MARKET REPORT

Review:
– Surprise decline in producer prices reinforced bets on Federal Reserve rate cuts this year.
– Traders are pricing in an 80% chance of a Fed reduction in March — up from a little over 50% a week ago

– Expectations for 2024 rate-cuts exploded to new highs at 170bps (now fully pricing in 6 cuts and a 65% odds of a 7th cut)
– Barclays shift first Fed rate cut forecast to March
– Worth nothing Producer figures have fallen faster than consumer for a while now

– Etherium RETRACED whilst BTC DUMPED after BTC ETF listings

– ND up 3% this week. Other Indexes flat.
– Microsoft overtook Apple as worlds most valuable company.
– Gold up early hard on weak PPI, pares gains, closes +1.5%
– ECB’s Lane says rate cuts are not a near-term topic
– Hawkish BoJ sources
– The US Federal Aviation Administration said it will increase its oversight of Boeing Co.’s production and manufacturing operations, a day after it opened a formal investigation into the plane maker over last week’s accident on a 737 Max 9 jet

EARNINGS:
– JPMorgan Chase & Co. -0.5%, closed out the most profitable year in US banking history with its seventh consecutive quarter of record net interest income and a surprise forecast that the windfall may continue this year
Wells Fargo & Co.’s -3.5%, fourth-quarter costs came in higher than expected, swollen by severance charges and the bank’s contribution to replenish the Federal Deposit Insurance Corp.’s main fund after bank failures last year
– BlackRock Inc. +1% clients jumped into its long-term funds in the fourth quarter, adding $63 billion to ETFs and other products
– Bank of America Corp.’s -1% earnings fell short of expectations as the bank’s numerous charges in the fourth quarter cut into profit and the firm’s fixed-income traders posted a surprise drop in revenue
– Citigroup Inc. +1% said it will eliminate 20,000 roles in a move that will save it as much as $2.5 billion as part of Chief Executive Officer Jane Fraser’s quest to boost the Wall Street giant’s lagging returns

DOLLAR  flat:
– AUD flat: 66.88                     UNCH (66.80 – 67.30) close lows
– EUR up small: 91.31             +0.25% (91.40 – 91.00) close mid top rge
– GPB down smalls: 127.46   -0.1% (127.25 – 127.85) close mid rge
– JPY down: 144.90                 -0.29% (145.50 – 144.36) close mid rge

GOLD up $2052                     +1.65% (2037 – 2067) close mid top rge
DOW/ES/ND:                          37760 -0.45%, 4811 UNCH, 16955 UNCH%
CRYPTO: BTC/ETH:                -2950/-6.35% 43470, -82/-3% 2530
CRUDE: $72.78                       +$0.76/+1%

Upcoming:

Monday: MARTIN LUTHER KING DAY HOLIDAY MARKETS SHUT

Next week:

PBoC MLF
ECB Minutes
UK jobs & CPI

Earnings:
TUES: PNC, GS, MS
WED: USB, SCHW, PLD
THURS: TFC, FAST, PPG

MAJORS:

DX:
PPI saw a knee-jerk reaction in that the Dollar sold off from highs of 102.31 to hit lows of 101.82 before retracing to circa 102.19, despite yields continuing to fall.
The reaction is the opposite of what we saw on Thursday to CPI, but in a similar fashion, it also saw a knee jerk move higher before completely reversed in the US afternoon.
Both CPI and PPI were, ignored. But this does give the Feds impetus to pick and choose data.
We saw another close above 102 the handle. Though chatter among traders is this will give impetus for Mar plus cuts and market odds re-affirm (for now), but the dollar is hanging in.

Martin Luthar King day Monday.

No call.

1-

AUD:
66.80 to 67.30 over PPI then retraced to finish UNCH.
I had a high Yesterday at 67.30.

“Sell a bounce, go with downward.”
Yest Mkt report.

Just resting on laurels.

6=

EUR:

“…. we could wash around the 91 handle a little. Id be looking at a turn sub high 90’s to return to 91.45

….

90.84 – 91.44”
Yest Mkt Report.
We did wash around 91.10 for hitting 91.41 pre PPI.
Post we sold back to the figure, which held, and closed back up 91.30
91 looking at a good base.

Resting on laurels.

POUND:
UK GDP was hotter than expected with strong growth in services despite a fall in construction, albeit it sparked little reaction to UK assets with the data unlikely to shift the dial for the BoE.

