January 2025 DDD

[ducati916]

Ah, may I have the fish without chips? NIce list and worth monitoring for reversal opps.

Just a thought. Could the recent high (SPY) and the very recent tech low (QQQ), when it's found, be the delimiters for a long trading range in the US markets? Long as in one to two years.

Investors will have to reassess their market expectations in light of DeepSeek's claims along with the huge PEs. The current news presents a good opportunity for a pause in the bullish sentiment.

On FCX from your thread, $36.02 is a buy currently. Added.

SPY: next support I have is 575

Limits for next 1-2yrs. I have no idea.

But clearly the SPY reached its most recent high with a lot of help from Mag 7 and NVDA in particular. If tech. as a sector is now struggling, the SPY could well struggle to break through that recent high.

Which means either (i) churn or (ii) we turn lower. I think (ii) because of the debt overhang.

Although, in March 2000 NASDAQ blew up, SPY went higher for another year. But at that time (check on this) the tech. exposure was much lower than it was currently.

• Nvidia ($NVDA) had its worst day since March 2020 today, dropping -17%. Its market cap shed -$600 billion, making Apple ($AAPL) the largest stock in the S&P 500 again.
• Ian points out that $NVDA violated its 200-day moving average for the first time in two years, closing slightly below it. More importantly, the trend remains higher.
• They say, "Nothing good happens below the 200-day moving average," but reclaiming it could spark a bullish reversal given the sudden shift in sentiment.

The Takeaway: $NVDA is testing its 200-day moving average for the first time in two years after dropping -17% to start the week.


The Nasdaq is down well over 3% as of this writing with AI hardware names driving the declines. The main AI infrastructure stock -- NVIDIA (NVDA) -- is down roughly 20% over the last two trading days, which equates to a drop of nearly $700 billion in market cap! Amazingly, news that DeepSeek out of China had built a ChatGPT-like product for a fraction of the cost was actually circulating weeks ago at the end of last year. It wasn't until this weekend, though, that the ramifications of this news started being debated heavily on social media platforms like X.

Our AI Basket is a set of 50 stocks with exposure to the AI Boom. The headline basket is further broken down into two sub-baskets: the Infrastructure basket and the Implementation basket. The former is comprised of stocks whose hardware and software lay the foundation for AI to work. These include companies that make semiconductors, data centers, cloud storage, and more. The Implementation basket, on the other hand, is made up of companies whose products are more oriented towards end-users of AI. This includes stocks with products like AI augmented software, copilots, automated services and the like.

Although AI stocks are down broadly today, it is the Infrastructure basket that has been hit the hardest. With DeepSeek's supposed low-cost to build its latest ChatGPT-like offering, it has brought into question the necessity for massive capex spend on chips and datacenters, and our AI Infrastructure sub-basket is down an incredible 8.2% on the day as a result! That compares to only a 1.5% decline in our Implementation sub-basket. As shown below, since the start of our AI Baskets a little over two years ago, this is easily the worst day for our Infrastructure basket relative to our Implementation basket to date, and it isn't even close. In tonight's Closer, we will provide a further look into the performance of the AI baskets in the wake of the DeepSeek discussion.

Obviously yesterday generated:









Those dates...a concern?



Oil News:

The ramifications of the Biden administration’s sanctions on Russia’s shadow fleet continue to roil oil markets, with the Brent-Dubai spread traded on ICE Futures expanding to its widest since at least 2015.

- The Middle East’s Dubai medium sour benchmark traditionally trades at a discount to Brent, but panic buying from Indian and Chinese refiners sent it to a $2.1 per barrel premium over the global benchmark.

- Asian refiners prefer prompt cargoes that are set to load over the upcoming weeks to avoid any shortfalls in crude deliveries, with frantic purchases putting Dubai’s average daily traded volume this month to 56,000 contracts, the highest on record.

- As Dubai-pegged grades become too expensive, Chinese refiners have almost doubled their purchases of Brazilian crude, buying almost 800,000 b/d for April, whilst India’s spot tenders have seen state-owned refiners like IOC doubling down on West African sweet barrels from Nigeria and Angola.

Market Movers

- US oil major ExxonMobil (NYSE:XOM) started exploratory drilling its Electra prospect in offshore Cyprus, previously describing the area west of the island as ‘highly promising’ despite it being the first ever wildcat in Block 5.

