a year include Audis, Porsches, and Skodas, plus the namesake brand, has two basic problems: cost and product. Average margins run 2%, while management is targeting 6%, says Stephen Reitman, who covers European autos for Bernstein Research.

CEO Oliver Blume settled for half a loaf at best on costs in a tangle with unions late last year. Instead of the unprecedented German plant closures he had threatened, he wrested a 10% cut in head count—by 2030.

“VW was essentially priced for bankruptcy,” says Michael Field, European equity strategist at Morningstar. “But I can’t say this is the end of their troubles.”

The big test for product will come in 2026, when VW tries to play catch-up in electric vehicles with four models priced below 25,000 euros ($26,028), says Germany-based industry analyst Matthias Schmidt.

Leading Chinese producer BYD may be faster off the mark, with its factory in Hungary starting budget EV production later this year.

The key to understanding other German stocks is that DAX 40 companies reap 80% of their revenue outside of Germany, says Maximilian Uleer, head of European equity at Deutsche Bank. In that context, investors are anticipating tailwinds.

Economic growth in Europe and globally is poised to accelerate, a little, this year. The European Central Bank keeps cutting interest rates while the U.S. Federal Reserve pauses. The ECB shaved 25 basis points, to 2.75%, on Jan. 30. Power prices, which buffeted German industry after Russia’s 2002 invasion of Ukraine, are back near prewar levels.

Germany is relatively shielded from President Donald Trump’s tariff threats, with just 10% of its exports bound for the U.S., adds Carsten Brzeski, global head of macro at ING Research. Volkswagen and other big names already manufacture extensively within the U.S.

That all should translate into an 11% jump in earnings for DAX constituents this year, after a 9% decline in 2024, Deutsche Bank predicts. Industrial companies will rebound from a negative 10% to 20% gains, Deutsche estimates.

Morningstar’s Field is scouring for value in names that remain traumatized by post-2022 events—like chemical giant Bayer, which has lost 60% of its value since the war in Ukraine started, and utility RWE, which is down by a quarter.

Brzeski fears national trauma ahead from German elections looming on Feb. 23. The center-right Christian Democratic Union looks poised to be top vote-getter. Less predictable is whether the far-right Alternative for Germany, or AfD, will win enough votes to force the CDU into a torturous three-way coalition with the Social Democrats and Greens.

The AfD exceeding its current polling around 20% would deliver a sentiment shock that could hurt German companies no matter where they do business. At best, “the risk of another divided, muddle-through government has increased over the past few weeks,” Brzeski says.

At VW, Blume will have to wield a sharper budget ax, score big with those four new EV models, or both. Otherwise, Field says, “his job may be open a year from now.”

>>> Barron’s Weekend Summary

Cover:
-The generative artificial-intelligence revolution has primarily benefited computer hardware manufacturers, such as Nvidia, Dell Technologies, Super Micro Computer, and suppliers like Taiwan Semiconductor Manufacturing and SK Hynix. However, the emergence of DeepSeek, a Chinese AI lab, has challenged the belief that AI is expensive due to its high computing power requirements. DeepSeek's models are on par with leading U.S. offerings from OpenAI and Google, all built at a fraction of the cost. This could spark a value shift from hardware to software, as AI has been defined more by largess than finesse. Companies like Salesforce are pushing to integrate AI that will automate their existing business software, and if DeepSeek's cost-saving methods can be replicated, Salesforce's expense for AI features would drop significantly.

Interview:
-No update

Tech Trader:
-The viral social media post about a $6M artificial-intelligence model from Chinese company DeepSeek erased $1T in market value across the largest US tech stocks. The hype raised questions about America's AI leadership and tanked tech stocks, with the Nasdaq Composite index falling 3.1% and AI leader Nvidia tumbled 17%. However, DeepSeek did not replicate OpenAI's ability by spending a few million dollars. The $6M figure omits all R&D funds for the model's architecture, algorithms, data acquisition, graphics processing units, and test runs. Comparing a theoretical final training-run cost to US company spending on AI infrastructure is apples to oranges, and DeepSeek's overall cost is likely much higher. Bernstein semiconductor analyst Stacy Rasgon criticized the $5M figure as "fundamental misunderstanding" and called the $6M training figure "deeply misleading," emphasizing that a smart team couldn't train the DeepSeek model from scratch with a few million dollars.

The Trader:
-Stocks were concerned about various factors this week, including China's DeepSeek chatbot, Big Tech earnings, and the latest Federal Reserve meeting. However, the market seemed to emerge unscathed, with the S&P 500 index finishing the week down 1%. This was due to the market's anxiety that if a scrappy open-source Chinese model could match ChatGPT, AI could be significantly cheaper than previously anticipated. This could be a boon to users but a blow to megacap tech stocks pouring billions into their own projects. The Temu of AI DeepSeek is expected to dramatically alter the $2T of AI expenditures expected over the next three years. Almost immediately, attention turned to earnings from Meta Platforms, Tesla, Apple, and Microsoft, who did their best to reassure the market. However, the S&P 500 index remained nearly unchanged for the week through Thursday's close, with 333 gainers in the index compared to 169 stocks that lost ground.
-Royal Caribbean has announced its entry into the river cruise market, a high-yielding segment currently dominated by Viking Holdings, which skews towards wealthier consumers. The first two of 10 river ships are expected to be delivered in 2027, and bookings for these maiden voyages will begin next year. Royal shares have surged 17% in 2025 and have gained more than Nvidia over the past 12 months. The river ships' cost per berth is expected to be above the $340,000 to $355,000 spent on recent ocean ships, and the ships come with their own financial risks. Gimme Credit's Kim Noland noted that the 10 ships will cost about $5B in the coming years, meaning they are expensive and not without risk and could delay a near-term upgrade in RCL's credit profile. Despite the apprehension, the news looks good for Royal, as river cruising is a fragmented market that has been growing at a double-digit clip a year for a decade.

