Good Morning!
On Tuesday, January 14, the S&P 500 closed at 5,842.91, up 0.11%. The NASDAQ fell 0.23%, finishing at 19,044 points, while the Dow Jones Industrial Average advanced 0.52% to close at 42,518. The Russell 2000 rose 1.13%, ending the trading session at 2,219.24.
Crypto Highlights
Bitcoin (BTC): At the end of yesterday's session, it traded at $96,527, up 2.43%.
Ethereum (ETH): Rose 3.19% to $3,229 per coin.
Solana (SOL): Up 2.67%, trading at $187.93.
Ripple (XRP): Surged 6.01%, trading at $2.67 per coin.
Yesterday's Earnings
Eaton Vance TaxManaged Global Diver ($EXG): The company reported its earnings with a market cap of $2.51B.
Applied Digital ($APLD): The company reported an expected loss of $0.14 per share with a revenue forecast of $63.39M. The market cap stands at $1.75B, with after-hours reporting.
Karooooo ($KARO): The company reported an expected profit of $7.18 per share with a revenue forecast of $1.15B. The market cap is $1.47B, with after-hours reporting.
Upcoming Earnings Today
JPMorgan ($JPM): JPMorgan Chase is expected to report a nearly 35% increase in earnings to $4.09 per share. Total revenue is expected to climb 8.6% to $41.9 billion.
Wells Fargo&Co ($WFC): Analysts expect Wells Fargo earnings to increase almost 60% to $1.42 per share. FactSet sees revenue rising 0.5% to $20.58 billion.
Goldman Sachs ($GS): Goldman Sachs is expected to report a 50% increase in earnings to $8.21 per share on 9.2% revenue growth to $12.36 billion.
Citigroup ($C): Analysts expect Citigroup to report earnings of $1.22 per share, improving from a loss of $1.16 per share last year. FactSet forecasts total revenue increases nearly 12% to $19.51 billion.
Headlines
Trump Proposes ‘External Revenue Service’ to Collect Foreign Tariffs
President-elect Donald Trump announced plans to establish an “External Revenue Service” (ERS) to manage tariffs, duties, and other revenues from foreign sources. In a Truth Social post on Tuesday, Trump criticized the reliance on the Internal Revenue Service (IRS) for domestic taxation, arguing that foreign entities benefiting from trade with the U.S. should pay their "fair share."
The ERS would mark a significant shift in U.S. trade and taxation policy. Currently, U.S. Customs and Border Protection oversees tariff collection. Trump’s announcement comes amid reports of his intent to declare a national economic emergency to implement new tariffs, including a 10% increase on Chinese imports and a 25% fee on products from Canada and Mexico. The ERS, set to launch on Trump’s inauguration day, January 20, 2025
Executive Order on Advancing United States Leadership in Artificial Intelligence Infrastructure
The Biden administration has introduced an ambitious "Framework for Artificial Intelligence Diffusion," aiming to reshape international AI governance and secure U.S. technological leadership. This interim rule establishes a tiered system for AI chip exports, prioritizing U.S. allies while imposing restrictions on adversaries. Tier one countries, including key allies like the UK, Japan, and South Korea, enjoy unrestricted access to U.S. AI technology, while tier two nations face conditional access tied to security agreements. The policy incentivizes global adoption of U.S. AI standards while safeguarding against potential misuse and mitigating risks of Chinese circumvention through chip smuggling or remote access.
US Producer Prices Rise Below Expectations, Signaling Slower Inflation
US producer prices increased modestly in December, rising 0.2% compared to 0.4% in November, according to the Labor Department. This slower-than-expected growth was driven by higher goods costs, offset by stable services prices. On a year-over-year basis, the Producer Price Index (PPI) climbed 3.3%, reflecting the highest annual gain since February 2023. Core PPI, excluding volatile food, energy, and trade components, also rose 3.3% year-on-year. These trends suggest inflation remains on a downward trajectory, despite lingering pressures from rising energy costs and resilient economic growth.
Economists anticipate the Federal Reserve will maintain its current interest rates until mid-2025, citing labor market strength and potential inflationary pressures from incoming administration policies. Wholesale goods prices saw a 0.6% rise, primarily fueled by a 3.5% jump in energy costs, while food prices dipped 0.1%. Services prices remained flat, with notable increases in airline fares and transportation costs offset by declines in hotel rates.
