Group 1 - The Bank of Thailand is expected to maintain interest rates in the upcoming monetary policy meeting to assess the impact of the elections on the economy and markets, with consumer price index declining for 10 consecutive months, creating room for potential rate cuts later in the year [1] - Morgan Stanley has raised Indonesia's GDP growth forecast for 2026 from 4.9% to 5.2% following better-than-expected Q4 2025 GDP, but warns that growth momentum may slow due to fiscal contraction and the end of automotive incentives [1] - The Indian central bank's monetary easing cycle may have ended, with a low likelihood of resuming rate cuts in the short term, as economic growth is stabilizing and inflation expectations have been raised [3] Group 2 - Kenanga economists suggest that the Malaysian ringgit is likely to depreciate due to strong domestic economic data and a supportive dollar, with the Federal Reserve expected to delay rate cuts until June [2] - Moody's potential downgrade of Indonesia's credit outlook to negative signals rising policy uncertainty, which could lead to increased scrutiny of the government's credibility and policy choices over the next 12 to 18 months [2] - The European Central Bank's President Lagarde has ruled out the possibility of rate cuts due to a stronger euro, providing support for the euro as the ECB maintains interest rates unchanged [3]

Group 1: Technology Sector - Tech stocks in the US have experienced a decline for three consecutive days, driven by investor concerns regarding potential disruptions in the artificial intelligence (AI) market [1][4] - The launch of Anthropic's new AI chatbot, Claude Opus 4.6, has raised fears about its impact on traditional professional services, leading to a sell-off in software companies [3][10] - The tech-heavy Nasdaq index has fallen by approximately 4% over the past five trading sessions, with significant losses attributed to fears surrounding AI's influence on the market [4][12] Group 2: Semiconductor Industry - The semiconductor sector has faced additional pressure, with shares of major companies like AMD and Qualcomm dropping by nearly 3% and over 7% respectively, due to concerns about demand for microchips [2][12] - The overall decline in tech stocks has contributed to a broader sell-off in the semiconductor market, reflecting investor anxiety about future demand [2] Group 3: Cryptocurrency Market - Bitcoin has seen a dramatic decline, with a drop of $200 billion, marking its sharpest decline in dollar terms since its inception, now trading about 50% below its record high of $126,198 [5][6] - The cryptocurrency market has been adversely affected by the tech sell-off, with Bitcoin experiencing its steepest one-day collapse on record, falling below $64,000 for the first time since September 2024 [6][11] - Ether, the second-largest cryptocurrency, also suffered significant losses, shedding more than 10% during the same period [11] Group 4: Financial Services Sector - Shares in financial services firms such as FactSet Research Systems, Nasdaq, and S&P Global have declined following the announcement of Anthropic's new AI tool, which is expected to automate tasks traditionally performed by these companies [2][8][10] - The overall sentiment in the financial services sector has been negatively impacted by the tech sell-off and concerns regarding AI's potential to disrupt traditional business models [2][3]

Group 1: Dollar Index and Labor Market - The dollar index rose to a 1.5-week high, finishing up by +0.23%, driven by a stock selloff that increased liquidity demand for the dollar [1] - Challenger's January job cuts rose by +117.8% year-over-year to 108,435, marking the largest amount of job cuts for a January since 2009 [2] - Weekly initial unemployment claims increased by +22,000 to an 8-week high of 231,000, indicating a weaker labor market than the expected 212,000 [2] Group 2: Federal Reserve and Interest Rates - Fed Governor Lisa Cook's hawkish comments suggested risks are tilted toward higher inflation, supporting the dollar despite signs of labor market weakness [1] - The FOMC is expected to cut interest rates by about -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] - Swaps markets are pricing in a 23% chance of a -25 basis point rate cut at the next policy meeting on March 17-18 [3] Group 3: Eurozone Economic Indicators - The euro fell by -0.14% as it gave up an early advance due to a stronger dollar, despite the ECB keeping interest rates unchanged [5] - Eurozone December retail sales fell more than expected, while German December factory orders unexpectedly rose, presenting mixed economic signals for the euro [5]

Group 1: Eurozone Retail Sales - Eurozone retail sales fell by 0.5% month-on-month in December, continuing a trend of weakness and exceeding market expectations [2] - There is a clear divide between essential and discretionary spending, with food sales showing slight growth while non-food items declined significantly [2] - The performance of retail sales varies significantly among member countries, with consumption disparities between northern and southern regions further weakening overall recovery [2] Group 2: Bank of England's Interest Rate Decision - The Bank of England maintained the base interest rate at 3.75%, aligning with market expectations, but the voting structure revealed internal divisions [4] - The 5-4 vote indicates a split in views on whether to maintain rates or lower them, reflecting concerns over inflation and economic pressures [4] - The current stance suggests that the Bank of England is unlikely to change its position in the short term, but the voting outcome may foreshadow future policy shifts [4] Group 3: European Central Bank's Policy - The European Central Bank kept the deposit rate unchanged at 2.00%, maintaining a cautious approach [6] - The statement emphasized confidence in medium-term inflation returning to target and indicated no urgent need for action [6] - The ECB's current focus is on stabilizing expectations rather than guiding trends, with euro movements likely influenced more by external factors [6] Group 4: Federal Reserve's Inflation Concerns - The Federal Reserve is shifting its focus to inflation risks, with some officials noting an upward tilt in risk distribution despite overall stable inflation [8] - Recent increases in commodity inflation are linked to tariff adjustments, creating uncertainty in price transmission and sustainability [8] - The Fed's cautious approach to interest rate cuts reflects the ongoing uncertainties surrounding tariffs and policy, suggesting dollar rates will remain resilient in the short term [8]

