Today, the latest figures on U.S. jobless claims came in at a surprisingly low 201,000, a significant drop from November's 146,000 and well below the 215,000 anticipated by Bloomberg's consensus. This is undeniably a positive signal for the job market. However, the ADP private employment report threw a slight curveball, revealing only 122,000 new jobs in September, falling short of the expected 140,000. But let's not forget the main event: the Department of Labor's official employment report, set to be released on Friday. This is the report that truly captures investors' attention, as it holds the key to understanding the broader employment landscape.

Meanwhile, Donald Trump is once again playing the provocateur, stirring the pot as he makes his business comeback. Inflation and market volatility are on the rise, much like the drama surrounding his return. At the heart of the market's current jitters is the persistent specter of U.S. inflation. It's the main character in this unfolding story, dictating the twists and turns of Wall Street's performance. Yesterday, the mere hint of accelerating price increases sent stock indices into a tailspin. The fear? That rising prices could have a domino effect, complicating monetary policy, unsettling the economy, and shaking investor confidence. Recent robust economic indicators have dashed traders' dreams of a Federal Reserve rate cut in the first half of 2025. The timeline for monetary easing seems to be slipping further into the future. This is underscored by the climb in U.S. government bond yields, which hit 4.68% on the 10-year note yesterday, marking the highest level since May 1, 2024. The market has a well-known affection for low rates, as they make borrowing cheap and encourage risk-taking.

The S&P500 lost 1.1% to 5909 points yesterday. The broad US index is now 3.1% below its December 6 record of 6099.97 points. The retreat is by no means catastrophic, but the change in perception of monetary policy does represent a paradigm shift.

Inflation is like that uninvited guest who just won't leave, and it seems Donald Trump's upcoming policies are giving it a reason to stay. Even if he doesn't follow through on his bold threats, the mere anticipation is enough to stir up anxiety. Investors, who prefer certainty, are left biting their nails. With Trump's inauguration approaching, expect more provocations that could send market volatility through the roof. In a press conference yesterday, Trump was in rare form, delivering a performance that can only be described as a spectacle. He once again floated the idea of turning Canada into the 51st state, while also expressing his interest in purchasing Greenland and the Panama Canal. These are territories he hinted he might acquire by any means necessary. And let's not forget his whimsical notion of renaming the Gulf of Mexico. It's a lot to digest, and the markets are feeling the indigestion. The future U.S. president's overtly imperialist vision is upsetting and shocking the muffled world of traditional diplomacy.

At the same time, China seems to be getting depressed again. The negative signals continue to pile up for the country's economy, whose attractiveness is in freefall. A well-documented article published yesterday by Bloomberg reinforced this feeling among Western financiers. As if in a twist of fate, it's the deflationary spiral that's causing the most concern - the exact opposite of the situation in the United States. The stimulus measures announced by the authorities seem to be flopping and are gradually losing their traction. This is why the MSCI China index has lost 4.5% since the start of the year. At the same time, and despite yesterday's setback, the S&P500 remains in positive territory in 2025 (+0.5%). The broad European Stoxx Europe 600 index did slightly better, up 1.4% since January1, following a positive session yesterday. The moderation in European inflation should enable the ECB to cut interest rates without having to rack its brains, as the Fed is forced to do.

So, to sum up, three rooms, three economic moods: deflation and depression in China, moderate inflation and leverage on rates in Europe, and high inflation and monetary rigor in the United States.

In Asia Pacific this morning, Japan loses a few points while China continues its slide. In Hong Kong, the Hang Seng fell for the 4th time in 5 sessions in January. South Korea gained 1.1% thanks to Samsung, whose cautious forecasts were put aside by a comment from Nvidia boss Jensen Huang, who expressed confidence in the Korean company's ability to resolve the technical problems with its memories. Jensen Huang is everywhere, even among competitors. India loses 0.1%, while Australia gained 0.8% thanks to financials and mining. In Europe, it’s a sea of red, with the Stoxx Europe 600 down 0.5%. Futures are also in the red, with futures on the three main indices down between 0.1 and 0.2%.

Today's economic highlights:

Today, the market awaits the minutes of the latest Fed meeting, to be published at 2:00 pm. US employment data (ADP survey and weekly jobless claims) are also on the calendar. https://www.marketscreener.com/stock-exchange/calendar/economic/

  • Dollar: EUR 0.9713  GBP 0.8106
  • Ounce of gold: USD 2667
  • Brent crude: USD 76.98 WTI: USD 74.00
  • 10-year US bond: 4.70
  • Bitcoin: USD 95,000

In corporate news:

  • Cintas makes $5.1 billion takeover bid for uniform supplier UniFirst.
  • The Goodyear will sell its Dunlop brand to Sumitomo Rubber Industries for $701 million.
  • Exxon Mobil estimates that oil price variations will reduce its fourth-quarter upstream earnings by $500 to $900 million.
  • Angi, a subsidiary of Handy Technologies, has agreed to pay $3 million to settle allegations by the FTC and New York Attorney General that it misled gig workers about their earning potential through misleading advertisements.
  • The Toronto-Dominion Bank questions the future of its 10.4% stake in Charles Schwab.
  • AWS (Amazon) to invest around $11 billion to expand its infrastructure in the USA (Georgia) to support cloud and AI technologies.
  • Financial stocks declined, influenced by a lawsuit against landlords like Cushman & Wakefield for alleged pricing schemes and Blackstone's acquisition of a stake in Citrin Cooperman, amidst broader financial market volatility.
  • The UK competition regulator is considering approving Synopsys' $35 billion acquisition of Ansys, contingent on the divestiture of certain business units.
  • Flutter Entertainment has reduced its 2024 revenue and adjusted EBITDA forecasts, citing unfavorable sports betting results in the US, particularly due to customer-friendly outcomes in Q4.
  • Tesla faces multiple challenges including a potential impact on its partnership with CATL due to U.S. military linkage concerns, investigations into its remote driving features and crash allegations, and high execution risks affecting its valuation, alongside an incident involving a Cybertruck explosion planned using AI chatbot ChatGPT.
  • Meta terminates its fact-checking program in the USA.
  • Merck & Co announces that its HPV vaccine for men has been approved by the Chinese Drug Regulatory Authority.

Analyst recommendations:

  • Accenture Plc: Wolfe Research upgrades to outperform from peerperform with a target price of USD 425.
  • Adobe Inc.: Deutsche Bank downgrades to hold from buy with a target price reduced from USD 600 to USD 475.
  • Aon Plc: Evercore ISI upgrades to outperform from in-line with a price target raised from USD 407 to USD 420.
  • Apa Corporation: Zacks downgrades to underperform from neutral with a target price reduced from USD 25 to USD 20.
  • Arthur J. Gallagher & Co.: Piper Sandler & Co upgrades to overweight from neutral with a price target raised from USD 285 to USD 315.
  • Autodesk, Inc.: Piper Sandler & Co upgrades to overweight from neutral with a price target raised from USD 311 to USD 357.
  • Boston Properties, Inc.: Wedbush upgrades to neutral from underperform with a price target raised from USD 70 to USD 81.
  • Ge Healthcare Technologies Inc.: Jefferies upgrades to buy from hold with a target price raised from USD 95 to USD 103.
  • Globe Life Inc.: Evercore ISI upgrades to outperform from in-line with a price target raised from USD 132 to USD 143.
  • Healthcare Realty Trust: Wedbush upgrades to neutral from underperform with a price target raised from USD 16 to USD 18.
  • L3Harris Technologies, Inc.: Bernstein upgrades to outperform from market perform with a price target reduced from USD 289 to USD 267.
  • Merck & Co., Inc.: Truist Securities downgrades to hold from buy with a target price reduced from USD 130 to USD 110.
  • Northrop Grumman Corporation: Wells Fargo upgrades to overweight from equalweight with a target price raised from USD 505 to USD 595.
  • Palo Alto Networks, Inc.: Deutsche Bank downgrades to hold from buy with a target price reduced from USD 207 to USD 190.
  • Polaris Inc.: KeyBanc Capital Markets downgrades to sector weight from overweight.
  • Rpm International Inc.: Wells Fargo upgrades to overweight from equalweight with a target price raised from USD 134 to USD 140.
  • Take-Two Interactive Software, Inc.: Baptista Research downgrades to hold from outperform with a price target raised from USD 180.20 to USD 210.
  • Tapestry, Inc.: Barclays upgrades to overweight from equalweight with a price target raised from USD 57 to USD 87.
  • The Allstate Corporation: Evercore ISI upgrades to outperform from in-line with a price target raised from USD 209 to USD 226.
  • Vici Properties, Inc.: Wedbush downgrades to neutral from outperform with a price target raised from USD 33 to USD 34.
  • Workday Inc.: Deutsche Bank upgrades to buy from hold with a target price raised from USD 265 to USD 300.
  • Affirm Holdings, Inc.: RBC Capital maintains its sector perform recommendation with a price target raised from 52 to USD 67.
  • Biogen Inc.: Truist Securities maintains its buy recommendation and reduces the target price from USD 302 to USD 220.
  • Lineage, Inc.: Mizuho Securities maintains a neutral recommendation with a price target reduced from USD 86 to USD 67.
  • Palantir Technologies Inc.: Deutsche Bank maintains its sell recommendation and raises the target price from USD 26 to USD 35.
  • Servicenow, Inc.: Baird maintains its outperform recommendation and raises the target price from USD 975 to USD 1250.
  • Admiral Group Plc: Morgan Stanley maintains its underweight rating with a target price raised from GBX 2100 to GBX 2612.
  • Ashmore Group Plc: Jefferies downgrades to hold from buy with a target price reduced from GBX 220 to GBX 170.
  • Beazley Plc: Morgan Stanley maintains its overweight rating with a price target raised from GBX 897 to GBX 959.
  • Experian Plc: AlphaValue/Baader Europe upgrades to buy from add with a price target raised from GBX 4557 to GBX 4599.