Economic Reports - The delayed November Personal Consumption Expenditures (PCE) report is expected on Thursday, skipping the October report due to a government shutdown, with the last September report showing +2.8% for both headline and core PCE [4] - The quarterly Gross Domestic Product (GDP) for Q3 2025 is also due on Thursday, with a first revision expected to align with the previously announced +4.3%, a significant improvement compared to the -0.6% reported in Q1 2025 [5] - Initial Jobless Claims are anticipated to rise above +200K, from +198K reported last week, indicating a "no hire, no fire" environment despite weaknesses in monthly job numbers [6] Q4 Earnings Reports - Q4 earnings season begins this week, with key reports from 3M and D.R. Horton before the market opens, and from Netflix, United Airlines, and Interactive Brokers Group after the market closes [7] - Interactive Brokers is rated as a buy (Zacks Rank 2), with expected growth of +2% on earnings and +4.3% on revenues [8] - Netflix, rated as a hold (Zacks Rank 3), is projected to achieve +27.9% growth in earnings and +16.8% in revenues as it expands globally [8] - D.R. Horton aims to exceed expectations of -25% earnings growth and -12% revenue decline [8]

Economic Strength and Consumer Behavior - Recent economic data indicates growing strength on Main Street, with Americans' take-home pay increasing by 1.42% after inflation from January to December 2025, contributing to rising retail sales and home purchases [1] - Retail spending rose by 3.3% year-over-year in November and increased by 0.6% from the previous month, surpassing economists' expectations of a 0.4% rise [2] Housing Market Dynamics - Lower interest rates have led to a 5.1% increase in existing home sales in December, as reported by the National Association of Realtors [3] - The average 30-year fixed-rate mortgage fell to 6.19% in December, down from 6.24% in November and 6.72% a year ago, indicating improved housing market conditions [6] - Inventory levels in the housing market remain tight, with fewer sellers eager to move, but more inventory is expected to come to market starting in February [6] Inflation Trends - Inflation remained elevated at the end of 2025, with the consumer price index (CPI) showing a 0.3% monthly increase in December and a 2.7% rise year-over-year [9] - Core CPI, excluding food and energy prices, rose by 0.2% in December and is up 2.6% from the previous year [9] Employment and Federal Reserve Actions - The US economy added 50,000 jobs in December, contributing to a decline in the unemployment rate [10] - The Federal Reserve has cut its benchmark federal funds rate by 25 basis points in its last three meetings, indirectly contributing to lower mortgage rates [12] - Market expectations indicate a 95% probability that the Fed will maintain its current target range of 3.5% to 3.75% in the upcoming meeting [13]

Group 1: Market Overview - The trading week begins on Tuesday, January 19th, 2026, with the market closed on Monday for Martin Luther King, Jr. Day [1] - The delayed November Personal Consumption Expenditures (PCE) report is expected on Thursday, skipping the October report due to a government shutdown [4] - The quarterly Gross Domestic Product (GDP) for Q3 2025 is also due on Thursday, with expectations for a revision in line with the previously announced +4.3% growth [5] Group 2: Job Market Insights - Initial Jobless Claims are anticipated to rise above +200K, from +198K reported last week, indicating a stable jobless claims environment despite weak monthly job numbers [6] Group 3: Q4 Earnings Reports - Q4 earnings season begins with reports from 3M (MMM) and D.R. Horton (DHI) before the market opens, and from Netflix (NFLX), United Airlines (UAL), and Interactive Brokers Group (IBKR) after the market closes [7] - Interactive Brokers is expected to grow by +2% on its bottom line and +4.3% on the top, holding a buy rating [9] - Netflix aims for +27.9% growth in earnings and +16.8% in revenues, continuing its expansion into global markets, holding a hold rating [9] - D.R. Horton is expected to improve on a -25% earnings growth forecast with -12% revenues [9]