Features:
-Dollar-cost averaging is an investment strategy that can be particularly effective in volatile markets. In down markets, it can force investors to buy equities at bargain-basement prices when other investors are selling or sitting on their wallets. In up markets, dollar-cost averaging protects investors from betting all their chips only to see them tumble in value. For nervous investors, the key is to acknowledge that none of us know what will happen in the future in the markers. Dollar-cost averaging works by dividing the sum of $1M into quarterly payments, which can be invested over a year. If the market falls during this time, you will purchase a chunk of those equities at tomorrow's lower price. However, if the market continues to rise, dollar-cost averaging will net you less money than buying $1M of stock today.
-President Donald Trump confirmed that tariffs on Mexico, Canada, and China are coming this weekend, along with additional tariffs on chips, pharmaceuticals, steel, aluminum, and copper. The levies are a response to the countries failing to stop the flow of fentanyl and illegal immigrants into the US. Trump said that he would put tariffs on oil and gas "fairly soon" around the 18th of February, with oil possibly having a reduced tariff of around 10%. He also mentioned imposing tariffs on steel, copper, and aluminum at some point "this month, next month." Trump said "absolutely" that he will impose tariffs on the European Union at some point. The breadth of the levies will have a big impact on companies from auto makers to home builders. Mexico and Canada are the US's largest trading partners, with a combined $1.8T of trade in goods and services. A 25% levy on Mexico could potentially increase tariffs by about $131B annually, while the Canada tariffs would raise taxes by $106B.

Europe:
-Volkswagen stock has surged 20% in the past two months, outperforming German equities. The leading stock index, the DAX 40, is up 10% over the same period, while the S&P 500 index is about even. Volkswagen faces two main problems: cost and product. Average margins run 2%, while management is targeting 6%. VW was essentially priced for bankruptcy, but this is not the end of their troubles. The big test for product will come in 2026 when VW tries to play catch-up in electric vehicles with four models priced below 25,000 euros ($26,028). Leading Chinese producer BYD may be faster off the mark, with its factory in Hungary starting budget EV production later this year. The key to understanding other German stocks is that DAX 40 companies reap 80% of their revenue outside of Germany, so investors are anticipating tailwinds. Economic growth in Europe and globally is poised to accelerate this year, with the European Central Bank cutting interest rates and the US Federal Reserve paused.

Emerging Markets:
-No update

Commodities:
-The US is set to impose 25% tariffs on Canada and Mexico on Saturday, causing anxiety in the uranium and oil markets. Both oil and uranium are major exports from Canada to the US, and trading volumes of the Canadian iShares S&P/TSX Capped Energy Index have been down from normal levels. The Energy Select Sector SPDR ETF has been seeing higher-than-usual volume, and Canadians are trading with more trepidation. It was not immediately clear which products would be hit with tariffs and what the rates would be. Analysts say tariffs on oil could cause US gasoline prices to rise, as several American refineries rely on processing Canadian oil. If 25% tariffs on oil were passed completely along to consumers, it could raise gasoline prices 35 cents per gallon in parts of the country. Canadian producers might have to sell their oil at a wider-than-usual discount to American crude. A tariff on uranium could hurt Canadian producers such as Cameco, while potentially benefiting US producers like UEC.

Streetwise:
-Wall Street experts have proposed a trading strategy that suggests buying low and selling high, with the goal of buying a $30 stock and selling it when it hits $750. This strategy is based on the belief that higher prices may signal better quality or a recent gainer. However, experienced investors understand that share prices are arbitrary and can be adjusted through stock splits or reverse splits. Factors like the overall value of the business, debt and cash flows, and prospects for improvement or worse are more important. The "buy low, sell high" strategy is considered an ‘un-truism,’ as most trades represent disagreements about whether an issue is low or high. Stocks tend to rise over time, and index investors have made out well by buying high and holding out for higher. A more useful mantra might be to buy often and hold until it's someone else's problem, as you're either dead or rich enough to give it away. However, at the moment, the first person might be right, as three recent observations by the research investment committee at BofA Securities suggest.