US Wholesale Inflation Eases Unexpectedly in December
US wholesale inflation cooled more than anticipated in December, driven by declining food prices and stagnant service costs, according to the Bureau of Labor Statistics. The Producer Price Index (PPI) for final demand rose by just 0.2% from the previous month, falling short of economists’ expectations for a 0.4% increase. Excluding volatile food and energy categories, the index remained unchanged from November.
Natural Gas Prices Projected to Rise in 2025, Reach $4 in 2026, Says EIA
The U.S. Energy Information Administration (EIA) forecasts a steady increase in natural gas prices, driven by rising demand for LNG exports and a shift in domestic power generation dynamics. In its January Short-Term Energy Outlook, the EIA raised its 2025 Henry Hub spot price estimate to $3.10/MMBtu, up from $3.00 in its December projection. This marks a 41% increase from the 2024 average of $2.19, an all-time low. For 2026, Henry Hub prices are expected to average $4.00/MMBtu.
US Budget Deficit Rises 40%, National Debt Surpasses $36 Trillion
The US federal budget deficit for the first quarter of fiscal year 2025 rose sharply to $710.9 billion, a 39.4% increase compared to the same period last year, according to the Treasury Department. December alone saw a $86.7 billion shortfall, a 33% improvement over the prior year’s monthly figure but insufficient to offset overall fiscal strain. Rising financing costs, growing government spending, and declining tax revenues have contributed to the expanding deficit, which has pushed the national debt beyond $36 trillion.
Interest on the national debt totaled $308.4 billion in the first quarter, up 7% from last year, and is projected to exceed $1.2 trillion for the full fiscal year, surpassing 2024’s record. Government outlays increased by 11%, while receipts fell by 2%. Interest payments now rank as the government’s largest expense after Social Security, defense, and healthcare.
Leak Reveals Imminent Trump Game-Changer—$100 Trillion Bitcoin Price Predicted
The price of Bitcoin has soared in the wake of Donald Trump’s election victory, with reports suggesting that his incoming administration plans to issue several executive orders that could ignite a major crypto market boom. Among these measures, expected on Trump’s first day in office on January 20, are policies to repeal controversial accounting rules that classify crypto as liabilities on banks' balance sheets and address challenges related to de-banking in the crypto industry. These actions are anticipated to fuel Bitcoin’s growth, with advocates like Michael Saylor predicting a potential rally to $5 million per coin and a market cap of $100 trillion.
Key catalysts behind the Bitcoin surge include growing adoption of spot exchange-traded funds (ETFs), fair value accounting changes by the Financial Accounting Standards Board (FASB), and Wall Street’s increasing interest in Bitcoin, led by major players like BlackRock. Meanwhile, the Trump administration’s crypto-focused agenda aligns with growing frustrations in the industry over regulatory pressures during the Biden era. Analysts and industry leaders see these policy shifts as pivotal for legitimizing and expanding the role of crypto in mainstream finance, with profound implications for the broader market.
California’s Insurance System Faces Crucial Test Amid Mounting Wildfire Losses
The Los Angeles wildfires are putting unprecedented pressure on California’s fragile insurance market, with the state’s FAIR Plan, an insurer of last resort, facing a potential financial crisis. Created in 1968 to provide coverage for homeowners unable to secure standard insurance, the FAIR Plan has become a critical safety net as climate change drives more frequent and severe wildfires. With just $377 million available to pay claims, the program is bracing for insured losses estimated to reach as much as $30 billion, and the fires are still ongoing.
The FAIR Plan’s inability to deny coverage for homes in high-risk areas has led to a dramatic expansion of its portfolio, with the number of homes covered doubling between 2020 and 2024. This surge underscores the growing vulnerability of California’s insurance system, as major insurers pull out of the market due to escalating wildfire risks.
Security Tightens in Washington Ahead of Trump’s Inauguration
Washington, D.C., has ramped up security measures in preparation for President-elect Donald Trump’s inauguration, scheduled for next Monday. With 30 miles of fencing, 25,000 law enforcement officers, and road closures, the city is braced for the event, which follows a tense campaign season marked by security incidents, including assassination attempts and domestic attacks. Officials remain on high alert for potential lone-wolf threats, although no specific coordinated plots have been identified.
