A daily market update from FS Insight — what you need to know ahead of opening bell.
“If you’re a true warrior, competition doesn’t scare you. It makes you better.” — Andrew Whitworth
Overnight
The Fed meets for the first time since Trump’s term started. Here’s what to expect CNBC
Trump offers millions of federal workers eight months of pay to resign BBC
Karoline Leavitt, the youngest White House press secretary, makes her debut in the briefing room AP
The ‘great rotation’ is finally showing some legs. It’s unclear if investors will follow CNBC
‘Doomsday Clock’ moves closer to midnight amid threats of climate change, nuclear war, pandemics, AI AP
Super Bowl ads beckon up to $8 million apiece for Fox CNBC
These Investors Doubled Down When the AI Trade Faltered WSJ
World’s largest sovereign wealth fund reports record $222 billion annual profit on tech rally CNBC
Frontier Airlines Is Bidding for Spirit—Again WSJ
The Baby Gap: Why governments can’t pay their way to higher birth rates FT
American Kids Are Getting Even Worse at Reading WSJ
Police say at least 30 people have died in a stampede at the massive Maha Kumbh festival in India AP
Boom Supersonic jet breaks sound barrier to open way for new ‘Concorde’ FT
As a Rising Political Star, Gabbard Paid to Mask Her Sect’s Ties to Alleged Scheme WSJ
Chart of the Day
| Overnight |
| S&P Futures +5
point(s) (+0.1%
) Overnight range: -10 to +14 point(s) |
| APAC |
| Nikkei +1.02%
Topix +0.68% China SHCOMP flat Hang Seng flat Korea flat Singapore flat Australia +0.57% India +0.9% Taiwan flat |
| Europe |
| Stoxx 50 +0.75%
Stoxx 600 +0.6% FTSE 100 +0.14% DAX +0.6% CAC 40 -0.2% Italy +0.3% IBEX +0.57% |
| FX |
| Dollar Index (DXY) +0.22%
to 108.1 EUR/USD -0.27% to 1.0402 GBP/USD -0.23% to 1.2415 USD/JPY -0.11% to 155.37 USD/CNY flat at 7.2446 USD/CNH -0.05% to 7.2719 USD/CHF +0.2% to 0.906 USD/CAD +0.19% to 1.4427 AUD/USD -0.42% to 0.6227 |
| Crypto |
| BTC +2.22%
to 102511.15 ETH +2.74% to 3135.45 XRP +2.46% to 3.0889 Cardano +3.17% to 0.9334 Solana +2.7% to 231.7 Avalanche +3.62% to 33.21 Dogecoin +3.82% to 0.3286 Chainlink +3.04% to 23.27 |
| Commodities and Others |
| VIX +0.67%
to 16.52 WTI Crude -0.94% to 73.08 Brent Crude -0.97% to 76.74 Nat Gas -2.62% to 3.38 RBOB Gas -1.07% to 2.031 Heating Oil -0.86% to 2.429 Gold -0.22% to 2757.39 Silver +0.04% to 30.43 Copper -0.14% to 4.24 |
| US Treasuries |
| 1M -1.1bps
to 4.3172% 3M -1.1bps to 4.273% 6M -1.6bps to 4.2634% 12M -0.8bps to 4.1157% 2Y -0.8bps to 4.1867% 5Y -0.9bps to 4.3202% 7Y -0.8bps to 4.4169% 10Y -1.0bps to 4.5223% 20Y -1.3bps to 4.8244% 30Y -1.1bps to 4.7642% |
| UST Term Structure |
| 2Y-3
M Spread narrowed 2.6bps to -12.8
bps 10Y-2 Y Spread narrowed 0.2bps to 33.1 bps 30Y-10 Y Spread narrowed 0.1bps to 24.0 bps |
| Yesterday's Recap |
| SPX +0.92%
SPX Eq Wt -0.49% NASDAQ 100 +1.59% NASDAQ Comp +2.03% Russell Midcap +0.18% R2k +0.21% R1k Value -0.59% R1k Growth +2.22% R2k Value -0.35% R2k Growth +0.75% FANG+ +3.45% Semis +1.97% Software +2.8% Biotech +0.62% Regional Banks -0.5% SPX GICS1 Sorted: Tech +3.6% Comm Srvcs +1.27% SPX +0.92% Cons Disc +0.34% Fin -0.2% Materials -0.35% Indu -0.64% Healthcare -0.66% Energy -1.04% REITs -1.24% Utes -1.39% Cons Staples -1.5% |
| USD HY OaS |
| All Sectors -0.3bp
to 303bp All Sectors ex-Energy -0.3bp to 287bp Cons Disc -0.8bp to 244bp Indu -0.2bp to 227bp Tech +0.3bp to 311bp Comm Srvcs -0.3bp to 490bp Materials +2.9bp to 281bp Energy +0.4bp to 283bp Fin Snr -1.6bp to 261bp Fin Sub -0.2bp to 192bp Cons Staples -6.5bp to 262bp Healthcare +0.7bp to 375bp Utes +2.9bp to 225bp * |
| Date | Time | Description | Estimate | Last |
|---|---|---|---|---|
| 1/29 | 2PM | Jan 29 FOMC Decision | 4.5 | 4.5 |
| 1/30 | 8:30AM | 4Q A GDP QoQ | 2.7 | 3.1 |
| 1/31 | 8:30AM | Dec PCE m/m | 0.3 | 0.1 |
| 1/31 | 8:30AM | Dec Core PCE m/m | 0.2 | 0.11 |
| 1/31 | 8:30AM | Dec PCE y/y | 2.5 | 2.4 |
| 1/31 | 8:30AM | Dec Core PCE y/y | 2.8 | 2.81774 |
| 1/31 | 8:30AM | 4Q ECI QoQ | 0.9 | 0.8 |
| 2/3 | 9:45AM | Jan F S&P Manu PMI | n/a | 50.1 |