>>> Weekend Papers Summary

FINANCIAL TIMES
-Donald Trump has announced plans to impose tariffs on the European Union (EU), adding the bloc to a list of targets including Canada and Mexico. The US president acknowledged that the new tariffs could cause market disruption but claimed they would help the country close its trade deficits. Trump claimed that the tariffs would make the US rich and strong. Before his plan for 25% tariffs on Canada and Mexico, Trump widened his threat to include the EU, which he said had treated the US "very badly". He said that the EU doesn't take our cars, farm products, and farm products, and that the US has a tremendous deficit with the EU. This sharp escalation in his rhetoric on trade means the world's biggest economy is on the verge of imposing tariffs on its most significant trading partners.
-Canada's former finance minister Chrystia Freeland has called for Ottawa to retaliate against US tariffs by adding significant levies on Tesla vehicles to punish Elon Musk, one of Donald Trump's billionaire friends. Freeland, who is running to replace Justin Trudeau as prime minister, emphasized the need for a swift, punitive response if Trump follows through on his threat to impose 25% tariffs on Canada and Mexico starting this weekend. She suggested that Canada must threaten to impose a 100% tariff on all Tesla vehicles and a 100% tariff on US wine, beer, and spirits if unfair tariffs are imposed on Canadians. This comments mark a sharp escalation in the trade dispute with Washington, which escalated after Trump announced tariffs on the US's two biggest trading partners from February 1.
-China is on the brink of a historic breakthrough in artificial general intelligence (AGI), with DeepSeek's algorithmic innovations reminding the industry that its technological edge isn't guaranteed. Eric Schmidt, former Google CEO and chair, says that to achieve AGI first, China needs to continue investing in talent, supporting its open-source ecosystem, and out-innovating competitors. DeepSeek, founded in 2023 as a side project for Liang Wenfeng, has become one of China's leading AI labs, aiming to out-innovate competitors rather than just outspend them. The company's algorithmic innovations highlight the importance of continued investment in talent and open-source ecosystem support.
-Hamas has released three Israeli hostages in exchange for the release of dozens of Palestinian prisoners, marking the fourth exchange of a fragile ceasefire in Gaza. The hostages, Yarden Bibas, Ofer Kalderon, and Keith Siegel, were handed over to Israeli forces in Gaza before being returned to Israel. Israel then began releasing the 183 Palestinian prisoners in return, with a large crowd gathering in Ramallah. The six-week truce is the first part of a complex three-stage deal negotiated by US-led mediators, which has raised hopes of an end to the hostilities in Gaza. The 15-month war has become the deadliest round of fighting in the Israeli-Palestinian conflict, leaving Gaza in ruins, consuming Israeli society, and putting the Middle East on the brink of a full-scale war.
-India's finance minister, Nirmala Sitharaman, has announced tax breaks for middle-class Indians and measures to improve business ease. The move comes amid a economic slowdown following Modi's re-election last year. The measures aim to revive the world's fifth-biggest economy and boost demand among urban consumers. The personal income tax threshold for taxpayers below Rs700,000 has been increased to Rs1.2M ($13,842), and brackets for taxable income rates have been raised. The government plans to introduce a new income tax bill next week. The new rates aim to reduce middle class taxes, boosting household consumption, savings, and investment.
-Belgium has formed a governing coalition led by a rightwing, nationalist party, the N-VA party, after eight months of negotiations. Bart De Wever, a founding member of the party, will be the prime minister. The N-VA party has advocated for greater independence for Flanders and Wallonia, Belgium's Dutch-speaking half, and pushed for them to exist as confederal states. The agreement was announced after De Wever met with King Philippe. Maxime Prévot, leader of Les Engagés, praised the agreement for its commitment to future generations. De Wever, the first N-VA politician to become prime minister, has been mayor of Antwerp since 2013, advocating for strong measures to crack down on cocaine smuggling at Antwerp's port.
-Former Federal Reserve official John Rogers has been arrested in the US for allegedly passing on economic secrets to China. Rogers, a senior adviser in the Fed's international finance division from 2010-21, was accused of accessing sensitive data on China-related tariffs, briefings to officials, and policy debates. He transferred sensitive information to his personal email account and passed it on to Chinese officials disguised as graduate students. Rogers also used encrypted messaging apps to communicate with Chinese officials. The justice department claimed Rogers met his co-conspirators in Chinese hotel rooms where he gave them sensitive trade secret information belonging to the Fed. Rogers was paid about $450,000 as a part-time professor at Fudan University in China. The indictment is the latest in a rising number of cases where officials from the US government, particularly agencies like the CIA and the military, have been charged with providing sensitive or secret information to the Chinese government.
-Progressive movements, such as "wokeness," have faced resistance from those who opposed civil rights in the 1960s and the suppression of sexist and racist jokes in the 1990s. The term "wokeness" emerged from the American Black community to describe awareness of injustices faced by Black people, later gaining currency among the wider left. Critics on the right have weaponized the word, making it pejorative. Today, wokeness refers to attempts to address systemic inequalities faced by disadvantaged groups, including women, people of color, LGBT+ people, and those with disabilities.
-Meta is considering reincorporating outside of Delaware, becoming the latest tech group to consider leaving the state that has long been considered an American corporate haven. The social media group is weighing moving its legal residence to another state, such as Texas, but has not decided on a destination. Meta's chief executive, Mark Zuckerberg, announced the company would move its US-based trust and safety staff from California to Texas as part of a broad 'free speech' overhaul of its approach to content moderation. The company has faced allegations from President Donald Trump and his allies that it censors conservatives and is staffed by liberal-leaning employees. Meta declined to comment on a possible relocation but stated that it had no plan to move its corporate headquarters out of California.
-Panama, once a strong US ally and global business hub, is now facing criticism for its portrayal as a corrupt rogue state in conflict with Iran and China. The Central American nation, known for its baseball passion, is caught in a geopolitical battle with the US. US Secretary of State Marco Rubio has claimed that China could potentially shut down the Panama Canal in any conflict, indicating that they have contingency plans to do so. This situation offers a glimpse into what could happen to other nations that have profited from globalisation and hoped to stay neutral if they fall foul of Washington's anti-China sentiment.
-Goldman Sachs has been approved by Vladimir Putin to sell its Russian subsidiary to an Armenian investment fund, marking the end of the US investment bank's exit from Russia almost three years after it first pledged to leave. The sale, for an undisclosed amount, comes as western banks struggle to secure sign-off for disposals of their Russian businesses since the Russian president launched a full-scale invasion of Ukraine in February 2022. Despite Dutch lender ING's €700M exit, some larger players, like Raiffeisen, have yet to make visible progress in leaving Russia. Russia has tightened restrictions on business sales by companies from "unfriendly" jurisdictions since the invasion, with deals requiring state approval and pricing at no more than 50% of market value.