Core Viewpoint - The Federal Reserve is facing a divergence in opinions regarding interest rate cuts, with some officials advocating for cuts in response to labor market weaknesses, while others emphasize inflation concerns as a reason to maintain current rates [1][2]. Group 1: Federal Reserve's Stance - Federal Reserve Vice Chair Michelle Bowman suggests that the Fed should be ready to cut interest rates further if the labor market shows signs of weakening [1]. - The current Federal Funds Rate is set between 3.50% and 3.75%, with a total of 75 basis points cut in 2025 [4]. - The Fed's dual mandate requires balancing maximum employment with low inflation, indicating a complex decision-making environment [3][4]. Group 2: Economic Implications - Higher interest rates are associated with lower inflation but can lead to increased job losses, while lower rates can reduce unemployment but may raise inflation [6]. - Economists define the neutral rate, or r-star (r*), as the interest rate that maintains full employment and stable inflation around the Fed's 2% target [5]. - The neutral rate is not fixed and can fluctuate based on various economic factors, including productivity growth and demographic trends [9]. Group 3: Future Projections - The Fed's median projection indicates only one additional 25 basis points cut is expected in 2026 [8]. - The next Federal Open Market Committee (FOMC) meeting is scheduled for January 27-28, with a low probability of a quarter-percentage point cut estimated at 5% [9].

Core Viewpoint - The Federal Reserve is shifting towards easier monetary policy due to political pressure, which may lead to sustained high prices and inflated asset bubbles [1][3]. Monetary Policy Changes - The Federal Reserve has halted quantitative tightening and is expanding its balance sheet, planning to purchase $40 billion in Treasury bills, indicating a move towards monetizing the deficit [3]. - The consumer price index (CPI) remains at 2.7%, above the Fed's target of 2%, suggesting that inflation is not being effectively controlled [2][3]. Inflation and Asset Bubbles - Monetizing government debt is expected to increase the money supply, leading to higher inflation and asset bubbles, particularly in commodities and the stock market [4][3]. - Predictions indicate that looser monetary conditions will continue to drive up prices of hard assets, with gold, silver, platinum, and copper reaching record highs [7]. Banking Sector Implications - Upcoming regulatory changes will enhance commercial banks' lending capacity, allowing for greater credit expansion and accelerating money growth [5]. Political Influence - The shift in monetary policy is perceived as being influenced by the Trump administration, with expectations that this loosening will persist [6].

Market Overview - U.S. stock markets are closed on January 19, 2026, for Martin Luther King Jr. Day, with no cash equity trading or after-hours sessions occurring [1] - U.S. equity futures are experiencing notable declines, with E-mini S&P 500 futures down approximately 0.7% to 0.9%, Nasdaq 100 futures down between 1% and 1.2%, and Dow Jones Industrial Average futures sliding by about 0.6% to 0.7% [2] Geopolitical Developments - President Trump announced a 10% tariff on imports from eight European countries, effective February 1, which could escalate to 25% by June 1 if no agreement is reached regarding the U.S. acquisition of Greenland [3] - European leaders are considering retaliatory measures, including activating the EU's Anti-Coercion Instrument, in response to the tariff threats [3] Safe-Haven Assets - Investors are flocking to safe-haven assets, with gold futures surging to a record high above $4,670 an ounce and silver futures reaching a new record above $94 an ounce [4] Global Market Performance - European equity markets are broadly lower, with the STOXX Europe 600 index down approximately 0.9%, Germany's DAX declining by 1.1%, and France's CAC 40 down 1.3% [5] - Asian markets show mixed results, with Japan's Nikkei 225 dipping by 0.7% to 0.8%, while China's economy expanded by 4.5% year-on-year in Q4 2025, despite disappointing retail sales figures [6] Upcoming Market Events - Key economic data and corporate earnings reports are expected to influence market sentiment upon the reopening of U.S. markets [7] - The Personal Consumption Expenditures (PCE) price index and a further estimate of third-quarter GDP growth are scheduled for release, which will be vital for assessing the U.S. economy [8] Earnings Season - The fourth-quarter earnings season is underway, with major companies such as Netflix, Intel, Visa, 3M, Johnson & Johnson, Procter & Gamble, and NextEra Energy set to report their results [10] Major Stock News - BRC Group Holdings reported a significant turnaround with a net income of $89.1 million in Q3, contrasting with a loss in the same period last year [14] - Goldman Sachs shares increased by 4.6% due to record-setting equity trading revenue [14] - European defense stocks are gaining amidst geopolitical tensions, while European car manufacturers are seeing declines due to fears of increased U.S. tariffs [14]

