Trump inauguration week boosted stocks, cryptos and kept bond yields stable; USD weakened and Oil price lowered
WEEKLY TRENDS
WEEKLY TRENDS
- The second week of Q4 earnings releases confirmed the first week, with strong results and positive outlook (e.g. Netflix jumped by 14%)
- This coming week will see big names releasing their results: 4 of the Mag7 (Apple, Meta, Tesla, Microsoft) and in Europe (LVMH, ASML, SAP) together with important macro data (US December PCE inflation on Friday) and Monetary Policy decisions (Fed/FOMC on Wednesday expected to stay put, ECB on Thursday expected to cut by 25bps)
- In his inauguration speech, Trump clearly pushed 4 related market sectors: Oil producers with his ‘Drill, baby, drill’; AI with his ‘Stargate’ programme that brings together OpenAI, Oracle and Softbank which stocks gained 14% last week; Data centres (Amazon, Microsoft) and nuclear energy needed by those; US made digital coins that could well be included in the US reserves (e.g. Solana, Ripple, USDC)
MARKETS
Equities
US Q4 earnings released (weekly stock performance):
Netflix (+14%), Charles Schwab (+7%), Abbott Lab (+9%), P&G (+2%), J&J(-1%), Citi (+13%), Texas Instruments (-3%)
EU:
Ericsson (-10%); Burberry (+17%) with LVMH, Kering, Hermès (+6%) continuing to benefit from likely US tariffs exemption
Bio Pharma:
Novo Nordisk (+8%) good test results on new obesity drug Amecrytine; Moderna (+21%) boosted by Covid-19 orders from 19 EU countries
Analysts:
Aviva (JPM ’overweight’ target GBP 615); BMW (Berenberg ‘buy’ target EUR 92); TotalEnergies (HSBC ‘buy’ target EUR 67.5)
Rates
US curve (2-10 years) steepening remained at 35bps. Bond yields remained flat across the board, HY corporate spread lower still
Commodities
Oil price down, after Trump’s Davos speech, asking Saudi Arabia and other OPEC members to lower the Oil price and hike production
Japan
BoJ raised as expected its rate by 25bps to 0.5% (highest since 2008)
Cryptos
BTC hit another record high last week at $109k while Ripple XRP, Solana SOL remained fairly stable (month performance at +40% for both)
Under the watch
AI demand drives Uranium price up (enriched uranium at ATH $190)
Nota Bene
US money market funds at another record high ($8.2trn) but cash as a percentage of total assets is at record low (Goldman Sachs)
MicroStrategy bought another $1.1bn of BTC last week (now holds 2.1% of total BTC, with a total investment at $29bn)
CALENDAR
Monetary Policy releases:
US: FOMC/FED (29 Jan) likely to stay put (unchanged rates)
EU: ECB (30 Jan) expected to cut by 25bps
Q4 Corporate earnings:
US: AT&T (27), GM (28), Microsoft, Meta, Tesla, IBM (29), Apple (30), ExxonMobil, Chevron (31)
EU: LVMH, SAP (28), ASML (29 Jan), ABB, Sanofi, Roche, Shell (30), Novartis (31)
WHAT ANALYSTS SAY
Goldman Sachs, 24 Jan 2025
Authors: Brian Singer, Jim Schneider and Carly Davenport ; Peter Oppenheimer, chief global equity strategist and head of macro research in Europe
· New data centers could drive a nuclear energy resurgence
Is nuclear energy the answer to data centers' power consumption?
The growing power demand created by data centers is likely to contribute to a resurgence of nuclear energy capacity, according to Goldman Sachs Research. In the US alone, big tech companies have signed new contracts for more than 10 gigawatts (GW) of potential new nuclear capacity in the last year.
However, nuclear energy alone won't be enough to satisfy the growing demand for power. Some 85-90 GW of new nuclear capacity would be needed to meet all the data-center power demand growth that our analysts expect by the end of the decade. Electricity usage by data centers is expected to more than double by 2030, according to reports led by Brian Singer, Jim Schneider, and Carly Davenport.
Our team expects renewable energy sources will comprise 40% of new capacity built to support the additional power demand from data centers through 2030. But renewables often come with higher transmission costs, and their capacity can fluctuate throughout the day. To ensure lower-carbon, round-the-clock power, technology companies are likely to take advantage of a combination of all of the above power sources and continue to support batteries, gas-fired plants, and carbon removal technology.
