A daily market update from FS Insight — what you need to know ahead of opening bell.
“Believe you can and you’re halfway there.” — Theodore Roosevelt
Over the weekend
Trump’s Move to Put Tariff Hikes Ahead of Tax Cuts Has Spooked Almost Everyone WSJ
Trump warns the EU and UK are in line for tariffs — but a U.S. deal with Britain might be in the cards CNBC
USAID staffers told to stay out of Washington headquarters after Musk said Trump agreed to close it AP
US demands Panama reduce Chinese influence over canal or face action FT
See How Russia Is Winning the Race to Dominate the Arctic WSJ
Geopolitical tensions fuel ‘pretty crazy’ demand for Greenland’s miners FT
Emergency crews deployed on Santorini as an earthquake swarm worries Greek experts AP
Another Thing Musk Hates About Germany: Absentee Workers at His Tesla Plant WSJ
For China, Trump’s Moves Bring Pain, but Also Potential Gains NYT
Eurozone inflation rises to 2.5% in January FT
L.A. wildfire victims face financial anxiety amid recovery: ‘The uncertainty is very unsettling’ CNBC
Beyoncé wins top Grammys prize for first time with ‘Cowboy Carter’ CNBC
Chart of the Day
| Overnight |
| S&P Futures -87
point(s) (-1.4%
) Overnight range: -132 to -78 point(s) |
| APAC |
| Nikkei -2.66%
Topix -2.45% China SHCOMP flat Hang Seng -0.04% Korea -2.52% Singapore -0.76% Australia -1.79% India -0.52% Taiwan -3.53% |
| Europe |
| Stoxx 50 -1.79%
Stoxx 600 -1.38% FTSE 100 -1.26% DAX -1.88% CAC 40 -1.77% Italy -1.4% IBEX -1.23% |
| FX |
| Dollar Index (DXY) +1.03%
to 109.48 EUR/USD -1.16% to 1.0242 GBP/USD -0.67% to 1.2312 USD/JPY -0.22% to 154.85 USD/CNY flat at 7.2446 USD/CNH +0.33% to 7.3463 USD/CHF +0.68% to 0.9171 USD/CAD +0.89% to 1.467 AUD/USD -1.16% to 0.6146 |
| Crypto |
| BTC -1.6%
to 95442.0 ETH -10.6% to 2598.73 XRP -7.97% to 2.3996 Cardano -10.6% to 0.7085 Solana -1.08% to 199.89 Avalanche -7.9% to 25.4 Dogecoin -3.28% to 0.2592 Chainlink -5.88% to 19.09 |
| Commodities and Others |
| VIX +20.57%
to 19.81 WTI Crude +1.96% to 73.95 Brent Crude -0.33% to 76.51 Nat Gas +7.65% to 3.28 RBOB Gas +4.3% to 2.124 Heating Oil -0.35% to 2.476 Gold +0.01% to 2798.56 Silver -0.27% to 31.22 Copper -1.06% to 4.234 |
| US Treasuries |
| 1M +2.8bps
to 4.3106% 3M -0.6bps to 4.2782% 6M -0.8bps to 4.29% 12M +2.9bps to 4.1786% 2Y +7.5bps to 4.2717% 5Y +3.2bps to 4.359% 7Y +1.3bps to 4.4537% 10Y +0.2bps to 4.5408% 20Y -1.3bps to 4.8295% 30Y -1.7bps to 4.7693% |
| UST Term Structure |
| 2Y-3
M Spread widened 7.0bps to -2.7
bps 10Y-2 Y Spread narrowed 7.0bps to 26.7 bps 30Y-10 Y Spread narrowed 1.7bps to 22.6 bps |
| Yesterday's Recap |
| SPX -0.5%
SPX Eq Wt -0.82% NASDAQ 100 -0.14% NASDAQ Comp -0.28% Russell Midcap -0.81% R2k -0.86% R1k Value -0.7% R1k Growth -0.32% R2k Value -0.84% R2k Growth -0.87% FANG+ +0.29% Semis -0.63% Software +0.13% Biotech -0.93% Regional Banks -0.25% SPX GICS1 Sorted: Comm Srvcs +0.74% Cons Disc +0.09% REITs -0.22% Healthcare -0.35% SPX -0.5% Utes -0.63% Fin -0.63% Indu -0.72% Cons Staples -0.72% Materials -0.73% Tech -0.79% Energy -2.74% |
| USD HY OaS |
| All Sectors -0.2bp
to 300bp All Sectors ex-Energy -0.5bp to 286bp Cons Disc -1.7bp to 238bp Indu +1.6bp to 226bp Tech +2.3bp to 312bp Comm Srvcs +2.1bp to 493bp Materials +2.7bp to 274bp Energy +1.5bp to 282bp Fin Snr +1.0bp to 259bp Fin Sub -1.8bp to 187bp Cons Staples +0.9bp to 281bp Healthcare -12.9bp to 359bp Utes +0.9bp to 227bp * |
| Date | Time | Description | Estimate | Last |
|---|---|---|---|---|
| 2/3 | 9:45AM | Jan F S&P Manu PMI | 50.1 | 50.1 |
| 2/3 | 10AM | Jan ISM Manu PMI | 49.9 | 49.2 |
| 2/4 | 10AM | Dec JOLTS | 8000.0 | 8098.0 |
| 2/4 | 10AM | Dec F Durable Gds Orders | -2.2 | -2.2 |
| 2/5 | 8:30AM | Dec Trade Balance | -96.75 | -78.193 |
| 2/5 | 9:45AM | Jan F S&P Srvcs PMI | 52.8 | 52.8 |
