Rise and shine everyone.

US Equity Markets hit another all-time high yesterday. Even the Russell 2000 saw a positive close.

Let’s begin with President Trump’s speech at the WEF yesterday, which he delivered virtually. It’s that time again when we watch everything that the president says because it definitely moves the market. He talked about decreasing energy costs and asking OPEC to reduce the price of oil. We can see that weighing on oil and NatGas prices, despite the demand flowing through due to colder weather.

The other notable issue was taxes. President Trump talked extensively about lowering taxes.

“My message to every business in the world is very simple: come make your product in America and we will give you among the lowest taxes of any nation on Earth… But if you don’t make your product in America, which is your prerogative, then very simply you will have to pay a tariff.” - President Trump at WEF

So the threat of tariffs looms, but it would seem that his stance against China has softened somewhat. He talked about rectifying the large trade deficit with China, in order to level the playing field so to speak. This is taking some of the pressure off of Chinese equities this morning.

Speaking of Asia, the Bank of Japan started the year with their first rate hike bringing the rate to around 0.5% (that’s a ~25bps hike). They also had a more hawkish tone and increased inflation projections for 2025 in the Outlook to 2.4% from 1.9% at the Headline level. The Nikkei initially extended its rise post BoJ but later moved below 40k, and the Yen obviously strengthened.

We got a host of Preliminary PMI data from Europe this morning. Manufacturing PMIs still largely remain in contractionary territory but are improving. (see the Calendar below). The Euro strengthened on some of the upbeat numbers.

This morning, the US Dollar is seeing some weakness alongside lower US Treasury yields. Some of this is because of comments from Trump taking a softer stance on tariffs but, also because of the stronger Euro and Yen, as we’ve just talked about.

Chart of the Day - Data Center Power Consumption

President Trump talked about lowering energy costs - and one reason is to support data centers, crypto, and AI initiatives. GS shows that data centers may increase energy consumption by 160% by 2030, so it stands to reason that the availability of energy at lower costs is crucial to success.

What We’re Watching

• US PMI numbers at 9:45 am

• Existing Home Sales at 10am

• A quiet weekend!

Calendars

(news taken from Reuters, FT, Bloomberg; Calendar from Trading Economics)