A daily market update from FS Insight — what you need to know ahead of opening bell.
“A ship in port is safe, but that’s not what ships are built for.” — Rear Adm. Grace Hopper
Chart of the Day
Good morning!
As many will recall, broad 25% tariffs on imports from Canada and Mexico were originally scheduled to take effect Feb. 1 until President Donald Trump announced that they would be postponed for a month. On Monday afternoon, Trump once again put pressure on markets when he indicated that those tariffs, as well as his planned “reciprocal” tariffs – “are going forward on time, on schedule.”
Those worried about the effect of these tariffs on the U.S. economy might have another reason to be worried. The President also wants to charge steep fees on all Chinese and Chinese-made cargo ships for each port-of-call in the U.S. The fees, as currently proposed by the White House, would be roughly $1 million per port of call, adjusted upward or downward based on a variety of factors, including the shipowner’s country of origin and the percentage of Chinese-made vessels in the owner’s fleet.
The fees would thus affect costs at most shipping companies – “at least 10 times higher than existing charges,” according to Lars Jensen, CEO of the cargo-shipping consulting firm Vespucci Maritime. Such increased shipping fees would affect “American importers, exporters, and consumers,” he told the Wall Street Journal.
Trump has good reason to be unhappy with Chinese shipping dominance: an investigation initiated last year by the Biden administration found evidence that China unfairly subsidized its shipbuilding industry with the aim of “targeting for dominance” in the global shipbuilding market. China had a 5% market share (based on tonnage capacity) in 1999, but by 2023, its market share had grown to above 50%.
However, it would be incorrect to claim that U.S. shipbuilding has suffered because of this. The last time the U.S. was the world’s leading builder of commercial ships was before World War I. Although shipbuilding ramped up during the two World Wars, it is no exaggeration to assert U.S. shipbuilders have all but completely failed to compete on the world market since that era; in fact, the only reason the U.S. still has a shipbuilding industry at all is the defense sector. American companies command just a 0.2% global market share of commercial shipbuilding: in 2022, China built 1,794 oceangoing commercial ships, and South Korea built 734. The U.S.? Just five – a little below the annual levels it’s notched for about half a century.
Later this week, we will explore some reasons why, discuss whether we should do something about it, and if so, what.
Catch Up With Fundstrat
The accumulation of negative headlines in recent weeks is adding up to a “growth scare” for investors. Thus, good news is what is needed to aid stocks. We expect Nvidia earnings (after close today) to be a key turning point
TECHNICAL
The two-week steep slide for U.S. equities looks close to bottoming, and NVDA might be a catalyst. NVDA’s technical trend is short-term range-bound as part of an intermediate-term bullish trend. The cycle composite for NVDA is bullish into October with brief pullback in April expected.
CRYPTO
The unwind of the popular BTC basis trade could act as a near-term headwind, and crypto now appears to have a negative correlation with bonds. In our (admittedly low-conviction) view, altcoins might bounce soon.
News We’re Following
Breaking News
- Dow, S&P, Nasdaq futures up ahead of crunch Nvidia earnings BAR
Markets and economy
- Inflation, looming trade war take a toll as consumer confidence marks biggest decline since 2021 AP