The inauguration will take place on the Capitol steps, the site of the January 6, 2021, insurrection. Anti-Trump protests and rallies are expected, with 25,000 participants anticipated for the “People’s March on DC.” Despite the heightened security environment, hotel occupancy and protest numbers are lower compared to Trump’s 2017 inauguration.
Nvidia’s Biggest Customers Delay Orders of New AI Racks
Nvidia’s largest customers, including Microsoft, Amazon, Google, and Meta, have delayed orders for the company’s latest “Blackwell” AI racks due to overheating and connectivity issues, according to The Information. Initial shipments of the Blackwell GB200 racks have exhibited glitches, prompting some customers to opt for earlier-generation chips or await updated models. Microsoft, for instance, scaled back its plans to install the racks in a Phoenix facility after OpenAI requested older Hopper chips instead.
These setbacks contributed to a more than 4% drop in Nvidia’s shares in early trading. Compounding the issue, the U.S. government announced new restrictions on AI chip exports, potentially impacting Nvidia's sales further. Despite these challenges, Nvidia remains on track to surpass its revenue target for Blackwell chips in the fourth fiscal quarter, according to CEO Jensen Huang.
Nvidia to Launch First ARM SoC for Windows Machines in Late 2025
Nvidia is reportedly set to debut its first ARM-based system-on-chip (SoC) for Windows PCs later this year, with two models, the flagship N1X and the mainstream N1. According to leaks, the N1X is slated for release in Q4 2025, with Nvidia aiming to ship 3 million units, while the N1 will follow in early 2026, targeting 13 million units in its first year. Nvidia has partnered with MediaTek for this venture, with MediaTek projected to earn $2 billion from the collaboration, representing 8% of its 2026 revenue.
Ukraine Launches Largest Attack of the War, Claims Kyiv
Ukraine conducted its largest attack of the war on Tuesday, striking deep into Russian territory and targeting ammunition depots, chemical plants, and industrial sites. According to Ukraine's General Staff, some of the strikes reached up to 1,100km (700 miles) from the border, in regions including Bryansk, Saratov, and Tula. The attacks disrupted air traffic at nine Russian airports and forced school closures in some areas. Ukrainian intelligence sources described the strikes as a "painful blow" to Russia's war capabilities.
Six EU Nations Push to Lower G7 Price Cap on Russian Oil
Six European Union countries—Sweden, Denmark, Finland, Latvia, Lithuania, and Estonia—have urged the European Commission to lower the G7-imposed $60 per barrel price cap on Russian oil. They argue that reducing the cap would further limit Moscow’s revenue for financing the war in Ukraine without causing a market shock. The G7’s price caps, introduced in late 2022 and early 2023, aim to curb Russian earnings from seaborne crude and refined petroleum products. Ukrainian officials support the proposal, emphasizing the direct correlation between oil prices and Russia's military aggression.
The six nations highlight improved global oil supply conditions as a basis for lowering the cap without significant disruption. They also assert that Russia, heavily reliant on energy exports, has limited alternatives to continue oil sales even at lower prices. Russian crude prices have generally remained below the cap, but proponents believe stricter caps would increase the sanctions' impact.
EU to Propose Ban on Russian Aluminium Imports in New Sanctions Package
The European Commission plans to propose banning imports of Russian primary aluminum in its 16th sanctions package, aimed at curbing Moscow's ability to finance its war in Ukraine. EU diplomats revealed that the proposal, expected in February to mark the war's third anniversary, would gradually phase out imports. While the EU has already restricted certain aluminum products like wires, tubes, and foil—accounting for less than 15% of total aluminum imports—the new measure targets the broader supply of the lightweight metal vital for electric vehicles, packaging, and construction.
In response to the news, aluminum prices briefly spiked to a monthly high of $2,602 per ton before settling at $2,576.50. Russian aluminum imports to the EU have steadily declined over the past two years, falling to 6% of total imports in 2024 from 19% in 2022. A potential ban may spark a scramble for alternative supplies from the Middle East, which accounted for nearly 9% of global production in 2024. The proposed sanctions align with similar bans enacted by the United States and Britain but had faced earlier resistance from some EU member states.
South Korean Authorities Launch Second Attempt to Arrest Embattled President Yoon
South Korean investigators made another attempt to arrest President Yoon Suk Yeol early Wednesday at his fortified official residence, following his controversial martial law declaration last month. The Corruption Investigation Office (CIO), working with police and the defense ministry, arrived at the compound alongside vehicles and officers. The operation has drawn significant public attention, with anti-Yoon protesters chanting demands for his resignation outside the residence despite freezing conditions.
