Market Report.
📉 Another day of uncertainty, with the market moving sideways. No significant corrections, but no gains either. The cause is likely fear of a large-scale conflict in the Middle East. As a distraction, Trump’s order to declassify everything about extraterrestrial life. Let’s analyse everything in depth.
🇺🇸 President Trump has issued a new ultimatum to Iran, warning that “really bad things” will happen if Iran does not make a deal over its nuclear program within the next 10-15 days. Trump threatened to take military action against Iran, saying the U.S. may have to “take it a step further” beyond the airstrikes carried out last June.
🇮🇷 Iran responded by threatening to retaliate against U.S. bases in the region if attacked, saying “all bases, facilities, and assets of the hostile force” would be legitimate targets.
🛰️ Chinese satellite published high‑resolution images showing a significant U.S. air buildup at Al Udeid Air Base in Qatar, amid rising U.S.–Iran tensions. Chinese commercial satellites repeatedly publishing imagery of U.S. assets (Patriot, THAAD, tankers, fighters) across Qatar, Jordan, Bahrain, and nearby bases during the current Iran crisis.
🛢️ Because of this, the crude market remains hot. West Texas Intermediate crude is trading below $67 per barrel, while Brent crude is near $72 per barrel, after gaining around 7% in the previous two sessions. Oil prices have surged around 16% this year as traders weigh the risk of supply disruptions from a potential conflict in the Middle East, offsetting expectations of a building global surplus.
🇬🇧 The Times revealed that the United Kingdom ‘has not yet granted permission’ for the US to use RAF Fairford (Gloucestershire, England) and Diego Garcia (British territory in the Indian Ocean) in a possible attack on Iran.
💰 Meanwhile, Trump announces that he already has funds for Gaza: President Trump announced that his newly formed “Board of Peace” has received around $17 billion in pledges from various countries for humanitarian and reconstruction efforts in Gaza.
🤝 The U.S. will contribute $10 billion, while over half a dozen other countries have promised $7 billion and personnel for a stabilization force in Gaza.
⚠️ Trump claimed the Board of Peace is proving it can “devise and implement real solutions” to global problems, though details remain unclear on how it will wrest control of Gaza from Hamas. Trump threatened that Hamas would be “harshly met” if it refuses to give up its weapons, but provided few specifics on how the stabilization force would operate.
📉 Remember when we said that the tariffs and DOGE had made the US government recorded a budget deficit of $95 billion in January, 26% lower than a year ago. Well, the trade balance, however, has barely changed.
📦 Despite President Trump’s efforts to reduce the U.S. trade deficit through tariffs and other measures, the deficit remained largely unchanged in 2025. The U.S. trade deficit for 2025 totaled $901.5 billion, down only slightly by 0.2% or $2.1 billion from the previous year.
🌍 The deficit remained stubbornly high, with the U.S. posting its largest goods deficits with the EU ($218.8 billion), China ($202.1 billion), and Mexico ($196.9 billion).
📈 Exports rose by $199.8 billion to $3.43 trillion in 2025, but imports also increased by $197.8 billion to $4.33 trillion, offsetting the gains in exports. Trump’s tariff policies had limited impact in significantly reducing the trade deficit, as companies front-loaded imports early in the year to get ahead of the new duties. It would be interesting to look at the medium- and long-term effect.
🇯🇵 Japan’s headline inflation rate fell to 1.5% in January, the lowest level since March 2022 and ending a 45-month streak of being above the Bank of Japan’s 2% target. Core inflation, excluding fresh food prices, eased to 2%, the lowest since January 2024 and matching forecasts. The “core-core” inflation, excluding fresh food and energy, came in at 2.6%.
🏦 The Bank of Japan has upgraded its inflation forecasts for fiscal 2026, projecting core inflation at 1.9% and “core-core” at 2.2%, up from previous estimates. Despite the slowdown, the BOJ is unlikely to delay rate hikes, as the core-core index, a clearer gauge of underlying price pressures, is easing only gradually from 2.9% to 2.6%.
📊 The inflation data comes after Japan’s economy grew 0.1% in the fourth quarter, narrowly avoiding a technical recession.
🇩🇪 Another of the world’s great economies also seems to be changing, Germany.
💶 Germany’s federal and state government tax revenues fell by 3.4% in January 2026 compared to the same month a year earlier: The year-on-year comparison was distorted by one-off factors affecting federal taxes, most of which relate to the comparative base from January 2025.
📆 The German government expects economic growth of 1.0% in 2026, a modest recovery following years of stagnation. Tax experts forecast tax revenue to increase to 926.9 billion euros in 2026, up 2.8% from the previous year.