NEW YORK TIMES
-A medical plane carrying six people crashed near a shopping center in Northeast Philadelphia, leaving no survivors and igniting a large fireball that engulfed homes and vehicles. The plane was transporting a young female patient from Philadelphia to her home in Mexico, with her mother, two pilots, a doctor, and a paramedic on board. All six people on the plane were Mexican, according to Mexico's Foreign Ministry. The burning debris left an apartment building and several vehicles in flames, and several blocks within a half-mile radius were cordoned off. Residents reported thick smoke rising from the crash site and smelling fuel.
-Immigration and Customs Enforcement (ICE) reported arresting 7,400 people in nine days, a significant increase in enforcement. However, details of these arrests are scarce, making it unclear whether the targeted criminals constitute a significant portion of those being captured. ICE and the White House have highlighted a few dozen cases, but no information is available for the remaining thousands of cases.
-Laredo, America's busiest port, is facing 25 percent tariffs on Mexican products by President Trump, as he aims to pressure the Mexican government to curb illegal immigration. Trump is also expected to impose 25% levies on Canada and impose a 10% tax on Chinese imports. He is a longtime proponent of tariffs and a critic of free trade deals, but has other concerns with Mexico, including the economic competition it poses for US workers. He and his supporters believe that imports of cars and steel from Mexico are weakening US manufacturers and that the US-Mexico-Canada Agreement needs to be updated or scrapped.
-Trade integration in North America is about to be disrupted due to tariffs President Trump plans to impose on Canada and Mexico, Washington’s top trading partners. While the tariffs are expected to cause pain on all three nations, they would disproportionately damage Canada and Mexico, which are smaller economies heavily dependent on the US. While Trump initially stopped short of including tariffs in his executive orders, he later revealed that he plans to pursue tariffs in the form of 25% on Mexico and Canada. Howard Lutnick, Trump's nominee to run the Commerce Department, suggested that Canada and Mexico could avoid a first wave of tariffs if they addressed Trump's demands to manage undocumented migrants and curb fentanyl exports.
-The Trump administration plans to scrutinize thousands of FBI agents involved in the Jan. 6 investigations, potentially targeting rank-and-file agents. This comes as over a dozen prosecutors at the U.S. attorney's office in Washington were informed they were being terminated. The move demonstrates Trump's willingness to use federal law enforcement to punish perceived political enemies, despite his cabinet nominees' assurances they would abide by the rule of law. Forcing out both agents and prosecutors would amount to a wide-scale assault on the Justice Department.
-Trump administration officials have released significant amounts of water from two dams in California's Central Valley, allegedly to make a political point. The water has been directed towards low-lying land in the Central Valley and will not reach Southern California. President Trump claimed that the same action would have prevented the Los Angeles wildfires on the other side of mountain ranges. However, experts expressed dismay that the water released now serves little use for farmers, who typically have higher irrigation needs during the spring and summer months.
-Secretary of State Marco Rubio's first overseas trip in Panama is amidst tensions in Central American countries due to President Trump's confrontational approach. The region is grappling with potential economic repercussions, such as mass deportations and a halt in foreign aid. Michael E. Shifter, president of the Inter-American Dialogue research institute, believes that each country is "each country for himself." Despite attempts to secure meetings with Trump's team in the lead-up to his presidency, the region faced rebuffs. With Trump in office and treating Latin America as a critical focus, the stakes are high.
-Hamas released three more hostages and Israel freed a group of Palestinian prisoners as part of an ongoing cease-fire deal. The release took place in a highly performative ceremony in Khan Younis, southern Gaza Strip, and in a separate ceremony in Gaza City. The freed hostages were expected to head to hospitals in Israel, where they would be reunited with their families and receive medical care after 15 months in captivity. Israel watched live broadcasts of the releases from "Hostage Square" in Tel Aviv, cheering as the three were handed over. The Palestinian prisoners' commission reported that Israel was releasing about 180 Palestinians from custody. The exchange was the fourth in a multiphase cease-fire deal that Israel and Hamas agreed to last month. Under the deal, Hamas pledged to free at least 33 of the 97 remaining hostages over the first six weeks in exchange for more than 1,500 Palestinians jailed by Israel.
-Black History Month, established nearly five decades ago by Republican President Gerald R. Ford, is now gaining new significance amid President Trump's attacks on diversity programs. The study of Black history, particularly the dark corners of slavery, segregation, and bigotry, is seen as an act of defiance. Martha Jones, a professor of history and presidential scholar at Johns Hopkins University, believes that Black History Month existed before presidents endorsed it and will continue even if they do not. However, she also laments the suppression of American history and calls for more attention to its contributions.

NEW YORK POST
-A small medevac jet carrying six people, including a pediatric patient and her mother, crashed into a Philadelphia neighborhood on Friday, resulting in multiple casualties and causing a massive explosion that lit up the night sky. The Learjet 55 out of Northeast Philadelphia Airport was headed to Springfield-Branson National Airport in Missouri when it plunged to the ground shortly after taking off. The child had just received "life-saving treatment" and was heading home to Mexico with her mother, a doctor, paramedic, pilot, and copilot. Jet Rescue Air Ambulance, the company that owns the aircraft, confirmed that they cannot confirm any survivors at this time.
-The military helicopter that collided with an American Airlines CRJ700 airliner flight over Washington, DC, was flying nearly twice as high as it should have been, but was not equipped with new technology that would have alerted air traffic control to its dangerously deviated path. The revelations come as questions plague the Pentagon over why the Army allowed its pilots to train in an area home to the most densely trafficked air path convergences in the country and as the Federal Aviation Administration prohibited most helicopter traffic in the area as the deadly midair collision continues to be investigated.
-The Federal Communications Commission (FCC) has requested that CBS-parent Paramount Global turn over footage and transcripts from a "60 Minutes" interview with former Vice President Kamala Harris as part of its review of the company's planned merger with Skydance Media. CBS News stated it is working to comply with the FCC's request for the full, unedited transcript and camera feeds from the interview, which aired on October 7, 2024. The interview led Donald Trump to file a $10B lawsuit, alleging that the Tiffany Network "deceptively" edited the sit-down to make his presidential opponent look better just before the election. CBS had previously said it aired a more succinct version of Harris' answer to a question about Israel on "60 Minutes" than the one shown during a promo on "Face the Nation" the day before, and called the allegations meritless.

>>> Weekly Market Update

Investors experienced a rollercoaster ride this week, with a slew of headlines that included central bank announcements, President Trump directives and key US earnings reports. But it was major a plot twist in the global AI narrative that spooked markets sending the NASDAQ careening lower on Monday and remained ever-present through the week. Over the weekend Chinese AI competitor DeepSeek rose to the top spot on US app stores, supplanting OpenAI. The NASDAQ plunged ~4% before Monday’s opening bell. Nvidia shares were routed, hemorrhaging some $500B in market cap. The entire AI stack including semiconductors, data centers, and electrical power generation experienced jarring pullbacks on worries that a significantly cheaper, efficient, open-sourced AI model could upend the boom in spending seen around US LLMs. A flight to safety was evident in stock sector flows and into US Treasury markets sending the 10-year back down to 4.5%. Some of these fears were allayed later in the week when Meta and Microsoft affirmed aggressive capex projections. Nevertheless, a potential paradigm shift had been introduced. Many argued the DeepSeek development was a good thing because it will allow for faster democratization of AI applications, while others also referred to it as a ‘Sputnik’ moment, with the emergence of a low-cost Chinese artificial intelligence model casting doubt on Western companies' dominance.