- US oil and gas firm ConocoPhillips (NYSE:COP) has taken over the Kebabangan cluster of fields in offshore Malaysia with an export capacity of 750 MMCf/day, following Petronas’ transfer of operator right.

- Appalachia-focused US oil producer Diversified Energy (NYSEEC) agreed to buy private equity-owned Maverick Natural Resources for $1.28 billion, boosting its Permian exposure with some 77,000 boe/d of production.

Tuesday, January 28, 2025

The media frenzy of Donald Trump’s first week in office has not been reflected in oil price movement as ICE Brent continues to trade in a relatively thin bandwidth of $77-79 per barrel. However, risks are tilted to the downside with ballooning Dubai backwardation, continuously weak Chinese manufacturing numbers, and Trump’s messaging vis-à-vis OPEC. It would take a major disruption – such as a potential shutdown in Libya – to send Brent futures back above $80 per barrel.

Deportation Rows Adds to Trump Risk Premium. Donald Trump’s threats to slap a 25% tariff on Colombia’s imports to the United States have roiled commodity markets, with 41% of Colombian oil exports sold in the US, a move averted by Bogota’s agreeing to take in deported migrants.

Trump Halts All Environmental Litigation. US President Donald Trump has reportedly halted all pending environmental litigation and reassigned four Justice Department attorneys, despite not being political appointees, focused on the issue to the newly created Sanctuary City Working Group.

Protesters Seek to Block Libyan Exports Again. Oil loadings from two key Libyan ports, Es Sider and Ras Lanuf with a combined capacity of some 450,000 b/d, have been brought to a standstill after protesters blocked the sites, demanding that the state oil firm NOC relocate to the country’s east.

Chinese Teapots Halt Runs as Losses Deepen. As market premiums for Middle Eastern grades spiral out of control and import tariffs on fuel oil tripled, at least four Chinese teapot refiners with a combined capacity of 320,000 b/d have halted refinery operations in Shandong province this month.

Chevron Officially Starts Kazakhstan Megaproject. US oil major Chevron (NYSE:CVX) reached first oil from its $48 billion expansion project of the giant Tengiz field in Kazakhstan, hoping to reach peak output of 960,000 b/d by the end of Q2 2025, a 25% increase compared to previous output rates.

Europe Eases Sanctions on Syria. EU foreign ministers have agreed on a roadmap to ease sanctions on Syria following the fall of the Assad regime and the emergence of former al Qaeda commander Mohammad al-Julani as the country’s new leader, seeking to lift energy-related restrictions.

Bangladesh Banks On Louisiana LNG. Privately held LNG developer Argent LNG signed a non-binding agreement with the government of Bangladesh to supply 5 mtpa of liquefied gas from its planned 20 mtpa Port Fourchon facility, expected to start commercial operations in early 2030.

Sudan Civil War Puts an End to Refining. Government forces retook Sudan’s only refinery, the 100,000 b/d Khartoum plant, wresting control from Sudan’s rebel RSF militia that has kept it for two years, but this came at the cost of setting it ablaze with smoke plumes big enough to be captured by satellite imagery.

Miners Applaud Trump’s Policy. Global mining giant Rio Tinto (NYSE:RIO) said it is very optimistic about President Trump finally permitting the long-delayed Resolution copper project in Arizona, the US’ largest untapped deposit containing some 1.8 billion mt of copper, stalled for 12 years.

Fires Decimate Iraqi Oil Production. A fire that broke out over the weekend at Iraq’s largest oil field Rumaila has reduced production by 300,000 b/d and capped output rates could remain in place for several more days, reportedly after crude was reintroduced to a storage tank after maintenance.

Coffee Gets into Pricing Volatility Spiral. Coffee futures soared to an all-time high of $3.555 per pound after Donald Trump threatened to slap tariffs on Colombia, the world’s third-largest exporter of the commodity, adding a new layer of geopolitical risk premium to an already tight market.

BHP Gives Up on Anglo American Dream. According to the Financial Times, Melbourne-headquartered mining major BHP (NYSE:BHP) has given up on its goal to acquire rival miner Anglo American (LON:AAL), claiming the deal has become ‘too expensive’ after Anglo’s stock price rally.

US Power Prices Set to Rise This Year. The EIA expects higher wholesale electricity prices across the United States, with the notable exception of Texas and the Northwest, averaging $40 per MWh over the year, up 7% year-over-year, with California seeing the biggest increases.

