Good Morning!
On Monday, February 3, the S&P 500 closed at 5,994.57, up 0.67% from the previous trading session. The NASDAQ surged 1.66%, finishing at 19,391.96. The Dow Jones Industrial Average remained relatively flat, rising 0.18% to close at 44,421.91. Meanwhile, the Russell 2000 rose 0.94%, ending the session at 2,258.42.
President Donald Trump agreed to postpone the implementation of a 25% tariff on imports from Canada and Mexico for one month after both nations pledged to enhance border security. Canadian Prime Minister Justin Trudeau unveiled a $1.3 billion initiative to bolster border enforcement, including new helicopters, advanced technology, and additional personnel to combat drug trafficking, particularly fentanyl. Meanwhile, Mexican President Claudia Sheinbaum committed to deploying 10,000 national guard members to the northern border to stem the flow of illicit drugs.
Palantir soared over 27% after exceeding earnings expectations, but investors have yet to fully grasp Palantir's potential role in Elon Musk's government cost-cutting initiative. As the federal workforce shrinks, the U.S. government may increasingly turn to AI, potentially deploying millions—if not billions—of AI agents over the next 15 years to handle administrative functions. While this shift could enhance cost efficiency, it also raises concerns about transparency.
Crypto Highlights
Bitcoin (BTC): Currently trading at $99,838, up 3.31% over the past 24 hours.
Ethereum (ETH): Up 7.31%, now trading at $2,808 per coin.
Solana (SOL): Up 6.86%, currently trading at $213.27.
Ripple (XRP): Surged 11.54% in the last 24 hours, now trading at $2.65 per coin.
Headlines
Trump Delays Canada and Mexico Tariffs for One Month After Border Security Agreement
President Donald Trump agreed to delay the implementation of 25% tariffs on imports from Canada and Mexico for one month after both countries pledged to strengthen border security measures. Canadian Prime Minister Justin Trudeau announced a $1.3 billion plan to enhance border enforcement, including new helicopters, technology, and personnel to combat drug trafficking, particularly fentanyl. Meanwhile, Mexican President Claudia Sheinbaum committed to deploying 10,000 members of the national guard to the northern border to curb illicit drug flows.
Trump, in a social media post, confirmed the temporary pause, stating that negotiations with Canada and Mexico will continue, led by Secretary of State Marco Rubio and other top officials. While the U.S. tariffs on Chinese goods—set at 10%—went into effect early Tuesday, China responded with its own tariffs and plans to challenge the U.S. at the World Trade Organization. Financial markets initially reacted negatively to the tariff announcements but partially rebounded after the delay for Canada and Mexico was confirmed.
Oil Prices Hit One-Month Low as U.S. Pauses Tariffs on Mexico
Oil prices fluctuated on Monday before closing at a one-month low, as markets reacted to President Donald Trump’s proposed tariffs on Canada, Mexico, and China. Brent crude settled at $75.96 per barrel, while U.S. West Texas Intermediate (WTI) closed at $73.16. Earlier in the session, concerns over potential trade disruptions pushed prices up more than $1 per barrel, but they eased after Trump announced a one-month pause on tariffs for Mexico following an agreement to strengthen border enforcement.
The proposed tariffs included a 10% levy on Canadian energy imports, which analysts warn could disrupt U.S. energy markets and drive up gasoline prices. Canada and Mexico account for about 25% of the crude oil processed by U.S. refiners, making any trade restrictions potentially costly. Analysts noted that the tariffs could also contribute to inflation, which may prompt the Federal Reserve to reconsider its monetary policy stance. Meanwhile, OPEC+ reaffirmed its plan for gradual oil production increases and removed the U.S. Energy Information Administration from its list of sources for monitoring supply compliance. Despite concerns over trade policy, global oil demand is expected to remain strong through the late 2030s.
Gold Hits Record High as Trump Tariffs Drive Safe-Haven Demand
Gold prices surged to an all-time high on Monday as investors sought safe-haven assets following President Donald Trump’s new tariffs on Canada, China, and Mexico. Spot gold rose 0.8% to $2,818.99 per ounce, after briefly touching a record $2,830.49 earlier in the session. U.S. gold futures also climbed 0.8%, settling at $2,857.10. Despite the usual headwinds from a strong dollar, gold has rallied as uncertainty surrounding the tariffs fuels fears of inflation and economic slowdown.
Trump Proposes Rare Earth Deal with Ukraine in Exchange for U.S. Aid
President Donald Trump announced Monday that he wants Ukraine to supply the U.S. with rare earth minerals as a form of repayment for the nearly $300 billion in financial aid provided to support Ukraine’s war efforts against Russia. Speaking at the White House, Trump claimed that Ukraine was open to the arrangement and emphasized the strategic importance of securing access to rare earths and other critical minerals.