Ahead of Wednesday’s FOMC announcement, the Bank of Canada cut rates as expected with Governor Macklem acknowledging potential US tariffs weighed heavily on policy makers’ minds. The FOMC statement marginally spooked markets when the Fed removed a reference to inflation making progress towards the 2% goal. Powell once again soothed sentiment with his press conference comments, namely referring to the statement changes as nothing more than "language clean up" not meant to send any signal. He went on to say that he thought rates were still "meaningfully" above the neutral rate, suggesting there is still room to cut if he sees real progress on inflation or incremental weakening in the jobs market. On Thursday, European rates moved lower after the ECB cut and affirmed market expectations for another cut in March. US and European economic readings, including US PCE data and German CPI readings underscored the messages offered by both central banks in the aftermath of their rate announcements.

As the week drew to a close, focus shifted back to the White House. Nvidia’s CEO met with President Trump on Friday amid speculation he was considering tighter export curbs on Nvidia sales to China in the wake of the DeepSeek advancements. The Administration also denied a report that tariffs might be delayed by a month, confirming 25% tariffs on both Canada and Mexico will take effect on February 1st, as well as an additional 10% levy on China, in response to illicit fentanyl smuggling into the US. Early in Friday’s session the NASDAQ had recouped all the losses from Monday’s DeepSeek swoon but stocks sold off in the afternoon following the latest tariff developments. For the week, the S&P lost 1% and the Nasdaq dropped 1.6%, while the DJIA rose 0.3%.

Many of this week’s corporate news headlines required a thorough look under the hood to get the real story. Apple beat analyst estimates, but shares initially sank because iPhone sales underachieved. Tim Cook and his CFO turned things around during the conference call, providing solid guidance as the services segment continued to flourish. Microsoft beat analyst projections, but sandbagged guidance for next quarter during its conference call, pushing shares lower. Tesla missed its bottom line number for the quarter as the company pulled ever incentive leaver it could to get deliveries close the expected number. Investors forgave the miss, however, as Tesla touted more affordable vehicles and robotaxis ‘coming soon.’ Clouds still hung over Boeing as it reported a big earnings miss, but the silver lining was that its 737 production program is finally getting back on track and could exceed expectations as it ramps. Starbuck’s new CEO managed to beat expectations in his first quarter on the job, managing to avoid a ‘kitchen sink’ strategy, though a closer examination of the numbers showed that transactions were down significantly.


MON 01-27
(DE) GERMANY JAN IFO BUSINESS CLIMATE SURVEY: 85.1 V 84.8E
(US) World Organization for Animal Health: US reported first outbreak of highly pathogenic H5N9 bird flu in poultry
(US) DEC NEW HOME SALES: 698K V 672KE
(US) TREASURY $70B 5-YEAR NOTE AUCTION DRAWS 4.330% V 4.478% PRIOR, BTC 2.40 V 2.40 PRIOR AND 2.36 OVER THE LAST 12
OPENAI.IPO *CEO Altman: DeepSeek R1 is an 'impressive' model; the model is impressive for what it can deliver for the price; planning some new releases; Excited to continue to execute on our research roadmap and believe more compute is more important now than ever before to succeed at our mission
NUE Reports Q4 adj EPS $1.22 v $0.64e, Rev $7.1B v $6.60Be; Market conditions are starting to improve and should gain momentum into 2025
WAL Reports Q4 $1.95 v $1.92e, Net Rev $838.4M v 817Me
ENR.DE Reports prelim Q1 Pretax €463M v €1.9B y/y, Rev €8.94B v €8.5Be
NVDA Tests 200-day moving average on new intra-day low; Falls below key tech level for first time since late 2023
DEEPSEEK.IPO Restricts registration to Chinese mobile phone numbers amid reports of service disruptions due to a sudden rush to download the chatbot – press
WMB FERC reinstates certificate for Transco’s Regional Energy Access Expansion
RYA.IE Reports Q3 Net €149M v €15M y/y, Rev €2.96B v €2.87Be; Expect last 29 of 210 Boeing 737 orders by Mar. 2026; Expect MAX-10 cert. in 2025 (15x delivs. due Spring 2027)

