Good Morning!
On Friday, the S&P 500 was flat closing at 6,114.63, while the NASDAQ was up 0.41% to 20,026.77. The Dow Jones Industrial Average declined 0.37%, ending the session at 44,546.08. Last week, the S&P 500 gained 1.13%, the NASDAQ rose 1.82%, and the Dow was up 0.34%. Meanwhile, small caps, represented by the Russell 2000, were flat, finishing at 2,279.98.
Last week saw a series of significant developments on both domestic and international fronts. Following reports of fraud and waste in USAD amounting to billions, Elon Musk floated the idea of auditing Fort Knox. Treasury Secretary Scott Bessent also made headlines by suggesting the possibility of "monetizing the asset side of the U.S. Federal Reserve balance sheet," a move that would have far-reaching implications for the Federal Reserve system.
Amid these discussions, Donald Trump proposed that the U.S. consider walking away from part of its debt. He also suggested cutting defense spending by 50%. Meanwhile, Vice President JD Vance traveled to Germany to attend the Munich Security Conference, delivering a speech on European security.
On Monday, European leaders gathered in Paris for an emergency summit, where they reassessed relations with the U.S. and debated the suspension of Hungary’s EU voting rights to preempt Viktor Orbán from undermining collective EU efforts in shaping foreign policy toward Russia.
Crypto Highlights
Bitcoin (BTC): Currently trading at $97,329, up 1.77% over the past 24 hours.
Ethereum (ETH): Up 3.79%, now trading at $2,736 per coin.
Solana (SOL): Up 5.34%, currently trading at $201.64.
Ripple (XRP): Soared 12.15% in the last 24 hours, now trading at $2.74 per coin.
Headline
Macron Called Emergency European Summit on Trump’s Policies
French President Emmanuel Macron organized an emergency summit in Paris on Monday to discuss challenges posed by U.S. President Donald Trump, according to Polish Foreign Minister Radosław Sikorski. Speaking at the Munich Security Conference, Sikorski emphasized that European leaders must respond strategically to Trump’s unpredictable diplomatic approach, which he likened to Russia’s military tactic of "reconnaissance through battle."
Russia Hardens Demands in First Direct Talks With US on Ukraine
The United States and Russia have agreed to continue negotiations on ending the war in Ukraine after a pivotal 4.5-hour meeting in Riyadh, marking the first direct diplomatic engagement between the two countries on the conflict. Notably, Ukraine was absent from the talks, sparking concerns that a deal could be imposed without Kyiv's consent. The Trump administration has already faced criticism for ruling out Ukraine's NATO membership and suggesting that Kyiv may need to negotiate over its occupied territories. US National Security Adviser Mike Waltz acknowledged that territorial discussions would be part of any resolution, while Secretary of State Marco Rubio reassured that the European Union would be involved in future talks.
Meanwhile, Russia has increased its demands, with Foreign Ministry spokesperson Maria Zakharova insisting that NATO formally revoke its 2008 pledge to admit Ukraine in the future. Russian Foreign Minister Sergei Lavrov also rejected the possibility of NATO peacekeepers in Ukraine, regardless of the flag they operate under. While both sides described the discussions as serious, no date was set for a meeting between Presidents Donald Trump and Vladimir Putin. The fast-moving negotiations have raised alarms in Ukraine and Europe over a potential settlement that could favor Moscow. Russia also expressed interest in easing economic sanctions, but Rubio remained cautious, emphasizing that any decision on sanctions relief would require European involvement.
Trump Imposes 25% Tariffs on US Steel and Aluminum Imports
President Donald Trump has announced a 25% tariff on all steel and aluminum imports, eliminating previous exemptions and reigniting concerns of global trade tensions. The tariffs, set to take effect on March 12, aim to curb surging metal imports, which the administration claims have undermined US steel and aluminum producers. This move follows recent tariff hikes on Mexico and Canada, further intensifying Trump’s protectionist trade agenda just weeks into his second term. White House trade adviser Peter Navarro defended the policy, stating it would end foreign dumping and secure domestic industries as pillars of the US economy.