Rare earths, a group of 17 metals essential for electric vehicles, cellphones, and defense technologies, are primarily produced by China, making supply diversification a key geopolitical concern. While Ukraine has significant deposits of lithium, titanium, and uranium, it is not among the world’s largest sources of these minerals. The U.S. currently operates only one rare earth mine with limited processing capacity, prompting efforts to develop domestic alternatives. Trump’s comments suggest a broader strategy to reduce reliance on China by leveraging Ukraine’s resources, though details of any formal agreement remain unclear.
Palantir Soars on AI-Driven Earnings Surge
Palantir shares surged 27% to a record high after the company reported stronger-than-expected fourth-quarter earnings and issued optimistic guidance. The Denver-based software firm posted adjusted earnings of 14 cents per share on $828 million in revenue, surpassing analyst expectations of 11 cents per share and $776 million in revenue. For the first quarter, Palantir forecasted revenues between $858 million and $862 million, well above the $799 million estimate. The company's full-year sales projection of up to $3.76 billion also exceeded expectations. Palantir’s stock has been on a remarkable rise, gaining 340% in 2024 as its AI platform continues to attract investor interest.
CEO Alex Karp highlighted the company's rapid expansion in both its commercial and government sectors, calling the momentum unprecedented. U.S. commercial revenue grew by 64%, while government revenue increased by 45% year over year. Palantir expects its U.S. commercial sales to grow by 54% in 2025, reinforcing its position as a leader in AI-driven software.
U.S. Judge Extends Halt on Trump's Federal Funding Freeze
A federal judge in Washington has extended the pause on the Trump administration’s plan to freeze federal grants and loans, ruling that the policy may have overstepped Congress’s constitutional authority over government spending. Judge Loren AliKhan stated that the White House budget office’s funding freeze, which targeted up to $3 trillion in financial assistance, could have "potentially catastrophic" consequences for organizations reliant on federal funds. This decision follows a similar ruling from a Rhode Island judge, marking two restraining orders against the policy.
EU Must Stand Firm Against Potential Trump Trade War, Finnish Central Banker Warns
The European Union must prepare to respond if President Donald Trump imposes punitive tariffs on European goods, warned Bank of Finland Governor Olli Rehn. While emphasizing that a trade war between allies should be avoided, Rehn stated that Europe “cannot lie down” in the face of U.S. threats and must take proportionate countermeasures if targeted. Trump has already imposed tariffs on Canadian and Mexican imports and has hinted that European goods may be next. Though negotiations should be the EU’s priority, Rehn argued that Europe must be ready to retaliate if talks fail.
Rehn’s comments reflect a more assertive stance than that of European Central Bank President Christine Lagarde, who previously urged diplomatic efforts to prevent a trade conflict. However, Rehn stressed that trade policy is driven as much by politics as by economics. He expressed confidence in the EU’s bargaining position, citing the strength of its 450-million-person single market and its expanding trade network. He dismissed concerns that the U.S. could bypass EU institutions by striking individual trade deals with member states, reaffirming the European Commission’s authority over trade policy.
Texas National Guard Granted Expanded Arrest Powers at U.S.-Mexico Border
Texas National Guard soldiers now have the authority to arrest and detain individuals who illegally enter the U.S. from Mexico, following a new agreement with the Trump administration. This expansion of military involvement in immigration enforcement marks a significant shift, as the Guard was previously limited to supporting roles such as surveillance and barrier construction. While Governor Greg Abbott had already empowered the Guard to arrest migrants on trespassing charges in 2021, that authority was restricted to private land. The new pact with U.S. Customs and Border Protection, signed Friday, allows the Guard to fully investigate, arrest, and detain migrants for deportation under CBP supervision.
This policy change challenges long-standing limitations under the Posse Comitatus Act, which prohibits the military from direct involvement in civilian law enforcement. However, Trump administration officials argue that legal precedent allows military action in cases of mass migration and narcotics control. Trump has already taken unprecedented steps by authorizing military deportation flights and announcing plans to detain thousands of undocumented immigrants at Guantánamo Bay. The Defense Department has also deployed additional troops to the border, intensifying federal and state collaboration on immigration enforcement.
California Assembly Approves $50 Million to Defend State Policies Against Trump
California’s Assembly approved up to $50 million in funding to counter potential legal challenges from the Trump administration, aiming to protect the state’s progressive policies and immigrant communities. The legislation allocates $25 million to the state’s Department of Justice to fight legal battles against federal actions and another $25 million to support legal defense for immigrants facing deportation. Assembly Speaker Robert Rivas described the move as a necessary step to safeguard constitutional rights, while Republican lawmakers criticized it as a political distraction from urgent issues like wildfires and the cost of living. The measure now heads to Governor Gavin Newsom for approval.