Core Insights - Today's CD rates are significantly higher than the national average, influenced by the Federal Reserve's interest rate cuts in 2025, which may present a final opportunity to secure these elevated rates with certificates of deposit [1] Group 1: Best CD Rates - As of January 19, 2026, the highest CD rate available is 4% APY, offered by Marcus by Goldman Sachs for a 1-year CD [2] - The competitive nature of CD rates is evident, with various financial institutions providing attractive offers [2] Group 2: National Average CD Rates - The national average CD rate for a 1-year term is currently at 1.63%, which is considerably lower than the best available rates [3] - The current average CD rates are among the highest seen in nearly two decades, primarily due to the Federal Reserve's strategy to combat inflation by maintaining elevated interest rates [3] Group 3: Finding the Best CD Rates - To secure the best CD rates, it is advisable to shop around and compare rates from multiple financial institutions [4] - Online banks typically offer more competitive rates due to lower overhead costs, making them a preferred option for consumers [4] - It is essential to check minimum deposit requirements and review account terms, including early withdrawal penalties and auto-renewal policies, to ensure alignment with financial goals [4]

Group 1 - The international gold market experienced a significant surge on January 19, with spot gold reaching a historical high of $4,690 per ounce, marking a daily increase of over 2% [1] - COMEX gold futures also rose sharply, peaking at $4,698 per ounce, just shy of the $4,700 mark [1] - Domestic gold jewelry brands in China reported prices at historical highs, with notable increases such as Lao Miao gold at 1,459 yuan per gram, up 24 yuan from the previous day [1] Group 2 - The recent surge in gold prices is attributed to a combination of short-term geopolitical risks and long-term macroeconomic expectations [3] - Reports indicate that former U.S. President Trump announced plans to impose tariffs on eight European countries starting February 1, which may heighten geopolitical tensions and influence precious metal market volatility [3] - Analysts suggest that the core driving logic in the gold market is the interplay between delayed policy easing expectations and persistent inflation realities, with central banks, particularly the Federal Reserve, expected to consider rate cuts by 2026 [3]