TUES 01-28
(IT) Italy PM Meloni under investigation for embezzlement; Investigation related to case of repatriated Libyan police officer - press
(RU) European Commission proposing tariffs on agricultural exports and fertilizers from Russia and Belarus
(US) JAN RICHMOND FED MANUFACTURING INDEX: -4 V -10E
(US) DEC PRELIMINARY DURABLE GOODS ORDERS: -2.2% V 0.6%E; DURABLES (EX-TRANSPORTATION): 0.3% V 0.3%E
(US) HHS Sec nominee Robert F. Kennedy Jr: Not anti-vaccine of anti-industry; Vaccines have 'critical role' in health care - Senate testimony
(US) Senator Murphy (D-CT): Connecticut Medicaid payment system turned off; Doctors and hospitals can't get paid
(US) TREASURY $44B 7-YEAR NOTE AUCTION RESULTS: DRAWS 4.457% V 4.532% PRIOR, BID-TO-COVER RATIO: 2.76 V 2.76 PRIOR AND 2.60 OVER THE LAST 12
(US) White House Office of Management & Budget (OMB) memo: Mandatory programs like Medicaid and SNAP will be excluded from Fed funding pause
DEEPSEEK.IPO *Microsoft is probing if DeepSeek-linked group obtained data from OpenAI; Microsoft researchers observed 'data exfiltration' last fall - US financial press
AAPL Said to be working with SpaceX and T-Mobile to offer service on iPhones; new iPhone update is expected to support Starlink satellites - US financial press
OPENAI.IPO Statement: China companies are 'constantly' trying to 'distill' US AI models; It is a technique that typically leverages the outputs of larger models to enhance the performance of smaller one, allowing similar results in certain tasks at a lower cost; Engages in countermeasures' to protect its intellectual property
SBUX TTN Summary Earnings Call: Guides Q2 EPS lowest for FY25 due to seasonality, restructuring, and elevated investments; Saw a shift in sales mix toward coffee and espresso based beverages in Q1 - earnings call comments
BXP Reports FFO Q4 $1.79 v $1.79e, Rev $859M v $795Me; Guides FY25 below consensus primarily due to higher net interest expense
LOGI Reports Q3 $1.59 v $1.38e, Rev $1.34B v $1.24Be; Raises FY guidance
SBUX Reports Q1 $0.69 v $0.66e, Rev $9.40B v $9.30Be; US and China SSS beat estimates but transactions decline
QRVO Reports Q3 $1.61 v $1.20e, Rev $916.3M v $901Me; Guides Q4 EPS above and Rev below consensus;expect HPA and CSG to deliver double-digit growth in fiscal 2025 and next fiscal year
MC.FR Reports FY24 Rev €84.68B v €84.3Be
SFD IPO opens for trade at $21.05
V X CEO Yaccarino: Visa to be first partner for XMoney account, which will debut later this year - post on X
BA CEO: To deliver in upper 30s in 737 jets in January and indicators to move beyond 38/month rate looking good; Making significant progress – CNBC
CVX Engine No. 1, Chevron, and GE Vernova to Power U.S. Data Centers
COLD To Build a Cold Storage Facility in Port Saint John, Canada Leveraging Strategic Partnerships with DP World and CPKC
BA Reports* Q4 Core -$5.90 v -$2.27e, Rev $15.2B v $16.4Be (v $15.2B prelim); 737 program resumed production in the quarter and plans to gradually increase production rate
RTX Reports Q4 $1.54 v $1.37e, Rev $21.6B v $20.6Be; Guides FY25 Rev below est
KMB Guides initial FY25 Capex $1.0-1.2B v $721M y/y; As far as pacing during the year, we currently expect net sales, adjusted operating profit, and adjusted earnings per share to be balanced, roughly 50:50, between the first half of the year and the second half of the year. - prepared remarks
GM Reports Q4 $1.92 v $1.75e, Rev $47.7B v $43.8Be; Guides initial FY25 strong
PII Sees more difficult first half versus second half in 2025; Industry retail continues to be challenged; Profit sharing recovery creates headwind; Expect negative mix to continue- earnings presentation
SYF Reports Q4 $1.91 v $1.90e, NII $4.59B v $4.62Be
WCH.DE Reports prelim FY24 Net €265M v €327M y/y, Rev €5.72B v €5.8Be

WEDS 01-29
(US) DOE CRUDE: +3.5M V +2ME; GASOLINE: +3.0M V +1.5ME; DISTILLATE: -5.0M V -2ME
(CA) Bank of Canada announces end of quantitative tightening
(US) Association of American Railroads weekly rail traffic report for week ending Jan 18th 500.2K total units, +25.9% y/y (update)
(US) FOMC LEAVES TARGET RANGE UNCHANGED BETWEEN 4.25-4.50%; AS EXPECTED; INFLATION REMAINS SOMEWHAT ELEVATED (REMOVES REFERENCE TO MAKING PROGRESS TOWARD GOAL), UNEMPLOYMENT RATE HAS STABILIZED AT LOW LEVEL
(CA) BANK OF CANADA (BOC) CUTS INTEREST RATES BY 25BPS TO 3.00%; AS EXPECTED; global tariff war with the US could cut Canadian GDP by 2.5% in 1st year and anther 1.5% in the 2nd percentage points
(US) Atlanta Fed GDPNow: Cuts Q4 GDP forecast from 3.2% to 2.3%
(US) HHS Sec nominee Robert F. Kennedy Jr: Promised Pres Trump that, if confirmed, he'll do everything possible to put Americans' health back on track - Senate testimony
(US) Truflation proxy of US aggregated Inflation Index drops again to 2.61% v 3.10% end-Dec, essentially erasing acceleration happened since end-Nov; Cleveland Fed’s Inflation Nowcast sees Jan US CPI Y/Y (to be out next month) at 2.9% v 2.9% Dec US CPI Y/Y (prior saw Jan CPI Y/Y to decelerate to 2.8%)
(EU) EU Commission "Competitive Compass" Roadmap for Europe to reignite Europe's innovation potential and to carry out series of packages to simplify business reporting; Industry Chief Sejourne calls for EU to 'Simplify, Invest, and Accelerate' economic policy – press
(BR) BRAZIL CENTRAL BANK (BCB) RAISES SELIC TARGET RATE BY 100BPS TO 13.25%; AS EXPECTED
MSFT Guides Q3 Rev $67.7-68.7B (calculated) v $69.7Be; Azure revenue growth 31-32% (cc) v 31-32% q/q; Capex growth rate to slow in 2026 - earnings call comments
MSFT TTN Summary of 17:30ET Earnings Call: Capex to remain at similar levels in Q3 and Q4 FY25; FY26 CapEx growth rate will be lower than FY25; Expects FY25 operating margins to be up slightly year over year; See Q3 FX headwind of 2ppts; Facing near-term execution challenges in non-AI Azure services, particularly in "scale motions" with customers reached through partners; adjustments being made, but impacts expected through H2 FY25.
LSTR Guides Q1 $1.05-1.25 v $1.35e, Rev $1.08-1.18B v $1.21Be - earnings slides
META Reports Q4 $8.02 v $6.68e, Rev $48.4B v $47.0Be; Guides Q1 rev short of consensus
LRCX Announces its Aether, innovative EUV dry photoresist technology, has been selected by undisclosed memory manufacturer as production tool of record for the most advanced DRAM processes
MSFT Expect capital expenditures to increase in coming years to support growth in our cloud offerings and our investments in AI infrastructure and training - 10Q
LRCX Reports Q2 $0.91 v $0.87e, Rev $4.38B v $4.31Be; Guides Q3 very strong
TSLA Reports Q4 $0.73 v $0.75e, Rev $25.7B v $27.5Be; More affordable models on track for production start in H1 2025; Cybercab scheduled volume production in 2026; Working on launching FSD supervised in China and Europe in 2025
WDC Reports Q2 $1.77 v $1.75e, Rev $4.29B v $4.25Be
CMCSA Introduces US's First Ultra-Low Lag Xfinity Internet Experience With Meta, NVIDIA, and Valve
TMUS Reports Q4 $2.57 v $2.17e, Rev $21.9B v $21.2Be
LII Reports Q4 $5.60 v $4.23e, Rev $1.35B v $1.24Be; FY25 guidance underwhelms
EAT Reports Q2 $2.80 v $1.80e, Rev $1.36B v $1.24Be; Raises outlook sharply; Notes new guests trying Chili's and return guests coming more frequently despite a more competitive promotional environment
AIT Reports Q2 $2.24 v $2.32 y/y, Rev $1.07B v $1.08B y/y; Raises Quarterly dividend 24.3% to $0.46 from $0.37 (indicated yield 0.73%)
AKZA.NL TTN Summary of 03:00ET Earnings Call: Not planning for a significant market rebound in 2025; Expects low single-digit growth in China in 2025 in Decorative Paints as they believe the market has bottomed out after a significant decline in Q4 2024.
AKZA.NL Reports Q4 €0.56 v €0.56e, Rev €2.62B v €2.52Be
ASML.NL Reports Q4 Net €2.69B v €2.64Be, Rev €9.26B v €9.02Be; Guides Q1 strong; Notes a shift in the market dynamics that is not benefiting all of its customers equally; Raises FY dividend 4.9% to €6.40/shr

