πŸ“Š ATFX’s Market Report.

🌍 Yesterday Trump promised a “revolution of common sense” to reverse the “failed policies” of the Biden administration, which he says caused “economic chaos” and “wasteful deficit spending.” He promised a “revolution of common sense” to reverse the failed policies of the Biden administration, which caused economic chaos and wasteful deficit spending. Trump directed his cabinet to “marshal all powers” to reduce the cost of living, including through the largest tax cut in US history. He claimed Kiev is ready to make a deal with Putin and is willing to meet with Putin soon with China’s help to end the “absolute killing field.” Trump also announced talks with China and Russia on reducing nuclear stockpiles, calling it an “unbelievable thing for the planet.” He issued a warning to businesses to either manufacture their products in the US or face tariffs to strengthen the economy and pay down debt. Trump also praised his executive order on border security, abolishing discriminatory diversity, equity, and inclusion, and banning transgender participation in women’s sports.

🀝 The leaders of the world’s two largest economies discussed issues such as TikTok, trade, and Taiwan in a phone call before Trump took office, as He has relevated during a FOX’s interview. Trump has spoken about a 10% punitive duty on Chinese imports due to fentanyl being sent from China to the U.S. via Mexico and Canada. He has also threatened tariffs against the European Union, Mexico, and Canada. Trump said the call was a friendly conversation and he could make a deal with China over fair trade practices. He would prefer not to use tariffs against China but called tariffs a “tremendous power.” The U.S. and China are embroiled in diplomatic and economic disagreements, including a technological and military rivalry, trade disputes, and concerns over TikTok’s ownership.

πŸ’Ή The Bank of Japan raised interest rates to their highest in 17 years, predicting that rising wages will keep inflation stable around its 2% target. The core consumer price index in Tokyo is expected to rise 2.5% YoY in January, up from 2.4% in December. Japan’s core consumer prices rose 3.0% YoY in December, the fastest annual pace in 16 months. Industrial output and retail sales are expected to rise 0.3% and 3.2% respectively. The jobless rate remains at 2.5%, and the jobs-to-applicants ratio is likely to remain at 1.25. Data releases are scheduled for January 31st. The BOJ made no change to its guidance on future policy, saying it will continue to raise rates if its economic and price forecasts are realized.

🌐 The European Union’s crackdown on American tech companies like Apple, Google, Meta, and Elon Musk’s X platform is causing President-elect Donald Trump to decide whether he is more concerned with Europe or Big Tech. The EU’s new laws, such as the Digital Services Act and Digital Markets Act, could result in billions in fines or mandatory divestment orders for these companies. The EU’s actions against Musk’s X platform could expose the bloc to retaliation from the new administration. Apple faces potential fines over its App Store practices, while Meta’s Zuckerberg has been cozying up to Trump. If Trump sides with Big Tech against the EU’s regulatory actions, it could spark broader tensions between the two sides of the Atlantic.

πŸ”¬ The European Union is planning to establish an advanced research project agency modeled on US government entities to invest in strategic technologies and build new aggregated supercomputing infrastructure for artificial intelligence. This is part of its “Competitiveness Compass” strategy, which aims to compete with the US and China for the next five years. The EU will also establish “mega AI factories” for start-ups, researchers, and industry to train and develop their AI models. The strategy will address areas like closing the innovation gap, transitioning to a climate-neutral economy, and dealing with a challenging security environment and vulnerable supply chains. Additionally, the EU will cut reporting obligations by at least 25% and create a new category for mid-sized firms.

πŸšͺ The EU launches its Pan-Euro-Mediterranean Convention (PEM) programme to compete with China’s RBI. The European Union has indicated it would be open to the UK joining the Pan-Euro-Mediterranean Convention (PEM), a customs program that also includes parts of the Middle East and Africa. Maros Sefcovic, the EU’s trade chief, said the bloc would consider the UK entering the PEM program, which helps broaden the supply chain companies can use in their trade between the EU and other members. The new Labour administration in UK seeks to forge closer ties with the bloc, though it has ruled out re-joining the single market and customs union. Joining the PEM convention would also help British companies selling to other PEM members outside the EU, such as Turkey or North Africa, by widening their potential supply chains. Other PEM members outside the EU include Switzerland, Iceland, Algeria, Egypt, Israel, Morocco, Serbia and Ukraine.

πŸ“ˆ Market view:

πŸ“ˆ The S&P 500 futures have just reached new all-time highs at 6155 points, after which they have slightly retreated a few points. Nasdaq 100 futures have also broken records at over 22000 points and are currently at this border.

πŸ’΅ The dollar seems to be weakening for good. It has approached the 107.50 level, but is currently showing a slight rebound towards 107.75. In the currency market, the EUR/USD has regained the 1.0450 level.

πŸ“‰ In Europe, the DAX 40 continues to set consecutive record highs, completely oblivious to the domestic crisis facing Germany. The index is currently above 21600 points. The EuroStoxx 50 is also rising strongly, topping 5250 points. The verticality on the charts is impressive, and although a severe correction is inevitable, our projection puts the target for the EuroStoxx at around 5350 points, provided the upward movement continues uninterrupted.

πŸ›’οΈ The crude oil market continues to decline after Donald Trump’s remarks at the World Economic Forum. Trump promised a deal to increase oil production and reaffirmed the public abandonment of US commitments on climate change. In this context, Brent crude oil has lost 78 dollars a barrel in the last few hours, although it is currently trading slightly above this level.

πŸ’° Gold, on the other hand, continues its slow but steady advance. It is currently close to 2800 dollars per ounce, trading at 2778 dollars per ounce.

πŸ’² Bitcoin, true to its volatile nature, is zigzagging around $105,000. It is currently at 104745 dollars.

🌍 Geopolitics:

🌐 German Economy Minister Robert Habeck warned Europe against becoming overly reliant on US energy, urging the region to stick together in response to the new Trump administration. Habeck said Europe should “meet the Trump administration with an outstretched hand, but not have our hand cut off,” referring to Trump’s climate and energy directives. Habeck cautioned that increased reliance on the US for energy could lead to a “form of blackmail” similar to Europe’s past dependence on Russian gas. Habeck emphasized that in a world where energy supply chains can be exploited for geopolitics, “energy dependency is always a problem.”

πŸ‡·πŸ‡Ί Russia announced that Ukraine attacked TurkStream pipeline facilities in the Krasnodar region of the North Caucasus, transporting Russian natural gas to Turkey and several European countries via Bulgaria. The attack was reportedly unsuccessful but Russia described it as ‘energy terrorism’. The attack is reminiscent of the Nord Stream pipeline sabotage in 2022, which was later revealed to have been organized by Ukrainian agents with possible Polish help. Ukraine had cut off Russian gas transit to Europe through its territory, making TurkStream the only supply route. Countries like Hungary and Bulgaria have reacted by stressing the importance of TurkStream and announcing measures to secure Balkan Stream. Ukraine’s and the EU’s interests seem increasingly at odds, despite European politicians and bureaucrats trying to convince people otherwise.

πŸ’£ President Trump Signs Executive Order Declassifying the JFK, RFK and MLK Assassination Files. The Order states, β€œThe American people deserve transparency and truth. It is in the national interest to finally release all records.” The Director of National Intelligence has been given 15 days to formulate a plan to release the remaining JFK documents, and 45 days to release the remaining RFK and MLK Jr. documents.