Group 1 - The Federal Reserve is expected to maintain interest rates unchanged in March with a probability of 90.1%, while the probability of a 25 basis point cut is only 9.9% [1][9] - By April, the probability of keeping rates unchanged is projected at 75.1%, with a cumulative 25 basis point cut probability rising to 23.2% [1][9] Group 2 - Gold prices have retreated from the $5000 per ounce mark due to a lack of new catalysts, leading traders to take profits [2][10] - Despite geopolitical tensions providing some support, a stronger dollar and previous rapid gains have triggered a technical adjustment in gold prices [2][10] - Analysts expect gold prices to remain in a range-bound fluctuation in the short term, with long-term prospects still viewed positively by several institutions [2][10] Group 3 - The U.S. stock market experienced volatility, with significant declines in tech stocks, particularly AMD, which fell 13% due to disappointing Q1 guidance [3][11] - Chinese concept stocks also saw declines, with NetEase and Bilibili dropping over 6%, and the Nasdaq Golden Dragon China Index falling more than 3% [3][11] - The cryptocurrency market faced pressure, with Bitcoin dropping below $75,000 amid broader market concerns [3][11] Group 4 - The People's Bank of China has outlined that in 2026, credit resources will focus on five key areas: technology finance, green finance, inclusive finance, pension finance, and digital finance [4][12] - The meeting emphasized the need for structural monetary policy tools and collaboration with fiscal policy to support domestic demand, technological innovation, and small and micro enterprises [4][12] Group 5 - In the A-share market, 1,442 companies are expected to report losses for 2025, with over 40% of companies in Hainan, Jilin, and Qinghai projected to incur losses [5][13] - The real estate sector is identified as a major area of loss, with Vanke A expected to report a loss of approximately 82 billion yuan, and five of the top ten largest losses coming from this sector [5][13] - Other sectors such as IT services, semiconductors, and chemical pharmaceuticals also show a high number of companies forecasting losses, indicating significant operational pressures [5][13] Group 6 - Elon Musk has become the first person in history to reach a net worth of $800 billion, following a merger between SpaceX and xAI that increased his wealth by $84 billion [6][14] - This milestone marks the fourth significant wealth achievement for Musk in just four months, having previously surpassed the $500 billion, $600 billion, and $700 billion thresholds [6][14] Group 7 - Musk's team has conducted secret research on Chinese companies in the photovoltaic sector, including TCL Zhonghuan and JinkoSolar, leading to speculation about contracts with major equipment manufacturers [7][15] - This initiative has sparked a surge in A-share photovoltaic and space photovoltaic concept stocks, with multiple stocks hitting the daily limit [7][15] - The merger aims to advance space photovoltaic and computational capabilities, planning to launch a million solar satellites to create an "orbital data center" for AI development [7][15]

Core Viewpoint - The Federal Reserve is likely to maintain interest rates unchanged in the foreseeable future, especially with the nomination of Waller as the next Fed Chair, amidst a resilient U.S. economy and rising inflation risks [1][3]. Economic Outlook - The combination of loose financial conditions, relaxed monetary policy, and upcoming large-scale fiscal stimulus (OBBA Act) may lead to a nominal GDP growth of 5-6% in the U.S. this year [1]. - The Dallas Fed tracks Q4 GDP growth at 2.49%, while the New York Fed's real-time forecast is at 2.74%, achieved even during a prolonged government shutdown [1]. Federal Reserve's Position - The Fed acknowledged stronger economic growth and shifted its risk balance from employment targets, describing economic activity as "robust" rather than "moderate" [3]. - The Fed Chair Powell indicated that the policy rate is no longer in a restrictive zone, with the current rate close to the estimated neutral rate of around 3.25% [3]. Dollar Dynamics - The dollar has depreciated approximately 11% over the past year, but with the Fed likely to remain cautious in the coming months, dollar shorts should be wary at current valuation levels [3][10]. - The weak dollar theme has been driven by various factors, including the U.S. Treasury's engagement with the Japanese Ministry of Finance, which has contributed to the dollar's decline [8]. Future Fed Leadership - Waller's nomination as the next Fed Chair is seen as a response to political dynamics, with him being viewed as a more establishment candidate and potentially facing less resistance during confirmation [6]. - Historically, Waller has been more hawkish than other candidates, prioritizing inflation control over employment considerations, and is expected to implement rate cuts only when absolutely necessary [6][7]. Market Implications - The current economic conditions and the Fed's emphasis on independence suggest that the future of the Fed may be less susceptible to political interference, which is viewed positively by investors who value central bank independence for global financial stability [10].