· Global stocks are vulnerable to declines
The Key Number: $11,000,000,000,000 ($11trn)
The large US technology companies known as the Magnificent 7 have added about $11 trillion in market cap since January 2023. That's the equivalent of all UK, French, and German stock market caps combined.
Global stocks are in a vulnerable position after two years of soaring valuations (particularly in the US), according to Goldman Sachs Research. “The powerful rally in equity prices in recent months leaves equities priced for perfection,” Peter Oppenheimer, chief global equity strategist and head of macro research in Europe. “While we expect equity markets to make further progress over the year as a whole — largely driven by earnings — they are increasingly vulnerable to a correction driven either by further rises in bond yields and / or disappointments on growth in economic data or earnings.”
That's a sign that diversification has become more important for the year ahead, according to Goldman Sachs Research. The portfolio strategy team recommends considering geographic diversification. The surging US dollar has benefited companies in other countries that count on the US for a higher share of their revenues, but they are still much cheaper than their US counterparts. Companies outside the technology sector are an opportunity, particularly “quality compounders” — stocks that generate steady profit growth throughout the economic cycle. Equity correlations are declining, which could open up opportunities for stock picking.
MKS PAMP, 23 Jan 2025 - Precious Metals Outlook 2025
· Gold : a new year, a new opportunity for another record high but bear risks grow
Base case: 2025 average price forecast $2750/oz (50% probability) - 2025 high-low range: $2500 - $3200/oz
Gold is in secular bull market, but the direction of travel won’t be as one-directional in 2025 as in 2024. Peak political fear is behind us following Trump’s decisive win, compounded by the US focus on deregulation, tax cuts, and tariffs (not wars). The rise of radical terrorist regimes in regions will jumpstart geopolitical bids at price dips, not rallies. Elevated headline risk is a reminder of how hard it is to be short on Gold, given the (associated?) Central Bank backstop / program. Developing macro headwinds—strong risk appetite and a resiliently higher US$ for now—ensures that price rallies should be capped in 1H’25.
Central Bank buying trends will continue at similar pace in 2025 vs. 2024, but flows will remain more discreet given the threat of Trump tariffs on countries perceived to be actively dedollarizing.
Investment demand is likely muted again given the high cost of carry, while physical demand should remain robust given ongoing debasement trends. DM retail demand is expected to remain soft as risk appetite is channeled into other asset classes. Gold prices at $3000+ or $2500- is contingent on whether the Fed is ahead or behind the Trumpflation curve; we expect them to be behind, leading to falling real rates and a softer US$ in the latter half of the year. Structurally, the positive feedback loop of HFL inflation, ongoing deglobalization / currency debasement / Central Bank dedollarization, messy and unpredictable geopolitics, unsustainable global debt paths, and an under-owned general investor community ensures that Gold remains a safe asset diversifier.
But expect volatile price action where, the risk of a bear case (a new and growing narrative) superseding the bull case (which is getting stale and increasingly priced in), is rising.
· Silver : sweet spot emerging amidst synchronized CB cuts & strong industrial demand
Base case: average forecast $36.50/oz. - 2025 high-low range: $28 - $42/oz
Silver is to outperform all precious metals in 2025 given synchronized CB rate cuts, a more supportive China & US macroeconomic backdrop, still strong solar demand, and ultimately a lower US$ trajectory. While China has neared late-growth PV capacity, the ROW is picking up the slack, being in an early-stage growth phase and increasingly adopting next generation (TOPCon vs. PERC) technology with higher silver loadings. Silver supply (both primary and secondary supply) and above-ground inventories are quite price elastic, capping rallies at $26oz and then at $35/oz in 2024. Another strong rerating toward $40 is required to entice notoriously sticky holders to release metal as industrial demand remains robust and persistent.
Silver’s upside will still hinge on investor participation outweighing any potential contraction in global industrial demand due the threat of Trump tariffs. Investment demand—both institutional and retail—should outpace the mild inflows seen in 2024. The same bullish argument from 2024 is now even more applicable: Silver has more upside risk than Gold because 1) it is relatively cheaper vs. its past price peaks, 2) is more elastic to a weaker US$ environment and a reflation upcycle, and 3) it is physically tighter with less readily available stocks. Fundamentally, deficits are expected throughout this decade, and its high beta characteristic vs. Gold is attractive in a synchronized rate-cutting cycle. The Gold/Silver ratio should fall to 80 and target 75, levels associated with the 2021 reflation / COVID reopening macro era.
