Good Morning!
On Friday, the S&P 500 closed at 6,040.53, down 0.5%, while the NASDAQ was flat (+0.28) to finish at 19,627.44. The Dow Jones Industrial Average slid 0.75%, closing at 44,544.66. Over the past week, the S&P 500 gained 1.2%, the NASDAQ surged 3.84%, and the Dow Jones rose 3.53%. Meanwhile, small caps, represented by the Russell 2000, jumped 4.57%, ending the week at 2,275.88.
Crypto Highlights
Bitcoin (BTC): Currently trading at $95,652, down 3.59% over the past 24 hours.
Ethereum (ETH): Down 15.91%, now trading at $2,600 per coin.
Solana (SOL): Down 7.63%, currently trading at $197.09.
Ripple (XRP): Down over 17% in the last 24 hours, now trading at $2.34 per coin.
On Sunday, the crypto market experienced a significant downturn, with coins such as Ethereum (ETH) and Ripple (XRP) taking a severe hit. Liquidations over the past 24 hours totaled more than $2 billion, with some estimates reaching as high as $10 billion. In total, the market lost over $800 billion in market capitalization within just a few hours.
Headlines
Dow Drops Over 400 Points as Trump Tariffs Spark Market Sell-Off
Stocks tumbled Monday after President Donald Trump imposed tariffs on major U.S. trading partners, igniting fears of a trade war that could disrupt supply chains, fuel inflation, and slow economic growth. The Dow Jones Industrial Average fell 458 points (1.1%), while the S&P 500 dropped 1.5%, and the Nasdaq Composite slid 1.8%. The impact rippled globally, with Germany’s DAX index down 1.7%, Bitcoin plunging from over $102,000 to $95,000, and Ether losing 12%. The U.S. Dollar Index jumped 0.8%, while WTI crude oil surged 108% on supply concerns.
Trump’s 25% tariffs on imports from Mexico and Canada, along with a 10% levy on Chinese goods, prompted immediate retaliatory measures. Investors fear further escalation, especially after Trump signaled tariffs on the European Union could follow. U.S. automakers and suppliers bore the brunt of the sell-off, with General Motors down 5%, Ford falling 2%, and Aptiv plunging 9%. Consumer brands also struggled, with Constellation Brands down 5%, Chipotle losing 2%, and Nike slipping 2%. Amid this turbulence, investors are closely watching upcoming corporate earnings reports and Friday’s nonfarm payrolls data, which is expected to show 175,000 new jobs added in January.
Dollar Surges as Trump Tariffs Trigger Global Currency Sell-Off
The U.S. dollar soared on Monday, pushing the Canadian dollar and Mexican peso to multi-year lows while China's offshore yuan hit a record low, following President Donald Trump’s new tariffs. The euro also dropped to its weakest level since 2022, as fears of a global trade war intensified. The tariffs, which include a 25% levy on imports from Canada and Mexico and a 10% tax on Chinese goods, are set to take effect on February 4. Canada and Mexico have already pledged retaliation, with China vowing to challenge the measures at the World Trade Organization.
The market reaction has been swift, with investors anticipating that higher U.S. inflation from the tariffs could lead to prolonged high interest rates. The Federal Reserve is now expected to delay rate cuts, further strengthening the dollar. The Mexican peso hit its lowest level in nearly three years at 21.2882 per U.S. dollar, while the Canadian dollar slumped to 1.4792 per U.S. dollar, a level not seen since 2003. Meanwhile, the euro fell as much as 2.3% to $1.0125, amid concerns that the U.S. could soon impose tariffs on the European Union.
Oil Prices Rise Amid Supply Concerns Following Trump Tariffs
Oil prices climbed on Monday as President Donald Trump’s newly imposed tariffs on imports from Canada, Mexico, and China raised fears of potential supply disruptions. Brent crude futures rose by 2% to $77.22 per barrel, while U.S. West Texas Intermediate (WTI) crude surged 3% to $74.72. The tariffs, which include a 25% levy on most goods from Mexico and Canada and a 10% tariff on Canadian energy imports, are set to take effect on February 4. Analysts suggest the lighter tariff on Canadian energy aims to minimize disruption to U.S. domestic markets, which heavily rely on Canadian and Mexican crude.