The tariffs are expected to strain relations with key US allies, particularly Canada and the European Union, which previously retaliated against Trump’s 2018 metal tariffs with levies on US goods. Canadian officials condemned the move, calling it "totally unjustified," while the EU may respond with its own trade measures. Although Trump hinted at a possible exemption for Australian steel, no final decision has been made. The announcement has already impacted commodity markets, with aluminum prices rising 10% and US copper futures reaching their highest premium over London prices since 2020. With industries reliant on imported metals, the new tariffs may increase costs for American manufacturers while escalating global trade tensions.
Japan’s Borrowing Costs Surge to 14-Year High Amid Rising Rates and Inflation
Japan’s borrowing costs have climbed to their highest level in 14 years as sustained inflation and expectations of wage increases push investors to anticipate further interest rate hikes. The benchmark 10-year Japanese government bond yield hit 1.31% on Friday, continuing its upward trajectory after a significant rise in 2024. The Bank of Japan (BoJ) lifted its short-term interest rate to 0.5% last month—the highest in 17 years—signaling a shift toward tighter monetary policy after decades of ultra-low rates. Core inflation in December surged 3%, marking its fastest increase in 16 months, with wage growth reaching a 30-year high, reinforcing expectations of further hikes.
Analysts now see Japan entering a sustained rate-rising cycle, with traders betting on a possible rate hike as early as July. The move is reshaping global financial markets as Japanese investors, historically large buyers of overseas bonds, may now prefer domestic assets, potentially triggering sell-offs in Eurozone and US bond markets. Some economists believe the BoJ’s policy rate could eventually reach 1% by 2026. Market expectations have adjusted accordingly, with swaps traders now assigning an 80% probability to a rate increase in July. Fund managers argue the BoJ has been slow to react to mounting inflationary pressures, which could continue to drive Japanese bond yields higher in the months ahead.
European Defense Stocks Surge as Investors Bet on Higher Military Spending
Shares in European defense companies soared to record highs on Monday as investors anticipated increased military spending across the continent. Rheinmetall surged 14% in Frankfurt, BAE Systems climbed 9% in London, and Thales gained 7.8% in Paris, driving the Stoxx Europe aerospace and defense index to its highest level since the early 1990s. The rally comes amid European leaders’ discussions in Paris about responding to US President Donald Trump’s negotiations with Russian President Vladimir Putin over Ukraine.
Trump has pressured European allies to raise defense spending well beyond NATO’s 2% GDP target, with 5% floated as a new benchmark—far above current levels, except for Poland. In response, UK Prime Minister Sir Keir Starmer has pledged to set a path toward 2.5% GDP defense spending and has even proposed deploying British troops. Analysts see a growing consensus among European leaders on the need for increased military funding, with higher defense budgets expected to drive industrial-scale arms production. The shift has also impacted bond markets, as investors priced in freer government spending, pushing German and UK bond yields higher. Defense analysts predict sustained investment growth in the sector, regardless of the outcome of US-Russia peace talks.
Bonds Slump as Meeting of European Chiefs Buoys Defense Stocks
Investors sold European bonds and shifted towards defense stocks following speculation that a high-level meeting in Paris would result in increased defense spending. The German 10-year bond yield climbed to 2.50%, while defense stocks like Rheinmetall AG saw record highs. This reaction stems from concerns that Europe may need to issue more debt to finance military investments, especially as the U.S. signals a reduced role in supporting Ukraine. Bloomberg Economics estimates that upgrading defense capabilities could cost major European nations an additional $3.1 trillion over the next decade.
French President Emmanuel Macron hosted discussions with European leaders, including Germany’s Olaf Scholz and Italy’s Giorgia Meloni, to address the continent’s security needs. The prospect of higher defense budgets has reignited debates over joint European bond issuance, a long-standing political issue. Analysts suggest that Europe may first tap national debt and repurpose existing EU funds before establishing a new military financing program. Investors have responded swiftly, with defense stocks rallying, European bond yields rising, and the euro facing pressure as markets anticipate a long-term shift in the region’s defense policy and spending.