California previously sued the Trump administration over 120 times during his first term, spending approximately $42 million on legal battles over immigration and environmental policies. With Trump’s return to office and renewed plans for mass deportations, Democratic lawmakers argue that preemptive funding is essential to protect immigrant families. Meanwhile, Republicans contend that the focus should be on disaster recovery and economic concerns, particularly in the wake of devastating wildfires in Los Angeles.
Ontario Reverses Decision to Cancel $68 Million Starlink Contract
Ontario Premier Doug Ford initially announced the cancellation of a $68 million ($100 million CAD) contract with Elon Musk’s Starlink in response to U.S. tariffs on Canadian imports. The move came after President Donald Trump declared a 25% tariff on nearly all Canadian goods, prompting Canada to impose a reciprocal tariff. Ford also vowed to ban U.S. companies from future provincial contracts, criticizing Musk’s ties to Trump and accusing him of harming Canadian workers and businesses. The Starlink contract, signed in November 2024, was intended to expand high-speed internet access to remote areas of Ontario.
However, later on Monday, Ford reversed his decision after Trump postponed the tariff implementation for 30 days following concessions from Canadian Prime Minister Justin Trudeau. Among those concessions was the deployment of 10,000 additional personnel along the U.S.-Canada border. Musk, who now leads the Trump administration’s Department of Government Efficiency, has been actively securing government contracts for Starlink.
20,000 Federal Workers Accept Trump Administration’s "Buyout" Offer
Approximately 20,000 federal workers have accepted the Trump administration’s "buyout" offer, according to a senior official, marking about 1% of the federal workforce. While this is a substantial figure, it falls short of the administration’s target of reducing federal employment by 5% to 10%. With the offer remaining open through Thursday, officials expect more workers to opt in despite strong opposition from unions and legal challenges questioning the plan’s legitimacy. The buyout allows employees to leave immediately while continuing to receive pay through September 30, though critics argue Congress must authorize such measures.
The administration insists it is legally implementing its broader strategy to restructure the federal government, including a hiring freeze, though some agencies continue to bring in new employees. Officials cited the restructuring of USAID as a key example of these changes. However, given the federal workforce’s typical 6% annual attrition rate, some of those accepting the buyout may have planned to leave government service regardless.
TSMC Plans Massive 1nm Chip Facility in Taiwan Amid Trade Concerns
Taiwan Semiconductor Manufacturing Co. (TSMC) is reportedly planning a large-scale 1nm fabrication facility in southern Taiwan’s Shalun, Tainan. Dubbed "Fab 25," the site could house six 12-inch plants and would expand TSMC’s advanced semiconductor manufacturing presence in Nanke. The project aligns with TSMC’s broader strategy of shifting factory development toward southern Taiwan, as Chairman Wei Zhejia confirmed. Additionally, the company’s board is set to visit Arizona in mid-February, where its U.S. investment totals $65 billion.
TSMC has also proposed 1.4nm and 1nm production sites in Shalun, with the first three plants dedicated to 1.4nm technology and the last three focused on 1nm chips. Meanwhile, analysts warn that potential tariffs on Taiwan from President Donald Trump could have mixed effects. While advanced semiconductor producers like TSMC hold strong pricing power, mature chip manufacturers facing stiffer competition could suffer more. Some economists suggest Taiwan should allow its currency to appreciate to help reduce its trade deficit with the U.S. as tensions over tariffs escalate.
Trump’s Order Leads to 2.2 Billion Gallon Water Release in California
The U.S. Army Corps of Engineers released 2.2 billion gallons of water from California reservoirs over the weekend following an order from former President Donald Trump. The move was intended to send water to Southern California farmers and Los Angeles, but experts warn it was misguided. Water policy researchers pointed out that the released water will not reach Los Angeles and was wasted during the wet winter season instead of being stored for summer when it is most needed. Heather Cooley of the Pacific Institute emphasized the risk this poses to agriculture, as farmers may face water shortages in the coming months.
