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Saturday Night Quarterback (on a Sunday) says, For the week ahead expect…
The Consumer Price Index inflation report, due from the Bureau of Labor Statistics on Wednesday morning, is forecast to show that the core consumer price index, which excludes food and energy prices, rose 0.3% in January for the fifth time in the last six months. Compared with a year earlier, core CPI is forecast to have risen 3.1%
Please watch my new YouTube Hot Money Moves video: Gold via 747
Today’s Hot Money Moves NOW is “Gold via 747.” It is extraordinary when big New York banks like Goldman Sachs have hired 747s to fly physical gold from London (where it’s cheaper) to New York. Most investors don’t own a 747 and may not be able to do this trade, but it is indicative of the high degree of uncertainty in the market. Flying gold from London to New York is a truly extreme move, and you wouldn’t see that without an underlying fundamental stress in the market. Gold is trading near all-time highs and you may not make a whole lot of money buying gold ETFs from here, but you would be avoiding some risk in the rest of the market. I have the GLD ETF in my Jubak Picks portfolio and will likely look for another to add.
China readies antitrust probe of Apple
China’s antitrust watchdog, the State Administration for Market Regulation, is laying the groundwork for a potential probe into Apple’s (AAPL) app store policies and the fees it charges app developers. Apple policies under scrutiny include the cut of as much as 30% on in-app spending that Apple collects and the company’s policy of barring external payment services and stores. The news is a reminder that China has weapons other than tariffs to employ in any trade war with the Trump Administration.
Job growth in January slower but still steady
The U.S. economy added 143,000 jobs in January, a slower but solid pace that was a tick below economist forecasts. The unemployment rate dipped to 4%. The labor market slowed compared to December. That December report was revised Friday to show 307,000 jobs gained that month. Average hourly wage growth accelerated, rising by 4.1% rate over the past 12 months. That wage gain was above the rate of inflation.
Hooey’s on first in initial “insight” from new Treasury Secretary Bessent
On Wednesdatmay, February 5, newly minted Treasury Secretary Scott Bessent said the Trump administration’s focus with regard to bringing down borrowing costs is 10-year Treasury yields, rather than the Federal Reserve’s benchmark short-term interest rate.
Please watch my new Quick Pick video: VRTX
Today’s Quick Pick is Vertex Pharmaceuticals (VRTX). The FDA has approved a new non-opioid, non-addictive pain killer from Vertex Pharmaceuticals. It’s currently only approved for acute pain, not long term, chronic pain. Acute pain treatment is about a $100 million market with plenty of generic opioid competitors. Because of this, the stock didn’t pop a lot on the approval news–less than 10%. This is a long term buy on the next market dip with an eye toward approval for chronic pain, a much larger market, and a much bigger jump in the stock.
Please watch my new YouTube video: The Fed is caught between a rock and a hard place
Today’s video is the Fed is between a rock and a hard place. Inflation has been stuck around 2.8% and the Fed would like to get it down to 2%. In January, the Fed paused any movement on interest rates but Wall Street remained hopeful for two cuts in 2025. The March 19 meeting will include a dot plot that will outline whether or not the central bank is thinking about any cuts for 2025. The problem is the Fed doesn’t know where the economy is going. There are too many uncertainties surrounding constantly changing Trump tariffs as well as the expected tax cut bill (which will result in higher yields and a market and economic stimulus). The budget also remains an unanswered question. These uncertainties, with the Fed also under huge political pressure from the Trump administration to make interest rate cuts, catch the Fed between a rock and a hard place and we won’t know how the Fed plans to address its dilemma until March.
AMD’s drop on huge revenue growth exemplifies risks in the tech sector
Yesterday, February 4, after the close of trading Advanced Micro Devices (AMD) reported record revenue growth for the fourth quarter. The chipmaker even reported growth in market share at the expense of rival Intel (INTC).
Yet in after-hours reading the stock dropped 8.80%. Today’s regular session confirmed the tumble with a 6.27% tumble. The problem for AMD, revenue growth in the company’s data center unit, which competes in the market for AI chips with Nvidia (NVDA) revenue slowed. The problem for the tech sector as a whole, and especially AI stocks, is that the dip in the growth rate for data center revenue was to a “disappointing” 69% rate. That’s only disappointing in comparison to the a year-over-year growth rate of of 122% that the company reported for the third quarter of 2024. This raises the important question for AI and tech stocks: Are current valuations for the stocks predicated on unachievable exceptions for extraordinarily high growth rates for unrealistically long time periods?
Canada and Mexico tariffs postponed; is a China deal next?
Now that Canada and Mexico have earned a one-month delay in the 25% tariffs President Donald Trump had proposed to implement today, Tuesday, February 4, Wall Street is struggling to figure out if a similar deal with China will roll back the 10% hike in tariffs on imports from China that went into effect today. So far, Wall Street is betting on another deal to keep the global economy out of a full-scale trade war. Today the Standard & Poor’s 500 rose 0.72% and the NASDAQ Composite gained 1.35%. I can understand the optimism. I just don’t agree with it.
Wall Street still in denial on tariffs
Futures markets are substantially lower as U.S. stocks get ready to open. Futures on the Standard & Poor’s 500 were down 1.64% and NASDAQ futures were off 1.87%. But I still say that Wall Street is in denial about the full economic damage from President Donald Trump’s tariffs.
Saturday Night Quarterback on a Sunday says, For the week ahead expect…
I expect a two-ring (at least) circus on Capitol Hill as Congress confronts two years worth of budgets. By law, the President is required to submit a budget for the next fiscal year–in this case the 2026 fiscal year that begins on October 1 2025–by the first Monday in February. Yes, tomorrow, February 3. Maybe you remember, however, that Congress hasn’t passed a budget for fiscal 2025–the fiscal year that began on October 1, 2024. And that the government is operating under a continuing resolution (a CR) that expires on March 14.
Two sells before the tariffs start–more to come, I suspect
Stocks moved down slightly on Friday–with the Standard & Poor’s 500 off 0.50% and the NASDAQ Composite down 0.28%–as investors started to revise their belief that President Donald Trump wasn’t really serious about raising tariffs.
Now that the White House as made it clear that the first round of tariffs–on Canada, Mexico, and China–will go into effect on Tuesday, I think we’ll see more downward movement in stocks. I don’t expect the drop to be swift or especially severe to start. That will have to wait until the economy starts to register the effects of higher prices for so much that we import. But I’d like to get ahead of this revision in sentiment with some sells now.
Trump tariffs target Tuesday–Canada, Mexico and China plan retaliation
Effective Tuesday at 12:01 a.m. Eastern time, American importers will pay a new 25% tax on goods from Canada and Mexico and a 10% tariff on products from China, President Donald Trump said on Saturday.
No good new for Fed interest rate cuts in today’s inflation data
Today’s release of the PCE (Personal Consumption Expenditure) index, the Federal Reserve’s preferred inflation measure, wasn’t good news for investors hoping that the central bank will quickly resume interest rate cuts. The PCE climbed 2.6% in December from a year earlier, faster than its 2.4% annual rate in November and above the central bank’s 2 percent target. Compared to the previous month, prices were up 0.3%.
First Trump tariffs due tomorrow?
The great tariffs guessing game looks like it will end tomorrow. At least Round One. Today White House press secretary Karoline Levitt said reports that tariffs wouldn’t be imposed until of tariffs from 1 March. She then said that President Donald Trump plans to impose his first round of tariffs tomorrow, February 1.
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