Morning Brew January 21 2025

Good morning,

We saw a huge amount of orders and announcements out of the Trump administration after the inauguration. So far markets are taking it fairly calm. While many of the decisions will have a massive political impact, the ones with severe effect on trade or financial markets remain pending.

• Key announcements so far are:
  Exit out of the Paris Climate accord (again) and more gas and oil drilling to bring energy prices down
• Declared a national energy emergency
• Exit from WHO (again)
• TikTok gets 75 more days to find a solution to continue operations
• 1600 rioters on Jan 6 2021 have been pardoned
• No US Citizenship for everyone born in the US
• Soldiers on the Mexican border to prevent illegal immigration
• Cartels involved in weapons and human trafficking are classified as terroristic organization
• He announced 25% tariffs on goods from Canada and Mexico from Feb 1, he is investigating if China is adhering to the 2020 trade agreement
• A 90 Day halt in foreign aid to reassess it

The market reaction so far is as said muted and hopeful as the feared immediate global tariffs have not been imposed, the 25% for Canada and Mexico weigh.

US 10 Year Yields are 4.55 after hitting 4.8% last week, the USD Index is at 1.0850 EURUSDD 1.0375, GBPUSD 1.2275 and USDJPY 155.50 The Canadian Dollar traded in massive swings from 1.4450 to 1.4260 and back to 1.4440, USDMXN also swung from 20.90 to 20.45 and back to 20.78. ECB’s Kazimir sees three to four more cuts starting next week.

Oil is trading lower at 76.90 per Barrel, Gold and Silver are friendly at 2726 and 30.55, Bitcoin remains nervous at 102000 after almost hitting 110k yesterday.

Dax and Eurostocks are slightly lower  over night while the key US indexes are slightly higher, the US500 is at 6000.

The performance of the Dax has been much better then headlines out of Germany, the Index is up 5% this year and 5 companies are up more than 10%.

Looking ahead, we have little in terms of economic announcements that could outshine any news from the US where we are awaiting clearer guidelines on China, global trade, the Impact of the Doge department, the breadth of the fight against illegal immigration and which measures will be implemented to fight inflation.

The combination of global tariffs, deportation of immigrants and less inflation are clearly opposing and require squaring the circle, let`s see if team trump manages it

The German ZEW and Canadian CPI are of interest, as well as earnings. In Davos, focus is on Ukrainian President Zelinski arriving and on the analysis of the inauguration.

Tuesday
UK Labor Data, Germany  ZEW, Canada CPI
Charles Schwab 3m, Netflix, Interactive Brokers,
Wednesday
P&G, Abott, Johnson & Johnson, Halliburton, Travelers, Kinder Morgan, Alcoa,
Thursday
Japan Trade,  France Business Climate Norway & Turkey Rate decision, US Initial Jobless Claims,  EU Consumer Confidence
GE Aerospace, American Airlines, Texas Instruments,
Friday
Australia PMI  Japan CPI  & Rate Decision Global PMI
Verizon, American Express, Ericsson