The West Faces Uranium Shortage Amid Rising Competition From China and Russia
Western nuclear energy companies are increasingly at risk of a uranium supply crunch as China and Russia aggressively secure global reserves, particularly in Africa and Kazakhstan. With growing reliance on nuclear power to meet emissions targets and electricity demand—especially from AI and data centers—Western nations face intensified competition for the key nuclear fuel. Kazakhstan, the world’s largest uranium producer, continues to diversify its sales, but China and Russia are expanding their control over global uranium supply chains, uranium enrichment, and nuclear infrastructure.
Industry experts warn that many in the West have underestimated the depletion of accessible uranium. Cory Kos, vice president at Cameco, North America’s largest uranium supplier, cautioned that supply risks are escalating. A report from the Center for Strategic and International Studies (CSIS) urged the United States to collaborate with allies, implement favorable trade policies, and invest in domestic enrichment capacity and overseas uranium production to counteract growing dependence on foreign sources. With nuclear power expansion plans underway in the U.S. and Europe, securing uranium supply is becoming an urgent geopolitical and economic challenge.
US Dollar Strengthens Amid Geopolitical Tensions and Economic Data
The US Dollar is gaining across the board as the New York Empire State Manufacturing Index unexpectedly returned to growth, signaling resilience in the US economy. Additionally, geopolitical uncertainty surrounding US-Russia talks on Ukraine has driven investors toward safe-haven assets, including the US Dollar. The Dollar Index (DXY) surged above 107.00, reflecting a 0.50% gain after initial reports from the meeting in Riyadh suggested that Russia sees no urgency for a presidential summit between Donald Trump and Vladimir Putin. With Russia maintaining its demands and negotiations appearing protracted, market sentiment has shifted toward risk-off assets such as gold, US bonds, and the Greenback.
Leaked Russian Report Reveals Struggles to Maintain Influence Over Former Soviet States
A leaked Russian government report highlights Moscow’s growing concerns over its diminishing influence in former Soviet states due to Western sanctions and economic pressure. Presented at a strategy session led by Prime Minister Mikhail Mishustin, the document acknowledges that Western outreach efforts have successfully distanced key Central Asian nations from Russia by offering them alternative trade routes and market access. The report also concedes that Russia’s allies have benefited from sanctions by pushing Russian businesses out of their jurisdictions and gaining control over key import and export flows.
Russia’s long-term ambition, according to the report, is to establish a Eurasian trade bloc that would rival Western economic powers and integrate Russia with the Global South. However, the document admits that Russia faces significant obstacles, including shifting loyalties in Central Asia, where countries are embracing Western education, reducing reliance on the Russian language, and seeking regional cooperation without Moscow. While Belarus remains Russia’s strongest ally, the Eurasian Economic Union—Moscow’s main regional integration project—faces deep structural challenges due to sanctions risks, currency controls, and payment system disruptions. The report ultimately acknowledges that even a Russian victory in Ukraine will not be enough to overcome Western economic pressures, requiring Moscow to take a long-term approach in maintaining regional ties.
Big Tech to Spend Over $300 Billion on AI in 2025 Despite Investor Concerns
Amazon, Microsoft, Alphabet, and Meta are set to invest more than $300 billion in artificial intelligence (AI) infrastructure in 2025, with Amazon leading the charge at over $100 billion. This marks a continued surge in spending despite investor unease over uncertain returns and the emergence of cheaper AI models, such as DeepSeek’s R1. The four tech giants collectively spent $246 billion on AI-related capital expenditures in 2024, a 63% increase from the previous year, and now plan to push spending beyond $320 billion to expand data centers and AI computing power.