Yoon, who has been evading arrest for weeks, faces multiple probes, including accusations of leading an insurrection, a crime punishable by life imprisonment or the death penalty. A previous attempt to detain him earlier this month failed after a tense standoff with his Presidential Security Service. Yoon’s December 3 martial law decree, citing threats from “anti-state elements,” was reversed by parliament hours later, drawing sharp criticism from lawmakers and the public. The crisis has plunged South Korea into political turmoil, with parliament also impeaching the acting president and the finance minister now serving in that role.
US to Remove Cuba from State Sponsors of Terrorism List
President Joe Biden announced plans to remove Cuba from the US State Sponsors of Terrorism list as part of a prisoner release deal, the White House said on Tuesday. In response, Cuba pledged to release 553 prisoners, potentially including those detained during anti-government protests in 2021. This move reverses the designation reinstated by President-elect Donald Trump in 2021, which had imposed restrictions on US economic aid and arms exports to the island nation.
The Biden administration found "no information" supporting Cuba's inclusion on the list, a step welcomed by Havana as a positive but limited measure. The decision is viewed as a potential step toward normalizing US-Cuba relations, which could alleviate Cuba's economic struggles and open the door for dialogue on broader issues. Biden also plans to lift financial restrictions on some Cubans and suspend claims to confiscated property.
U.S. Removes Malware Allegedly Planted by Chinese-Backed Hackers
The U.S. Justice Department announced the successful removal of "PlugX," a malware allegedly planted by Chinese-backed hacking groups, from over 4,200 computers worldwide. The malware, attributed to groups known as "Mustang Panda" and "Twill Typhoon," had been active since 2014, targeting systems across the U.S., Europe, Asia, and Chinese dissidents. PlugX, deployed through infected USB devices, was used to steal sensitive information.
Greenland Signals Willingness to Work with U.S. on Defense, Says PM
Greenland’s Prime Minister Mute Egede expressed readiness to strengthen defense and mining collaborations with the United States while maintaining Greenland’s autonomy. Speaking at a press conference on Monday, Egede emphasized that Greenland remains open to cooperation but asserted that decisions regarding the territory’s land and resources rest solely with Greenland. His comments come as President-elect Donald Trump renews interest in acquiring the territory, calling it vital for American and international security.
Greenland’s strategic location between North America and Europe and its rich deposits of rare earth minerals have made it a focal point of U.S. geopolitical interest. Trump, who previously attempted to purchase Greenland in 2019, has placed the issue back on his agenda, suggesting he may use military or economic measures to secure control. Denmark’s Foreign Minister Lars Lokke Rasmussen echoed Greenland’s commitment to dialogue, stating that Denmark and Greenland are prepared to address legitimate U.S. security concerns in the Arctic while safeguarding Greenland’s sovereignty. Egede reaffirmed that Greenland is not for sale but remains open to global partnerships.
Elon Musk Could Be China’s Pick to Buy TikTok, Report Suggests
As the US Supreme Court nears a decision on whether TikTok must divest its US operations or face a nationwide ban, Chinese officials are reportedly considering Elon Musk as a potential buyer. According to Bloomberg, Musk’s company, X (formerly Twitter), could integrate TikTok into its operations, gaining access to its massive trove of user data. This data could bolster Musk’s ambitions for xAI and help stabilize X, which has seen a decline in users and advertising revenue. However, challenges remain, including TikTok’s estimated $50 billion price tag and the need for approval from US regulators.
The proposed sale reflects strained US-China relations, with TikTok seen as both a security risk and a trade bargaining chip. As the January 19 deadline looms, ByteDance has maintained that a sale would be "extraordinarily difficult." Meanwhile, TikTok users are exploring alternatives like Instagram Reels, YouTube Shorts, and even other Chinese-owned apps like Lemon8 and Red Note.
US Finalizes Rule to Effectively Ban Chinese Vehicles, Including Polestar
The Biden administration has finalized a rule barring Chinese vehicles and connected vehicle software from the US market to address national security concerns. Effective for model year 2027 vehicles and beyond, the rule prohibits the import or sale of technologies linked to foreign adversaries, including Bluetooth, Wi-Fi, cellular, and satellite components, as well as onboard systems like cameras and sensors. The administration aims to block China and Russia from leveraging vehicle technology to gather sensitive data on US citizens and infrastructure, underscoring its commitment to securing critical supply chains and protecting privacy.