Core Insights - The Schwab U.S. Small-Cap ETF (SCHA) has achieved a 5.5% return year-to-date, benefiting from its low annual expense ratio of 0.04%, which is among the lowest in the small-cap category [2][8] - Recent analyses have shown mixed opinions on SCHA, with some sources highlighting its attractiveness due to low costs and historical performance, while others have downgraded it, suggesting that current market conditions favor large-cap stocks over small-cap stocks [3] Interest Rate Impact - Small-cap stocks are significantly affected by borrowing costs, as they rely more on debt for growth compared to larger firms. The current 10-year Treasury yield is at 4.24%, which poses challenges for small-cap companies [4][8] - If Treasury yields rise towards 4.5% or higher, the increased cost of capital could compress small-cap valuations more rapidly than those of large caps, making interest rate direction a critical factor for SCHA's near-term performance [4] Portfolio Composition - SCHA's portfolio is highly diversified, containing over 500 positions with no single holding exceeding 0.50% of total assets, which shifts performance drivers from individual stock selection to sector allocation [6] - The fund's major sector allocations include Industrials, Financials, and Information Technology, which together account for approximately half of the total assets and are key determinants of the fund's performance relative to its benchmark [6] Notable Holdings - The ETF has significant exposure to emerging sectors such as quantum computing through Rigetti Computing (RGTI), renewable energy infrastructure, and cryptocurrency mining operations [7] - Rocket Companies (RKT), a top holding, illustrates the volatility and growth potential typical of small-cap businesses that have not yet scaled their operations [7]

Summary of Morgan Stanley Global Macro Forum Call Industry and Company Involvement - The call involves insights from Morgan Stanley's Global Macro Strategy team, focusing on macroeconomic trends and financial markets, particularly in the US and Japan. Core Insights and Arguments - **Fed Outlook**: Kevin Warsh's nomination does not significantly change the Federal Reserve's outlook. Two additional rate cuts are expected in the second half of the year due to disinflation, with gradual changes likely under a Warsh-led Fed, primarily through balance sheet policy rather than interest rates [39][39][39]. - **Yield Curve Dynamics**: A smaller Fed footprint in communications and balance sheet management is anticipated to steepen the yield curve. Investor speculation regarding the Fed's intentions may influence the swap spread curve [39][39][39]. - **JGB Yield Forecast**: The forecast for Japanese Government Bonds (JGB) yields has been revised higher due to an improved US growth outlook and changes in the Bank of Japan's (BoJ) stance. A bear-steepening trend is expected as the BoJ gradually hikes rates, with persistent weak supply/demand dynamics in the 10-year plus sector [39][39][39]. - **US Rates Volatility**: US rates volatility has decreased due to low realized volatility and a surge in callable bond issuance. A near-term rebound is possible due to a two-week issuance gap around the Chinese New Year, with reduced demand from Chinese banks for supranational callables [39][39][39]. - **FX Volatility**: The increase in FX volatility appears isolated, indicating FX-specific risks rather than broader macroeconomic risks. The USD risk premium remains elevated, but medium-term risks to the USD are high. A bullish stance is maintained on risk assets, particularly AUD, CAD, EM FX, and SEK [39][39][39]. Other Important Points - **Volatility Trends**: Rates volatility has not increased alongside FX volatility, with the VIX remaining stable despite higher FX volatility [30][30][30]. - **Short USD Positioning**: There has been a reduction in short USD positioning, while USD risk premia have returned to levels seen in Q2 2025 [32][35][35]. - **Market Dynamics**: The dynamics between the 10-year and shorter-term sectors are driven more by inflation concerns than fiscal concerns, with the 2-year and 10-year term premiums trading in parallel [14][14][14]. This summary encapsulates the key points discussed during the Morgan Stanley Global Macro Forum, highlighting the macroeconomic outlook, interest rate expectations, and market dynamics in both the US and Japan.

Earnings season is kicking off in a big way. The S&P 500 ($SPX) recently cleared the 7,000 mark on AI-driven optimism and rate-cut hopes, and that momentum has traders hunting for the next breakout. However, the pullback has begun as President Trump's choice for Federal Reserve chair has injected fresh market volatility, refocusing investors on interest-rate-sensitive names and macro risks. Meanwhile, smaller social media plays, like Trump Media (DJT) and Joyy (JOYY), have seen surging volume as meme-sty ...

President Donald Trump's nomination of Kevin Warsh to succeed Jerome Powell as Chair of the Federal Reserve is already rippling through markets. 1. Inflation Is ‘A Choice,’ Not a Trade-OffWarsh rejects one of the Fed's most entrenched ideas: that low unemployment mechanically leads to inflation.On Monday, veteran strategist Ed Yardeni wrote that Warsh views inflation as "a byproduct of unsound policy decisions," not the inevitable result of economic strength. Warsh explicitly rejects the Phillips Curve fram ...