THRS 01-30
(US) Pres Trump announces Canadian and Mexican tariffs will be 25% because of Fentanyl
(EU) ECB CUTS KEY RATES BY 25BPS; AS EXPECTED
(US) Q4 ADVANCE GDP ANNUALIZED Q/Q: 2.3% V 2.6%E; PERSONAL CONSUMPTION: 4.2% V 3.2%E
(US) DEC PENDING HOME SALES M/M: -5.5% V 0.1%E; Y/Y: -2.9% V 4.2%E
(EU) ECB chief Lagarde: Disinflation process remains well on track; wage growth is moderating - Prepared Remarks
(ES) SPAIN JAN PRELIMINARY CPI M/M: +0.2% V -0.1%E; Y/Y: 3.0% V 2.9%E
(ZA) SOUTH AFRICA CENTRAL BANK (SARB) CUTS INTEREST RATES BY 25BPS TO 7.50%; AS EXPECTED
(DE) GERMANY Q4 PRELIMINARY GDP Q/Q: -0.2% V -0.1%E; Y/Y: -0.2% V 0.0%E
(EU) ECB chief Lagarde: Decision to cut by 25bps was unanimous; no discussion on terminal rate; Believes there is currently no stagflation - Q&A
(EU) EURO ZONE Q4 ADVANCE GDP Q/Q: 0.0% V 0.1%E; Y/Y: 0.9% V 1.0%E
(UK) Reportedly halt at major 1,000 MW IFA-2 subsea electrical interconnector cable linking UK to France extended to 3PM Jan 30th – press
005930.KR Reports Q4 final (KRW) Net 7.58T v 7.05Te , Op 6.49T v 6.50T prelim, Rev 75.8T v 75.0T prelim; affirms 2025 memory Capex to be inline with 2024
(JP) JAPAN JAN TOKYO CPI Y/Y: 3.4% V 3.0%E; CPI (EX-FRESH FOOD) Y/Y: 2.5% V 2.5%E
PPG Reports Q4 $1.61 v $1.65e, Rev $3.73B v $4.01Be; Guides lower than estimates; EPS grows weighted toward H2
VRTX FDA approves Journavx (suzetrigine) new type of nonopiod painkiller, first in decades
AAPL Guides Q2 Rev 'up low to mid single digits' y/y from $90.8B year ago (v $95.0Be), including 2.5ppt FX headwind; Services 'up low double digits'; Gross margin 46.5-47.5%; $15.1-15.3B opex - earnings call
AAPL Reports Q1 $2.40 v $2.36e, Rev $124.3B v $124.0Be; iPhone rev misses estimates
V Reports Q1 $2.75 v $2.66e, Rev $9.51B v $9.34Be
INTC Reports Q4 $0.13 v $0.12e, Rev $14.3B v $13.8Be; Guides below consensus
JNPR DOJ sues to block HPE's $14B, $40.00/shr all cash deal
WMT Canada unit announces $6.5B investment in its store and supply chain footprint, announcing dozens of new stores to be built across Canada over the next five years
APO Announces Partnership with Securitize and Launch Tokenized Access to Credit Fund on Aptos, Avalanche, Ethereum, Ink, Polygon, and Solana Networks
MA Reports Q4 $3.82 v $3.68e, Rev $7.49B v $7.38Be; Jan MTD Switched Transactions +11% y/y, Cross-border Volumes +18% y/y
MAN Reports Q4 $1.02 v $0.99e, Rev $4.40B v $4.42Be; Notes relatively stable activity at lower levels across North America and Europe and good demand elsewhere
SHW Reports Q4 $2.09 v $2.07e, Rev $5.30B v $5.32Be; "We expect demand softness to persist in several end markets well into the second half of the year, if not into 2026"
NOC Reports Q4 $6.39 v $6.27e, Rev $10.7B v $11.0Be
CAH Reports Q2 $1.93 v $1.75e, Rev $55.3B v $55.1Be
CAT Reports Q4 dealer statistics: Total machines -2% v -6% prior (4th consecutive drop)
CAT Guides Q1 Rev lower y/y [implies <$15.8B v $15.4Be], adj Op margin 'lower' y/y; Guides initial FY25 Rev slightly lower y/y [implied <$64.8B v $65.5Be]; Anticipate another year of services growth - earnings slides
DOW Guides Q1 Rev $10.3B v $10.9Be; Expect soft macroeconomic conditions to persist near-term across most end-markets and regions; Asset Footprint Update to be provided by mid-2025 - earning slides
OPENAI.IPO TTN Reminder: Axios report from Jan 20th stated that likely OpenAI may announce a next-level breakthrough that unleashes Ph.D.-level super-agents to do complex human tasks and CEO Altman scheduled a closed-door briefing for U.S. government officials today, on Jan 30th
CI Reports Q4 $6.64 v $7.83e, Rev $65.7B v $63.2Be; Cuts outlook, taking corrective actions to address cost pressures; Approves increase of $6.0B in incremental share repurchase authorization; Raises Quarterly dividend 7.9% to $1.51 from $1.40 (indicated yield 1.99%) payable on March 20, 2025 to stockholders of record at the close of business on March 05, 2025 (ex-date March 04)
UPS Reports Q4 $2.75 v $2.52e, Rev $25.3B v $25.3Be; Guides FY25 very weak; Reaches agreement in principle with its largest customer to lower its volume by more than 50% by H2 2026; Reconfiguring its U.S. network, and launching multi-year “efficiency reimagined” initiatives
NVDA Reportedly Chinese algorithm boosts Nvidia GPU performance 800-fold in science computing over traditional methods; The breakthrough by Chinese researchers could help solve complex problems in industries ranging from aerospace to bridge design – SCMP
EMR.UK Reports FY24 Trading Update: Net fee income down 6% CC LFL; Adj Pretax expected to at least meet current market expectations despite ongoing difficult trading conditions; Permanent placement continues to be challenging
BT.A.UK Reports Q3 Adj EBITDA £2.10B v £2.06e, Adj Rev £5.18B v £5.34B y/y
HMB.SE Reports Q4 (SEK) Net 3.08B v 1.58B y/y, Op 4.62B v 4.23Be, Rev 62.2B v 63.5Be; Dec 1st-Jan 28th Rev +4% y/y
SHEL.UK Reports Q4 $0.60 v $0.68e, Rev $66.3B v $78.7B y/y; Announces $3.5B share buyback and raises dividend
HLAG.DE Reports prelim FY24 EBIT $2.8B v $2.7Be, EBITDA $5.0B v $4.83B y/y, Rev $19.1B v $17.9B y/y
UHR.CH Reports FY24 (CHF) Net 219M v 890M y/y, Op 304M v 558Me, Rev 6.74B v 6.99Be; Notes expectation is that the habits and behaviour of Chinese consumers will continue to change
ROG.CH Reports Q4 (CHF) Rev 15.5B v 15.5Be
NOKIA.FI Reports Q4 €0.18 v €0.13e, Rev €5.98B v €5.74Be
ABBN.CH Reports Q4 $0.54 v $0.50 y/y, Oper EBITA $1.43B v $1.33B y/y, Rev $8.59B v $7.39Be