| 2/3 | 10AM | Jan ISM Manu PMI | 48.9 | 49.2 |
| 2/4 | 10AM | Dec JOLTS | n/a | 8098.0 |
| 2/4 | 10AM | Dec F Durable Gds Orders | n/a | -2.2 |
MORNING INSIGHT
Good morning!
Wednesday is an important day to reinforce the “buy the dip” with four of the Magnificent Seven set to report and January FOMC meeting, which we expect to be marginally dovish.
Click HERE for more.
TECHNICAL
- SPX has bounced, but negative breadth might postpone an immediate breakout.
- CTA exposure lifting on SPX gains might provide a tailwind over the next month.
- Low percentage of SPX names outperforming isn’t always bearish, but points to Technology’s outsized influence.
Click HERE for more.
CRYPTO
We break down the recent price action, share our views on the Federal Reserve, and discuss why the Lunar New Year signals higher prices ahead.
Click HERE for more.
First News
Not that long ago, Silicon Valley moguls were touting that the risk of underinvesting in artificial intelligence is dramatically greater than overinvesting.
The DeepSeek-led market rout this week has upended that dominant narrative.
For the past two years, investors have been sounding the alarm (without much success until now) over the following two factors about tech behemoths even as they led the market to notch dozens of records: (1) Skyhigh valuations (2) Exorbitant sums of money used for capital expenditures.
It seems like investors made their peace somewhat with #1. In the case of #2, it was a hard pill to swallow, but still many investors found arguments to justify it.
Arguably, DeepSeek has now provided added credility to those who have been warning that this widely held belief bordered on being downright silly.
The Magnificent Seven companies reported about $66 billion in capital expenditure in the latest quarter. And there are signs that they have plans to shore up that spending even more. Recently, Meta said it plans to spend more than $60 billion on AI. Some tech giants are teaming up to build $500 billion of AI infrastructure in the U.S.
In comparison, the Chinese artificial intelligence startup claimed that it used a significantly lower investment, allegedly less than $6 million, for its latest large language AI model.
Investors understandably panicked. On Monday, Nvidia, Tesla, Microsoft, and Google erased $651 billion in market cap from the broader market. That marked the biggest one-day loss for the group since August 2024, when a softer-than-expected jobs report sparked recession fears. The biggest offender was Nvidia, whose shares lost 17% to start the week but recovered 8.8% on Tuesday.
Earnings from Meta Platforms, Microsoft, and Tesla after market close today might shed light on their capex plans and how they’re gearing up for a fight with DeepSeek.
While it’s still too early to tell whether the U.S. can maintain its semiconductor leadership on the global stage, there’s an argument to be made that a sell-off of this tenacity is actually healthy. It goes without saying, but Big Tech’s strategy of spending billions of dollars like there’s no tomorrow in hopes that one day it will figure out a way to monetize the nascent AI technology cannot simply continue indefinitely. Maybe that’s why Apple, considered to be a laggard in the AI revolution, gained 3.2% on Monday.
For now, the “buy the dip” belief in market participants was strong, boosting major stock indexes Tuesday to rebound some from their recent lows.
It’s possible new competition pushes tech behemoths to get creative like the Chinese and figure out ways to lower their own capex.
Dan Romanoff, a senior equity research analyst at Morningstar, makes that same argument. “We expect these large U.S. tech companies to replicate some of the AI techniques DeepSeek leveraged to drive down the cost of R1 to reduce the costs of their model training and inference, potentially lowering their medium- and long-term capital expenditures,” Romanoff wrote.
If there is one thing about the U.S., it’s that it hates to lose.
