1. On Monday, January 26, U.S. stock index futures for the three major indices all fell ahead of the market open. As of the time of writing, Dow Jones futures were down 0.00%, S&P 500 index futures fell 0.07%, and Nasdaq futures declined 0.18%. 2. As of the time of writing, Germany's DAX index rose 0.10%, the UK's FTSE 100 index increased 0.17%, France's CAC 40 index fell 0.21%, and the Euro Stoxx 50 index dropped 0.08%. 3. As of the time of writing, WTI crude oil rose 0.07% to $61.11 per barrel. Brent crude increased 0.12% to $65.15 per barrel.
Major tech giants are set to report earnings this week, facing a critical test for their trillion-dollar AI bets. Microsoft, Meta Platforms, and Tesla will announce their results on Wednesday, followed by Apple on Thursday. As large technology companies prepare to release quarterly earnings in the coming weeks, AI-related trades are approaching a pivotal juncture. The "Magnificent Seven" were previously seen as undisputed winners in the market, but this narrative has significantly wavered since the start of the year, with investors now chasing cyclical stocks, small-caps, and international momentum plays. This earnings season will test the resilience of these mega-cap tech stocks, especially against a backdrop of market broadening beyond a handful of winners. Furthermore, as the memory chip industry enters a "super cycle," South Korea's two memory chip giants—SK Hynix and Samsung Electronics—are scheduled to report earnings this week. Wall Street analysts are becoming increasingly optimistic about the fundamentals and stock price prospects of core companies related to memory chips/storage products.
Can Powell "stand firm" to the end? The market is already betting that the Fed will not yield. Since the beginning of the year, the博弈 over the Federal Reserve's independence has escalated to multiple levels, yet the world's most important central bank has shown little sign of compromise—it now even has support from the Supreme Court and senior politicians. Whether this backing gives the Fed the confidence to strongly resist pressure for "accelerated rate cuts" will be a core test this week. The upcoming Federal Open Market Committee (FOMC) meeting is almost certain not to kickstart an accelerated easing cycle. However, how Powell outlines the future policy path and responds to questions related to political pressure may be the central focus of this meeting—especially given the high likelihood that U.S. President Donald Trump will announce his candidate to replace Powell during the two-day meeting. Additionally, as the U.S. Attorney's Office for the District of Columbia has launched a criminal investigation into Federal Reserve Chair Powell concerning the renovation of the Fed's Washington headquarters and whether Powell lied to Congress about the project's scope, it remains uncertain whether Powell will be able to attend the press conference on time.
JPMorgan sounds the prelude to the Fed's rate decision: internal hawkish voices emerge, policy statement wording may see subtle adjustments. JPMorgan recently released a preview report for this week's Fed decision. The bank stated that this meeting will not include new rate dot plots or economic projections, and revisions to the post-meeting statement are unlikely to send substantial policy signals. During the press conference, the bank expects Powell to indicate that current policy is well-prepared to address various risks to the Fed's dual mandate and that he will avoid discussing political issues related to the Fed. The bank anticipates several adjustments to the statement: the description of economic growth might be upgraded from "moderate" to "solid"; job growth may still be described as slow, but unlike the previous statement's mention of a "slight increase in the unemployment rate before September," this week's statement could note that the unemployment rate has stabilized in recent months. The bank expects inflation to still be described as "slightly elevated." In the risk balance section, the bank anticipates the Committee will remove the phrase "downside risks to employment have increased in recent months" but will continue to emphasize its ongoing attention to risks related to both sides of the dual mandate.
Approaching $5,100! Gold's bull run charges ahead at full speed, fueled by geopolitical risks and currency depreciation. International gold prices have broken through the $5,000 per ounce mark for the first time, with the rally remaining fierce. This sharp rise in gold is driven by President Donald Trump's reshaping of the diplomatic landscape and investors' massive exodus from sovereign bonds and various currencies. Boosted by a weaker U.S. dollar, spot gold extended gains by up to 2.2% as of writing, approaching $5,100 per ounce, having earlier risen to $5,111.11 per ounce during the day. Over the past six trading sessions, the U.S. dollar index has fallen nearly 2%. Market speculation that the U.S. might assist Japan in boosting the yen, combined with concerns over Fed independence and the unpredictability of Trump's policies, has further exacerbated the dollar's weakness. Other precious metals also rose, with spot silver up over 6% to $109.7 per ounce, having reached $110.125 per ounce intraday; spot palladium gained over 5%; spot platinum rose nearly 4%.