The Trump administration has directed agencies to suspend all federal grants and loans starting at close of business today. Why it matters: The new administration is showing signs — in its unilateral actions and legislative strategy — that it is more serious about fiscal austerity than the last time President Trump was in office. That implies a very different fiscal policy for Trump 2.0, with pain ahead for federal funding recipients as well as downward pressure on inflation and interest rates. Driving the news: The new directive is an audacious and legally dubious move, instructing agencies to "temporarily pause all activities related to obligation or disbursement of all Federal financial assistance, and other relevant agency activities" that could be affected by executive orders. Payments to individuals — including Social Security and Medicare — are exempted from the order. There is great uncertainty about how widely it will be applied, how long it will last, and whether it will be upheld by the courts. Legal scholars are skeptical. In effect, the administration is seeking to suspend billions in spending that was passed by both houses of Congress and signed by President Biden with a two-page memo from the acting director of the Office of Management and Budget. Yes, but: Whatever happens next with this specific order, it's only the latest sign that this administration is dead-set on slashing federal outlays — and willing to tolerate any political backlash it may cause. Congressional Republicans are looking to spending cuts, particularly for Medicaid and Biden-era climate initiatives, to help offset the fiscal cost of tax-cutting plans. Treasury Secretary Scott Bessent has set a goal of a budget deficit of 3% of GDP, achieved through spending reductions. That implies hundreds of billions of dollars a year in cutbacks. Elon Musk's Department of Government Efficiency has pivoted its emphasis somewhat in recent weeks toward internal operations of agencies, but it has set reducing spending as a major goal. Flashback: In Trump's previous term, his administration offered big cutbacks in its budget proposals — but didn't achieve them in practice. Discretionary federal spending was 13% higher in 2019, on the eve of the pandemic, than it was in 2016 before he took office. It was little changed as a percentage of GDP. Between the lines: While meaningful spending reductions would be good for the government's medium-term fiscal trajectory, they would also impede growth in the near term. It would, all else equal, exert a downward tug on inflation and justify lower interest rates from the Fed to offset that drag. Kevin Warsh, a potential Fed chair nominee, recently accused Fed officials of "cherry-picking" by fretting about the inflationary impact of tariffs while failing to factor in the possibility that spending cuts would "materially reduce inflationary pressures."

jog on
duc

 

[ducati916]

Dry, but worth it:



jog on
duc

 

[ducati916]

Probably the first of 2




jog on
duc

 

[peter2]

The SEC should reject them immediately.

 

[ducati916]

The SEC should reject them immediately.

Of course they should. But will they? Pure nonsense. The primary function of capital markets, to raise and allocate capital has been subverted into a casino.

Tax

The central economic policy goal for President Trump and congressional Republicans this year is to extend and build upon their 2017 tax reform. It won't be easy.

The big picture: To succeed, the president and congressional leadership must manage an exquisitely complicated set of economic and political trade-offs, while maintaining lockstep unity in a Republican party with the narrowest of majorities.

• The key decision-makers in the White House and on Capitol Hill are like a person in the center of a four-way tug-of-war, in which giving a little in any one direction causes problems with the other three.
• As work begins on Republicans' biggest legislative priority, understanding this web of interconnections and trade-offs is crucial to making sense of daily developments.

Zoom out: One of this unlucky person's arms is pulled by forces demanding the biggest tax cuts possible. But there are two directions that can go.

• One way is toward business-centric pro-growthers who seek tax changes to incentivize corporate investment.
• More populist candy-throwers pull in another direction. They want to offer tax benefits that may poll well but don't grow the economy's potential.

Then there's the other arm, tugged in the direction of fiscal restraint — from the bond vigilantes in one direction and spending hawks in the other.

State of play: A 50-page document that congressional Republicans have circulated in recent weeks offers a menu of hundreds of provisions that could plausibly be included in a final bill.

• Each provision comes with an estimate of how much it would either increase or decrease the deficit — which can be broadly categorized as pulling the final bill in one of those four directions.
• The months ahead will be a process in which the tax-writing committees in the House and Senate try to sort through the political trade-offs to arrive at a bill that can pass with near-unanimous Republican support.

What they're saying: "A lot of these policies have been known about as options all along," Joseph Boddicker, counsel at Alston & Bird and a former Senate Republican tax aide, tells Axios.

• "That piece isn't as difficult. I think they have the various puzzle pieces. They just need to know, ultimately, what it is that they're trying to build."

