Quarterly Outlook
Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?
John J. Hardy
Chief Macro Strategist
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Morning Brew January 2 2025
Erik Schafhauser
Senior Relationship Manager
Summary: Trump speaking to Davos at 17 CET
Good morning,
The AI Plans announced in the US and Netflix Earnings boosted risk sentiment and caused the S&P500 to hit a record high. The Dow rose 0.30%, S&P 500 the 0.61%, the Nasdaq 1.28%, the Dax also is at record levels.
Economic Data remains thin and the Trump administration and Earnings drive markets for now. Donald Trump is expected to speak in Davos via Video followed by a Q&A, this will be late European afternoon.
So far his focus seems to be on implementing MAGA policies within the US with a focus on immigration and DEI, while foreign policies are managed in Terms if intentions and statements on what his administration would like to do. Global tariffs are in play to be implements on Feb 1 and further sanctions against Russia are in play as well.
Over Night we are expecting the Japanese Rate Decision, the BOJ never confirms an exact time but it is usually early European hours. Traders are expecting the biggest hike in 19 years – the probability is seen at 95% we will see a 25 basis point hike. If that expectation is not fulfilled, the Yen will fall significantly.
In Germany, an attack by an Afghan against Children in Aschaffenburg is fueling the immigration discussion in the runup to the election.
US Yields remain calm at 4.59 and the USD Index grinds a little higher to 108.40, EURUSD remains near but just below the 1.04, Cable is stop on 1.23 and USDJPY 156.57 ahead of the BOJ and after a massive beat in the trade balance. (+130b vs an expectation of -53b)
Bitcoin is under some pressure but holds the 100k so far, Gold and Silver give up some ground and are trading 2753 and 30.60. The Gold Silver Ratio is at an interesting technical level at 90, this has been an important resistance several times in the past.
Oil is a little lower at 75.10 in the US Line
Expect a lot of attention on the Trump speech, it seems not to be very publicly known he will appear ...
Thursday
Japan Trade, France Business Climate Norway & Turkey Rate decision, US Initial Jobless Claims, EU Consumer Confidence
Trump speaks in Davos (virtually)
GE Aerospace, American Airlines, Texas Instruments,
Friday
Australia PMI Japan CPI & Rate Decision Global PMI
Verizon, American Express, Ericsson
Christine Lagarde and BlackRock CEO Larry Fink speak at Davos
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