· Platinum : still playing for fundamentals to play out
Base case: 2025 average price forecast $1050/oz - 2025 high-low range: $900 - $1200/oz (50% probability)
Fundamental deficits, the drawdown in above-ground stocks and low prices for consecutive years haven’t squared. However, Platinum is getting to the inflection point given prices have based, the PGM basket is significantly under the cost curve, and the macro is turning. Continued tightening in 2025 will be driven from supply, as primary supply will be flat-lower (with further cuts or capacity closures a rising risk that hasn’t been priced) while growth in scrap/secondary will be limited. Demand growth in 2025 should continue to be buoyed by hybrids being favored globally ex-China, continued substitution of palladium for platinum, and the upside risk to jewelry demand in China as fiscal & monetary stimulus improves consumer sentiment when Platinum is relatively cheap.
The threat to demand stems from higher tariffs on global growth, especially if Trump tariffs target OEM parts suppliers, which will negatively impact US ICE production and future demand. Trends in auto demand and related policy will be critical for prices in 2025. Expected higher floors, rangebound pricing (i.e.: short-term conviction is low) with a market that is itching for a bullish catalyst. We remain structurally constructive into easing cycles and economic recoveries, especially now that China has joined the reflation party, and there is little-to-no supply backstop on incremental demand growth. Overall, after years of being a forgotten asset class, sticky investor interest in PGMs should return as the decline in the US$ extends, China recovers, and reflation pricing in commodities takes place.
· Palladium : switching to a surplus but auto policy & positioning risks are an upside
Base case: 2025 average price forecast $1050/oz - 2025 high-low range: $850 - $1300/oz (50% probability)
Primary supply should remain unchanged as Russian supply recovers after their smelter rebuild, offsetting reduced output in North America and South Africa. Upside price risk stems from potential sanction risk on Russian material, given recent US comments and the growing risk of Trump policy on the auto sector. Secondary supply is expected to be subdued, barring a large upside price rerating or significantly lower interest rates. Light-duty vehicle sales are forecast to rise in 2025, and so automotive Palladium demand should increase as more ICE and hybrids are sold than estimated in a Trump era. Additional demand tailwinds can stem from a US policy withdrawal of support for EVs but also from a ramp-up in consumer sentiment in both the US and China. That is despite the widespread use of tri-metal gasoline autocatalysts (in which Palladium is substituted out in favor of Platinum) and China’s outperforming EV penetration rate.
The larger threat to demand stems from higher tariffs on global growth, especially if Trump tariffs target OEM parts suppliers, which will negatively impact US ICE production and future demand. The persistent net short futures positioning, largely hinging on “the death of ICE,” will be tested in 2025 on slower EV penetration trends, hybrid continuation, and the threat of Trump emission regulation/policy/tariff changes. The compressed range in 2024 cannot last—there will be tactical bullish opportunities and volatile trading in 2025.
Equities
US Q4 earnings released (weekly stock performance):
Netflix (+14%), Charles Schwab (+7%), Abbott Lab (+9%), P&G (+2%), J&J(-1%), Citi (+13%), Texas Instruments (-3%)
EU:
Ericsson (-10%); Burberry (+17%) with LVMH, Kering, Hermès (+6%) continuing to benefit from likely US tariffs exemption
Bio Pharma:
Novo Nordisk (+8%) good test results on new obesity drug Amecrytine; Moderna (+21%) boosted by Covid-19 orders from 19 EU countries
Analysts:
Aviva (JPM ’overweight’ target GBP 615); BMW (Berenberg ‘buy’ target EUR 92); TotalEnergies (HSBC ‘buy’ target EUR 67.5)
Rates
US curve (2-10 years) steepening remained at 35bps. Bond yields remained flat across the board, HY corporate spread lower still
Commodities
Oil price down, after Trump’s Davos speech, asking Saudi Arabia and other OPEC members to lower the Oil price and hike production
Japan
BoJ raised as expected its rate by 25bps to 0.5% (highest since 2008)
Cryptos
BTC hit another record high last week at $109k while Ripple XRP, Solana SOL remained fairly stable (month performance at +40% for both)
Under the watch
AI demand drives Uranium price up (enriched uranium at ATH $190)
Nota Bene
US money market funds at another record high ($8.2trn) but cash as a percentage of total assets is at record low (Goldman Sachs)
MicroStrategy bought another $1.1bn of BTC last week (now holds 2.1% of total BTC, with a total investment at $29bn)
CALENDAR
Monetary Policy releases:
US: FOMC/FED (29 Jan) likely to stay put (unchanged rates)
EU: ECB (30 Jan) expected to cut by 25bps
Q4 Corporate earnings:
US: AT&T (27), GM (28), Microsoft, Meta, Tesla, IBM (29), Apple (30), ExxonMobil, Chevron (31)
EU: LVMH, SAP (28), ASML (29 Jan), ABB, Sanofi, Roche, Shell (30), Novartis (31)
WHAT ANALYSTS SAY
- Goldman Sachs - Briefings (Nuclear powered data centers - Global stocks are vulnerable to declines)
- MKS PAMP- Precious Metals Outlook 2025 (Gold, Silver, Platinum, Palladium)
Goldman Sachs, 24 Jan 2025
Authors: Brian Singer, Jim Schneider and Carly Davenport ; Peter Oppenheimer, chief global equity strategist and head of macro research in Europe
· New data centers could drive a nuclear energy resurgence
Is nuclear energy the answer to data centers' power consumption?