This regulation significantly impacts automakers, including Polestar, owned by Chinese company Geely, which may be unable to sell vehicles in the US, even those manufactured domestically. Larger manufacturers like Ford and GM also face challenges in adapting supply chains to comply with the complex new rules. The policy extends to banning Chinese testing of self-driving cars in the US and restricting hardware in vehicles by 2030.
Zuckerberg Plans Meta Layoffs as Company Culls ‘Low Performers’ Faster
Meta CEO Mark Zuckerberg has announced plans for significant layoffs aimed at accelerating the removal of underperforming employees. According to an internal memo viewed by The Washington Post, the layoffs are expected to impact 5% of Meta's workforce, equating to thousands of jobs. This decision is part of a broader initiative to "raise the bar on performance management" as the company focuses on advancing AI-powered services and immersive technologies. Affected employees will be notified by February 10 and will receive severance packages, with some positions potentially backfilled.
Despite these cuts, Zuckerberg expressed optimism about Meta’s future, emphasizing that streamlining teams would enhance the company’s ability to lead in technological innovation. The announcement comes amid ongoing efforts to expand Meta's work in artificial intelligence and the metaverse, following a reduction of nearly 15,000 jobs since late 2022.
Google Faces First Major Probe Under UK’s Tough New Antitrust Rules
The UK’s Competition and Markets Authority (CMA) has launched its first significant investigation under the newly implemented Digital Markets, Competition, and Consumers Act (DMCC). The probe focuses on determining whether Google holds "strategic market status" (SMS) in the search services market. If designated as having SMS, Google could face regulatory interventions to prevent anti-competitive practices. With over 90% of the UK’s general search queries and 200,000 advertisers relying on its tools, Google’s dominance is a primary concern for the CMA, which seeks to ensure a level playing field for businesses and fair treatment of user data.
CMA Chief Executive Sarah Cardell emphasized the need for competitive fairness, particularly as AI-driven innovations reshape online search. The investigation aligns with global antitrust trends, following the US Department of Justice's push to dismantle Google’s search and advertising dominance.
Intel Shares Hit 5-Year Low as Mizuho Lowers Price Target
Intel's stock (INTC) dropped to a five-year low on Tuesday, closing at $18.81 after briefly hitting an intraday low of $18.75. This decline followed Mizuho’s decision to cut its price target from $23.00 to $21.00. Trading volume was notably low, with only 15.2 million shares changing hands compared to the average of 53 million. At the time of writing, the stock traded slightly higher at $18.91.
TSMC Cuts Ties with Supplier Over Huawei Sanction Breach
Taiwan Semiconductor Manufacturing Company (TSMC) has severed its relationship with Singapore-based supplier PowerAIR after discovering a TSMC-produced chip in Huawei's Ascend 910B AI accelerator. The move followed an internal review prompted by a TechInsights report that identified TSMC components in Huawei’s processor, in violation of U.S. sanctions.
TSMC, which stopped supplying chips to Huawei in 2020 under U.S. restrictions, reiterated its compliance with export laws. The discovery underscores the geopolitical complexities surrounding global semiconductor supply chains, especially amid increasing U.S.-China trade tensions.
JPMorgan Predicts XRP ETF Could Attract Up to $8 Billion
Banking giant JPMorgan estimates that a spot-based XRP exchange-traded fund (ETF) could draw between $3 billion and $8 billion in assets. The prediction is based on the performance of Bitcoin and Ethereum ETFs launched last year, with Bitcoin ETFs accounting for 8% of its $1.81 trillion market cap, while Ethereum ETFs have seen a lower penetration rate of 3%. JPMorgan also anticipates similar performance for Solana ETFs, signaling growing institutional interest in cryptocurrency ETFs.
Ripple's Monica Long and other industry leaders believe XRP will be next in line for ETF approval following Bitcoin and Ethereum. Several firms, including Bitwise and WisdomTree, are already vying to launch the first U.S.-based XRP ETF. Market optimism is growing, with Polymarket users estimating a 59% chance of approval in 2025 and a 50% likelihood by midyear. Ripple CEO Brad Garlinghouse has expressed confidence in an eventual approval, particularly as regulatory sentiment is expected to shift under a new administration, with SEC Chair Gary Gensler stepping down this month.