With all the focus on the US deficit, it is helpful to understand that 100 years of US history shows “You can set the highest marginal income tax rate wherever you like, but you never get more than 20% of US GDP in receipts”. With 125% US debt/GDP and 7% of deficit/GDP, this means the only way to avoid a debt spiral is to drive growth “g” > rates “r”. Hiking taxes or cutting spending will only trigger a spiral and make the problem worse.

Add in DOGE and you risk magnifying that effect and problem.

The Fed:





First move is often the WRONG move. Bloomberg might be a bit early in their call.



I would be tempted to go SHORT right here in the SPY.

What the St. thinks:

Wall Street Responds To The Fed's Hawkish Pause​

BY TYLER DURDEN
THURSDAY, JAN 30, 2025 - 08:50 AM
Coming into today's FOMC meeting, consensus was that the Fed would unveil a dovish pause, instead what the Fed revealed was much more hawkish than many expected.
Below is a snapshot of some of the initial kneejerk reactions by Wall Street strategists and analysts.
Lindsay Rosner, Goldman Sachs Asset Management:

This is a new phase of the Fed’s easing cycle, given the strong growth and resilient labor market data providing scope for a more patient approach amid elevated data and policy uncertainty. The Fed’s easing cycle has not yet run its course, but the FOMC will want to see further progress in the inflation data to deliver the next rate cut highlighted by the fact they removed the reference on inflation making progress.

David Russell, Head of Market Strategy at TradeStation

The statement was a little hawkish, but policymakers are on hold with a long break until the March meeting. Data between now and then will set the tone for that next big decision. Today’s meeting is a non-event for Fed watchers. The central bank wants to be less of a factor over the next month as Trump takes the spotlight.

Ira Jersey, Bloomberg Intelligence US interest rate strategist

The Fed’s statement was somewhat hawkish relative to last month, so it isn’t surprising that the knee-jerk reaction was for some modest bear flattening (something we noted might occur in our preview)

Neil Dutta, Renaissance Macro

This press statement makes clear that the dominating risk is a passive tightening of monetary policy. The Fed is remarkably complacent. I don’t agree with their economic outlook. Housing is a mess and wage growth is slowing. Core inflation is likely to ease in the months ahead as rental disinflation comes more into focus.

Steve Chiavarone, Federated Hermes

The statement is a tad hawkish, especially with the softer-than-expected PPI and CPI this past month. The key here is Powell’s tone during the press conference. The problem with this Fed is that they have been backward looking. They are simply reflecting the inflation data of Q4 (which was hotter), rather than on focusing on the softer data more recently and a downward trajectory likely on inflation in the coming months. This means they are adding to volatility rather than dampening it at this point.

Ali Jaffery, CIBC Capital Markets

While Trump administration policies aren’t in the statement, they do add to arguments for holding off on rate changes for now. Uncertainty around trade policy has likely increased with repeated threats to Canada, Mexico and others. All of this adds to up to a Fed that is in ‘wait-and-see’ mode. We expect that to be part of Powell’s message today.

Seema Shah, Principal Asset Management.

Keeping policy rates on hold until a clear direction starts to emerge is sensible. But make no mistake, if next month brings a second consecutive soft inflation print, coupled with a slight weakening in jobs growth, we may start to hear a renewed dovish tone to Fedspeak, with near-term rate cuts back on the table.

Anna Wong and Stuart Paul, Bloomberg Economics

The rate hold was widely anticipated. More notable were hawkish edits to the statement – removing an acknowledgment that inflation had made progress toward the 2% target, and saying the unemployment rate has stabilized – that appear intended to signal the pause could be an extended one. That said, our baseline is for the Fed to deliver three rate 25-basis-point rate cuts this year – more than the 50 bps of total cuts the median FOMC member anticipates – as we expect the labor market to be weaker than the Fed projects. However, we think risks to this view are skewed toward the Fed remaining on hold for longer, or cutting fewer times this year.

David Rosenberg, Rosenberg Research

We think the Fed is going to end up being on the wrong side of the forecast. Job gains are far less ‘strong’ than has been characterized in this statement. All these job gains are in part-time employment and hiring rates have absolutely plummeted. The backlog of continuing claims has been on a discernible upward path and the consumer surveys have revealed a substantial loss in labor market confidence.

Source: Bloomberg


jog on
duc