Market Correction 2025: Dollar, Yields, Yield Curve, and Trump
The factors that nobody is talking about.
Capital Markets Insights | 13 Jan - 17 Jan
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Here's the scoop on this week's market mayhem:
U.S. Markets
The U.S. stock market experienced a significant rally, driven by optimism about economic conditions, the anticipation of stable or lower interest rates, and expectations surrounding policy changes with the new administration. The S&P 500 and Dow had their best weekly performance since early November, while the Nasdaq saw gains since early December.
The U.S. stock market experienced a significant rally, driven by optimism about economic conditions, the anticipation of stable or lower interest rates, and expectations surrounding policy changes with the new administration. The S&P 500 and Dow had their best weekly performance since early November, while the Nasdaq saw gains since early December.
Gold
Gold prices showed resilience, with some posts indicating stability or slight increases in value. Following a softer CPI print, gold maintained bullish sentiment, staying steady into the low $2,700s.
Gold prices showed resilience, with some posts indicating stability or slight increases in value. Following a softer CPI print, gold maintained bullish sentiment, staying steady into the low $2,700s.
Oil
Oil prices continued their upward trend, marking the fourth consecutive week of increases, largely influenced by U.S. sanctions on Russia, which have shifted oil sourcing patterns globally. This has led to increased demand from alternative regions and a rise in freight costs due to rerouting of oil tankers. Despite a drop in U.S. rig counts, production hasn't declined thanks to technological improvements.
Oil prices continued their upward trend, marking the fourth consecutive week of increases, largely influenced by U.S. sanctions on Russia, which have shifted oil sourcing patterns globally. This has led to increased demand from alternative regions and a rise in freight costs due to rerouting of oil tankers. Despite a drop in U.S. rig counts, production hasn't declined thanks to technological improvements.
Crypto
Cryptocurrency markets, notably Bitcoin, showed significant movement, with prices nearing $108,000 following the better-than-expected CPI report. The market sentiment was notably bullish, with Bitcoin experiencing a hike towards this significant threshold.
Cryptocurrency markets, notably Bitcoin, showed significant movement, with prices nearing $108,000 following the better-than-expected CPI report. The market sentiment was notably bullish, with Bitcoin experiencing a hike towards this significant threshold.
Strongest Forex for the Week
The Euro (EUR) against the U.S. Dollar (USD) was highlighted as hitting fresh intraday highs, suggesting it was among the stronger currencies for this period. Traders were advised to look for short opportunities in EUR/USD after spikes above certain levels.
The Euro (EUR) against the U.S. Dollar (USD) was highlighted as hitting fresh intraday highs, suggesting it was among the stronger currencies for this period. Traders were advised to look for short opportunities in EUR/USD after spikes above certain levels.
Economic Calendar and CPI
The week's economic calendar was highlighted by the release of the U.S. CPI data. The CPI for December came in at a year-over-year increase of 2.9%, which was slightly higher than the previous month's reading but in line with forecasts. This data influenced market reactions, leading to extended bullish bounces in U.S. stocks, stability in gold, and a notable increase in Bitcoin's value. The core CPI slowed to 0.2%, fueling hopes for a Federal Reserve rate cut by July. This CPI data was a central focus, impacting expectations for monetary policy adjustments.
The week's economic calendar was highlighted by the release of the U.S. CPI data. The CPI for December came in at a year-over-year increase of 2.9%, which was slightly higher than the previous month's reading but in line with forecasts. This data influenced market reactions, leading to extended bullish bounces in U.S. stocks, stability in gold, and a notable increase in Bitcoin's value. The core CPI slowed to 0.2%, fueling hopes for a Federal Reserve rate cut by July. This CPI data was a central focus, impacting expectations for monetary policy adjustments.
Geopolitics
Hamas and Israel have reached a ceasefire deal, as confirmed by multiple sources, including official announcements from mediators like Qatar and the United States. Here are the key points regarding this ceasefire:
- Announcement and Timing: The deal was announced on January 15, 2025, with the ceasefire set to come into effect on January 19, 2025. This agreement aims to end 15 months of warfare in Gaza.
- Phases of the Deal:
- Phase 1: A 42-day ceasefire where 33 Israeli hostages are to be released by Hamas in exchange for hundreds of Palestinian prisoners held by Israel. Israeli forces will withdraw from populated areas in Gaza, and humanitarian aid will be allowed to surge into the area. This phase also includes the release of American hostages.
- Phase 2 and 3: These phases involve further negotiations for the release of the remaining hostages, a full Israeli troop withdrawal, and the establishment of "sustainable calm." The details of these phases were to be finalized after the first phase, with plans for reconstruction and the exchange of remains.
This Week's Top Gainer in US Markets (excluding small caps under $2B market cap)
- Company: HEES (H&E Equipment Services Inc)
- Gain: 100.59%
United Rentals (NYSE: URI) has agreed to purchase H&E Equipment Services (NASDAQ: HEES) for $92 per share in cash, valuing the company at an enterprise value of $4.8 billion, which includes $1.4 billion in net debt.
Founded in 1961, H&E operates around 160 branches in over 30 states in the U.S., employing 2,900 people and managing a rental fleet worth $2.9 billion. Over the last twelve months ending September 2024, H&E reported $696 million in adjusted EBITDA with revenues reaching $1.518 billion.
The acquisition is projected to yield $130 million in annual cost savings within two years and $120 million in additional revenue by the third year. The deal is slated to be finalized in the first quarter of 2025, pending standard conditions like regulatory approval. There's also a 35-day window until February 17, 2025, for H&E to consider alternative offers.
This Week's Top Loser
- Company: FTAI (Fortress Transp & Infra Inv)
- Gain: -35.42%
On January 15, 2025, Muddy Waters released a report accusing FTAI Aviation of inflating MRO revenue through misrepresented one-time engine sales, claiming 80% of adjusted EBITDA was from sales, not services. This caused an immediate stock price drop. The report led to widespread skepticism on X about FTAI's financial transparency, further pushing the stock down as investors sold shares.
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And now, for the grand finale of this newsletter, here's one of our favorite quotes to inspire your next investment boogie:
‘’Diversification is for the know-nothing investor; it’s not for the professional.’’
Stay sharp, Investorean! Keep an eye on your investments and take care of that cash.
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