executive Summary:
- Mixed start in earning season
- Cap We Waved Index improves width with uniform weight
- Deepsek AI sends shockwaves through business
- Fed keeps the rates stable as expected – no deduction is expected till June
- Development out of Washington is in headlines
Index display for January:
The US Equality ended more in January after a decline in the previous month. The width was positive, performed better than the official index more than 70bps with the same weighted S&P. Despite the same weight outperformance, the S&P reached the new record height during the 500 months, which closed just below the figures. With Russell 2000 recovery of its 8% loss from December, small-caps also improved. The treasury was strong with some yield curve stapling, while the gold was 7.1%above, the new record height reached, and the bitcoin futures were up 9.3%. WTI crude was up 1.1%, with concerns about supplies from restrictions on Russian oil and concerns about potential 10% tariffs on Canadian oil.
While development out of Washington remained in the headlines this month, the market continued to benefit from animal spirits, deragulation dynamics, corporate buyback and some rates. Despite not officially declared before the end of the month, the new tariff has been announced by the Trump administration against Mexico and Canada (25%) and China since then. Additionally, President Trump mentioned the tariff on chips, steel, aluminum and copper in the near future and mentioned that he had not settled at a universal tariff rate. He suggested that this would be “much larger” than the initial 2.5% Treasury Secretary Besant.
The AI-Goth Katha faced a shock as the cheap Deepsek AI model, who appears to be China, triggers a sales in the AI-related shares. This examined its models, pricing power, and US tech expenses on its models, pricing power, and wide questions about the US leadership in the global AI race. Concerns about large technology emerged, which add existing concerns about the spread evaluation. Additionally, the idea that AI applications can be applied to a fraction of the expected costs, questions about comprehensive capital expenditure schemes. While the initial shock was surrounded, it seems as if the cost was overblogged and the searched successes of Deepsek are to be repeated for other players who may still benefit from a large calculation advantage.
Moving forward for the Fed, there was no change in the benchmark rates at the January FOMC meeting, which remained at 4.25–4.50%. It was mostly an unequal meeting and press conference with the market not expected to cut another rate by June. In the press conference, Chair Powell mentioned that there is no hurry to make changes in the fed as the recent inflation reading has been good and can help reduce the shelter inflation. Analysts generally witnessed an extended grip moving beyond the fed, although some say in-line inflation reading is probably leading to the cut by midyar.
Turning to the economic figures, the December core CPI unanimously came forward, while the headline was slightly below. Analysts believe that the trend of core CPI inflation is still slow towards the target of FOMC, especially after December PPI came to cooler than expected. It should be noted, although December nonform payroll was more warm than the expected printing growth of 256k jobs.
Total return of field for January:
Earning Comment:
The results have become mixed, reporting earnings for Q4’24 with 36% of S&P 500 companies. According to the factset, out of these companies, 77% have reported actual EPS above estimates, equal to 77% an average of 5 years, but above 75% at an average of 10-year. Overall, companies are reporting earnings that are above 5.0% from estimates, below an average of 5-year below 8.5% and below 6.7% at an average of 10-year. Since 31 December, positive EPS surprise reported by companies in financial and communication sectors, partially offset by negative EPS surprise reported by companies in the industrial sector, to increase the overall income growth rate for index on this The biggest contributor is. Duration.
While the percentage of S&P 500 companies is about to report positive earnings, which is above an average of 10 years, the magnitude of earning is below the average of 10 years. However, S&P500 companies are reporting high -earnings for the relative fourth quarter relative to the end of last week and end of the quarter. In addition, the index is reporting its highest year-by-year income growth rate for Q4 2024 in three years. Mixed (actual + estimate) income growth rate for the fourth quarter is currently 13.2% which will be the highest year at the growth rate of the year since Q4’21. This will also mark the sixth consecutive quarter of increase in yoy income for index.
Seven of the eleven regions are showing an increase in income from year to year for Q4, five of these sector are experiencing an increase in double digits: financial, communication services, information technology, consumer discretionary and utilities. Alternatively, four regions see a year-on-year decline in earnings for the quarter, in which energy and industrial have reported a dual-point decline.
In terms of revenue, 63% of S&P 500 companies have reported actual revenue above estimates, which is below the 5-year average 69% and 10 years average 64%. On average, companies are reporting revenue that are 0.9% above estimates, which is a 5-year average 2.1% and average of 10-year below 1.4%. From 31 December, the positive revenue from companies in financial, consumer discretionary, health care and energy areas is surprising that the overall revenue growth for the index during this period has contributed significantly to the overall revenue growth rate.
Under the leadership of the information technology sector, eight areas are reported to increase revenue growth for Q4. On the other hand, three areas are reporting a year-on-year decline in revenue for Q4 under the leadership of industrial sector.
Results of sales and income by S&P sector:
2-day price reaction releases after income:
Fed:
Yield curve 1 m change:
Sleep:
Bitcoin:
Dxy:
looking ahead:
February Q424 will bring the conclusion of income season, as well as further economic data including jobs, inflation and GDP. The focus in a holding pattern currently with a fed should be transformed from broad macro to micro, but any giring in data can throw a wrench into things. There will be a development to see the implementation of the newly declared tariffs on both Mexico and Canada as investors assess retaliation measures. The month ranks third in terms of historic monthly returns in the last 10 years, with average return 0.15%, although it was the second best performing month with a return of 5.17%in 2024, only Nampars back from 5.73%. Was.
Economic Calendar:
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