Despite concerns of an economically damaging trade war, Goldman Sachs analysts predict limited immediate impact on global oil and gas prices. However, U.S. gasoline futures have already jumped 2.5%, indicating potential cost increases for American consumers. Industry experts warn that prolonged tariffs could lead to production losses in Canada and Mexico, tightening global oil supplies and pushing prices higher.
JPMorgan to Deliver $4 Billion in Gold Amid Tariff Uncertainty
JPMorgan Chase & Co. is set to deliver 30 million troy ounces of gold—valued at more than $4 billion—against futures contracts in New York this February, as concerns over potential U.S. import tariffs fuel a rush to move precious metals into the country. This marks the second-largest delivery recorded in CME Group’s Comex exchange data since 1994. The move follows a surge in gold futures prices on Comex, outpacing spot prices in London, creating an arbitrage opportunity for banks capable of transporting bullion quickly between key trading hubs.
Since President Donald Trump’s election, physical gold inventories on Comex have grown by 13 million ounces, equivalent to $38 billion. In addition to gold, traders have started flying silver into the U.S.—a rare occurrence due to its bulk and lower value, highlighting the urgency of securing metal in anticipation of trade restrictions. JPMorgan alone issued delivery notices for 1.485 million ounces for February 3 deliveries, while Deutsche Bank, Morgan Stanley, and Goldman Sachs accounted for the rest.
European Markets Sink as Trump Tariff Threats Shake Investors
The pan-European Stoxx 600 dropped 1.4% by midday in London, with all sectors in negative territory. Germany’s DAX index declined 1.7%, France’s CAC 40 lost 1.51%, and the FTSE 100 in the U.K. fell 1.36%.
Automakers were among the hardest hit, with the Stoxx 600 autos index tumbling 3.8%. Shares of Volkswagen plunged 6.8%, BMW dropped 4%, and Porsche fell 5%. French car parts supplier Valeo saw an 8.6% decline, while Renault slid 1.4%. European tech, industrial, and banking stocks also lost more than 2% as investors reacted to rising trade tensions.
EU Vows Firm Response to Trump’s Tariff Threats, Macron Says
French President Emmanuel Macron has pledged that the EU will stand up for itself if President Donald Trump follows through on his threat to impose tariffs on the bloc. Speaking in Brussels, Macron emphasized that “if our commercial interests are attacked, Europe, as a true power, will have to make itself respected and therefore react.” His comments were echoed by German Chancellor Olaf Scholz, who stressed that while the EU is strong enough to respond, “the goal should be that things result in cooperation.”
Trump’s tariffs on Canada, Mexico, and China, announced over the weekend, have already triggered retaliation, with further trade barriers on the EU “definitely happening,” according to Trump. European leaders, including Poland’s Donald Tusk, warned that a trade war is “a complete mistake” and that everything must be done to prevent conflict “in the face of a Russian threat or Chinese expansion.” Denmark’s Mette Frederiksen acknowledged the importance of alliances but asserted, “If the Trump administration imposed tough tariffs on Europe, we need a collective and robust response.”
The European Commission condemned the tariffs, emphasizing that they create “unnecessary economic disruption” and vowing to “respond firmly to any trading partner that unfairly or arbitrarily imposes tariffs on EU goods.” Some EU officials, like France’s Marc Ferracci, suggested that “a response must focus on products that are important” to the U.S. to ensure a “credible threat” in negotiations. As uncertainty looms, Germany’s likely next chancellor, Friedrich Merz, warned that “Trump will swiftly realize the tariffs he imposes will not have to be paid by those who import into America … but by consumers in America.” European markets have reacted negatively, with stock indices tumbling amid fears of further economic strain.
Eurozone Inflation Rises Unexpectedly in January
Eurozone inflation increased to 2.5% in January, surpassing analysts’ expectations of 2.4% and remaining above the European Central Bank’s (ECB) 2% target for the third consecutive month. Despite this uptick, policymakers are not expected to alter their plans for gradual interest rate cuts. The rise has been largely driven by energy prices, though core inflation, which excludes food and energy, remained steady at 2.7%. ECB President Christine Lagarde reaffirmed confidence in the disinflation process, signaling that further rate reductions remain on the table.