No call

12-

YEN:

Yen saw gains vs the buck with the narrowing Fed/BoJ policy rate differential supporting the move. USD/JPY fell from peaks of 145.56 to lows of 144.37 with USD/JPY looking set to end the week just under 145.00. Earlier on, Reuters reported that BoJ policymakers expect the economy to make progress towards meeting the threshold of negative rates, but they are divided on the timing. The Yen had little reaction to the reports with the US PPI the biggest driver of the pair.

Wouldn’t surprise to see 145 again.

“144.31 – 145.88”
Yest Mkt report. 6 pips off low, 22 off high.

Resting on laurels.

GOLD & SILVER:

Surged post a market now pricing in a Mar cut at 80%. Mkt ignores CPI but listens to PPI (though Dollar pricing ignoring both.
Gold did come off but is betting big on Fed Rate cuts this year.
We did hit 2066 but closed 2052

Silver held at $23, again, forming a base there. It did hit $23.70 but drifted off to close $23.36.
I like a buy around $23 back to $23.90

No call Gold, buy dip in Silver.

EQUITIES:
US:
– SPX +0.08% 4,784
– NDX +0.07% 16,832
– DJI -0.31% 37,593
– RUT -0.23% 1,951

EUR:
– DAX +0.95% 16,704.56
– FTSE 100 +0.64% 7,624.93
– CAC 40 +1.05% 7,465.14
– Euro Stoxx 50 +0.84% 4,479.65

SECTORS (W to S): Consumer Discretionary -1.05%, Health -0.29%, Financials -0.23%, Industrials -0.04%, Materials +0.14%, Consumer Staples +0.35%, Technology +0.35%, Utilities +0.59%, Communication Services +0.62%, Real Estate +0.78%, Energy +1.26%

Delta Airlines  -9%: Weak Q1 revenue guidance.
Tesla  -4%: Cut prices by up to 6% on its Model 3 and Model Y EVs in China. Elsewhere, production at the gigafactory Berlin is to stop most output for two weeks due to Red Sea disruption.
– Boeing  -2%: FAA is increasing oversight of Boeing production and manufacturing, with a 3rd party overseeing inspections and quality systems.

US House China Committee has asked the CEO’s of INTC, NVDA, and MU to testify, via FT citing sources.


OIL
:
WTI (G4) SETTLES USD 0.66 HIGHER AT 72.68/BBL; BRENT (H4) SETTLES USD 0.88 HIGHER AT 78.29/BBL

Oil prices were firmer Friday after Western powers struck back against Yemen’s Houthis, albeit prices faded significantly through the session. WTI and Brent saw some upside into APAC and through into the European morning on Friday, with front-month contracts peaking at USD 75.25/bbl and 80.75/bbl, respectively. That followed the US and UK conducting a joint strike against Houthi targets in Yemen, to which Yemen’s Houthis assured a response, while the US has said it would not hesitate to take further action too. However, contracts pared gains significantly through the rest of the session with WTI and Brent bottoming at 72.36/bbl and 77.97/bbl, respectively, ahead of settlement. There was no catalyst for the pullback, with traders instead pointing to the Houthis story as a rip to fade rather than an opportunity to bake in a more permanent geopolitical risk premium. There has been much commentary that despite the transit issues in the Red Sea, the overall impact on the physical oil market has been minimal, although we did hear from some oil-focused shipping names on Friday about diverting routes. Meanwhile, some analysts suggest that the response from the US and UK could even hasten the normalisation of shipping. Elsewhere, in the US, the Baker Hughes weekly rig count saw oil rigs down two to 499 and nat gas down one to 117.

Oil report courtesy of zerohedge.com

BOND YIELDS:

US 1-MO 5.393 +0.01 US 6-MO 5.193 -0.045 US 1-YR 4.683 -0.094 US 5-YR 3.832 -0.059 US 10-YR 3.939 -0.036 US 30-YR 4.175-0.005

CRYPTO
“Extended periods of vol.”
The sears of all sears!
The prognosticator of prognosticators!

BTC DUMPED on hugely laclustre ETF performance trading down from 46k to 43.25k

iShares BTC ETF

Eth also retraced as the ETF shine faded from 2650, touch 2700 now back to 2600

Could head back to 40.5/1K now with 45.5 a good cap.
ETH back to 2500

Best of luck out there. Let the market come to you

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