Good Morning!
Last week was a turbulent time in the markets, as we highlighted in our Weekly Recap on Friday. The S&P 500 closed at 5,942, up 1.26%, while the NASDAQ gained 1.77%, finishing at 19,621. The Dow Jones Industrial Average also advanced, rising 0.8% to close at 42,732.
Congress will convene today for a joint session to certify Donald Trump's electoral victory, a process dictated by federal law. Electoral votes will be presented in ceremonial mahogany boxes, and representatives will conduct the official count.
Crypto Highlights
Bitcoin (BTC): Currently trading at $101,536, up 3.81% over the past 24 hours.
Ethereum (ETH): Rose to $3,692 per coin, up 1.98%.
Solana (SOL): Gained 4% in the last day, currently at $221.44.
Ripple (XRP): Rose 3.25% in the last 24 hours at $2.44 per coin.
Upcoming Earnings
There are no significant earnings announcements scheduled for today.
Headlines
Canada PM Trudeau to Announce Intention to Step Down: Report
Canadian Prime Minister Justin Trudeau is expected to announce his intention to step down as leader of the Liberal Party, according to a report by CBC News citing sources. Trudeau, under mounting pressure from Liberal legislators due to declining poll numbers and recent political missteps, is scheduled to hold a press conference on January 6. While he plans to remain in office until the party selects a new leader, this transition could take months, leaving the government vulnerable at a time when U.S. President-elect Donald Trump’s proposed tariffs threaten Canada’s economy. Trudeau’s potential resignation follows calls from within his party for new leadership, especially after the Liberals lost key seats in special elections and faced criticism for policy failures, including housing and immigration.
Trudeau’s leadership, which began in 2013 and saw the Liberals rise from third place to victory in 2015, has increasingly come under fire. His progressive platform and pandemic response earned praise early on, but soaring prices, record budget deficits, and internal party tensions have eroded public and party support. Finance Minister Chrystia Freeland’s resignation in December, following disputes over spending priorities, marked a significant turning point.
Austrian Coalition Talks Collapse After Liberal Neos Party Withdraws
Efforts to form a three-party coalition government in Austria have fallen apart after the liberal Neos party withdrew from negotiations. The talks involved Austrian Chancellor Karl Nehammer's conservative Austrian People's Party (ÖVP), the centre-left Social Democrats (SPÖ), and the Neos party, following the right-wing Freedom Party's (FPÖ) victory in September's elections. Neos leader Beate Meinl-Reisinger cited irreconcilable differences over fiscal policy, including contentious issues like raising the retirement age, as the primary reason for her party’s exit. Despite their withdrawal, Meinl-Reisinger indicated that Neos might support specific policy points already agreed upon in discussions.
The collapse of the talks leaves the ÖVP and SPÖ with a razor-thin majority of 92 seats in the 183-member parliament, raising uncertainty about the path forward. The FPÖ, led by the controversial Herbert Kickl, called for new elections, with recent polls showing their support growing to 35%.
German Inflation Rises to 2.9% in December, Exceeding Expectations
German inflation surged to 2.9% in December, exceeding analysts’ forecast of 2.6%, according to preliminary data from the national statistics office, Destatis. This marks the third consecutive month inflation has remained above the European Central Bank’s 2% target, reflecting a steady rise from September’s 1.8%. Core inflation, which excludes volatile food and energy prices, also increased slightly to 3.1%, while services inflation climbed to 4.1%, up from 4% in November. Analysts attribute the rise to diminishing favorable energy base effects and upward wage pressures, signaling that inflation may persist at elevated levels.
The data comes during a period of political uncertainty, as Germany prepares for early federal elections on February 23. The elections were prompted by the collapse of the ruling coalition in November, following Chancellor Olaf Scholz’s dismissal of former Finance Minister Christian Lindner and a subsequent loss of confidence vote.
UK Firms Plan Price Rises as Business Confidence Falls to Lowest Level Since 2022 ‘Mini-Budget’
Business confidence in the UK has dropped to its lowest level since the market-disrupting "mini-budget" of September 2022, according to a survey by the British Chambers of Commerce (BCC). The trade group reported a significant decline in sentiment following the Labour government's October 2024 budget, which included an increase in National Insurance (NI) contributions, impacting many employers. The survey revealed that 63% of businesses cited tax as a concern, up from 48% in the previous quarter, while 55% plan to raise prices in the next three months to offset rising labor costs. Sectors such as hospitality, manufacturing, construction, and healthcare expressed fears about covering additional costs and indicated plans to reduce investment.
The Labour government, which took office in July, has defended the tax hikes as necessary to address a major fiscal deficit left by the previous administration. However, critics argue that the measures have increased uncertainty and risk stifling economic growth.
BRICS Expands with Nine New Partners, Representing Half of World Population and 41% of Global Economy
The BRICS forum for economic cooperation officially welcomed nine new partner countries on January 1, 2025, further solidifying its influence in the global economic landscape. With the inclusion of Belarus, Bolivia, Cuba, Indonesia, Kazakhstan, Malaysia, Thailand, Uganda, and Uzbekistan, BRICS now accounts for nearly half of the world’s population and over 41% of global GDP (PPP). This expansion underscores the group’s ongoing efforts to de-dollarize the international monetary system and enhance economic collaboration among the Global South. At the October 2024 summit in Kazan, Russia, BRICS invited 13 nations to join as partners, with nine accepting and four—Algeria, Nigeria, Turkey, and Vietnam—yet to respond.