Homeland Security funding has become a flashpoint, with the shadow of a U.S. government shutdown reappearing. According to reports, a Senate Republican aide stated that Senate Republican leaders plan to reject Democrats' request to split Homeland Security Department funding and will push for passing a massive omnibus spending bill to avoid a partial government shutdown this week. It is reported that several Democratic senators spoke out on January 24 to condemn immigration enforcement actions by U.S. Immigration and Customs Enforcement (ICE), a sub-agency of the Department of Homeland Security, in Minnesota. Senate Democratic Leader Chuck Schumer said that evening that if Homeland Security funding is included in the government funding bill, Democrats will block its passage in the Senate. In December of last year, the U.S. Congress passed a temporary funding bill for the federal government, ending the longest government shutdown in U.S. history, which lasted 43 days. The temporary funding bill expires at the end of this month, and Congress must pass a new funding bill before the deadline, otherwise many federal agencies will once again "shut down."
The Trump administration is splashing out $1.6 billion to take a stake in USA Rare Earth (USAR.US), valuing the company at a staggering $16 billion! According to a report last Saturday, the Trump administration plans to inject $1.6 billion into USA Rare Earth in exchange for a 10% equity stake, which would represent the U.S. government's largest single investment in the rare earths sector to date. Based on disclosed transaction details, the total $1.6 billion investment package includes approximately $277 million in equity acquisition and $1.3 billion in government loans, granting the U.S. government a 10% stake in the company. In addition to the direct government funding, investment bank Cantor Fitzgerald will lead a $1 billion private financing package, leveraging a public-private partnership model to push USA Rare Earth's overall valuation to approximately $16 billion. This figure far exceeds the company's current secondary market capitalization, reflecting a strong consensus on the premium for strategic mineral resources between Wall Street and the White House. As of writing, USA Rare Earth's stock surged over 37% in Monday's premarket trading, while another U.S. rare earth supplier, MP Materials (MP.US), rose over 5%.
A massive $30 billion acquisition deal falls through! Merck (MRK.US) and Revolution (RVMD.US) halt talks due to price disagreements. According to informed sources, Merck has stopped negotiations to acquire biotechnology company Revolution Medicines after the parties failed to agree on a purchase price. Reports indicated the deal would have valued Revolution Medicines at around $30 billion. The report added that talks could potentially resume in the future, or other bidders might emerge. Currently, Merck is seeking to strengthen its treatment portfolio through deals to address an anticipated approximately $18 billion sales loss over the next five years due to patent expirations. A deal with Revolution Medicines could have given Merck access to its experimental drug, Daraxonrasib. As of writing, Revolution Medicines' stock plummeted over 22% in Monday's premarket trading.
Citigroup (C.US) may conduct a new round of layoffs in March, potentially affecting MD and senior-level positions. Citigroup is expected to cut more jobs in March, following a round of approximately 1,000 layoffs this month. Sources stated that the new round of layoffs is expected to be announced after bonus payments are distributed but did not disclose the number of cuts. The sources said the March layoffs are likely to affect Managing Directors and senior-level employees across various business lines. Some senior managers have already been reassigned to different departments to secure their positions ahead of the staff reduction. Citigroup's CFO stated during a recent earnings call that they have been continuously reducing headcount and expect this trend to continue, aiming to cut costs and improve efficiency. He also mentioned that Citigroup's severance expenses last year were approximately $800 million.
Reports suggest IonQ (IONQ.US) is splashing $1.8 billion to acquire domestic foundry giant SkyWater (SKYT.US), aiming to secure long-term U.S. Department of Defense orders. According to reports, quantum computing company IonQ Inc. has agreed to acquire SkyWater Technology, valuing the chip manufacturer at approximately $1.8 billion. IonQ will acquire the Minnesota-based company for $35 per share in a cash-and-stock deal. IonQ CEO Niccolo de Masi stated that the transaction aligns with Trump's goal of revitalizing U.S. chip manufacturing. SkyWater is the only pure-play semiconductor foundry in the United States. By acquiring it, IonQ gains access to a trusted domestic production line, mitigating supply chain risks for quantum processing units (QPUs) from design and prototyping to mass production. As of writing, SkyWater's stock rose over 7% in Monday's premarket trading, while IonQ gained nearly 2%.
Earnings Preview for Tuesday Premarket: UnitedHealth (UNH.US), Boeing (BA.US), NextEra Energy (NEE.US), Union Pacific (UNP.US), United Parcel Service (UPS.US), General Motors (GM.US), American Airlines (AAL.US)
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