Yesterday's Earnings
Palantir (PLTR): Actual EPS: $0.14 (Beat by 27.27%), Expected EPS: $0.11, Actual Revenue: $827.5M (Beat by 6.34%), Expected Revenue: $778.17M, Market Cap: $238.94B
NXP (NXPI): Actual EPS: $3.18 (Beat by 1.27%), Expected EPS: $3.14, Actual Revenue: $3.11B (Beat by 0.32%), Expected Revenue: $3.10B, Market Cap: $51.43B
IDEXX Labs (IDXX): Actual EPS: $2.62 (Beat by 9.62%), Expected EPS: $2.39, Actual Revenue: $954.28M (Beat by 2.24%), Expected Revenue: $933.38M, Market Cap: $37.95B
Equity Residential (EQR): Actual EPS: $1.10 (Beat by 168.29%), Expected EPS: $0.41, Actual Revenue: $766.78M (Beat by 1.53%), Expected Revenue: $755.24M, Market Cap: $26.69B
Tyson Foods (TSN): Actual EPS: $1.14 (Beat by 26.67%), Expected EPS: $0.90, Actual Revenue: $13.62B (Beat by 0.89%), Expected Revenue: $13.5B, Market Cap: $20.30B
Clorox (CLX): Actual EPS: $1.55 (Beat by 11.51%), Expected EPS: $1.39, Actual Revenue: $1.69B (Beat by 3.68%), Expected Revenue: $1.63B, Market Cap: $18.98B
Everest (EG): Actual EPS: -$13.96 (Miss by 209.22%), Expected EPS: $12.78, Actual Revenue: $4.03B (Miss by 8.81%), Expected Revenue: $4.42B, Market Cap: $14.99B
Healthpeak Properties (DOC): Actual EPS: $0.01 (Miss by 78.63%), Expected EPS: $0.0468, Actual Revenue: $697.99M (Beat by 1.25%), Expected Revenue: $689.41M, Market Cap: $14.21B
Earnings Today
Alphabet C (GOOG): Expected EPS: $2.12, Expected Revenue: $96.7B, Market Cap: $2.51T
Alphabet A (GOOGL): Expected EPS: $2.12, Expected Revenue: $96.69B, Market Cap: $2.49T
Merck & Co (MRK): Actual EPS: $1.72 (Miss by 4.97%), Expected EPS: $1.81, Actual Revenue: $15.6B (Beat by 0.84%), Expected Revenue: $15.47B, Market Cap: $222.43B
PepsiCo (PEP): Actual EPS: $1.96 (Beat by 0.51%), Expected EPS: $1.95, Actual Revenue: $27.78B (Miss by 0.61%), Expected Revenue: $27.95B, Market Cap: $204.51B
AMD (AMD): Expected EPS: $1.08, Expected Revenue: $7.54B, Market Cap: $187.86B
Amgen (AMGN): Expected EPS: $5.04, Expected Revenue: $8.85B, Market Cap: $154.38B
Pfizer (PFE): Actual EPS: $0.63 (Beat by 31.25%), Expected EPS: $0.48, Actual Revenue: $17.8B (Beat by 3.01%), Expected Revenue: $17.28B, Market Cap: $148.93B
KKR & Co (KKR): Actual EPS: $1.32 (Beat by 0.76%), Expected EPS: $1.31, Actual Revenue: $3.26B (Beat by 67.18%), Expected Revenue: $1.95B, Market Cap: $136.42B
PayPal (PYPL): Actual EPS: $1.19 (Beat by 6.25%), Expected EPS: $1.12, Actual Revenue: $8.4B (Beat by 1.45%), Expected Revenue: $8.28B, Market Cap: $81.50B
Chipotle Mexican Grill (CMG): Expected EPS: $0.2439, Expected Revenue: $2.85B, Market Cap: $80.28B
Mondelez (MDLZ): Expected EPS: $0.676, Expected Revenue: $9.72B, Market Cap: $75.74B
Transdigm (TDG): Actual EPS: $7.83 (Beat by 2.49%), Expected EPS: $7.64, Actual Revenue: $2.01B (Miss by 0.50%), Expected Revenue: $2.02B, Market Cap: $73.70B
Regeneron Pharma (REGN): Actual EPS: $12.07 (Beat by 7.10%), Expected EPS: $11.27, Actual Revenue: $3.79B (Beat by 0.80%), Expected Revenue: $3.76B, Market Cap: $71.87B
Simon Property (SPG): Expected EPS: $1.82, Expected Revenue: $1.41B, Market Cap: $56.07B
Cummins (CMI): Actual EPS: $3.02 (Miss by 35.88%), Expected EPS: $4.71, Actual Revenue: $8.45B (Beat by 4.57%), Expected Revenue: $8.08B, Market Cap: $50.00B
Marathon Petroleum (MPC): Actual EPS: $0.77 (Beat by 24.19%), Expected EPS: $0.62, Actual Revenue: $33.47B (Beat by 0.72%), Expected Revenue: $33.23B, Market Cap: $48.61B
