Economic Indicators - The dollar index (DXY00) is down -0.04%, influenced by a smaller-than-expected decline in US jobless claims and a larger-than-expected drop in January existing home sales [1] - US weekly initial unemployment claims decreased by -5,000 to 227,000, indicating a slightly weaker labor market than the expected 223,000 [2] - January existing home sales fell -8.4% month-over-month to a 16-month low of 3.91 million, below expectations of 4.5 million [3] Currency Movements - The Chinese yuan has strengthened, reaching a new 2.5-year high, which is putting additional pressure on the dollar [1] - The euro (EUR/USD) is up by +0.09% amid mild dollar weakness, although gains are limited by a decline in German bund yields [5] - The yen (USD/JPY) is down by -0.24%, with the yen reaching a 2-week high against the dollar, supported by lower T-note yields [6] Interest Rate Expectations - Swaps markets are pricing in a 6% chance of a -25 basis point rate cut at the next Federal Open Market Committee (FOMC) meeting on March 17-18 [4] - The FOMC is expected to cut interest rates by approximately -50 basis points in 2026, while the Bank of Japan (BOJ) is anticipated to raise rates by +25 basis points in the same year [4] - There is a 3% chance of a -25 basis point rate cut by the European Central Bank (ECB) at its next policy meeting on March 19 [5]

Core Viewpoint - The Indian government's upcoming budget is expected to prioritize job creation and economic stability amid global uncertainties, with a focus on infrastructure spending and fiscal consolidation [1][2][4]. Employment and Growth - The budget is anticipated to emphasize employment support and growth initiatives, with increased spending on infrastructure such as roads, ports, and railways, alongside reforms in the import-duty regime [2][3]. - Economists project India's economic growth to be between 6.5% and 7% for the next fiscal year, with inflation expected to align with the central bank's target of 4% [8]. Fiscal Deficit and Debt - The fiscal deficit is projected to decrease to 4.2% of GDP in the upcoming fiscal year, down from 4.4% in the current year, as the government aims to adhere to fiscal consolidation [4][6]. - India's general government debt is estimated to reach 81.29% of GDP by March 2024, a significant increase from 69% in 2015, primarily due to pandemic-related borrowing [7]. Revenue Generation - The government anticipates net tax revenues of 28.3 trillion rupees (approximately $308 billion) and an additional 500 billion rupees from disinvestment [9]. - Corporate and income tax collections will need to increase by 11.7% and 43% year-on-year, respectively, to meet budgeted targets [10]. Capital Expenditure - Capital expenditure is expected to be a focal point, with an allocation of about 12.04 trillion rupees, nearly 3% of GDP, although concerns about reaching saturation in large infrastructure projects have been raised [12]. - Defense-related capital spending is projected to rise to 2.3 trillion rupees, reflecting ongoing border tensions [13]. Market Borrowing - The government is likely to engage in record bond borrowing, with gross market borrowing expected to reach 16.5 trillion rupees and net borrowing at 11.6 trillion rupees [14].

Economic Assessment - The U.S. economy has been given a "B-minus" grade by economist Justin Wolfers, indicating concerns over inconsistent trade policies and a significant decline in consumer morale [1][2] - Wolfers suggests that while the economy is "not terrible," the B-minus rating reflects a generous view amidst "grade inflation" in economic discourse [2] Labor Market and Inflation - The unemployment rate has "drifted up" over the past year, and inflation remains above the Federal Reserve's targets, impacting household budgets [3] - The current budget deficit is characterized as "extremely large," which may be excessive for the current stage of the business cycle [3] Consumer Sentiment - Consumer confidence is reported to be near an "all-time low," indicating a disconnect between economic growth figures and the reality of rising costs and job security [5][6] - The prevailing sentiment among consumers is described as "miserable," driven by economic pressures despite positive headline growth [6] Market Performance - Major stock indices such as the S&P 500, Dow Jones, and Nasdaq 100 have shown year-to-date increases of 1.74%, 1.31%, and 3.24%, respectively [7]

Core Viewpoint - The US dollar index has reached a 4.25-month low, primarily influenced by speculation regarding potential currency intervention with Japan and domestic political uncertainties [1][2]. Group 1: Currency Market Dynamics - The dollar index (DXY00) has decreased by 0.79%, hitting a 4.25-month low [1]. - Speculation about US coordination with Japan for currency intervention has contributed to the dollar's decline, as it aligns with President Trump's view that a weaker dollar benefits US exports [2]. - The yen has appreciated to a 2.5-month high against the dollar, influenced by reports of US authorities checking dollar/yen prices, indicating possible intervention [2]. Group 2: Political and Economic Factors - Political risks are prompting foreign investors to withdraw capital from the US, exacerbating the dollar's weakness [3]. - President Trump's threat of 100% tariffs on US imports from Canada if Canada signs a trade agreement with China has added to the uncertainty surrounding the dollar [4]. - The potential for another partial US government shutdown is creating additional pressure on the dollar, with Senate Democrats threatening to block funding deals [5]. - Concerns regarding the Federal Reserve's independence, a growing US budget deficit, and increasing political polarization are also contributing to the dollar's decline [5]. Group 3: Economic Indicators - ADP reported that US private payrolls increased by an average of 7,750 per week in the four weeks ending January 3, marking the smallest job growth in six weeks [6]. - The Conference Board's US January consumer confidence index unexpectedly fell by 9.7 points to an 11.5-year low of 84.5, which is weaker than anticipated [6].