- More traders turn bullish in first quarter even as market shows signs of fatigue, Schwab survey says CNBC
Business
- Apple shareholders overwhelmingly reject proposal to keep diversity programs despite conservative backlash SEM
- GM raises quarterly dividend, initiates $6 billion stock buyback CNBC
Politics
- White House Moves to Pick the Pool Reporters Who Cover Trump NYT
- 21 Civil Servants Working for DOGE Resign, warn of security risks WSJ
- Trump announces US ‘gold card’ visa scheme for wealthy foreigners FT
Overseas
- Ukraine Agrees to Mineral-Rights Deal With U.S. FT
- China plans bank capital injections of at least $55 billion BBG
- Taiwan Detains Ship and Chinese Crew After Undersea Cable Severed WSJ
Of Interest
- Chinese foodies pose as mourners to try funeral home’s famed noodles BBC
| Overnight |
| S&P Futures +28
point(s) (+0.5%
) Overnight range: +8 to +32 point(s) |
| APAC |
| Nikkei -0.25%
Topix -0.3% China SHCOMP +1.02% Hang Seng +3.27% Korea +0.41% Singapore -0.2% Australia -0.14% India flat Taiwan +0.5% |
| Europe |
| Stoxx 50 +1.17%
Stoxx 600 +0.79% FTSE 100 +0.63% DAX +1.33% CAC 40 +1.06% Italy +0.85% IBEX +0.87% |
| FX |
| Dollar Index (DXY) +0.14%
to 106.46 EUR/USD -0.15% to 1.0498 GBP/USD -0.15% to 1.2647 USD/JPY +0.27% to 149.43 USD/CNY +0.09% to 7.2577 USD/CNH +0.1% to 7.2621 USD/CHF +0.24% to 0.8951 USD/CAD +0.21% to 1.4343 AUD/USD -0.39% to 0.6319 |
| Crypto |
| BTC +0.33%
to 88998.46 ETH -0.94% to 2488.03 XRP -1.04% to 2.3056 Cardano -0.07% to 0.6846 Solana -3.63% to 140.43 Avalanche +1.69% to 22.3 Dogecoin -0.05% to 0.2121 Chainlink +0.13% to 15.45 |
| Commodities and Others |
| VIX -3.09%
to 18.83 WTI Crude +0.01% to 68.94 Brent Crude -0.1% to 72.95 Nat Gas -0.81% to 4.14 RBOB Gas -0.14% to 1.965 Heating Oil -0.92% to 2.368 Gold -0.1% to 2912.0 Silver +0.13% to 31.78 Copper +3.7% to 4.647 |
| US Treasuries |
| 1M -1.1bps
to 4.2738% 3M +0.2bps to 4.2833% 6M -0.8bps to 4.3005% 12M -1.7bps to 4.0969% 2Y +1.9bps to 4.1127% 5Y +1.4bps to 4.1431% 7Y +1.6bps to 4.2248% 10Y +1.3bps to 4.3078% 20Y +0.8bps to 4.6052% 30Y +0.5bps to 4.5595% |
| UST Term Structure |
| 2Y-3
M Spread widened 1.6bps to -18.9
bps 10Y-2 Y Spread narrowed 0.3bps to 19.3 bps 30Y-10 Y Spread narrowed 0.9bps to 25.0 bps |
| Yesterday's Recap |
| SPX -0.47%
SPX Eq Wt +0.1% NASDAQ 100 -1.24% NASDAQ Comp -1.35% Russell Midcap -0.29% R2k -0.38% R1k Value +0.11% R1k Growth -1.05% R2k Value +0.05% R2k Growth -0.78% FANG+ -1.56% Semis -2.12% Software -1.62% Biotech -1.58% Regional Banks +0.07% SPX GICS1 Sorted: Cons Staples +1.69% REITs +1.15% Healthcare +0.86% Materials +0.8% Indu +0.53% Fin -0.1% SPX -0.47% Utes -0.51% Cons Disc -0.84% Tech -1.37% Energy -1.47% Comm Srvcs -1.53% |
| USD HY OaS |
| All Sectors +6.5bp
to 328bp All Sectors ex-Energy +6.2bp to 306bp Cons Disc +5.5bp to 297bp Indu +7.4bp to 247bp Tech +8.6bp to 332bp Comm Srvcs +7.4bp to 518bp Materials +7.0bp to 288bp Energy +9.9bp to 315bp Fin Snr +5.6bp to 277bp Fin Sub +6.1bp to 216bp Cons Staples +7.6bp to 301bp Healthcare +0.7bp to 349bp Utes +5.8bp to 234bp * |
| Date | Time | Description | Estimate | Last |
|---|---|---|---|---|
| 2/26 | 10AM | Jan New Home Sales | 680.0 | 698.0 |
| 2/26 | 10AM | Jan New Home Sales m/m | -2.6 | 3.6 |
| 2/27 | 8:30AM | 4Q S GDP QoQ | 2.3 | 2.3 |
| 2/27 | 8:30AM | Jan P Durable Gds Orders | 2.0 | -2.2 |
| 2/28 | 8:30AM | Jan PCE m/m | 0.3 | 0.3 |
| 2/28 | 8:30AM | Jan Core PCE m/m | 0.3 | 0.16 |
| 2/28 | 8:30AM | Jan PCE y/y | 2.5 | 2.6 |
| 2/28 | 8:30AM | Jan Core PCE y/y | 2.6 | 2.79437 |
| 3/3 | 9:45AM | Feb F S&P Manu PMI | n/a | 51.6 |
| 3/3 | 10AM | Feb ISM Manu PMI | 50.5 | 50.9 |