Macron Unveils €109 Billion AI Investment Plan to Boost France’s Tech Industry
French President Emmanuel Macron has announced a €109 billion investment in artificial intelligence (AI) infrastructure as part of a broader effort to ensure Europe remains competitive in the global AI race. Speaking at the AI Action Summit in Paris, Macron emphasized the need for Europe to accelerate AI development, citing rapid advancements in the US and China. The investment will focus on building computing clusters and data centers to match large-scale projects like the US’s $500 billion Stargate initiative. The funding also includes contributions from private entities such as Brookfield, which pledged €20 billion for AI infrastructure in France, and the UAE’s MGX fund, which plans to invest €50 billion in a new data center campus.
Trump Administration’s Made in America Push May Lead to Intel Selling 20% of Foundry Business to TSMC
A new report suggests that Taiwan Semiconductor Manufacturing Company (TSMC) may acquire a 20% stake in Intel’s Foundry Services (IFS) business as part of the Trump administration’s push to manufacture advanced chips in the U.S. This move would allow Intel to collaborate with TSMC while avoiding regulatory challenges related to antitrust laws. Intel's stock has surged in response to Vice President JD Vance’s remarks in Paris, emphasizing the importance of domestic semiconductor production. However, differences in manufacturing processes between the two firms and potential regulatory scrutiny could complicate any potential deal.
Singapore Buys Only a Small Amount of Nvidia Chips, Official Says
A senior Singaporean official clarified that the country accounts for less than 1% of Nvidia Corp.’s overall revenue, despite the U.S. investigating whether Chinese AI startup DeepSeek secured chips through Singapore. Tan See Leng, Singapore’s second minister for trade and industry, explained that while 22% of Nvidia’s August-October sales were billed to Singapore, this was due to centralized invoicing practices rather than physical deliveries of the chips. Most Nvidia products sold in Singapore are used by major enterprises and the government.
General Motors to Close Shenyang Facility in China Amid Restructuring
General Motors (GM) is set to shut down its manufacturing plant in Shenyang, China, as part of a broader restructuring strategy in the country, according to a Reuters report. The facility, which produces the Buick GL8 minivan and Chevrolet Tracker SUV, is expected to cease operations this month. GM faces increasing competition from Chinese automakers benefiting from government subsidies, pushing the company to focus on its premium brands—Cadillac, Buick, and its import business. GM operates in China through a joint venture with SAIC Motors, manufacturing its Buick, Chevrolet, and Cadillac models.
The decision comes as GM grapples with financial challenges, reporting a $2.96 billion loss in Q4 2024, a sharp contrast to the $2.1 billion profit from the same period the previous year. The company recorded $4 billion in restructuring charges related to its China operations, contributing to over $5 billion in special charges, including impairments in joint ventures and the discontinuation of its Cruise robotaxi funding. However, GM remains committed to autonomous technology, integrating Cruise’s innovations into its Super Cruise system, which supports hands-free driving across 750,000 miles in North America and is available in more than 20 vehicle models.
BMW Backs Petrol and Hybrid Cars Amid US EV Transition Uncertainty
BMW has reaffirmed its commitment to combustion engine and hybrid technology, warning that the transition to electric vehicles (EVs) in the US could be a “rollercoaster ride” under the new Trump administration. Board member Jochen Goller emphasized that the company remains optimistic about petrol and plug-in hybrid sales, anticipating fluctuations in EV demand due to shifting policies. Unlike some rivals that focused solely on electrification, BMW has maintained a broad product strategy, offering EVs alongside traditional and hybrid models, a move that has positioned it well in a slowing global EV market.
Despite challenges such as a 13% decline in sales in China and a large-scale recall last year, BMW has performed better than competitors like Volkswagen and Mercedes-Benz, which have struggled to adjust to weaker EV demand. The company remains well-positioned for EU emissions regulations and is less vulnerable to Trump’s trade policies, given that 65% of its US sales come from locally manufactured vehicles. Meanwhile, BMW is set to launch its Neue Klasse EV platform, promising longer range and improved software.
