Fed Holds Steady, Big Tech Earnings Diverge, and Commodities Surge: PALvatar Market Recap, January 29 2025

0:05Good morning, good afternoon or good evening, depending on where you are in the world. Thanks for joining me, Palvatar, on another market recap. I'm an AI avatar, but the good news is that you're getting a double dose of the real Raoul today. His conversation with Alex Gurevich is out today on the latest Journeyman, available for free. And for Alpha members and above, Raoul joins Julian Bittle on the widely anticipated shooting the shit. Be sure to check it all out if you want to hear Raoul's views on the market right now. For now, here are the key headlines. As expected, the Federal Reserve has kept its benchmark interest rates unchanged between 3.5 % and 3.75 % after three consecutive cuts last year.

0:54Chair Jerome Powell hinted at an extended pause in his subsequent press conference. He did not discuss the Department of Justice criminal probe against him. Traders are pricing in a cut in June, as per CME's FedWatch tool. Stock market reaction has been fairly subdued, in line with the lack of fireworks. We also got a slew of earnings reports, notably from MAG7 heavyweights Tesla, Meta and Microsoft. As expected, Tesla's annual revenue fell for the first time, as the company pivots further into AI and robotics. It's investing$2 billion in Elon Musk's XAI and will scrap a couple of Tesla models to produce the Optimus robot in its California factory.

1:37Investors rewarded the company with a 2 % increase in the share price in pre-market trading. That's not the case with Microsoft, whose stock is down significantly despite record quarterly revenues and profits. The Financial Times attributes this to investor concerns about ballooning AI spending and a lackluster growth of cloud services. Curiously, the reaction to Meta's earnings was reversed, whose shares surged despite also having a significant AI capital expenditure. Financial Review put these widely different reactions to largely similar reports down to the interpretation of the CEO's messaging in post-earnings calls.

2:16Markets, eh? Apple will follow the three heavy hitters tonight. and OpenAI is aiming to raise$40 billion from the likes of NVIDIA, Microsoft and Amazon in the latest funding round. Ongoing geopolitical tensions, which once again appear to be flaring up between the US and Iran, as well as a weak dollar, have added fuel to the relentless rally in precious metals. The returns continue to defy gravity, with gold pushing near$5 ,600 for the first time and silver now up 60 % year-to-date. However, it was copper's time to shine, with a 6 % price increase and a fresh all-time high. Oil prices also increased to a four-month high due to the Iran standoff.

3:03However, another US government shutdown might be averted after the New York Times reported that President Trump and Democratic Senator Chuck Schumer were negotiating a deal on Wednesday. There is also a notable story from Reuters, which says the Trump administration wants to step away from its plans to guarantee a minimum price for rare earth projects. Read Andreas Steno's note on the Real Vision website on the implications of that report. In the Eurozone, consumer confidence rose to minus 12.4 in January, the highest level in nearly a year, and services sentiment reached its strongest point in two years at 7.2 for January, exceeding expectations.

3:46British Prime Minister Keir Starmer is in China, where he met President Xi Jinping, calling their talks productive. It's probably best if we ignore the crypto price action, but there are some notable headlines from the space. The United Arab Emirates Central Bank has approved its first USD-backed stablecoin, while Coindesk reports the White House is playing mediator with banks and crypto as it tries to advance the delayed market structure bill. Speaking of US regulation, the SEC has cautioned that tokenised stocks and bonds will be covered by securities laws. That's it for today. Now I invite you to watch the real Raoul.

4:26No guarantees it will be as good as this recap. After all, he's just a human. Anyway, take care.

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