Founded in 2009 by Brazil, Russia, India, and China, and joined by South Africa in 2010, BRICS has evolved into a significant economic bloc. In 2024, it expanded to include Egypt, Ethiopia, Iran, and the UAE, further boosting its global presence. The group’s influence now surpasses the G7 in terms of GDP (PPP), with the original BRICS members alone making up 33.76% of the global economy, compared to the G7’s 29.08%. This marks a stark contrast to 1990, when the G7 dominated with 52% of global GDP.
Nippon Steel May Sue US Government Over Biden’s Block of US Steel Acquisition
Nippon Steel is considering legal action against the U.S. government after President Joe Biden blocked its $14.3 billion bid to acquire US Steel, citing national security concerns. Tadashi Imai, Nippon Steel’s president, criticized the review process as improper and pledged a swift response, saying the company would explore all options. Biden’s decision, made in the final days of his administration, marked a significant use of executive authority and drew praise from the United Steelworkers (USW) union, which opposed the deal. The union hailed the move as a victory for national security and American steelworkers, arguing that US Steel remains financially strong without foreign investment.
However, the decision has sparked controversy. Critics, including US Steel CEO David Burritt, labeled Biden’s action as “shameful and corrupt,” warning that it could discourage foreign investment and jeopardize US Steel’s future. Nippon Steel and US Steel had argued that the acquisition was critical for injecting $2.7 billion into domestic operations to ensure the company’s viability. The Committee for Foreign Investment in the United States (CFIUS) failed to reach a consensus on the sale, leaving the final decision to Biden.
Donald Trump’s EV Stance Fuels Sales Rush for Dealers
As President-elect Donald Trump prepares to take office on January 20, his plans to roll back fuel economy standards and eliminate the $7,500 EV tax credit have already sparked significant consumer and market reactions. Many buyers rushed to purchase electric vehicles (EVs) in the final months of 2024, hoping to capitalize on existing incentives before potential price increases. Automakers like General Motors and Kia benefited from this surge, posting record EV sales in Q4 2024. GM reported a 50% increase in quarterly EV sales, helping it achieve its best year since 2019. Kia saw an impressive 74% growth in EV sales for the year, with its CEO touting the brand’s strategy for sustained growth. However, Tesla, the market leader, fell short of expectations, reporting a modest 2.3% year-over-year increase in deliveries.
Despite the boost in EV sales, hybrids continue to dominate growth for some automakers. Ford, for instance, saw a 27% jump in hybrid sales in Q4 2024, outpacing its 16% EV growth. Hyundai also reported record-breaking December sales, led by an 87% increase in Santa Fe HEV and 133% in Tucson HEV sales.
Volkswagen and Xpeng Partner to Build Super-Fast Charging Network in China
Volkswagen and Xpeng have announced plans to expand their partnership in China by integrating their super-fast electric vehicle (EV) charging networks. Under a memorandum of understanding, the two companies will open their combined network of more than 20,000 charging points across 420 cities to each other’s customers. Additionally, they plan to explore co-branded charging stations to enhance accessibility and convenience for EV drivers in both urban and remote areas. Shares of both companies rose following the announcement, with Xpeng closing 3.4% higher in Hong Kong and Volkswagen up 2% in Europe.
Boeing Ends 2024 as the Biggest Loser in the Dow Jones Index
Boeing faced a challenging 2024, ending the year with its stock price down 31%, making it the worst performer among the 30 companies in the Dow Jones Industrial Average. The year began ominously with an Alaska Airlines 737 Max incident in January, which revealed manufacturing defects and prompted a company-wide overhaul of processes. Regulatory scrutiny followed, with the FAA limiting 737 Max production to 38 jets per month. Adding to its troubles, Boeing endured a seven-week strike involving 30,000 workers, further delaying deliveries and production of key models like the 777X jet. Despite a leadership change in August, when Kelly Ortberg took over as CEO with promises to prioritize engineering over profits, the company struggled to regain its footing.
Throughout the year, Boeing faced relentless challenges, from technical mishaps to operational disruptions. The Starliner spacecraft, for instance, returned uncrewed after a problematic mission, leaving astronauts stranded in space for an extended period. The company’s financial and reputational struggles culminated in plans to lay off 10% of its workforce. While the Dow Jones Industrial Average saw a 13% gain, led by Nvidia’s stock doubling, Boeing’s decline was rivaled only by Nike, whose shares fell nearly 30%.
OpenAI Is Turning Its Attention to ‘Superintelligence’
OpenAI CEO Sam Altman recently announced a shift in the company’s focus toward achieving "superintelligence." In a blog post, Altman expressed confidence in OpenAI's ability to develop artificial general intelligence (AGI), which the company defines as highly autonomous systems capable of outperforming humans in most economically valuable tasks. Altman believes superintelligent tools could revolutionize scientific discovery and innovation, driving unprecedented levels of prosperity and abundance. While the timeline for superintelligence remains uncertain, Altman has previously suggested it could emerge within "a few thousand days."