Southwest Airlines to Cut 1,750 Corporate Jobs in First Involuntary Layoffs
Southwest Airlines is implementing its first-ever nonvoluntary layoffs in its 53-year history, cutting 1,750 corporate positions—approximately 15% of its corporate workforce. The move, announced in a regulatory filing, is part of the airline’s broader effort to reduce costs and streamline operations in response to increasing competitive pressures. The layoffs will impact senior leadership and directors, with most expected to be completed by the end of the second quarter. CEO Bob Jordan described the decision as unprecedented but necessary as Southwest aims to become a leaner and more agile company.
The airline expects to incur one-time pretax charges between $60 million and $80 million in the first quarter to cover severance and other employment costs, with projected savings of $210 million in 2025 and $300 million in 2026. The job cuts coincide with Southwest’s broader transformation strategy, which includes shifting away from its signature open-seating policy in favor of assigned seating and adding more premium seating options.
US Endowments Increase Crypto Exposure Amid Bitcoin Boom
University endowments and charitable foundations in the US are ramping up investments in cryptocurrencies following President Donald Trump’s pledge to make the country a global leader in digital assets. The trend marks a shift in institutional sentiment, as major investors who were previously hesitant now seek exposure to the rapidly growing sector. The University of Austin is raising a $5 million bitcoin fund, making it the first university endowment to launch a dedicated crypto portfolio. Meanwhile, Emory University has disclosed holdings in bitcoin exchange-traded funds (ETFs), and the Rockefeller Foundation is considering expanding its exposure to digital assets.
Earnings Today
Arista Networks (ANET): Expected EPS: $2.26, Expected Revenue: $1.9B, Market Cap: $138.15B
Medtronic (MDT): Actual EPS: $1.39 (Beat by 2.21%), Expected EPS: $1.36, Actual Revenue: $8.29B (Miss by 0.48%), Expected Revenue: $8.33B, Market Cap: $110.47B
Constellation Energy (CEG): Actual EPS: $2.44 (Beat by 21.39%), Expected EPS: $2.01, Actual Revenue: $5.38B (Miss by 1.82%), Expected Revenue: $5.48B, Market Cap: $99.26B
Cadence Design (CDNS): Expected EPS: $1.82, Expected Revenue: $1.35B, Market Cap: $81.43B
Occidental (OXY): Expected EPS: $0.7338, Expected Revenue: $6.98B, Market Cap: $45.62B
Entergy (ETR): Actual EPS: $0.66 (Beat by 4.76%), Expected EPS: $0.63, Actual Revenue: $3.01B (Miss by 7.10%), Expected Revenue: $3.24B, Market Cap: $37.10B
Vulcan Materials (VMC): Actual EPS: $2.17 (Beat by 21.91%), Expected EPS: $1.78, Actual Revenue: $1.85B (Beat by 2.21%), Expected Revenue: $1.81B, Market Cap: $35.98B
EQT (EQT): Expected EPS: $0.4972, Expected Revenue: $1.8B, Market Cap: $31.64B
CoStar (CSGP): Expected EPS: $0.2198, Expected Revenue: $698.89M, Market Cap: $30.34B
Devon Energy (DVN): Expected EPS: $0.9803, Expected Revenue: $4.17B, Market Cap: $22.70B
IFF (IFF): Expected EPS: $0.8204, Expected Revenue: $2.69B, Market Cap: $21.91B
Genuine Parts (GPC): Actual EPS: $1.61 (Miss by 1.83%), Expected EPS: $1.64, Actual Revenue: $5.77B (Beat by 0.70%), Expected Revenue: $5.73B, Market Cap: $16.50B
Allegion PLC (ALLE): Actual EPS: $1.86 (Beat by 6.29%), Expected EPS: $1.75, Actual Revenue: $945.6M (Beat by 0.79%), Expected Revenue: $938.17M, Market Cap: $11.03B
Celanese (CE): Expected EPS: $1.25, Expected Revenue: $2.39B, Market Cap: $7.58B
