Morning Roundup

By Mark Masterson on January 23, 2025

Good morning,

Below are the news items moving markets today:

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Executive Summary

President Trump’s first full week in office is proving to be the flurry of activity we expected. 

The lone job related economic data print for the week was a miss…..

• Initial claims came in at 223K vs consensus 219K and prior week’s unrevised 217K.
• Initial claims highest since mid-December with four-week moving average increasing 750 to 213,500 from the previous week’s unrevised average of 212,750.

Tech earnings off to a good start.  Here are the companies reporting this week.….

Earnings Whispers 1 21 25

Some interesting headlines from the past 24 hours…..

First – interesting comments from JP Morgan’s CEO – Jamie Dimon.

• JPMORGAN CEO DIMON: ASSET PRICES ‘KIND OF INFLATED’ IN U.S. STOCK MARKET
• CEO on the inflationary impacts of tariffs: “ I would put in perspective, if it’s a little inflationary, but it’s good for national security, so be it. I mean, get over it. National security trumps a little bit more inflation”
• CEO Jamie Dimon on Elon Musk  “Elon and I hugged it out…We settled some of our differences…You’ve got to look at Elon, at SpaceX, Tesla, Neuralink – the guy is our Einstein. I’d like to be helpful to him & his companies as much as we can”

We never have a lull in new headlines from President Trump as he does multiple press conferences daily…..

• President Trump’s trade comments this week have jarred somewhat of view that tariff headlines have been more benign than expected given earlier concerns around day one action.
• Markets took some comfort from reports highlighting Trump’s view of tariffs as negotiating leverage in trade deals while his memorandum ordering trade investigations in lieu of immediate tariffs was also welcomed.
• However, also thoughts memorandum more hawkish than initially interpreted given wide-encompassing nature of the investigations (probes into US trade deficits, unfair trade practices, FX manipulation and country adherence to trade deals), as well as the order specifically requesting recommendations on tariff imposition (Bloomberg).
• Trump’s unpredictability another factor clouding visibility on tariff imposition following off-the-cuff remarks this week threatening levies on Mexico, Canada, EU and China potentially as soon as 1-Feb.
• Trump has also reinforced a propensity to wield tariffs outside of a trade context, threatening to hit Russia if it does not agree to deal to end Ukraine war (Reuters).

How about this little beauty……

• BREAKING: President Trump is considering abolishing the federal income tax, per NYT.

Here is Trump on Russia and the Ukraine war….

• TRUMP: TAXES, TARIFFS, AND SANCTIONS WILL ALSO TARGET ANYTHING BEING SOLD BY RUSSIA TO VARIOUS OTHER PARTICIPATING COUNTRIES.
• TRUMP: IF WE DON’T MAKE A UKRAINE DEAL SOON, US WILL PUT HIGH LEVELS OF TAXES, TARIFFS, AND SANCTIONS ON ANYTHING BEING SOLD BY RUSSIA TO THE US.
• TRUMP: IF WE DON’T MAKE A UKRAINE DEAL SOON, U.S. WILL PUT HIGH LEVELS OF TAXES, TARIFFS, AND SANCTIONS ON ANYTHING BEING SOLD BY RUSSIA TO U.S.

Looks like Larry Fink agrees with Jamie Dimon….

• BLACKROCK CEO FINK: I SEE A POSSIBILITY FOR PROLONGED ELEVATED INFLATION.

The full summary from Washington:

• Nothing incremental on tariffs in Trump’s Hannity interview; downplays national security concerns about TikTok (The Hill)
• Trump pushing plan to use tariff revenue to help pay for tax cut extension, though likely to face GOP opposition (Reuters)
• Republican leaders considering big debt-and-funding deal with Democrats (Politico)
• Trump transition team thinks Hegseth has the votes to be confirmed as Defense Secretary (Axios)
• US military is preparing to send 1,500 troops to assist with border security (Reuters)

Some amazing charts showing the differing views depending on if you are a Republican or a Democrat….

Inflation expectations Democrats vs. Republicans post Election Day.

Republicans see it going down, and democrats see the opposite.

Bloomberg/Hedgeye 1 23 25

Another crazy chart of consumer sentiment Democrats vs. Republicans.

Hedgeye 1 23 24

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Articles of Interest:

• Markets:
  • China guiding local mutual funds and insurers to boost stockmarket investments (CNBC, Bloomberg)
  • Japan retail investors’ appetite for foreign equities keeping yen gains in check (Bloomberg)
• Central banks:
  • Fed signals extended rate pause as Trump’s policies loom, PIMCO says (FT)
  • ECB rate cut bets surge as traders eye potential half-point move by June (Bloomberg)
• Geopolitics/International:
  • Trump threatens Russia and other countries with tariffs and sanctions if Putin doesn’t agree to Ukraine deal (Reuters), NATO chief welcomes stance (CNBC)
  • Trump relists Houthis as terrorist organization after Biden administration revoked designation four years earlier (Bloomberg)
  • Saudi Arabia pledges $600B investment in US, eyeing Trump’s economic reforms (Bloomberg)
  • EU extends olive branch to Trump administration on trade (Politico), crafts comprehensive offer to avert trade war (Handelsblatt)
  • EU considers pan-EU EV subsidy to boost industry and counter China competition (FT)
  • Europe weighs troop deployment to Ukraine as Trumps return revives Macron’s proposal (FT)

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Charts of the day:

Amazing chart showing the volume of foreigners buying US stocks…..

Yardeni: “Over the past three months, foreigners purchased US equities at a record pace of $76.5 billion (chart). One note of caution: Their buying has a record of being a contrary indicator. They tend to be big buyers right before bear markets.”

Yardeni 1 23 25

Sentiment on bonds is very bearish….

Sentiment tends to be a contrarian indicator, so perhaps bonds are due for more of a bounce?

Bank of America 1 23 25

I’ve noted this for months.

Markets are expensive historically.  No question about that fact.

The below chart combines a number of metrics…..

“The S&P 500’s #valuation, measured across multiple metrics like P/E, #CAPE, and market cap to #GDP, is at historical extremes, reaching prior peaks.” –

@thedailyshot

It does show that we are in a rare extreme for sentiment….

Daily Shot 1 23 25

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Quote of the day:

“One of the most powerful ways to increase your savings isn’t to raise your income. It’s to raise your humility.”

– The Psychology of Money