🏛️ Political maneuvering around the upcoming leadership changes at the European Central Bank (ECB): The apparent early departure of ECB President Christine Lagarde, following the recent exit of French central bank head Francois Villeroy de Galhau, raises concerns about the independence and credibility of the ECB.
🇫🇷🇩🇪 French President Emmanuel Macron and German Chancellor Friedrich Merz appear to be “election-proofing” the stewardship of the euro by blocking the possibility of Euroskeptic politicians like Marine Le Pen or Jordan Bardella from influencing ECB leadership.
❓ Does this mean that Trump is not the only villain in this film, pursuing the Fed’s interventionism, but that the EU is also carrying out political manoeuvres to disrupt the natural evolution of institutions like ECB?
⚡ European bureaucrats seem to want to once again tamper with democratic processes within Europe, fuelling the anti-EU surge.
🎯 There are concerns that this political maneuvering could distract from the ECB’s primary focus on addressing persistent low inflation and ensuring competent monetary policy during a critical period for the euro area.
🏦 By the way, the European Central Bank (ECB) has fined JPMorgan’s European arm €12.18 million ($14.32 million) for misreporting its capital requirements.
📑 Between 2019 and 2024, JPMorgan’s European unit reported lower risk-weighted assets than it should have, by misclassifying corporate exposures and applying a lower risk-weight than required by banking rules. The bank also unduly excluded certain transactions when calculating its risk-weighted assets.
📝 JPMorgan acknowledged the fine and stated that it has remedied the issue. The bank maintained that it has consistently maintained strong capital buffers and its approach to capitalization remains unchanged. The ECB decision may be challenged at the Court of Justice of the European Union.
🏢 The US investment firm Blue Owl Capital is experiencing some turbulence growing interconnectedness between private credit, pension funds, and the insurance industry, with the potential risks this may pose to financial stability. Blue Owl Capital sold a $1.4 billion portfolio of private loans to help pay out investors in one of its private credit funds: The buyers were three major North American pension funds – CalPERS, OMERS, and BCI – as well as Blue Owl’s own insurance subsidiary, Kuvare.
🔄 The sale was part of Blue Owl’s plan to return cash to investors in its Blue Owl Capital Corp II fund, which faced a wave of redemptions last year.
💼 Blue Owl said the loans were sold at 99.7% of par value, and the strong bidder interest suggests the assets were viewed as attractive. The transaction highlights the growing entanglement between private credit and the insurance industry, as some of the assets may end up in Blue Owl’s collateralized loan obligations (CLOs), which are popular with insurers.
Geopolitics.
👑 Yesterday, on his birthday, Prince Andrew was arrested by police at his home. Potential implications of the arrest of Prince Andrew, the younger brother of King Charles, on suspicion of misconduct in public office: Allegations include that Andrew forwarded confidential reports to Epstein while serving as a UK trade envoy, and that he may have been involved as an accessory or witness to Epstein’s use of UK airports for human trafficking.
📰 A Bloomberg article suggests the monarchy may struggle to survive the scandal, as it goes beyond previous royal scandals that were eventually forgotten or absorbed into the institution’s mythology.
🚔 The Police released yesterday a statement saying that Andrew has been “released under investigation.”
🛸 Trump has announced a directive, but it is more a political instruction to “start a process” than an immediate mass declassification of every UFO/alien file.
📢 In a Truth Social post, Trump wrote that, “based on the tremendous interest shown,” he will direct the Secretary of War/Defense and other agencies “to begin the process of identifying and releasing Government files related to alien and extraterrestrial life, unidentified aerial phenomena (UAP), and unidentified flying objects (UFOs), and any and all other information” on these issues.
🤔 What are they trying to distract you with here? What’s coming next?
Market View.
📊 As noted in the full report, US equity markets are neither falling nor advancing decisively.
📉 E‑mini S&P 500 futures remain within the same range seen in recent days, currently trading around 6,895 points.
💻 Nasdaq 100 futures have once again slipped below the 25,000‑point level, but continue to hover nearby at approximately 24,930 points.
💵 The US Dollar Index (DXY) continues to strengthen, climbing to around 98. This is putting pressure on EUR/USD, which has fallen below the 1.18 level and is currently trading near 1.1745.
🇪🇺 In Europe, modest corrections were seen during yesterday’s session. The DAX returned to the 25,000‑point region before rebounding to around 25,100 points. Meanwhile, Euro Stoxx 50 futures have pulled back from recent all‑time highs and are now trading near 6,080 points.
🛢️ The oil market continues to post strong gains amid renewed tensions with Iran, with spot Brent crude reaching around $72.30 per barrel in recent hours.
🥇 Gold futures are back above $5,030 per ounce, with the technical picture remaining constructive.
₿ Finally, Bitcoin remains unchanged, hovering near the $68,000 level, which for now continues to act as resistance.
