Busier day for statistics and earnings as Lunar New Year holidays get under way, Trump 2.0 and DeepSeek AI jolt the overarching themes; digesting UK Shop Prices, French Consumer Confidence, ECB Lending survey; awaiting US Durable Goods Orders, House Prices and Consumer Confidence; Boeing, GM, Starbucks headline US earnings run; UK, German, Italian, Dutch and US auctions
US Durable Orders seen posting modest gains, surveys suggest some upside risks from tariff-beating orders; Consumer Confidence seen rebounding from sharp December setback, but plenty of wildcards
Markets 101: lopsided/imbalanced portfolios are risky; the disruptor can easily be disrupted!
EVENTS PREVIEW
While the overarching themes of Trump 2.0 and emergent concerns about AI spending are ongoing focal points, the data and corporate earnings schedule offers some distractions today, as the Lunar New Year holidays get under way. There are UK BRC Shop Prices (still negative but seeing some unwind of Non-food price falls) and French Consumer Confidence (rebounding more than expected, but still very weak) to digest, ahead of Irish Q4 GDP, US Durable Goods Orders, Consumer Confidence and House Prices. The ECB publishes its quarterly Bank Lending survey, and some macro-prudential ECB speak. On the corporate earnings front LVMH and SAP feature in Europe, while the US looks to Boeing, General Motors, Kimberly-Clark, Lockheed Martin, Paccar and Starbucks amongst others. A busier day for govt debt auctions has German 2-yr, Dutch 5-yr, UK I-L 10-yr, Italian 2-yr and I-L 4 & 11-yr, while the US sells 7-yr and FRN 2-yr. Two important takeaways from yesterday’s dramatic price action: a) the disruptor can also be disrupted, b) stop extrapolating about Trump tariff ‘policies’ from single actions (e.g. Colombia), and more generally a further reminder that lopsided, imbalanced portfolios/positioning and poor general market liquidity are a recipe for volatility, often very violent.
** U.S.A. – Dec Durable Goods Orders, Jan Consumer Confidence **
– Durable Goods Orders are expected to post a solid 0.6% m/m gain led by aircraft orders (as per jump in Boeing Orders on the month), with core measures seen up a more modest 0.3% m/m, though the strength of both ISM Orders and Production sub-indices imparts some upside risks for headline and core, particularly as anecdotal evidence suggests that some orders have been brought forward to try and beat any tariffs. Durable Shipments (and tomorrow’s Goods Trade Balance) will be watched for those looking to make last minute adjustments to their forecasts for Thursday’s Q4 advance GDP estimate. Consumer Confidence will bear some scrutiny, after posting an unexpected drop in December (104.7 from 112.8) as consumer concerns about tariffs sparking more inflation weighed on their economic outlook, despite the Labour Differential (Jobs Plentiful minus Hard to Get) rising to the highest level since last May. A modest bounce to 105.9 is expected, predicated on better news on the economy and solid labour demand, though choppy equity markets and gasoline prices could be wildcards, and also be wary of revisions, which over the past 24 months have on occasion been very sizeable.
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