Summary of Economic Data Surprises and Market Reactions in 2025 Industry Overview - The report focuses on the US economy, analyzing economic data surprises, forecasting performance, and market reactions related to growth and inflation in 2025 [1][2]. Key Points Economic Growth - The US GDP is projected to have increased just under 2.5% Q4/Q4 in 2025, aligning with the initial forecast of 2.4% and surpassing the consensus forecast of 1.9% [3][4]. - Initial growth forecasts were lowered by 1.9 percentage points due to anticipated large tariffs, but were later adjusted upward after the most disruptive tariffs were scaled back [4][5]. Inflation - The core PCE price index increased by approximately 2.8% Q4/Q4 in 2025, which is higher than the forecast of 2.4% and reflects a modest progress in disinflation [12][16]. - The overshoot in inflation is attributed to larger-than-expected tariffs, contributing an estimated 60 basis points to the year-on-year rate [12][16]. Forecast Performance - The hit rate for economic indicator forecasts averaged 71% in 2025, slightly above the 64% average since 2017, with notable accuracy in GDP (100% correct) and core CPI (90% correct) [16][22]. - The performance lagged for the ISM manufacturing index, achieving only a 44% hit rate, indicating overly optimistic forecasts for manufacturing surveys [22][29]. Market Reactions - Market sensitivity to inflation data surprises was notably high, with stock market reactions at 1.5 times the normal level and bond market reactions at 2.6 times the historical average [29][33]. - The relative importance of the unemployment rate in market reactions has increased, with an estimated 80% weight on unemployment surprises compared to 20% on nonfarm payrolls, reflecting uncertainty in labor market conditions [36][39]. Economic Indicators - The report includes various economic indicators such as consumer expenditures, business fixed investment, and housing market statistics, projecting a mixed outlook for these areas in 2025 and beyond [43][44]. - Notable projections include a decline in residential fixed investment by 2.1% and an increase in business fixed investment by 4.1% in 2025 [43]. Additional Insights - The report highlights the impact of frontloading imports ahead of tariff increases, which distorted GDP measurements due to the differing treatment of imports and inventory investments [8][9]. - The economic outlook for 2026 suggests potential moderation in market reactions due to expected healthy growth and lower inflation, but uncertainties in the labor market may keep reactions elevated [39]. Conclusion - The analysis provides a comprehensive overview of the US economic landscape in 2025, emphasizing the interplay between tariffs, inflation, and market reactions, while also highlighting the forecasting accuracy and challenges faced by analysts in predicting economic trends.

Summary of Key Points from the Conference Call Industry Overview - The report focuses on the Asia-Pacific economic outlook for 2026, with specific emphasis on China, Japan, India, Taiwan, and New Zealand. Core Insights and Arguments 1. **China's GDP Growth**: - Expected real GDP growth of 4.8% in 2026, surpassing consensus expectations of 4.5%-4.6% due to strong export growth and easing fiscal policy [6][5][4] 2. **Housing Market in China**: - The housing market is not expected to bottom out across all indicators; housing starts are down approximately 80% from peak levels in 2020, while construction activity has fallen about 60% [7][4] - Home prices have significantly declined, with expectations that they will remain lower by the end of 2026 [7][4] 3. **China's Trade Surplus**: - Anticipated to increase further, with a record trade surplus of nearly $1.2 trillion in 2025 expected to rise in 2026 due to competitive manufacturing and a focus on exports [13][14][4] 4. **US Tariff Relief**: - Modest tariff relief expected for Asia, particularly benefiting India, as negotiations continue to lower trade barriers [19][4] - Taiwan has signed an agreement to reduce US tariffs in exchange for significant investments in semiconductor and AI production [21][4] 5. **Japan's Fiscal Policy and Yields**: - No significant rise in bond yields expected post-election; fiscal policy may loosen but will be constrained by market pressures [25][26][4] - The yen is expected to strengthen slightly, moving away from the current weak levels [31][4] 6. **Growth Surprises in Asia-Pacific**: - Taiwan and New Zealand are projected to outperform consensus growth expectations, driven by tech exports and recovering economic conditions, respectively [33][4] 7. **Inflation Outlook**: - Inflation pressures are not expected to drive significant policy shifts among Asia-Pacific central banks, with CPI inflation returning to pre-COVID levels [41][4] - China and Thailand are expected to see continued easing in monetary policy due to low inflation [42][4] 8. **Central Bank Policy Rate Expectations**: - Anticipated tightening in Japan, Taiwan, and New Zealand, with the Bank of Japan expected to resume rate hikes [47][48][4] 9. **Asian Currencies Performance**: - Majority of Asian currencies expected to appreciate against the USD in 2026, with the CNY anticipated to strengthen due to strong fundamentals [52][4] Other Important Insights - The report highlights that most themes from the previous year were accurate, with notable surprises including the rise in government bond yields in China and the underperformance of the Indian Rupee [56][4] - The analysis includes a review of past predictions and their outcomes, reinforcing the credibility of the current forecasts [56][4]