The growing power demand created by data centers is likely to contribute to a resurgence of nuclear energy capacity, according to Goldman Sachs Research. In the US alone, big tech companies have signed new contracts for more than 10 gigawatts (GW) of potential new nuclear capacity in the last year.
However, nuclear energy alone won't be enough to satisfy the growing demand for power. Some 85-90 GW of new nuclear capacity would be needed to meet all the data-center power demand growth that our analysts expect by the end of the decade. Electricity usage by data centers is expected to more than double by 2030, according to reports led by Brian Singer, Jim Schneider, and Carly Davenport.
Our team expects renewable energy sources will comprise 40% of new capacity built to support the additional power demand from data centers through 2030. But renewables often come with higher transmission costs, and their capacity can fluctuate throughout the day. To ensure lower-carbon, round-the-clock power, technology companies are likely to take advantage of a combination of all of the above power sources and continue to support batteries, gas-fired plants, and carbon removal technology.
· Global stocks are vulnerable to declines
The Key Number: $11,000,000,000,000 ($11trn)
The large US technology companies known as the Magnificent 7 have added about $11 trillion in market cap since January 2023. That's the equivalent of all UK, French, and German stock market caps combined.
Global stocks are in a vulnerable position after two years of soaring valuations (particularly in the US), according to Goldman Sachs Research. “The powerful rally in equity prices in recent months leaves equities priced for perfection,” Peter Oppenheimer, chief global equity strategist and head of macro research in Europe. “While we expect equity markets to make further progress over the year as a whole — largely driven by earnings — they are increasingly vulnerable to a correction driven either by further rises in bond yields and / or disappointments on growth in economic data or earnings.”
That's a sign that diversification has become more important for the year ahead, according to Goldman Sachs Research. The portfolio strategy team recommends considering geographic diversification. The surging US dollar has benefited companies in other countries that count on the US for a higher share of their revenues, but they are still much cheaper than their US counterparts. Companies outside the technology sector are an opportunity, particularly “quality compounders” — stocks that generate steady profit growth throughout the economic cycle. Equity correlations are declining, which could open up opportunities for stock picking.
MKS PAMP, 23 Jan 2025 - Precious Metals Outlook 2025
· Gold : a new year, a new opportunity for another record high but bear risks grow
Base case: 2025 average price forecast $2750/oz (50% probability) - 2025 high-low range: $2500 - $3200/oz
Gold is in secular bull market, but the direction of travel won’t be as one-directional in 2025 as in 2024. Peak political fear is behind us following Trump’s decisive win, compounded by the US focus on deregulation, tax cuts, and tariffs (not wars). The rise of radical terrorist regimes in regions will jumpstart geopolitical bids at price dips, not rallies. Elevated headline risk is a reminder of how hard it is to be short on Gold, given the (associated?) Central Bank backstop / program. Developing macro headwinds—strong risk appetite and a resiliently higher US$ for now—ensures that price rallies should be capped in 1H’25.
Central Bank buying trends will continue at similar pace in 2025 vs. 2024, but flows will remain more discreet given the threat of Trump tariffs on countries perceived to be actively dedollarizing.
Investment demand is likely muted again given the high cost of carry, while physical demand should remain robust given ongoing debasement trends. DM retail demand is expected to remain soft as risk appetite is channeled into other asset classes. Gold prices at $3000+ or $2500- is contingent on whether the Fed is ahead or behind the Trumpflation curve; we expect them to be behind, leading to falling real rates and a softer US$ in the latter half of the year. Structurally, the positive feedback loop of HFL inflation, ongoing deglobalization / currency debasement / Central Bank dedollarization, messy and unpredictable geopolitics, unsustainable global debt paths, and an under-owned general investor community ensures that Gold remains a safe asset diversifier.