FRI 1/31
(US) White House Press Sec Leavitt: Feb 1st deadline for tariffs still holds; Pres Trump to implement 25% tariffs on Canada and Mexico and 10% on China; Report on tariff deadline moving to March 1st is false
(US) Trump: Not looking for concessions; There is nothing that China, Mexico and Canada can do stop these tariffs; We may further increase tariffs; Will put tariffs on oil and gas by Feb 18th; Canada oil tariff will start at 10% (rather than 25%)
(US) DEC PERSONAL INCOME: 0.4% V 0.4%E; PERSONAL SPENDING: 0.7% V 0.5%E
(US) Q4 EMPLOYMENT COST INDEX (ECI): 0.9% V 0.9%E
(US) Atlanta Fed GDPNow: Initial Q1 GDP estimate 2.9%
(DE) GERMANY JAN PRELIMINARY CPI M/M: -0.2% V 0.1%E; Y/Y: 2.3% V 2.6%E
(DE) GERMANY JAN UNEMPLOYMENT CHANGE: +11.0K V +15.0KE; UNEMPLOYMENT CLAIMS RATE: 6.2% V 6.1%E
(FR) FRANCE JAN PRELIMINARY CPI M/M: -0.1% V 0.0%E; Y/Y: 1.4% V 1.5%E
(EU) ECB Dec Consumer Expectation Survey: 1-year ahead CPI Expectations: 2.8% v 2.7%e
(FR) France Socialist Party's Vallaud: French lawmakers panel has reached agreement regarding 2025 budget [**Note: The text will now go to the lower house of French parliament]
E2open Ocean Shipping Index: Geopolitical Tensions, Labor Shortages and Port Congestion Driving Significant Increases in Global Transit Times
(US) Fed's Bowman (voter, hawk): Inflation still elevated with upside risk; Want to see more progress before adjusting rates; Important to get clarity on Trump's actual policies
V Recent Jan 1-28st U.S. Payments Volume Growth was around +8% y/y v +7% y/y during Dec - earnings supplement
NOVN.CH Reports Q4 Core EPS $1.98 v $1.81e, Rev $13.2B v $13.0Be
CVX Reports Q4 $2.06 adj v $2.19e, Rev $48.3B v $47.0Be; Raises dividend 5% to $1.71/shr; Plans to increase oil production by as much as 10% in the US Permian Basin in 2025
CVX Guides initial FY25 oil production 1Mbblepd; Plan to moderate growth and capex to drive predictable and durable FCF generation; Intend to maintain a buyback range of $10-20B/yr depending on market conditions; Targeting $2-3B in structural cost reductions
XOM Reports Q4 $1.67 adj v $1.56e, Rev $83.4B v $87.1Be
XOM Guides initial FY25 Cash Capex $27-29B v $26B y/y; In 2025, we’re starting up 10 key projects with 2026 >$3B earnings potential; Sees annual share buybacks $20B; First quarter is a turnaround season for Product Solutions, so we’re executing higher scheduled maintenance versus last quarter - earnings slides
CHD Reports Q4 $0.77 v $0.77e, Rev $1.58B v $1.56Be; Declared 4% increase in quarterly dividend from $0.28375 to $0.295/shr
GWW Reports Q4 $9.71 v $9.75e, Rev $4.23B v $4.23Be; FY25 guidance below esitmates
MTSR IPO opens for trade at $25.50
OPENAI.IPO Reportedly CEO Altman on Jan 30th presented new agentic technology coming in Q1 2025 that can independently complete tasks in the real world; Altman called it "a single-digit percent of the economic value we will pass to the U.S. economy" - Axios