Meanwhile, concerns over U.S. trade policies add to economic uncertainty in the Eurozone. President Donald Trump announced new tariffs, including a 10% levy on European goods, which economists warn could slow economic growth by up to 0.5 percentage points. The Eurozone economy showed no growth in the final quarter of 2024, with Germany and France experiencing contractions.
Trump and Musk Move to Shut Down USAID, Sparking Controversy
The U.S. Agency for International Development (USAID) faces an uncertain future as President Donald Trump and Elon Musk push to dismantle the agency, citing concerns over partisanship. Musk, who has been working closely with Trump on federal government reforms, announced Monday that the president had agreed to shut USAID down. The agency’s Washington headquarters was closed for the day, with employees instructed to work remotely, while its website and social media accounts were taken offline, now displaying only a reduced version on the State Department’s website.
During a conversation on X Spaces, Musk stated, “With regards to the USAID stuff, I went over it with (the president) in detail and he agreed that we should shut it down.” Later, Trump reaffirmed his opposition to the agency, telling reporters at Joint Base Andrews, “It’s been run by a bunch of radical lunatics, and we’re getting them out, and then we’ll make a decision” on its future. Critics argue that Trump lacks the authority to unilaterally dismantle USAID, which was created by Congress as an independent body. Meanwhile, Democrats have strongly opposed the move, warning that it could upend global aid efforts and disrupt the work of U.S. foreign policy contractors.
Trump Threatens to Cut U.S. Funding to South Africa Over Land Reform
President Donald Trump has announced plans to halt all future U.S. funding to South Africa over concerns that the country’s new land policy discriminates against certain groups. The policy, signed into law by President Cyril Ramaphosa last month, allows for land expropriation without compensation under specific conditions, aiming to address historical inequalities in land ownership. Trump claimed South Africa was “confiscating land” and “treating certain classes of people very badly,” adding that an investigation into the situation was underway.
In response, Ramaphosa emphasized that South Africa remains a constitutional democracy governed by the rule of law and denied any land confiscation. He also noted that U.S. funding primarily supports 17% of South Africa’s HIV/AIDS program through Pepfar, amounting to $440 million in 2023. Tech billionaire and Trump adviser Elon Musk, a South African native, also criticized the law, calling it discriminatory. Meanwhile, South Africa’s Mineral Resources Minister Gwede Mantashe suggested retaliating by withholding mineral exports to the U.S. Critics fear the policy could deter investors, drawing comparisons to Zimbabwe’s economic collapse following land seizures.
DeepSeek’s AI Claims Under Scrutiny Amid Reports of $1.6 Billion Investment
Chinese AI startup DeepSeek has attracted global attention for its claims of developing OpenAI-level models with a fraction of the resources. However, a new SemiAnalysis report suggests the company actually operates 50,000 Nvidia GPUs and has spent $1.6 billion on hardware alone—far exceeding the widely publicized $6 million training cost. This revelation casts doubt on the narrative that DeepSeek has disrupted AI development with minimal investment.
The report states that DeepSeek’s infrastructure includes 10,000 Nvidia H800s, 10,000 H100s, and additional H20 GPUs, spread across multiple locations for AI training, research, and financial modeling. The company’s total operational spending is estimated at $944 million, and its researchers—recruited exclusively from mainland China—reportedly earn up to $1.3 million annually, exceeding salaries at competitors like Moonshot.
While DeepSeek has made breakthroughs like Multi-Head Latent Attention (MLA), the hype surrounding its efficiency claims appears overstated. The $6 million figure reportedly covers only pre-training GPU costs, excluding infrastructure, research, and refinement expenses. As SemiAnalysis concluded, DeepSeek’s success is not a miracle but the result of significant investment, technical innovation, and a highly skilled workforce
NVIDIA GeForce RTX 5090 & 5090D GPUs Facing Widespread Failures After Driver Installation
The newly launched NVIDIA GeForce RTX 5090 and RTX 5090D GPUs are experiencing major technical issues, with some units getting bricked after installing the latest drivers. Reports from Chinese forums like Chiphell, Baidu, and Bilibili suggest that affected cards—particularly from Colorful, Manli, and Gigabyte—are becoming unrecognizable by the system following driver updates. Users describe cases where their GPUs stop displaying output, fail to be detected by Windows, BIOS, or drivers, and, in some instances, show signs of IC burns.