Core Insights - The average American household's share of federal borrowings is now equal to half the median price of their homes, and this figure is rising rapidly [1] - The U.S. is experiencing a significant shift in borrowing patterns, moving from stable debt levels to alarming increases post-COVID, with a primary deficit emerging due to excessive spending [1] - Federal borrowings have surged from $17 trillion at the end of 2019 to $30.9 trillion, marking an 81% increase, with debt as a share of GDP now nearly 100% [2] - Debt per household has reached $229,000, and if families were to pay the prevailing interest, it would amount to $7,700 annually, representing 9% of their average income [3] - Projections indicate that by 2035, the debt-to-GDP ratio could rise to around 135%, with total borrowings potentially reaching approximately $60 trillion [3]

Core Viewpoint - Ecuador's National Assembly approved a $46.3 billion budget for 2026, focusing on social programs, security, and infrastructure development, reflecting a 13% increase from 2025 [1] Budget Overview - Total budget spending is set at $46.3 billion, which is 33.27% of GDP, based on a projected real GDP growth of 1.8% and a nominal GDP of $139.1 billion [1] - Total revenue is estimated at $46.3 billion, including $21.7 billion in current revenues, $8.5 billion in capital revenues, and $16.1 billion in financing [1] Expenditure Breakdown - Current spending is allocated $23.5 billion, with $1.8 billion for public investment and $10.5 billion for capital expenditures [2] - The budget projects an overall deficit of $5.4 billion, with a financing requirement of $10.5 billion primarily for debt amortization [2] Social Support and Local Government Funding - The budget prioritizes social support, with $6.3 billion allocated for transfers and subsidies, including $1.8 billion for social assistance programs and $3.9 billion for social security systems [3] - Transfers to local governments will total $4.1 billion, with mandatory funding for education and health increasing by $695 million each [4] Impact on Construction Industry - The 2026 budget is expected to have a mixed impact on the construction industry, with capital spending and public investment programs supporting infrastructure activity [5] - However, tight fiscal conditions and a significant deficit may limit the scale and timing of project execution, leading to moderate growth in the construction sector [5]

Core Viewpoint - The proposed California billionaire tax is prompting ultra-wealthy residents to leave the state, potentially exacerbating the budget deficit rather than alleviating it [1][3][4]. Group 1: Wealth Exit - Individuals with a combined net worth of approximately $500 billion have decided to permanently leave California due to the proposed billionaire tax, which is characterized as an asset seizure-style levy [2][4]. - The immediate exit of these high-net-worth individuals is seen as a preemptive measure to avoid the tax, which could ultimately lead to lower revenue collection for the state [3][4]. Group 2: Budget Implications - The departure of wealthy residents is expected to worsen California's budget deficit, placing additional financial burdens on ordinary taxpayers [3][4]. - Lawmakers may be forced to resort to increased borrowing or broader tax hikes to compensate for the loss of revenue from high-net-worth individuals [3]. Group 3: Tax Criticism - The billionaire tax is criticized for targeting unrealized and illiquid wealth, particularly affecting startup founders who may have significant equity but modest salaries [5]. - An example highlighted involves a founder with $1.2 billion in paper equity earning a $150,000 salary, who could face substantial cash obligations under the proposed tax, risking insolvency if the company's value declines [6].

Group 1: Market Trends and Predictions - The S&P 500 closed at 6,896, up from 6,100 at the beginning of 2025, indicating a positive market trend [2] - The best-performing AI stock in 2025 was Palantir (PLTR), which saw a 139% increase, followed by Broadcom (AVGO) at 51% and Microsoft (MSFT) at 16% [2] - A survey indicated that 2026 is the earliest expected time for lower mortgage rates to make homeownership more affordable [2] Group 2: Sector Performance - In the nuclear power sector, Oklo (OKLO) gained 28%, Constellation Energy (CEG) increased by 11%, and Cameco (CCJ) rose by 23%, while NuScale Power (SMR) experienced a decline of 64% [4] - The sentiment around Trump's trade strategy was split, with opinions divided on its effectiveness [4] Group 3: Future Outlook - The next quarterly rebalance for the S&P 500 is scheduled for March 2026, with companies like Strategy (MSTR), Reddit (RDDT), and SoFi Technologies (SOFI) being considered for inclusion [5] - Potential candidates for the next Federal Reserve Chair include Kevin Hassett, Kevin Warsh, Christopher Waller, Michelle Bowman, and Rick Rieder [5]

The Santa Claus rally is ready to roll into the end of the year. The Federal Reserve is starting to pump capital back into the market. Now, this Q is happening at a time where the US government's finances are improving, too.Treasury Secretary Scott Besson said yesterday the current calendar year-to-ate deficit is $1.5% trillion. But that compares to a deficit of $ 1.9% trillion for the period last year. It's a 21% drop year-over-year. Now, it's not only that it's a smaller deficit.The economy is also bigger ...

With its budget deficit worsening, California is pulling back on a policy that extended government-supported healthcare to immigrants living in the country unlawfully https://t.co/lCx3JwG2RF ...