| 2/5 | 10AM | Jan ISM Srvcs PMI | 54.1 | 54.0 |
| 2/6 | 8:30AM | 4Q P Nonfarm Productivity | 1.4 | 2.2 |
| 2/6 | 8:30AM | 4Q P Unit Labor Costs | 3.4 | 0.8 |
| 2/7 | 8:30AM | Jan AHE m/m | 0.3 | 0.3 |
| 2/7 | 8:30AM | Jan Unemployment Rate | 4.1 | 4.1 |
| 2/7 | 8:30AM | Jan Non-farm Payrolls | 170.0 | 256.0 |
| 2/7 | 10AM | Feb P UMich 1yr Inf Exp | 3.2 | 3.3 |
| 2/7 | 10AM | Feb P UMich Sentiment | 72.0 | 71.1 |
MORNING INSIGHT
Good morning!
Trump is imposing tariffs to stop the flow of drugs and illegal aliens, which is different than the trade war of 2018. While we expect markets to panic, we would buy the dip.
Click HERE for more.
TECHNICAL
- Equal-weighted SPX has largely made no net progress since early last week.
- European indices look quite bullish, yet much of this recent gain is arguably due to the euro’s decline.
- Chart of european equities vs. US equities suggests bounce should prove short lived.
Click HERE for more.
CRYPTO
We explore how the latest tariff headlines are affecting the crypto market and outline our interpretation of these developments. We also discuss the recent SoftBank deal that has provided a lift to HPC miners and examine the accelerating SBR initiative at the state level.
Click HERE for more.
First News
Writer’s note: We will take a break from discussing the tech sector for five straight days and instead delve into talking about utilities. Just kidding, this is also about tech.
About 90% of companies in the S&P 500’s utilities sector are set to report earnings this month.
Their commentary on power demand will be key to watch as it could have big consequences on the future of the artificial intelligence industry, which is already on course to be redesigned by DeepSeek.
Analysts surveyed by FactSet estimate the utilities sector will report an earnings growth of about 10.8% from a year ago, the fifth-highest of the S&P 500’s 11 sectors.
Tech’s foray into AI has reaped little tangible benefits in most areas of the economy. But utilities have seen an instant impact. That’s because AI models need to be fed huge amounts of data to help improve their performance, which requires significant amounts of electricity.
A Wall Street Journal story over the weekend explained just how much. “Current and widely used AI models, including OpenAI’s GPT-4 and Meta’s Llama 3.1, were trained at data centers that use around 30 megawatts of electricity at a time, according to the nonprofit research group Epoch AI. That’s roughly as much power as 30 Walmart stores use at any given moment.”
There are some who believe that if DeepSeek’s claims about using less computing power to carry out the same tasks are true, that could mean less electricity use. The jury, however, is still out on that.
What has become clear over the past year is that without utilities’ support, the AI revolution could come to a pause. That belief made utilities an exciting sector last year, a complete reversal from the boring and stodgy reputation commanded by it for long.
This year, too, they’ve kept that momentum up. Utilities are up 2.1%, while the S&P 500 has added 2.9%.
But within the utilities sector, a lot is riding on a few star players. One among them is Vistra Corp., which is expected to be the largest contributor to the sector’s earnings growth. Without Vistra, the blended earnings growth rate for the sector would fall to 5.5% from 11.5%.
Over the past five years, its shares have gained 653.50%, whereas, the S&P 500 has added 81.52%.
The company will announce its quarterly results on Feb. 27.
Analysts are optimistic about utilities this year. From the first quarter to the last, they’re calling for earnings growth rates of 8.5%, 4.3%, 17.4% and 13.8%, respectively.
We leave you with this meme.