But expect volatile price action where, the risk of a bear case (a new and growing narrative) superseding the bull case (which is getting stale and increasingly priced in), is rising.
· Silver : sweet spot emerging amidst synchronized CB cuts & strong industrial demand
Base case: average forecast $36.50/oz. - 2025 high-low range: $28 - $42/oz
Silver is to outperform all precious metals in 2025 given synchronized CB rate cuts, a more supportive China & US macroeconomic backdrop, still strong solar demand, and ultimately a lower US$ trajectory. While China has neared late-growth PV capacity, the ROW is picking up the slack, being in an early-stage growth phase and increasingly adopting next generation (TOPCon vs. PERC) technology with higher silver loadings. Silver supply (both primary and secondary supply) and above-ground inventories are quite price elastic, capping rallies at $26oz and then at $35/oz in 2024. Another strong rerating toward $40 is required to entice notoriously sticky holders to release metal as industrial demand remains robust and persistent.
Silver’s upside will still hinge on investor participation outweighing any potential contraction in global industrial demand due the threat of Trump tariffs. Investment demand—both institutional and retail—should outpace the mild inflows seen in 2024. The same bullish argument from 2024 is now even more applicable: Silver has more upside risk than Gold because 1) it is relatively cheaper vs. its past price peaks, 2) is more elastic to a weaker US$ environment and a reflation upcycle, and 3) it is physically tighter with less readily available stocks. Fundamentally, deficits are expected throughout this decade, and its high beta characteristic vs. Gold is attractive in a synchronized rate-cutting cycle. The Gold/Silver ratio should fall to 80 and target 75, levels associated with the 2021 reflation / COVID reopening macro era.
· Platinum : still playing for fundamentals to play out
Base case: 2025 average price forecast $1050/oz - 2025 high-low range: $900 - $1200/oz (50% probability)
Fundamental deficits, the drawdown in above-ground stocks and low prices for consecutive years haven’t squared. However, Platinum is getting to the inflection point given prices have based, the PGM basket is significantly under the cost curve, and the macro is turning. Continued tightening in 2025 will be driven from supply, as primary supply will be flat-lower (with further cuts or capacity closures a rising risk that hasn’t been priced) while growth in scrap/secondary will be limited. Demand growth in 2025 should continue to be buoyed by hybrids being favored globally ex-China, continued substitution of palladium for platinum, and the upside risk to jewelry demand in China as fiscal & monetary stimulus improves consumer sentiment when Platinum is relatively cheap.
The threat to demand stems from higher tariffs on global growth, especially if Trump tariffs target OEM parts suppliers, which will negatively impact US ICE production and future demand. Trends in auto demand and related policy will be critical for prices in 2025. Expected higher floors, rangebound pricing (i.e.: short-term conviction is low) with a market that is itching for a bullish catalyst. We remain structurally constructive into easing cycles and economic recoveries, especially now that China has joined the reflation party, and there is little-to-no supply backstop on incremental demand growth. Overall, after years of being a forgotten asset class, sticky investor interest in PGMs should return as the decline in the US$ extends, China recovers, and reflation pricing in commodities takes place.
· Palladium : switching to a surplus but auto policy & positioning risks are an upside
Base case: 2025 average price forecast $1050/oz - 2025 high-low range: $850 - $1300/oz (50% probability)
Primary supply should remain unchanged as Russian supply recovers after their smelter rebuild, offsetting reduced output in North America and South Africa. Upside price risk stems from potential sanction risk on Russian material, given recent US comments and the growing risk of Trump policy on the auto sector. Secondary supply is expected to be subdued, barring a large upside price rerating or significantly lower interest rates. Light-duty vehicle sales are forecast to rise in 2025, and so automotive Palladium demand should increase as more ICE and hybrids are sold than estimated in a Trump era. Additional demand tailwinds can stem from a US policy withdrawal of support for EVs but also from a ramp-up in consumer sentiment in both the US and China. That is despite the widespread use of tri-metal gasoline autocatalysts (in which Palladium is substituted out in favor of Platinum) and China’s outperforming EV penetration rate.
The larger threat to demand stems from higher tariffs on global growth, especially if Trump tariffs target OEM parts suppliers, which will negatively impact US ICE production and future demand. The persistent net short futures positioning, largely hinging on “the death of ICE,” will be tested in 2025 on slower EV penetration trends, hybrid continuation, and the threat of Trump emission regulation/policy/tariff changes. The compressed range in 2024 cannot last—there will be tactical bullish opportunities and volatile trading in 2025.
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