Adding to the concern, the PCMarket community reported 16-pin power cables melting while stress-testing RTX 5090D, RTX 5080, and RTX 4080 GPUs—raising fears of power delivery issues reminiscent of the RTX 4090's infamous cable failures.
With widespread reports of bricked GPUs, concerns over PCIe compatibility, and potential overheating risks, NVIDIA has yet to issue an official statement. For now, users are advised to delay installing new drivers or altering PCIe settings cautiously.
SoftBank and OpenAI Launch Japan AI Joint Venture
SoftBank Group and OpenAI have announced the creation of SB OpenAI Japan, a joint venture aimed at providing AI services to corporate customers in Japan. The initiative, revealed Monday by SoftBank CEO Masayoshi Son and OpenAI CEO Sam Altman, will be jointly owned by OpenAI and a new entity formed by SoftBank and its telecom subsidiary.
SoftBank has committed to paying $3 billion annually to integrate OpenAI’s technology across its businesses. Additionally, Son is considering an investment of $15 billion to $25 billion in OpenAI, further strengthening his company’s position in AI. SoftBank is also committing $15 billion to Stargate, a U.S.-based AI infrastructure project in collaboration with OpenAI and Oracle. Altman emphasized the growing demand for computing power, stating, “The world is going to just need so much compute.”
Taiwan to Assist Companies Relocating to U.S. Amid Trump Tariffs
Taiwan has pledged support for companies seeking to relocate to the United States following President Donald Trump’s newly imposed tariffs. The economy ministry announced plans to provide information on potential U.S. investment locations, local regulations, and assistance in finding business partners. The government’s Industrial Technology Research Institute branches in North America will also facilitate research and manufacturing cooperation between Taiwanese and U.S. firms. Given that many Taiwanese companies operate factories in Mexico and China, where tariffs will now apply, the government is closely monitoring global trade developments to offer timely support.
Trump Tariffs Spark Fears of Bitcoin and Crypto Market Crash
Bitcoin and cryptocurrency markets have been rocked by a wave of uncertainty following President Donald Trump’s newly imposed tariffs, triggering a sharp selloff. Bitcoin, which had surged to nearly $110,000, dropped overnight to just over $91,000 before stabilizing around $95,000. Ethereum and XRP saw even steeper declines, with Ethereum plunging nearly 20%. The sudden downturn has wiped out approximately $300 billion from the crypto market as global investors brace for the economic fallout of escalating trade tensions with China, Canada, and Mexico.
Despite the market turmoil, some analysts believe the trade war could ultimately benefit Bitcoin. Bitwise strategist Jeff Park argues that both sides of the trade dispute may turn to Bitcoin for different reasons, accelerating its rise. Meanwhile, Federal Reserve Chair Jerome Powell’s recent comments have opened the door for Wall Street to deepen its involvement in crypto, a significant shift from the previous administration’s restrictive stance. With major financial institutions like BlackRock embracing Bitcoin ETFs, the long-term outlook for crypto remains uncertain but potentially bullish.
Stellantis Reshapes Leadership Amid Post-Tavares Overhaul
Stellantis NV continues its leadership shakeup following the departure of CEO Carlos Tavares, appointing new heads for Jeep, Peugeot, and DS Automobiles. Chief Engineering and Technology Officer Ned Curic will now oversee software operations, while Antonio Filosa, a potential CEO candidate, is expanding his role to include global quality responsibilities. Chairman John Elkann is driving the transition, shifting decision-making power to regional executives and working to mend relations with dealers and governments.
Earnings Today
Palantir (PLTR): Expected EPS: $0.1104, Expected Revenue: $778.17M, Market Cap: $187.91B
NXP (NXPI): Expected EPS: $3.17, Expected Revenue: $3.13B, Market Cap: $53B
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: $37.31B
Equity Residential (EQR): Expected EPS: $0.4116, Expected Revenue: $755.24M, Market Cap: $26.79B
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: $20.12B
Clorox (CLX): Expected EPS: $1.39, Expected Revenue: $1.63B, Market Cap: $19.64B
Everest (EG): Expected EPS: $12.78, Expected Revenue: $4.42B, Market Cap: $14.94B
Healthpeak Properties (DOC): Expected EPS: $0.0468, Expected Revenue: $689.41M, Market Cap: $14.45B
